"GOOD HEALTH IS GOOD BUSINESS"
An Address by LEROY A. LINCOLN Chairman of the Board of Directors, Metropolitan Life Insurance Company, New York, N.Y.
Thursday, October 16th, 1952
CHAIRMAN: The President, Mr. John W. Griffin.
MR. GRIFFIN: Members and Guests of the Empire Club of Canada: Since we sat down to lunch less than an hour ago the Metropolitan Life Insurance Company has written over 1,200 new policies and thereby made a substantial addition to its all-but-incredible total of 33 1/2 million policy holders--of whom 2,500,000 are Canadians. Founded in 1868, in New York, this firm built its business on so-called industrial insurance--"protection for the masses" on a weekly premium basis. While the great rise in workmen's earnings in recent years has reduced the importance of this type of insurance it still accounts for a large percentage of Metropolitan's income.
Everything one says about this company must be in superlatives. It has the greatest assets of any American corporation--according to The Wall Street Journal it could buy out U.S. Steel, General Motors and DuPont and still have $2 billion left. It is the largest private landlord in the world with 36,000 families living in its eight huge apartment communities. It lends money by the millions for capital works of all kinds and lesser sums to small businessmen through their local banks.
The greatest problem facing this commercial giant is how to invest the income produced by its sales force of 21,000 agents and by its billions of invested capital.
At the head of this great organisation, which stands first in America in its field, is our speaker today. Mr. Leroy A. Lincoln, a lawyer by profession, began his connection with the Metropolitan m 1918 and after fifteen years as president became Chairman of the Board at the beginning of last year. A director of many firms bearing such household names as Chase National Bank, the Home Insurance Company and the Union Pacific Railroad, he has found time to take an active part in Red Cross work and is National Chairman for the United States Red Cross campaign for 1953.
It is a great pleasure to present him to you today.
MR. LEROY LINCOLN: Thank you, Mr. President, particularly on behalf of the largest insurance company which you have been good enough to mention.
When I was invited to make this talk I cast about for something to say. That is one of the hardest things in my life anyway, and in this instance everybody immediately began to send me a lot of literature and manuscripts and things about Canada. It soon occurred to me that that was perhaps one thing you knew more about than I did. So I thought I would not indulge in any discussion on Canada: I would not even bring in a line about the "3,000 miles of undefended border". That is not quite true. I had occasion some two or three years ago to go to your neighbouring city of London. I left New York in the evening and was due in London some time in the morning, but in spite of your "undefended border" at two o'clock in the morning two of your blue-uniformed officials woke me and had an interview with me. So I say it is not entirely undefended. Canada was on guard against that particular invasion. But it is still a cliche. I have heard a great many times, from the Canadian side, about the "great giant to the south". Well now that great giant to the south is beginning to feel kind of small. Lately, when I come to think about currency and the boom, I am not so sure which side the giant is living on right now.
I have got some material here that is prepared and printed, of which you probably have a copy, so you won't need to bother listening to me. If you haven't a copy, just drop me a line and I will send you one.
I begin these remarks in print by saying that this invitation brings to mind the fact that I spent the earlier part of my career in the neighbouring City of Buffalo. At Fort Erie in my day there was an institution which devoted itself to an observation of horses, and these horses, of course, encouraged a good deal of discussion among the people who attended the gatherings. The institution was called the Fort Erie Race Tracks. I very soon learned that was no place for me, so that from that early day of my career to this, I have avoided the race tracks.
Over on our side of the border we are now entering on the quadrennial contest for the political control of our National government by one of our political parties. My friends here to my right and left have been cross-examining me about the results. I can't possibly tell you. But I can tell you we, the Republicans, are not nearly so smug about this thing as we were four years ago.
Just the other day I saw that some of our leading statesmen, this time of the Democratic persuasion, paid a visit to the birthplace of Abraham Lincoln, who, of course, was the patron saint and father of the Republican party. These statesmen said they would like to know, if Abraham Lincoln were in the world today, what he would think now about the Republican party. Well I would like to add to that, if the same Abraham Lincoln were here today, what would he think about the Government of the United States--and I am not making a political speech. I don't want these remarks to be taken in any partisan sense, and I do not want the Consul General to report back to Washington and get me into trouble, because I am connected with the big Company described. Mr. Haering, you told me your hearing was not very good when such things were discussed.
I do believe a lot of us are thinking about a situation which exists nowadays in our country and perhaps in yours, namely--the desire to have what is called "big government" and to have the central government embrace the handling of affairs in the municipalities and communities. I, for one, believe that the less government we have from the centre location,--in our case Washington--the better. I don't believe the tendency for central government should be encouraged. The Government should not undertake to be an all-wise administrator and provider but we have, and perhaps you have, a school of thought which believes in the transfer of power from the municipalities to the central government. I don't want to discuss this any more, although I would be glad to discuss it with my friends here, if they want to debate the subject.
