It is my object in the present paper to discuss the principles which should guide the actuary in fixing the maximum amount of risk to be retained by a Life Insurance Company upon a single contingency.

Those principles are by no means limited to life insurance, but extend with suitable modifications to other kinds of insurance, as fire, marine, hailstorm, health, and accidental death insurance. They are also applicable to the risks of mercantile transactions, and in particular to the risks incurred by a bank in discounting its customers' bills. There can be little doubt that some recent failures of banks have been caused principally by the neglect of these principles; in other words, the manager has failed to put a proper limit on the risks undertaken, i.e., has trusted individuals to an imprudent extent, and the loss of heavy sums consequent on their failure has proved disastrous to the bank.

In considering the various expenses, or, as some writers term them, expenditures, that are the results of a general average act, the same test must be applied as in the case of sacrifices. Were they had recourse to as being, in the exercise of sound judgment and prudence, indispensably necessary for procuring the safety of all concerned in the adventure? Might the act from which they proceeded be the means of arresting any course of events which, if allowed to take their full scope, would terminate in the destruction of the vessel and the consequent loss of the freight and cargo? It is true human judgment is likely to err under these, as in other circumstances of like nature, and expenses may be incurred needlessly, for the ultimate consequences of an act cannot be always perceived; but if the end proposed will admit of no other course by which the vessel and the property in her may be preserved at the time, and if the measures resorted to are such as would not be employed in the ordinary prosecution of the voyage, there is reason for admitting such as a lawful subject of contribution. When common sense is exercised, and the circumstances are regarded comprehensively and clearly, the results are generally found to justify the means adopted in cases of danger needing prompt action.

Referring to the hoax about Mr. Goulburn in No. XIV., Messrs. C. H. and Thompson Cooper have corrected an error, by stating that the election which gave rise to the hoax was that in which Messrs. Goulburn and Yates Peel defeated Lord Palinerston and Mr. Cavendish. They add that Mr. Gunning, the well-known Esquire Bedell of the University, attributed the hoax to the late Rev. R. Sheepshanks, to whom, they state, are also attributed certain clever fictitious biographies—of public men, as I understand it—which were palmed upon the editor of the Cambridge Chronicle, who never suspected their genuineness to the day of his death. Being in most confidential intercourse with Mr. Sheepshanks, both at the time and all the rest of his life (twenty-five years), and never having heard him allude to any such things—which were not in his line, though he had satirical power of quite another kind—I feel satisfied he had nothing to do with them. I may add that others, his nearest friends, and also members of his family, never heard him allude to these hoaxes as their author, and disbelieve his authorship as much as I do myself. I say this not as imputing any blame to the true author, such hoaxes being fair election jokes in all time, but merely to put the saddle off the wrong horse, and to give one more instance of the insecurity of imputed authorship. Had Mr. Sheepshanks ever told me that he had perpetrated the hoax, I should have had no hesitation in giving it to him. I consider all clever election squibs, free from bitterness and personal imputation, as giving the multitude good channels for the vent of feelings which but for them would certainly find bad ones.