From this table it appears that the new member admitted in the 26th year, receives more than twice as much profits on a division, as the one admitted in the first year, if no allowance is made for interest on the balances due to the old member; which is manifestly unjust and improper. The increase is derived from the profits of the older member. He who has longest trusted to the company, who has run most risk from their failure or mismanagement, who will receive at last little or no benefit from his insurance, on account of the large amount he has had to pay in premiums, this man is made to divide the interest from his accumulated profits to one whose only connection with the company is one of great advantage. In fact, the old member ought to receive all his profits, and the compound interest on those profits at the full rate received from the company's investments. If the company make more than 4 per cent on his money, he should receive more.

It will be well, perhaps, to refer to a charter of one of these companies, and show how these principles are to be applied. The charter of the Mutual Life Insurance Company of New York requires an account to be opened with the assured; and in this, each is to be charged with a proportionate part of the losses and expenses, and to be credited with his premium, and with an equal share of the profits of the company derived from investments and earnings in proportion to his premium. This account is to be made up every five years, and the balance paid to each member at his decease, but not till then.

The losses and ordinary expenses are known from the books of the company. Under the head of expenses must be included the cost of reinsuring each of the surviving members, and that cost must be determined by imagining each one of the assured to take out policies in a new company, reckoning their ages to be one year greater than they really are. After the first division of profits there must be estimated, also, as part of the expenses, the amount due to those who have a balance to their credit, at the preceding distribution, for interest on this balance; the interest to be compound, and at the rate the company shall actually receive on their investments. These are real expenses, not paid out, indeed, but none the less real; the first for a fund to meet the future losses, the other for interest on sums belonging to the assured, but retained by the company for the sake of increasing the strength of the company, and for other purposes. The credit side of the account, as far as made up from premiums, will be easily determined from the books of the company. The profits from investments and earnings will be found by taking losses and expenses from the premiums received, understanding by expenses what has just been explained. The account would stand as follows::-

Dr.

To losses......
To balance...

FIRST FIVE YEARS.

By premiums...
By profits.........

Cr.

To losses.

To balance.

SECOND FIVE YEARS.

By premiums...

By interest on preceding balance.....
By profits..........

It would not do to keep the profits in two separate items of interest and earnings; for, after a while, the interest might exceed the profits. Should it never exceed the profits, as the charge for losses cannot, according to the charter, exceed the premiums, the assured would ultimately receive his assurance, and all the interest ever earned by the company; which, of course, might not happen.

In conclusion, it cannot be impressed too strongly on the companies to use caution and wisdom in determining their profits. Life insurance companies, with a paid-up capital, are exposed to failures; and the weaker basis of the mutual system renders this prudence the more necessary. Let no anxiety to declare large profits lead to an over-estimate of the gains they have made. Ignorance, miscalculations, extravagant estimates of the value of stocks belonging to the company, besides the ordinary sources of failure, mismanagement, unfortunate investments, and corruption of offi. cers, may ruin the company, and change what promised to be a blessing to the assured, into a curse. The mutual system is not only honest and fair, but eminently suited for this kind of insurance. The objections that lie against it in fire and sea risks, do not apply in life insurance; for the laws which govern the duration of life are far more regular than those which govern the preservation of houses and ships. The effect of an epidemic is never so irregular as a great fire or a sea-storm. But, while the system is good, it must be managed, not only with integrity and prudence, but with all that skill and exactness which mathematical science can bring to its aid. The former are necessary for success, but not more so than the latter. Both are indispensable.

Art. II. ADMINISTRATION OF THE RAILROADS OF MASSACHUSETTS:

WITH REFERENCE TO THE RATES OF FREIGHT AND FARE.

To construct a railroad in Massachusetts, has ceased to be a Herculean enterprise. Experience and science now light the path of the engi neer, and indicate the route, materials, and mode of construction. Capital, too, has ceased to be coy and repulsive when the line is feasible and the traffic sufficient. The undertaking, however, is not complete when the rails are down. The first movement of the locomotive opens another field of action; a field which demands close investigation and rigid analy sis, which puts in requisition commercial as well as professional skill, and philosophical research. The administration of a great line of iron-way, affecting both public and private interests, with powers still undefined, and latent resources still undeveloped, is a subject alike worthy of the study of the merchant, the man of science, and the philanthropist.

