of the reserve should be an
ample allowance for the special labor required in the purely banking
portion of the business.
In this we have the concurrence of the late Elizur Wright. In an essay
on this subject he says:
"The expenses of the five largest savings banks in Boston, in
1869, did not exceed 4-10 of one per cent. on $28,000,000
deposited in them. They certainly had twice as many transactions,
in proportion to the deposits, as any life insurance company could
have with the same amount of reserve, so that 1/2 of one per cent.
on the reserve seems to be ample for all working expenses save
those of maintaining the agencies and collecting the premiums."
This need hardly be looked upon as an admission that it costs twice as
much to care for the funds of a life insurance company as for those of
a savings bank. A liberal expense allowance must be made at the
outset, seeing that an error in this particular cannot easily be
rectified after the policy is issued. The dividend, or, to speak more
correctly, the annual return of surplus, will correct any overpayment
on this account.
There is another expense which seems inevitable. This is the
government tax on insurance companies, amounting in the aggregate to
nearly 1/3 of one per cent.
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