We use a term in the United States to describe the ambitions of one school of thought, namely "The Welfare State." There is much to be said for "welfare", but the real question is, "How much of this welfare is to be had at the hands of the State, and how much is to be had outside the purview of the government, as such."
I, for one, am of the school of thought which would limit the unwarranted expansion of governmental activity in these directions, and per contra, would expand the sense of responsibility of the individual citizen, of local welfare organisations, and of private business in ways that are appropriate for the development of such services.
I can illustrate what I have in mind with reference to the part that business can play, out of my own experience. It has been my good fortune throughout a considerable part of my business life, to be associated with an activity which is looked upon as a business which plays a large part in what it believes to be a realm of "welfare". I refer, of course, to the business of life insurance, which has numerous facets, and which, in its larger analysis, lends itself very little, comparatively, to exploitation for private purposes. And I think that is quite a true statement, that life insurance as such is not a very good subject for exploitation for private purposes. It may be that life insurance as an institution does occasionally afford opportunity for private gain; but, generally speaking, and in its acceptance by the public, whether in the United States or Canada, it is, I maintain, a welfare institution in the sense that it enables people to make provision for their own welfare and that of their families.
I want to pass over the strictly economic aspects of life insurance, in the sense of financial protection and security and in the sense of a reservoir of funds collected from innumerable small sources and available for usefulness on a large scale. In passing, I am proud to call your attention to the fact that life insurance companies in our country are to be found working side by side with your own great life insurance companies in affording, by way of investments on behalf of their policyholders, extremely large sums of money for the development of your growing institutions.
But I think there is a phase of the contribution of life insurance to "welfare" which may be more or less taken for granted, but which is of extreme importance. Life insurance has no monopoly of contribution toward the improvement of public health and the extension of years of life in our two countries. It does, however, claim a real part in the extension of longevity, alongside the work of other organisations and of public health authorities, as such. Life insurance keeps the figures, and its statisticians will tell us with real conviction just what the improvements have been.
Down through the ages the prospect of life at birth has increased from period to period, but it has been most striking in the past 40 years, particularly in the United States and Canada. As a corollary to the insurance side of this business, life insurance is greatly concerned with sickness, accidents, and mortality. These concern everyone, whether in the life insurance business or not, because the state of the public health will determine the productive capacity of the population and its bearing on the national economy. That is the reason I selected the title you will find on the printed copy of this speech, "Good Health is Good Business". Public health is basic in any consideration of public welfare.
Our two countries stand side by side and pretty much at the forefront of the civilised world in matters pertaining to public health. Disease and pestilence have no national considerations. I repeat that because I don't think we always remember it, that disease and pestilence have no home of their own, they can cross the boundaries, back and forth. And that is perhaps why those officers interfered with me when I came across at two o'clock in the morning.
In the United States and Canada the expectation of life at birth is now more than 68 years. Only a half century ago the expectation of life in the United States was something less than 49 years, and probably in Canada it was hardly that. There has, therefore, been a gain of about 20 years in the course of the last half century, which has resulted from a reduction in the over-all mortality of close to one half.
Fifty years ago infant mortality was a tremendous source of waste in the population. Some of us can remember the horrors of the outbreak of communicable diseases of childhood in our localities. Measles, scarlet fever, whooping cough, and particularly diphtheria could frighten whole communities. There has been an extraordinary transformation. The annual toll of infant mortality has been reduced from 15 percent to 3 percent. Those communicable diseases of childhood are no longer a serious factor in mortality. Most dramatic has been the story of diphtheria, which, in my childhood days, wiped out more than one of my playmates and was a striking cause of death throughout our two countries. Today it is almost non-existent as a factor in mortality. The same may be said, broadly speaking, for those other childhood diseases.
Typhoid fever took a heavy toll of life during each spring and summer. Today, in spite of an occasional slight outbreak, it is said to be almost altogether a disease of the past. We are told that many a medical student goes through his four years of professional training without seeing a single case of this disease in the hospital where he is studying.
Pneumonia is another example--a disease whose rate of mortality has been drastically reduced in the last ten or fifteen years, through the use of antibiotics. Again, there is tuberculosis. In the last fifty years the rate from this disease has been reduced by better than 90 percent, and this progress has been accelerated during the last five years.
While speaking on this topic from the point of view of life insurance, I pay my respects to public health organisations. Fifty years ago public health activities were grossly inadequate. In the last fifty years there have been great improvements in fundamental public health laws and in the creation of the public health profession in which Canada has played its important part.
