VALUATIONS AND BONUSES 155 
magnitude and results, such a principle can apply. It is not 
an easy question to answer. When we look at the long record 
of pre-war writings down by the Companies as shown in 
Chapter XI the axiom seems justified. These surely have gone, 
never to return. On the other hand, however, when we look 
at the war depreciation, so enormously larger, the same thing 
cannot be said. Much of that has come back already. (It is 
right in this connexion to include, as has been done, the heavy 
fall in 1920 ; since although that did not happen during actual 
hostilities it is undoubtedly a war result.) Is it to be contended 
that this recovery should be ignored, so far as actual accounts 
are concerned, and exist only as a hidden reserve to which 
policy-holders, deprived of bonuses in its absence, can never 
have access ? 
The fact is that this time-honoured doctrine of severity, 
like many other good things, can be pushed ad absurdum. 
Suppose that at any particular valuation date a world panic, 
founded on some baseless alarm, swept through the stock 
markets of the nations; reducing prices to a degree at which 
all Life assurance profits disappeared and even solvency was 
threatened. Suppose, further, that it went as suddenly as it 
had come, and confidence returned—prices responding. Would 
it be right, or even sane, to perpetuate its presence for all time 
in the Companies’ accounts ? That would literally follow from 
the old maxim. Of course the answer would be Sell, and take 
the profits’. But this might be practically very unwise. It 
might mean deprivation of substantial future profit, and 
reinvestment under less favourable conditions in something 
less attractive. 
If these are considered wild assumptions, it may be pointed 
out that the same would have been thought ten years ago of 
any prediction of the financial experiences of ‘the war. It 
seems as if common sense must take its place in this discussion, 
as in everything else. One element entering into the considera- 
tion of the case should certainly be that the business under 
review is a very special one, and in some respect, relative 
especially to the present question, unique. It is concerned with