Tontine

Tontine, a system of life insurance owing its name to Lorenzo Tonti, an Italian banker, born at Naples early in the 17th century, who settled in France about 1650. In 1653 he proposed to Cardinal Mazarin a new scheme for promoting a public loan. A total of 1,025,000 livres was to be subscribed in ten portions of 102,500 livres each by ten classes of subscribers, the first class consisting of persons under 7, the second of persons above 7 and under 14, and so on to the tenth, which consisted of persons between 63 and 70. The annual fund of each class was to be divided among the survivors of that class, and on the death of the last individual the capital was to fall to the state. This plan of operations was authorized under the name of "tontine royale" by a royal edict, but this the parlement refused to register, and the idea remained in abeyance till 1689, when it was revived by Louis XIV., who established a tontine of 1,400,000 livres divided into fourteen classes of 10o,000 each, the subscription being 300 livres. This tontine was carried on till 1726, when the last beneficiary died - a widow who at the time of her decease was drawing an annual income of 73,500 livres. Several other government tontines were afterwards set on foot; but in 1763 restrictions were introduced, and in 1770 all tontines at the time in existence were wound up. Private tontines continued to flourish in France for some years, the "tontine Lefarge," the most celebrated of the kind, being opened in 1791 and closed in 1889.

The tontine principle has often been applied in Great Britain, at one time in connexion with government life annuities. Many such tontines were set on foot between the years 1773 and 1789, those of 1 773, 1 775 and 1777 being commonly called the Irish tontines, as the money was borrowed under acts of the Irish parliament. The most important English tontine was that of 1789, which was created by 29 Geo. III. c. 41. Under this act over a million was raised in Io,000 shares of ioo, 5s. It was also often applied to the purchase of estates or the erection of buildings. The investor staked his money on the chance of his own life or the life of his nominee enduring for a longer period than the other lives involved in the speculation, in which case he expected to win a large prize. It was occasionally introduced into life assurance, more particularly by American life offices, but newer and more ingenious forms of contract have now made the tontine principle practically a thing of the past. (See NATIONAL DEBT; INSURANCE.)