avings banks, then 1/2 of one per cent. 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. on the reserve.

When we consider that these institutions are intended to encourage
thrift and to relieve the community from the care of numberless widows
and orphans, it seems a clear violation of the principles of political
economy to levy a tax on this business; still, whatever our opinion
may be as to the justice or injustice of the imposition, the tax is
maintained and must be provided for. Consequently a further allowance
of 1/2 of one per cent. must be added to the net premium to cover the
same, making a total of 1 per cent. of the reserve for banking
expenses and taxes. Considering this point as settled for the time
being, let us proceed to investigate the insurance expenses.

Here, again, we are fortunate in being able to refer to the official
reports of a class of corporations doing nearly, if not quite pure
insurance.

The assessment societies, outside of the fraternal and benevolent,
reporting in 1889 to the insurance commissioner of Massachusetts, show
outstanding risks amounting to $733,515,366. Losses to the amount of
$7,270,238 were paid during the year at a cost for transacting the
business of $2,403,053, which