Board of Underwriters, holding that it was an illegal combination. The board has filed a demurrer. In November, 1898, Superintendent Matthews of Ohio ruled that local boards were not illegal. His conclusion was:

If insurance is not trade, nor a commodity, nor an article of commerce, as decided by the Supreme Court of Texas, then I do not see how combinations of insurance agents to control rates for the purposes heretofore mentioned can be considered combinations in restraint of trade, nor combinations in violation of any common law principle that may have been, in different cases, announced by the Supreme Court of Ohio and other states. The trend of almost all judicial opinions and decisions is to the effect that the business of insurance is an occupation, as distinguished from trade or commerce. The insurance business, being a mere occupation, combinations among agents for self-protection are as legal as other combinations among persons following the same calling. Such combinations among members or followers of an occupation are not, in my judgment, in and of themselves illegal, and only become so when they employ coercive methods or infringe upon the equal rights of others.

The opinion of the commissioner was published in full in The Weekly Underwriter of November 5, 1898. Attorney-General Monnett announced that he would ignore it and push his suits against the companies for combining.

ANTI-REBATE COMPACT OF THE LIFE INSURANCE COMPANIES. Under date of September 4, 1895, Insurance Commissioner Merrill, of Massachusetts, addressed a circular letter to every regular life insurance company transacting business in that State, suggesting that concerted action be taken by them to suppress rebating. Responses were received from twenty-four of the twentynine companies addressed, giving their unconditional assent to the proposition. The single refusal was from the Connecticut Mutual Life, whose president wrote that its agents did not rebate, and therefore that it did not feel itself embraced within the call.

The commissioner's action having thus been so successful in eliciting the expression of a desire by the body of life insurance companies for some form of united action, his next step was to call a meeting of representatives of the companies, to be held in the Fifth Avenue Hotel, New York, on October 12.

At this meeting the following twenty-four companies were represented by officers or proxies: Aetna Life, Berkshire Life, Connecticut General Life, Equitable Life, Germania Life, Home Life, John Hancock Life, Mutual Life of New York, Manhattan Life, Metropolitan Life, Massachusetts Mutual Life, Mutual Benefit Life, National Life of Vermont, New England Mutual Life, New York Life, Phoenix Mutual Life, Prudential, Provident Life and Trust, Penn Mutual Life, State Mutual Life. United States Life, Union Central Life, Union Mutual Life. Washington Life.

Commissioner Merrill called the meeting to order and President Hegeman of the Metropolitan Life presided.

The following agreement was adopted, receiving the signatures of all the companies represented except the Aetna Life, whose president reserved its action for further consideration:

COMPACT.

Whereas, The rebate of insurance premiums has become an admitted evil of such magnitude that the legislatures of twenty-one States have enacted laws forbidding rebates and providing penalties for violations of such laws; and

Whereas, Although the courts have confirmed the validity of such laws, they have generally been a dead letter; and

Whereas, Life insurance companies have placed themselves on record, without exception, as believing that the discontinuance of rebating, whether prohibited by law or not, would be equally for the best interests of the insured, the agent, and the company; and

Whereas, The result of unorganized efforts for the enforcement of antirebate laws has shown that the practice of rebating can be successfully suppressed only by the active, organized co-operation of all life insurance companies; therefore

Resolved, That each of the companies whose names are subscribed hereto agree with each of the other subscribing companies, and with those companies who may hereafter join herein and become party hereto,

First-That it will not itself pay or allow, or offer to pay or allow, nor will it permit any person connected with it in any capacity to pay or allow, or offer to pay or allow, any rebate of premium in any manner whatsoever, directly or indirectly.

Second-That, for the purpose of carrying out this agreement, a referee, who has no official connection with any life insurance company, shall be appointed, and shall examine into and decide all charges of violation of the first article hereof, and all charges of rebating by agents or others, and whose decisions shall be final. Such referee to be at liberty to act on such written or oral statement and in such mode of procedure as he may think proper, and not to be bound by legal rules of evidence of procedure, nor be required to hear counsel.

Third-That on the decision of the referee that any person connected in any capacity with any company party hereto has made any rebate in any manner whatsoever, directly or indirectly, such person shall immediately be dismissed from the service of said company, and shall not, for a period of one year thereafter, be again employed by any company party hereto.

Fourth-That said referee, upon having his attention called to any case of a violation of the criminal laws of any one of the States against rebating by any life insurance company or any agent of any life insurance company, shall take steps, if he deem it expedient, to have such case prosecuted by the proper authorities in such State, and may employ counsel in such State to assist in such prosecution, the fees and expenses of such counsel to be paid out of the fund hereinafter provided for.

Fifth-That a fund of ten thousand dollars ($10,000) shall be placed in the hands of said referee, which fund shall be contributed and continuously maintained by assessments on the several companies party hereto, in proportion to the amount of insurance written in 1894.

