istence had begun to be applied to business enterprise and was now shortly to be applied to the formation of a continuous trustee upon a business basis.

The Journal of the 22d House of Representatives of the Commonwealth of Pennsylvania (1811-12) contains a discussion, reproduced below, which indicates the existence by that time of a sufficiently complex economic life and large enough individual capital to justify the formation of a life insurance company. This discussion occurred in connection with a petition to incorporate the Pennsylvania Company for the Insurance of Lives, Granting Annuities, etc.: 1

1

Mr. Holgate from the committee to whom was referred on the 3d instant, the petition of the Pennsylvania company for assurance on lives, granting annuities, etc. praying for a charter of incorporation, made report, which was read as follows, viz.

That they have given due attention to the subject, and have read the reports made to the two last Legislatures by committees appointed on like applications, and unite in opinion that such an institution would be highly beneficial to many descriptions of citizens throughout the state, but is more particularly necessary in the city and large towns, where it might be the means of preventing many families of industrious tradesmen and others, from becoming chargeable on the public charity and provide the means of education to their orphan children; and also assist the aged infirm not blessed with an abundance of wealth to pass the downward path of life with ease and comfort. These advantages, so conducive to the independent spirit of republicans, the committee have not discovered to be counterbalanced by any well-founded objection on the force of private injury or public inconvenience; as the petitioners ask no exclusive monopoly, every citizen being at liberty either to become a stockholder or to form contracts with the company, as it may suit their respective circumstances, or to remain entirely unconnected with it, while it affords no patronage that can operate in any way on the political economy of the commonwealth.

Boston, apparently, was beginning to appreciate a similar need, for on February 24, 1814, the Massachusetts General

1 House Journal, Penna., 1811-12, p. 157. It was on Tuesday, December 3, 1811. The bill incorporating this venerable institution, which of course is still in existence, was finally passed on February 22, 1812, and approved by the Governor on March 10, 1812. Ibid., pp. 457, 564.

1

2

Hospital was authorized by an act of the legislature to grant annuities on lives. That the Massachusetts General Hospital performed such services is evidenced by the fact that in 1817 there was a committee of the hospital "on the subject of granting annuities." 3

4

In New York City also such business was beginning to develop at this time. A number of early fire insurance companies in New York were granted the power by their charters to do a life insurance business. As early as 1801, the New York Insurance Company was given the power to do a fire and marine insurance business as well as life insurance, and insurance "for the ransom of persons in captivity." In the same year the Columbian Insurance Company was given similar powers, and in addition it was permitted to do an annuity business. In 1807, the Phoenix Insurance Company of New York was incorporated to do a fire and life insurance business. In 1814 two fire and life insurance companies were incorporated, one of which had power to do a mortgage business. In 1815 the National Insurance Company was incorporated to do a fire and life insurance business. In the May 28, 1819, issue of The Commercial Advertiser of New York, the following advertisement began to appear:

THE UNION INSURANCE COMPANY

Insure lives, grant annuities, and enter into all contracts dependent upon the chances of life and death.

The savings of salaried and professional men, and even the small earnings of the industrious laborer or servant, may be applied to the

1 A corporation was chartered in 1811 to build the Massachusetts General Hospital. The form of organization of this company is suggestive of the modern corporation. See "Speech of Governor E. Gerry of the Commonwealth of Massachusetts to both Houses of the Legislature at the session commencing on the 2d Wednesday in January, 1812,” p. 17.

2 Bowditch, N. I., A History of the Massachusetts General Hospital, p. 11. 3 Ibid., p. 27.

Laws of New York, 1801, ch. 19.

Ibid., ch. 56.

Ibid., 1807, ch. 12; 1814, ch. 59.

7 Ibid., 1814, chs. 144 and 216. 8 Ibid., 1815, ch. 173.

purchase of annuities, to command at the period of life when active exertion is either impossible or highly irksome. . . .

The company grant ENDOWMENTS to children on terms extremely liberal, and should make it an object to every parent to provide for his offspring.