As respects Canada, and as an outstanding example, I want particularly to refer to conditions which, a number of years ago, existed in the Province of Quebec respecting child health. Through the intervention of life insurance, a demonstration was established in the Town of Thetford Mines where, in the course of three years, infant mortality was reduced by 68 percent. After this demonstration, your leaders took up the challenge against sickness and premature deaths in such cities as Montreal, and large appropriations were made to combat not only the diseases of children, but also to stem the tide of such other diseases as tuberculosis and typhoid fever.
It was in those days, too, that the Canadian authorities began to consider seriously the importance of setting up adequate public health administration units with fulltime, well-trained health officers and the necessary sanitation personnel and public health nurses. We, on our side of the border, have watched this development with much pride and satisfaction. In this field you have gone faster and farther than we have in the States.
What has been accomplished in the Province of Quebec furnishes a good example. Twenty-five years ago the death rate among our industrial policyholders in that Province was almost twice that for the rest of Canada.
Now the mortality for the two is practically the same. In 1.926 deaths from the diarrheal diseases in Quebec outnumbered those for any other disease. Now they are a relatively minor cause of death-a major public health triumph. Tuberculosis, which ranked second, has decreased by more than 80 percent and the communicable diseases of childhood by 98 percent.
The developments in Public Health have had very definite consequences which many of us in business do not always realize. The saving of lives, particularly of young people, has significant economic and social benefits. Canada, even more than the United States, is a rapidly growing country. Your population is expanding, and there is room for a very great increase in the coming decades. The prevention of diseases and the reduction in mortality add materially to the great productive resources of the country. Again I refer to my title, "GOOD HEALTH IS GOOD BUSINESS". The saving of 50 percent in the current mortality over that at the turn of the century means an annual saving of some 125,000 lives in Canada alone. At the same time, the duration of the working-life span has materially increased. In the early decades of the century the working life of large numbers of men was brought to an early end when they came down with tuberculosis in their 20's or 30's. Today this disease is a relatively minor factor in the mortality f Canada, and so it is with a whole list of diseases and conditions which today are very much under control. In this way the national economy is well served. I am trying to make the point that good health and prolongation of life enhances the productive capacity of the country.
I am also very much impressed with the effect which all these developments have had on family life. At no time in the past has the family been as secure as it is today. Young people who marry can look forward to living together and raising their families without the distressing fears of the families being broken up by the premature death of the father or the mother.
Our communities, too, have gained immeasurably, for they have been relieved of the heavy burden of supporting large numbers of indigent widows and orphans. Under current mortality conditions, the number of families broken in the course of a year by the death of husband or wife is actually one-third less than would have been broken under conditions of only 50 years ago. Due to the marked improvement in mortality at the child-rearing ages, the incidence of orphanhood has been reduced by an even larger proportion. Immeasurable are the gains in mental and spiritual health in a generation of young people who have been brought up under the guidance of both parents. One cannot exaggerate the blessings of the health developments which have taken place.
The greatest progress in reducing mortality has been made at the younger ages, as a result of which more are surviving to the older ages, to swell, in due time, the ranks of those 65 and over. And that brings up another question which I shall deal with later. This is actually what has happened. In our country the proportion of those 65 years of age and over has doubled since the beginning of the century, and their absolute number has quadrupled. The situation is more acute in the United States that it is in Canada, but you will feel the impact of your old-age problem soon enough, and it would be well to keep it in mind and to prepare for it.
There are many difficulties that confront older people. The economic problem is paramount. A large majority of those who reach these advanced ages are not able, for one reason or another, to maintain themselves. In your country and in ours, provision has recently been made in the form of social security legislation which provides something of a floor toward the maintenance of such older folks, but in the last analysis, the aged and the dependent must generally be taken care of whether through government or private channels by those who are productively employed. And I want to repeat that, because we have to have in mind that this increase in the number and percentage of those more advanced ages, forces a greater burden on those who are productively employed.
In the past this burden of the dependent aged was offset somewhat by the decreasing proportion of dependent children in the population. Over a number of decades the ratio of those in the productive ages of life remained fairly constant. In recent years, however, a striking change has taken place. The birth rate, which had been declining for many years, rose from the low of 1933 and reached a high point in 1947, which was at the level of that 25 years earlier. Although the birth rate has declined since, it is still fairly high. These high birth rates are reflected in an increase of 14 percent in the number of young people under 20 between 1940 and 1950, and there will be a still further increase of about 16 percent during the next decade, ending in 1960.
In this way, the burden of dependency which has to be carried by those at the working ages of life has increased, and the outlook is that this trend will continue for some time to come. We can see this in the declining proportion of the total population at the main working ages of life--20 to 64--from 59 percent in 1940 to 57.5 percent in 1950. A recent projection made by the experts of the Census Bureau for 1960 predicts a further decline to 55 percent.