In discussing the rates of charge appropriate to a modern railroad, its relation to the State must not be forgotten.

One of the first objects of association, and one of the first trusts which devolves on government, is the construction of roads; without them, property is nearly worthless, and society but little advanced from barbarism.

The State, in some portions of the world, provides roads itself; in others, assigns the duty of constructing them to others.

Massachusetts delegates to associations the trust and duty of providing railroads. Let us inquire what is the compact between them.

They ask the State to transfer to them its right of eminent domain-its power to appropriate the property of individuals. They apprise the State of the progress of art, suggest that the public good requires railroad facilities; that they will reduce the cost and increase the speed of locomotion, and develop latent resources; and, with great propriety, they urge that they can construct the work and conduct the traffic with more economy and safety than the State. Upon these representations, the acts of incorporation are granted, and reciprocal obligations are assumed by the parties. Trusts are created for the benefit of the public, and tolls are granted for the remuneration of the trustees. The State delegates to societies the office of catering for the public, and, in its contract, aims to make such terms as shall tempt the capitalist to embark his funds, and, at the same time, secure to the public all facilities compatible with a fair remuneration. It confers important powers, accompanied with corresponding duties; for the companies it creates are to lend wings to commerce, and to the social intercourse of the State.

Is not this the true basis of our railroad system? and could it rest on a better or safer foundation? Were the companies chartered to forget the cardinal principles to which we have adverted; were they to pursue a narrow and self-defeating policy, by infrequent trains, high charges, and inferior cars, engines, and track, to incommode and depress the district they traverse, of which they hold a virtual monopoly; were they to misapply the revenue by needless expenses, or high salaries to favorites or dependents, could they expect countenance of the legislature, or success in contests with rivals who offer the very advantages they withhold? Should they, on the contrary, pursue a more judicious and generous policy; adopt the improvements of the day which tend to increase speed, safety, and comfort; reduce the cost of transit, and, by branches, give access to quarries and waterfalls, and restore the fading prosperity of villages which have suffered by a diversion of their traffic, or facilities given to rivals, reliance may well be placed upon legislative protection.

THE STATE WILL NOT CHARGE THE PUBLIC WITH THE COST OF MAINTAINING TWO LINES, WHEN ONE NOT ONLY CAN, BUT DOES, ACCOMMODATE THE PUBLIC.

Massachusetts permits her railroad companies to earn a revenue of 10 per cent. England and France have been more liberal than Massachusetts. In regions where money is worth less than in America, they have authorized a nett return of 10 per cent to the projectors. They have reserved, also, a reversionary interest, but have made the terms more liberal than our own. These advantages enable their successful lines (and nearly all are successful,) to carry the stock to a premium of 50 to 100 per cent, and thus enrich those who have benefited the country. And it is but just that they who have adventured their capital in this new field of enterprise, to accomplish great public results; who have applied talent, energy, and skill, to construct and conduct great public works in a judicious and frugal manner, should receive, in all countries, a liberal return; and such return has been, and, doubtless, will be, sanctioned here by an enlightened public opinion.

Massachusetts has not at the outset restricted the rate of tolls. She has referred the rate to the discretion of the parties incorporated, reserv. ing merely a right to reduce the charge when the revenue shall exceed a maximum of 10 per cent upon the outlay. More than ten years have elapsed since the first lines were opened in Massachusetts. At that early period, the directors, although intelligent and trustworthy, had little or no experience in the movement of passengers and freight. Alarmed by the almost uniform excess of cost over estimates, without statistics to guide them, they did not stop to theorize or experiment, but were satisfied to adopt such rates as should put down the stage and wagon, their immedi ate competitors. Having set their cars in motion, they found much to alter, renew and enlarge. Busied with the extension of their tracks and depots, with requests for branches, with experiments in engines and cars, they left the chances of the future to determine how the rates thus estab lished would coincide with philosophy, the public good, and their pecuniary interest. With a piece of mechanism on their hands, competent to carry both men and goods at less than one-eighth the cost of horse-power on common roads, they took that cost as a standard for their guidance, marking only one shade below it, just low enough to incline the scale in their favor, and secure a preference.

