GOVERNMENT LIFE ASSURANCE.

Wellington Independent, Volume XXVI, Issue 3377, 21 December 1871, Page 2

GOVERNMENT LIFE ASSURANCE.

TO THE EDITOR OF THE INDEPENDENT,

Sin, — I trust you will so fur depart from your rule as to allow me space in your valuable journal to notice a paragraph which appeared in your evening contemporary on this subject. The writer has indulged in whab can only bo termed ill-natured abuse, aud has uot given ono solitary reason in support of the assertions he so recklessly made. Such a course in dealing with so important a subject is unbecoming in the highest degree. It is asserted " that the scheme will bo used to increase and perpetuate the debt of New Zealand.' The " Post" ends the proposition hero, and wisoly — as tho thing on the face of it bears proof of being more than self-support-ing;. By a reference to works on the question of life assurance, I infer that the Government rates aye based on what is called tho Carlisle tables, with 4 per cent., and from 10 to 15 per cent, for cost of management. If my inference be correct, I assert no company based on the tables in question, and at tho rate named, ever contented itsolf with a " loading" of from 10 to 15 per cent. If my surmises as to the basis of the Q-ovornmont echcrao bo correct, it is clearly based on correct formula, and in that case must be self-supporting. If self-support-ing, how can it be used to increase tho debt ? The statement »hat it will open the door to great abuses is only meaningless jtu'gon until the writer will venturo to indicate how. This he will not do, simply because he cannot. Ho adds, " and as to tho business done by Government comparing favorably with other institutions looally represented, tho reverse is tho case." Any schoolboy could see the drift of this, and make a good guess as to its origin. Again, ho says " the advantages of life assurance are undeniable, and tho necessity of assurers being secured is o£ paramount con* sideration." Where can tho people of a country bo better secured in things of this kind than by tho Government of tho country ? — Nowhere.

All insurance moneys, whether received by governments or companies, must be invested, and everything depends on the class of investment. Suvoly those assured in the Government are as well secured by our own debentures as they would be by those of another government or corporation. The writer in the " Post" would do well to give finance a little consideration before venturing 80 dogmatically on the subject. Ho asserts the Government scheme taxes prudent ÜBBurora for the benefit of " favored individuals who receive tho cost of management." This is recklessness gone completely wild. Has he over heard of a case whore managers or workei'3 did not receive this consideration that ho vainly trios to designate a " favor." Any tyro can tell you tho present value of a bill for £250 maturing in thirty years henco discounted at a given rate. This is apparently tho " Post's" mode of calculating, and it would appear he requires to be informed that a life assurance calculation and the discounting of a bill are different things j — an absence of tho knowledge of this difference will lead to many errors. That about 3£ per

cent, as being given by the Government., seems a proof of the correctness of their calculations. If they offered or promised muoh more there would be room for doubt, because they would be offering an amount so near the average value of money for large sums over long periods that there would be no margin for contingencies. I trust the importance of the subject will be a sufficient excuse for my troubling you at such length. — I am, &0., Assures.