Sixth-That said referee is authorized at his discretion to offer rewards for the evidence necessary to establish a violation of any rebate law or of any article of this agreement, not exceeding one hundred dollars ($100) in any one

case.

Seventh-That said referee shall have a salary of the amount of two thousand dollars ($2,000) per annum, payable monthly from the fund established by Section 5, and shall be entitled also to reimburse himself out of said fund for such traveling expenses, postage, telegrams, and other incidental expenses as he may deem it necessary to incur; and shall also be authorized to employ a secretary and such clerical assistance as he may deem necessary, and to pay such secre tary and clerical assistance out of said fund, the amount to be paid for such secretary and clerical assistance, however, not to exceed three thousand dollars ($3,000) per annum; statements of account, properly audited by the president of one of the companies party to this agreement, and having its home office in Boston, to be rendered with every assessment.

Eighth-That said referee shall notify each company party hereto of any decision made by him under this agreement.

Ninth-That in case of a vacancy at any time in the position of referee, a new referee shall be chosen by the concurrence of a majority of the companies parties hereto, such choice to be made either at a meeting called for that purpose or by correspondence.

Tenth-That this agreement may be modified or abrogated at any time by a majority of the companies parties hereto, at a meeting to be called by the referee or on the written request of five of said companies.

Eleventh-That each company party hereto shall immediately notify all its agents of the adoption of this agreement, and that same shall go into effect on and after November 1, 1895.

Resolved, That copies of this agreement be furnished to every life insurance company not represented at this meeting, and to the National and all State associations of life underwriters, with a request for their hearty co-operation.

The Connecticut Mutual and Travelers were not represented in the meeting, the president of the former having declined the invitation to be present, on the ground that its agents were not rebating. The Travelers declined without assigning a reason.

The meeting elected ex-Governor William E. Russell, of Massachusetts, referee, with the powers and compensation named in the compact. He subsequently appointed Commissioner Merrill secretary. The commissioner accepted the office, but upon the condition that no compensation should be paid him from the fund placed by the companies at the disposal of the referee.

[For the reasons assigned by three Hartford companies, the Aetna Life, Connecticut Mutual Life, and Travelers, for not joining the compact, for a copy of the official notification by Referee Russell to the subscribing companies of his proposed course of procedure, and for the forms of pledges required by agents to sign, see the Cyclopedia for 1895-96, pages 52 to 54.]

All the companies under the agreement issued notices to their agents, warning them of the consequences of rebating premiums: and inclosing pledges for their written signatures.

In consequence of the death of Referee Russell, in October, 1896, a vacancy occurred in the office, which was filled by the appointment of Thomas B. Reed, Speaker of the House of Representatives of the United States. He was in office when this record closed, and ex-Commissioner Merrill continued as secretary. [For a statement of events following the establishment of the compact see the Cyclopedia for 1897-98.]

In compliance with the request of the National Association of Life Underwriters, that he will receive complaints endorsed by the executive committees of local life underwriters' associations, as well as by insurance companies, Referee Reed, on November 25, 1898, made the following order:

Dear Sir. In compliance with unanimous request of the National Association of Life Underwriters, their co-operation having been asked by the original compact, and because it seems to him reasonable, the referee so modifies the letter of his predecessor, dated November 6, 1895, in the Third Specification, that the Third Specification shall read as follows:

'Third. As the referee will no doubt receive many complaints which may be vague and irresponsible, it seems to me expedient to establish as a rule of procedure before me that every complaint made by the agent of any company shall be first submitted to his own company, or to the executive committee of the Local Life Underwriters' Association to which he belongs, there to be carefully investigated, to be supported by proper proof, and only after such investigation and proof, to be submitted to me by said company or said executive committee for my consideration. This rule properly requires that all plaints of agents shall be investigated by the company or said executive committee, and come to me with the responsibility of the company or of the executive committee behind the complaint after such investigation.

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In no case, of course, can complaints be entertained, made either by or against agents of companies which are not parties to the compact."

Yours truly,

Thomas B. Reed, Referee.

The Germania Life Insurance Company withdrew from the compact in March, 1898.

ANTI-REBATE LAWS. Following is a list of the States which have laws prohibiting the giving of rebate of premium to the insured by life insurance companies or their agents, together with the text of such laws:

The first anti-rebate law applying specifically to the business of life insurance was enacted by Massachusetts in 1887. The previous year, it is true, Louisiana passed a law prohibiting the allowance of rebates in insurance, but no class of insurance was named in the act; it was supposed to refer to fire insurance, and it was not until later that an opinion was given by the attorney-general of the State that its provisions were applicable to the practice of life insurance.

The Massachusetts law has served as a model for the anti-rebate laws of most of the States enacting them, in some cases being copied almost literally, and in others being followed closely in substance. Twenty-two States now prohibit rebating by law. The following is a synopsis of anti-rebate legislation from its beginning in 1886:

ALABAMA. The Alabama law is a part of Chapter 614 of the Acts of 1897. The following is the text:

Section 27. No life, nor any other insurance company, nor any agent thereof, shall make any contract of insurance, nor agreement as to policy contract, other than is plainly expressed in the policy issued thereon; nor shall any such company or agent pay or allow, or offer to pay or allow as inducement to insurance, any rebate of premiums payable on the policy, nor shall any particular policy-holder of the same class be allowed any advantage in the dividends or other benefits thereto.

