losses due to the war, and urged strenuously that the companies should make no extra charge at all for the war risk, but should regard themselves as free, in the general interest of the country, to dip into the fund just described to whatever extent it might be necessary to do so.

It is true that in the United States lawmakers and others prefer to think of life insurance companies in terms of their aggregate resources, convenient for filching through taxation and otherwise, instead of in terms of the multitudinous policyholders for whom the resources are held in trust; but even so no general support could be found for a scheme to engineer a raid in the name of patriotic necessity upon the annual surpluses accumulated by the companies under the promise of distributing these surpluses to the policyholders as dividends on their policies.

In the light of the latest developments in connection with the war losses which the companies will probably have to meet, if a really large army of American troops is sent to Europe before peace is made, the earlier discussions and proposals with respect to war policy clauses and war risk premium rates seem already curiously out of date and irrelevant. For as the great majority of American life insurance companies complete the compilation and computation of their war exposure on policies already outstanding when war began-policies containing no military service clause at all-and as they discover what the actual war experience of life companies in other belligerent countries has been and continues to be, the pressing problem for them ceases altogether to be that of the limits of patriotic generosity, and becomes that of making sure to weather the storm without financial impairment. It is by reason of this newly discovered uncomfortable state of things that the suggestion, now much under discussion among life underwriters, has been made, that the payment of all dividends on participating life policies should be discontinued for the period of the war, i.e., that a kind of moratorium should be established for such dividends.

It is, of course, impracticable for one not in immediate touch with the business, not merely of a single life insurance company but of many, to pass a competent judgment upon the necessity of the expediency of such a moratorium for life policy dividends as has just been described. It is certain that some few of the American companies are under no necessity of adopting this procedure, since in the years before the war they had clung to the practice of inserting war service clauses in all their policies, and thus have not now to face war losses for which no extra premium has been paid or can be demanded. Such companies, however, are undoubtedly the rare exceptions, since disbelief in the possibility of a really serious war between the United States and any other nation or nations has been so general among all classes of our business men, life underwriters included, that provision against such a contingency has been looked upon as almost ridiculous. As for the companies for which the contingency has become a stern reality, it may be taken as certain that great differences exist among them as regards the situation they now have to meet. Some might undoubtedly rely upon. their resources to carry them through with any war loss ratio they could possibly experience: others might find themselves hard pressed in a long drawn out war.

INCREASE OF TAXES

Insurance has also been seriously affected by the increased taxation. The expenses of the war have been so enormous that the governments have been forced to use almost every possible source for raising revenue without very scrupulous regard as to whether the subject of taxation was a proper one for increased taxation. Theoretical considerations and principles of equity and justice in taxation have either given way or been modified by the practical necessity and ability to secure the funds for the state. The insurance business in most of its branches not only had on hand large funds, but it was in continual process of collecting large amounts. These funds thus appealed to the hard pressed legislator as an easily available source of revenue, notwithstanding that these large accumulations, in many branches of insurance, were liabilities and not assets; that is to state, they were reserve funds, held under the terms of the insurance contract to meet financial obligations of the insurer. The extent and character of these increased taxes are considered elsewhere in this study.

PUBLIC INSURANCE

One of the most interesting effects of the war on insurance is the establishment of government insurance of several kinds. It is too early to deduce any conclusion from the experience under these various kinds of government insurance, but it may well result that the experiments now being made will result in the permanent establishment and extension of government insurance. As is well known to students of insurance, different kinds of public insurance had been in operation in various countries. In Australia government life insurance had been in operation, and likewise in the European nations several examples of government property insurance. In the United States there had been a trial of public life insurance in the state of Wisconsin. These examples, taken at random, show that government insurance was not a new thing at the outbreak of

the war and, indeed, in many of the nations there had been a growing opinion that insurance in several forms afforded a proper activity for the state. The new hazards which the war introduced into many kinds of insurance, the resulting increase in the risk, and the impossibility of calculating this risk made a condition from which many of the private insurance organizations were glad to be relieved. It was but natural and proper that the state should be called upon to carry these new and unpredictable risks. Hence the state became the insurer, taking on a function which in times of peace would have been strongly opposed by the private insurance organizations. It is assumed probably by the majority of legislators and the people at large, that this assumption by the state of insurance will be an activity to be discontinued at the close of the war. But several considerations may work against the achievement of this end. In the first place, the insurance contract in many of its forms is one which either creates obligations extending to a distant date of maturity, or if not directly doing this, it creates a moral obligation to continue the contract.

In the second place, public insurance was gaining supporters before the war, and if the experiment should appear to be successful, there may result such a demand that the governments which have gone into the insurance business may be forced to continue it. This may be done in competition with private companies, or the state may do as Italy did some years since, make of life insurance, or other forms of insurance, a monopoly.

II

THE EFFECT OF THE WAR ON LIFE

INSURANCE

The present war is doing more to bring to the attention of people an appreciation of what life insurance is than all the educational activities of many years. Protection for the family or dependents has become an actual, present problem for many, and a realization that the institution of life insurance is the only possible agency to secure this end has resulted. Individual and competitive life has given way, for the time being, to collective mass conduct, and therefore the cooperative, mutual, characteristic of life insurance finds a wide opportunity for use. Indeed, so great is the need for the wide application of the insurance principle to equal the correspondingly broad cooperation of social groups, united to achieve a single purpose, that the existing agencies for the operation of the insurance principle—private insurance organizations have been found inadequate to meet the situation. There has, therefore, resulted the use of that most inclusive agency known to society-government-which in different ways has assumed for the time being the function of granting insurance of various kinds.

STATUS OF LIFE INSURANCE BEFORE the War

It has been shown how and why insurance was becoming more popular in the period preceding the war, and how in its various forms it was becoming increasingly used to meet the needs of society. This increase in the use of insurance was due in part to the fact that it was becoming more scientific and in part to a better understanding and appreciation of insurance. The need

or demand for insurance was a result of the fact that society, both in its individual and group activities, was becoming more interdependent. However social progress may be characterized, and whether there is any agreement as to what constitutes social progress, it is undoubtedly true that the past century has witnessed what Herbert Spencer has described as an increased homogeneity, accompanied by an increased heterogeneity. The isolation of interests and the individual economic and social conduct have given way to a growing community of interests of an increased number of groups and a greater unity of interests. Life insurance has therefore found an unusual field of service in this developing community of interests, and has therefore increased in all the leading nations in volume and in individual policies. The following table shows the amount of life insurance in force in some of the leading nations at the close of the year 1916:

Statistics are not available to determine the number of single persons who hold life insurance policies. There were in the United States in 1916 over ten million ordinary life policies in force in the regular life and industrial companies. This does not include the large number of policies in fraternal and assessment companies, nor does it take into account the fact that many persons hold more than one policy of life insurance.

The life insurance companies of the United States have not in large numbers entered foreign countries to solicit business. The following table shows the foreign business of the large United States companies which have to any extent entered the international field.