In 1835, when the lines of Massachusetts were opened, the average charge by railroad for passengers, was four cents each, per mile, and the average charge for freight, not far from nine cents per ton, a mile; cates which would be considered almost prohibitory, at the present day. The precedent, thus established, was copied under subsequent charters, as a matter of course, and the light since thrown upon the subject has been principally gleaned from the experience of other lands, or from concessions made in struggles to improve a losing business, to meet competition, or to reduce a revenue exceeding the limits prescribed by the charters. Under this light, however, the charge for passengers has, since 1837, fallen nearly one-half, viz. to a nominal average of 2 first-class passengers, and 1 second-class; but, with due allowance for deductions made to stage and steamboat travellers, by season tickets, and special trains, to 2 cents per mile, on first-class, and 11⁄2 cents on second-class passengers. Freight has fallen in nearly the same ratio, and the question naturally arises, what causes have led to this reduction of charge? How far has it been judicious, and will it be progressive? It is our purpose, in this essay, to discuss the topics thus presented.

00

The first section of the Western Railroad, the great enterprise of Massachusetts, leading from Worcester to Springfield, a distance of fifty-five

AVERAGE RATES of railroads ouT OF BOSTON, FOR FIRST-CLASS PASSENGERS, JULY, 1846.

miles, was finished in the summer of 1839, and opened for travel in the October following.

By this line, and the Boston and Worcester, a continuous railroad of one hundred miles united the port of Boston with the valley of the Connecticut, at a point in Massachusetts twenty-six miles above tide water, and sloop navigation at Hartford. At this period, Hartford and New York were the great marts of the valley. Small steamers run between Springfield and Hartford, and lines of steamers and packets between Hartford and New York. The average charge between New York and Springfield was less than three dollars per ton, and three dollars per passage.

Instead of conforming to these rates, the directors of the Western Railroad rigidly adhered to precedents, and resolving to adopt the average rates of Massachusetts, fixed the rate of passage by first-class cars, at $3 75 from Boston to Springfield, the local fare at 4 cents per passenger a mile, and the charge for freight at an average rate of six dollars per ton between Boston and Springfield, or six cents per ton, a mile.

This decision, in which the Boston and Worcester Railroad concurred, attracted public attention, gave rise to the first public discussion of the rates of fare; and such was the solicitude in Boston respecting the Western Railroad, in which both the public credit of the State, the growth of the city, and the fortunes of many citizens were embarked, that deep interest was taken in the question. It was the fortune of the writer to commence this discussion, in a series of essays, published in the Boston Atlas, in August, 1839, with a view to change the decision of the directors of the Western Railroad Company. Their enterprise originally aimed at the trade of the West, and the expansion of the business of the State. Eloquent appeals on these points, had been made to Boston. Her citizens had responded by large subscriptions to the stock. Measures tending to crush her commerce in the bud, were to be averted; and the writer, participating in the feelings of the stockholders, his associates from the outset, entered with warmth into the discussion. He had been engaged for years previous, in directing a line of steamers on the coast of Maine, under rates varying with competition; had drawn deductions favorable to moderate charges from experiments tried under his own eye, and could see nothing so amphibious in the habits of our citizens as to prevent the success of a policy on land which had triumphed on the water.

Under such impulses he entered the field, taking the ground that the average rates of fare and freight in Massachusetts were "too high, both for the interests of the public and the stockholders; that the directors of her roads, instead of adopting the liberal and enlightened policy of Belgium, seemed, in most instances, to have aimed at extracting as much as possible from each passenger; to have supposed they had done all that was politic or advisable, if they had put down the competition of the stage and the baggage-wagon; to have gone on the assumption that they accomplished everything if they secured the existing travel, and the gain incident to increased speed; without taking at all into account the vast business they might call into existence by a reduced rate of fare, and the attendant benefits they might confer on Boston and the State."

These views were sustained by contrasting the power of the locomotive with that of the horse, by reference to the success of the system of Belgium, to the tendency of the age to cheap amusement and locomotion, to the experience of the steamers on the coast and on the Hudson, to the