COLORADO.

The Colorado law is the same as the Massachusetts law, with an additional section as follows:

The penalty of violating this section shall be a fine of $250; and the superintendent of insurance shall revoke the certificate of authority of any agent convicted of a violation of this act, and shall not grant the agent so convicted a license as agent for the term of three years thereafter.

CONNECTICUT. The Connecticut law varies somewhat in phraseology from that of Massachusetts, so it is printed here in full, being Chapter CXXXIV, Session Laws, 1889:

Section 1. No life insurance company doing business in the State of Connecticut shall make or permit any distinction or discrimination in favor of individuals between insurants of the same class and expectation of life in the amount of payment of premiums or rates charged for policies of life or endow. ment insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contracts it makes; nor shall any such company, or any agent, sub-agent, broker, or any other person, make any contract of insurance or agreement as to such contract, other than as plainly expressed in the policy issued thereon; nor shall any such company or agent, subagent, broker, or any other person, pay or allow, or offer to pay or allow, as inducement to insurance, any rebate of premium payable on the policy, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever not specified in the policy contract of insurance.

Section 2. No person shall act in the solicitation or procurement of ap plications for, or policies of insurance for, any company or corporation referred to in this act, without first procuring a certificate of authority as agent from the insurance commissioner. Said certificate of authority must be renewed on April 1 of each year.

Section 3. Any person or corporation violating any provision of this act shall be fined not less than $100 nor more than $500, and it is hereby made the duty of the insurance commissioner, on the conviction of any person acting as such agent, sub-agent, or broker, to revoke the certificate of authority issued to him at once, and no such certificate shall be thereafter issued to said convicted

person by said commissioner for the term of three years from the date of such conviction.

DELAWARE. The Delaware law is a copy of the Massachusetts law, while the penalty prescribed for its violation is the same as that of Pennsylvania.

ILLINOIS. The law is Sections 203 to 206 of Chapter 73 of the Revised Statutes, and was approved June 19, 1891. The first section is as follows:

Section 1. No life insurance company or association organized under the laws of this State, or doing business within the limits of the same, shall make or permit any distinction or discrimination between insurants of the same class and equal expectation of life, in its established rates, nor in the charging, collecting, demanding, or receiving of the amount of premium for insurants of the same class and equal expectation of life; nor in the return ratably of premiums, dividends, or other benefits, accruing or that may accrue, to such insurants as aforesaid; nor in the terms or conditions of the contract between such company and the insurants; and such contract of insurance shall be fully and wholly expressed and contained in the policy issued and the application therefor, nor shall any such company or its agents pay, or allow, or offer to pay or allow, to any person insured, any special rebate of premium, or any special favor or advantage, in the dividends or other benefits to accrue on such policy, or promise the same to any person as inducement to insure, or promise to give any advantage or valuable consideration whatsoever, not expressed or specified in the policy of such company.

The three additional sections declare the discriminations enumerated in Section I to be violations of law, and any company or association so violating shall, with the agent or agents concerned, be jointly and severally subject to a penalty of not less than $500 nor more than $1,000 for each offense, and the auditor of public accounts shall cancel the certificate of authority of such agent. It is declared that the act does not apply to fraternal associations..

IOWA. The following is the provision in the Iowa Code of 1897: Section 1782. No life insurance company shall make or permit any distinction or discrimination between persons insured of the same class and equal expectancy of life in the amount or payment of premiums, or rates charged for policies of life or endowment insurance, or in the dividends or other benefits payable thereon, or in any other of the terms or conditions of the contract it makes, nor shall any such company or agent thereof make any contract of insurance or agreement, other than as plainly expressed in the policy issued, nor shall any such company or agent pay or allow, directly or indirectly, as an inducement to insurance, any rebate of premium payable on the policy or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, not specified in the policy or contract of insurance.

KENTUCKY. The Kentucky law, which is a section of the revenue law of 1893, is an exact copy of the Massachusetts law, and prescribes a penalty of not exceeding $500, to be paid by any company, officer, or agent thereof violating the provisions of the law.

LOUISIANA. The Louisiana law is Act 86 of the Acts of 1886, and is as follows:

Section 1. It shall not be lawful for any insurance company, conducting or doing business in this State, whether same be domiciled in this State, or doing business through an agent, to allow any rebate on any policy effected in their respective companies, but it shall be their duty to make their net premiums, and such net premiums shall appear in the body, and be embraced in said policy, and no rebate nor allowance shall be made either by endorsement on said policy or otherwise; nor shall it be lawful to give any rebate on open policies effected in any insurance company doing business in this State, either in money, or in insurance scrip, or otherwise.