Page:The New International Encyclopædia 1st ed. v. 01.djvu/677

ANNUALS. The first, the Foiijcl-inc-nol, was published in London, in 1823, and was folhnved ))y the Liter- ary Souvenir; the Kcrp.ialcc, edited by Lady Wortley, and subsequently by the Countess of Blcssington; the Book of Bcniili/: the Musical Bijou; the Comic Annual, begun by Thomas Hood and others, and in the L'nited States by the (Sift and the Token, to mention a few of the many. Large sums were spent on these publications and large profits were realized: but while many authors of distinction, as Tennyson, were induced to contribute to them, the articles, as a rule, were of an inferior and highly sentimental nature, and after 1840 the demand for annuals declined. The Foryct-me-not had an unparalleled life of twenty-two years; but the Book of Beauty and the Keepsake survived it, the last named ceasing to exist in 1850. The tradition of the old annuals survives in the special Christmas numbers of many magazines.

ANNUALS, or MON'OCYC'LIC PLANTS. Plants w-hose life cycle is completed within a single vegetative period. They are most characteristic of dry and waste places. See ; and.

ANNU'ITY (from Lat. annus, year). A sum of money paid annually. If perpetual, the right to receive the payment passes from the annui- tant to his heirs. Such perpetual anniities are less frequent than life annuities, which may as- sume the most varied forms. In the simplest phase of the matter the annuitant receives a fixed annual payment during his life, the annuity being extinguished by his death. If upon the lives of several persons, the aggregate amount of the annuity only is fixed. On the death of one of the recijiients, his share is distril)Uted among the survivors, the last person receiving the whole amount which was formerly distributed. The annuity may begin immediately and stop upon the hajipening of some contingency, as marriage; or again, the annuity may not begin until a later date, in which case it is designated as deferred. Many other combinations can be and actually are devised. Such annuities arise either from testa- mentary dispositions or from contract. In the former case it Is the desire of the testator to in- sure to the recipient an income fixed in amount either for life or for a lesser period. Thus, a father may provide an annuity for his daughter, to be terminated upon marriage. In ease of an annuity resting upon contract, the annuitant or some one for him, surrenders the use of a sum of money to another person who agrees to make fixed annual payments to the annuitant during the life of the latter. The annuity may be ])ur- chased by a single payment or a series of pay- ments extending over a number of years. The latter is particularly' applied to old age insur- ance, the object of which is to secure a fixed an- nual income after reaching a certain age. Such a contract between two individuals would be little more than a wager. No one can tell how long an individual may live, and one of the par- ties to the contract must gain at thc^ expense of the other. hen, however, the business is con- centrated so that the party paying the annuities deals w'ith a large number of persons, the same laws that make life insurance possible make this a calculable and legitimate enterprise. The relations of life insurance and annuities are obvious. They are reciprocals of one another. In life insurance a series of annual payments ob- tains for the insured ecrtain ca]>ital at death, wiiile in annuities the surrender of a certain capital insures a series of annual payments dur- ing life. Annuities are, in fact, older than life insurance, and the latter is an offshoot of the former.

The elements in the calculation of the rates ot annuities are the same as in life insurance, though the calculation is a dilfcrent one. The first element is the probability of human life, as determined by vital statistics. Upon the length of human life depends the number of payments, and for a given capital, therefore, tlie amount ot such payments. It is obvious that the sum of $1000 would piu'chase a larger annuity for a man of fifty than for one of twenty-five. It is equally clear that for a series of contracts once entered upon, a lengthening of the average period of human life would cause pecuniary loss to those paving the annuities, while a shortening of hu- man life would cause a profit. Like results have frequently followed from undertaking annu- ity contracts upon an erroneous statistical basis. The second element in the case is the interest upon money. If the money surrendered at the outset were locked up in a strong box. the cal- culation of the payment for a fixed number of years would be simplicity itself. In that ease an annuity of .$1 for ten years could not be pur- chased for less than $10. But the purchase money is, in fact, placed at interest, and under the terms of the contract above noted, the seller of the annuity would enjoy the interest on .$10 for one year, on $9 for the second year, and so on. The purchaser, however, will not surrender his entire claim to interest, but will at least share it with the seller. It follows, therefore, that an annuity of $1 for ten years should be purchased for something less than $10. How much less, will depend upon the rate of interest. If interest were six per cent., the annuity could be purchased more cheaply than if it were only three per cent. Changes in the rate of interest complicate the practical problem of executing annuity contracts.

Such contractual annuities as have been de- scribed are more frequent in Europe than in the United States. In Europe, the earliest public debts were in the form of life annuities. The ill success of these ventures was one of the earliest stimulants to a scientific study of the laws of mortality. In European cotintries the issue of annuities is still carried on by the C4overnment as well as by private companies. The greater familiarity with annuities which prevails in England, for instance, explains the frc(|ucnt al- lusions to the interest on the pulilic delit as a multitude of perpetual annuities. The repay- ment of the principal not being contemplated, the investor in the funds acquires the right to re- ceive a certain annual income, and this right is transferable to his heirs. Annuities are assuming new importance in the Ignited States, owing to the fact that most life insurance companies are beginning to issue new and attractive forms of annuity policies.

The mathematical treatment of the subject is extensive, involving the preparation of mortality and investment tables. The formation of these tables is discussed in the Assuraiirr Mayazine, a journal of the Institute of Actuaries of Great Britain and Ireland.

The annuity may be chargeable only to the person of the gi'antor, or it may be a charge on