Tontine

ton-ten', a form of investment. It is named for its suggestor, Lorenzo Tonti, a citizen of Naples who settled in Paris in the time of Mazarin. In its simplest form a tontine is a joint investment the profits of which are to be paid to the surviving investors. Payments cease when the last investor dies. In 1689, for instance, Louis XIV of France, then in need of money, organized a tontine of $70,000,000. It was divided into fourteen different classes, practically fourteen different tontines. Shares were placed at three hundred livres, $57.90 each. The French government pledged itself to divide a fixed sum annually among the surviving shareholders. This tontine existed forty years. The last shareholder, a widow, all others being dead, received an annual income of $14,185.50. At her death the obligation to pay dividends ceased. Numerous private tontines have been organized on a large scale. The tontine La Farge of Paris drew 60,000,000 francs from subscribers and then failed. A government tontine opened in England in 1789, ran for seventy years, and paid the surviving subscriber $210,150 a year. The tontine plan for erecting public buildings was formerly popular in the United States. A fixed rental was paid the surviving subscribers. Even though the return was small in comparison with the total amount subscribed, the subscribers who lived the longest derived a fine income. At the death of the last survivor the building reverted to the public, free of incumbrance. Some life insurance companies have adopted a tontine policy whereby the persistent payers of premiums reap a benefit from those who drop out. See Insurance