This chapter recounts the testimony of the actuary Emory McClintock before the New York State Armstrong investigation hearings of 1905 with an emphasis on McClintock’s explanations of how life insurers smoothed or averaged their data. Charles Evans Hughes examined McClintock sceptically and saw McClintock’s smoothing practices, especially when applied to corporate earnings, as a kind of corruption of capitalism. The chapter traces the origins of smoothing to developments in banking and astronomy, both of which influenced actuarial practice and convinced actuaries of the fundamental reality of life seen through the lens of smoothed, averaged data. It then contrasts Hughes’ idea that chance should be crucial to capitalism with McClintock’s and other risk makers’ ideal that individuals and corporations should be freed from fluctuations and chance through the risk-making process. Hughes and Armstrong committee eventually recommended doing away with the deferred dividend (or tontine) policies that stood at the center of the investigation and McClintock eventually suffered a medical breakdown from stress. But smoothing practices, the chapter argues, lived on.
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