I might also call your attention to the fact that our young people are staying at school for longer periods and are entering the labour force later in life, again reducing the productive capacity of the population. In addition, our young women are marrying earlier. That, too, takes them out of the labour force, and even if they do stay at work after marriage, they leave work at an earlier age because of the coming of the children. These factors throw an ever greater burden upon those who remain in the labour force.
For all these reasons consideration will have to be given to the ways and means by which the proportion of the total population at the productive ages can be increased to meet the large burden of dependency. There are many evidences that leaders in industry are taking these matters seriously and are making provision for keeping their older workers on the job. Employers are also helping to meet the economic problems of retired employees by the establishment of pension funds supplementing Federal pension plans. Most important, industrial workers themselves, while they are still in their productive period of life, are more and more making provision for their later years through the purchase of life insurance and through other savings and investments. One cannot too strongly emphasize the vision and foresight which Canadian employers have exhibited as respects the welfare of their employees-in many cases insurance and retirement plans long preceding the inauguration of any social security legislation.
On all these phases of public health, greatly increased attention is manifest through the co-operation of life insurance with such bodies as the American Medical Association, the Public Health Service, and our Federal Security Agency. Corresponding interest is very evident throughout Canada. In both of our countries we have developed separate organisations among life insurance companies for devotion of some of their funds to medicall research. In our so-called Life Insurance Research Fund, we now have the support of 140 life insurance companies of the United States and Canada, which contribute from $600,000 to $700,000 a year to this Fund--I like to convert that sometimes to what an equivalent endowment would be at current rates of interest. It would require a capital endowment of something like $20,000,000 to produce from $600,000 to $700,000 a year. And incidentally, I want to say your Canadian life insurance companies preceded us in that inauguration of Medical Research.
In the case of this particular Fund, the research is so far begin devoted to the diseases of the heart and cardiovascular organs. Special research studies are going along in other agencies respecting degenerative diseases, such as cancer, poliomyelitis, and so forth. Fortunately, our two countries, in particular, have the resources, the talent, and the facilities to investigate these problems on a broad scale, and I like to think of you as the big giant, having the resources to throw into these investigations. Healthy people make strong nations, and strong nations are needed for survival under present conditions.
Sometimes we speculate on how much room there should be for further improvement. If we have gained 20 years in expectation during the last half century, is there a limit? One feels that there must be a limit; but there is every good reason to believe that existing records will continue to be broken. We are told that there is every reason to hope for further conquests in the field of health that may bring the expectation of life at birth to something like 75 years, as against the 49 years of a half century ago.
These considerations, emanating from my life insurance background, are presented as really playing their important part in the general economic field. Improvement in the economy of our two countries will come in no small measure through improvement in the health and mortality of our people.
I cannot close without hearty congratulations to my Canadian friends on the remarkable development of the past few years in your country. If I may be permitted, I would indulge here in an amusing anecdote, which strikes me as being a very typical of this changing condition. A few months ago we were at the Seigniory Club. I might say that I have been many times to Canada and to the Seigniory Club off and on for a number of years. When I was there I would pull out my money, go to the cashier, and get a little change with which to pay caddies, and others. This time, last June I think it was, I had forgotten about the recent reversal of exchange rates. I presented a $20 bill to the cashier and received back $19.60. That seems typical of what the change has been, and the difference in conditions in these two countries.
I mention that merely by way of congratulating you on the great transition in Canada from an agricultural to an industrial economy. Developments of the last few years in the matter of iron ore, new and large petroleum discoveries, and the establishment of vast manufacturing enterprises, such as newsprint, synthetic fibres, chemicals and the aluminum projects in Quebec and British Columbia, all go to warrant the great optimism which we share with you as to the future of Canadian business.
A striking practical example of our sharing this optimism with you is to be found in the remarkable number of joint commissions and committees, both governmental and industrial, which have been constituted with representation from both sides of the border. These commissions and committees have been created and now exist in the common interest of our two countries.
No little part in your new outlook is due to the wisdom and fairness of your government. I have no partisan feelings regarding what may be your local conditions, but it can hardly be gainsaid that those who have to do with your financial and your business background are men of great capabilities as evidenced by the existing conditions. Also, in social and welfare activities your people have reached a maturity which expresses the underlying democracy that prevails in your country. From every aspect, it appears to us that you are entering a new phase of growth which will give you an opportunity to play an even greater part in the affairs of the world.
Let me take this opportunity to thank you for the privilege of appearing before your distinguished group and to congratulate you nationally and individually on everything that gives such promise to Canada and to its people.
THANKS OF THE MEETING were expressed by Mr. J. G. Parker.