The Union Insurance Company was incorporated on March 31, 1818.1 Shortly afterwards The Franklin Fire Insurance Company's charter was amended to provide power to make insurance on lives as well as fire insurance.2 The Mercantile Insurance Company of New York was incorporated on April 10, 1818 and was granted the same powers. Each of these three companies was to set up an "annuity fund" which was to be held virtually in trust by the company for beneficiaries of life insurance policies, annuities, etc. This "annuity fund" was to be managed separately from the fire insurance business and to be exempt from loss of any kind arising from fire insurance.

1 Laws of New York, 1818, ch. 78. 2 Ibid., ch. 140, April 10, 1818.

CHAPTER XII

CORPORATE FIDUCIARIES IN THE

UNITED STATES, 1818-50

The embryo of the modern corporate fiduciary emerged as a collateral feature of a life insurance company. This was in 1818, when the Massachusetts Hospital Life Insurance Company, of Boston, Massachusetts, was incorporated. In the Columbian Centinel of Boston, January 31, 1818, there appeared a long communication under "Miscellany" addressed to the editor and signed by "A citizen of Massachusetts" in which, after referring to the beneficent nature of life insurance companies in general, and to the long establishment of such companies in England and to the organization in Philadelphia of the Pennsylvania Company for Insurance on Lives, Granting Annuities, &c. the following remarks were made:

Many parents possess a competency to render their own situation comfortable, and to bring up their children in a decent, and well educated manner; but nevertheless, have it not in their power to give them the advantages of a public education, for which their genius may eminently qualify them, or to assist them either in commencing business, or in settlement for life. By the purchase of an Endowment during their infancy or childhood, such children may be secured, either an annual payment after a given period, or a gross sum, at such period as may be deemed most beneficial, either for securing them the advantages of a liberal education, or assisting them on entrance into life.

Full many a flower, now doom'd to blush unseen,

And waste its sweetness in the desert air

Many a "village Hampden," and "mute inglorious Milton," would be rescued from obscurity, and called forth to dignify, adorn, and bless mankind. The reflection "how many a youth, to fortune and to fame unknown," might have been heretofore secured to the public by the advantages of the institution which is now recommended, should

urge its speedy adoption, and extensive recommendation to the community.

However powerfully these important considerations may urge the benevolent to a speedy attempt to procure these advantages, for those who stand so much in need of them, yet the plan does not recommend itself merely as a charitable institution. The Life Assurance Companies in Europe, when conducted with judgment, have invariably produced handsome dividends to the Stockholders, and in some cases returns of considerable sums have been gratuitously made to the persons assured. . . .

Less than a month later an act to incorporate the Massachusetts Hospital Life Insurance Company was passed.1 The Massachusetts General Hospital apparently gave up its annuity business, but was to receive one-third of the net profits which shall "have arisen from the insurance on lives" during each year by the Massachusetts Hospital Life Insurance Company, and in consideration of this the Massachusetts Hospital Life Insurance Company was granted a monopoly of life insurance business in the state. Further, the company was granted the power

to make insurances on lives, by sea and on land, and to contract for reversionary payments, and generally to make all kinds of contracts, in which the casualities of life and interest of money are principally involved; and to make, execute and perfect such and so many contracts, bargains, agreements, policies, and other instruments, as shall or may be necessary, and as the nature of the case shall or may require.

It is the wording of the last clause, "and to make, execute, etc. . . ." which indicates that the use of the word "contracts" in the clause "and generally to make all kinds of contracts..." is a very broad use of that word. At any rate, the directors of the company assumed that they had the power

1 Laws of Massachusetts, 1817, Ch. 180, Feb. 24, 1818.

2 Ibid., sections 7 and 8; and 1823, Ch. 51. Cf. Bowditch, N. I., A History of the Massachusetts General Hospital, pp. 11 and 60. For the period 1829-51, the hospital received over $150,000 from the insurance company as a result of this provision of the charter. Ibid., p. 431.