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Ir is sad enough that, as a rule, the poor, for their small purchases, have always to pay a higher price than the rich for their large ones. This is a necessary condition of the existence of all trade. Its disadvantage to the poor may, indeed, be modified, and that to a large extent, by co-operation, but can, in the very nature of things, never be absolutely extinguished as long as goods can be sold more cheaply by wholesale than by retail. But a vastly greater disadvantage to the most deserving of the industrial classes exists at the present moment. I allude to the waste of the working men's attempted provision against destitution and pauperism, caused by the insecurity of most of the so-called Friendly Societies in which they are induced to invest their hardly spared savings.

To indicate and advocate, at all events, one measure which, if adopted, must prove of eminent effect in diminishing the loss, disappointment, and ruin, now wrought upon the attempted independence of our thrifty working men, is the object of the present article. I shall limit its scope strictly to the terms of its title, in considering only "Sick Benefit Societies," or those which undertake to provide for their members and contributors certain stipulated sums when sickness renders them incapable of earning wages. And it may save some confusion if I state that my idea is not "National Compulsory Insurance." Effectual as that measure will be in the desired direction, and growing though a wholesome opinion in its favour is, and must be, in view of its now universally admitted logical victory, still, as it only proposes to include in its benefits the young as they enter upon manhood, it would not aid much in protecting the providence of some who are no longer young to-day. On the other hand, the measure I am now concerned with might save many deserving folk of every age from the misery which our present mad system of fostering rotten Sick Benefit Societies may be even now entailing upon them.

In explanation of my proposal, I will examine in the following pages: I. The fact and extent of insecurity in existing Sick Benefit Societies. II. The chief causes of this insecurity. III. The possible remedy. IV. The chief objections to its application. V. The chief objectors.



To show the shocking insecurity of some Sick Benefit Societies at present time I may refer to Mr. Randell's striking article in this Review about three years ago, wherein he quoted from official

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sources the condition of one most ominously named, “The Integrity Life Assurance and Sick Benefit Society," having no fewer than 111,000 members and a realised fund of only £7,001, or a provision, farcically so called, of about fifteen pence for every member. The Rev. Edward Sturges, of Wokingham, fully exposed this society last year in a memorable letter to The Times. But I will strengthen its argument by a few further illustrations of the financial condition of others. I must, however, preface them by a very few words as to present requirements which the law expects all such Sick Benefit Societies to fulfil as a condition of their "registration" or "enrolment" in the Registrar's Office, which confers certain privileges on these organizations. The Friendly Society Act of 1875 made it compulsory on all enrolled societies to have a quinquennial valuation made of their assets and liabilities, a copy of which they are required to lodge with the Registrar of Friendly Societies, as well as an annual audited statement of accounts. The necessity of these valuations was most strikingly proved by the fact that most of the Sick Benefit Societies postponed making their valuations to the last possible date-a strong presumption that their managers expected to have serious deficiencies to disclose. The law further requires a copy of the quinquennial valuation to be kept always hung up in a conspicuous place at the registered office of the society; a requirement of which few members are aware, and which is, so far as I know, by no means generally attended to.

Apart from the actual valuation itself, which may be, and often is, a lengthy document not easily "understanded of the people," a portion of it, the "Valuation Balance Sheet," gives, in a very short and clear form, a summary of the results which, if placed (as the law might and ought to insist) in the hands of every member, would enlighten them in a very remarkable degree as to the condition of their societies in the way of solvency. With so much of explanatory preface I subjoin, as an illustration, the valuation balance sheet (Dec. 31, 1880) of a society-the Independent Mutual Brethren Friendly Society concerning which I might tell a very long and interesting story, but must postpone doing so from unwillingness to remark publicly on a case 1 still pending in our courts of law. This balancesheet was drawn up by their own actuary, the members being returned as 14,115.



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373,301 Assets: Value of con


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(1) Independent Mutual Brethren Friendly Society v. Hart-Davis.

These figures are very startling and very pitiable. That a society with only £6,705 in hand should have undertaken liabilities to its 12,000 poor members which would require £147,000 more to induce the society's own actuary to call it secure, is deplorable enough in itself; but it is still more deplorable to be authoritatively assured in Parliament that the law as it now stands is helpless to protect members of such societies from loss and disappointment by requiring managers to take proper steps for correcting such deficiencies.


I turn to another illustration of the insecurity of many of these societies, and of the extraordinary fatuity of their members, if not the deliberate fraud of their managers, which hinders the correction in time of errors which, allowed to continue, cannot fail eventually to destroy the independence which these clubs were professedly established to In this case I will not name the society, hoping, as I do, from the fact that they have had a second valuation made only two years after their first one, that they have learnt a timely lesson against delay in remodelling their rates of contribution, so as to diminish their liabilities in time to come. Of course the figures I quote are those of the society's own actuary, employed at its cost and on its behalf. I place a summary of their two valuations together for comparison :

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So much for illustrations of my first point, the insecurity of many Sick Benefit Societies. But I must not be content to establish this fact without giving my readers also an idea how many of these in proportion to the whole numbers are financially unsound. In studying this question as I may claim to have done deeply, anxiously, and sometimes, I have felt, a little thanklessly, through a long series of years, I was already well provided with observations and tabulations whereon to base some sort of approximate calculation as to this most vital point: sufficient indeed to prove to a demonstration, that, even of those societies which claim legal privileges by registration, to say nothing of those which never have ventured to submit their regulations to the (scarcely more than mere formal) observation of the Registrar, a very large majority are on an insecure financial basis. And, for even hinting at such a possibility as this, I have had only too often to encounter the obloquy, public as well as private, not merely of the swindlers whose obloquy is an honour, but of representatives of good societies on whose cordial aid I ought fairly to reckon, and in whose true interests I have always felt and


worked. The rogues of course hate me for exposing their malpractices. The honest, ignorant, Friendly Society men assail me for trying to injure, as they suppose, instead of to improve, as I desire, "the Friendly Society system."

1. For this reason I rejoice that I can cast aside all my own calculations, and still strengthen my claim on the public opinion of our country for legal protection to poor men's providence, by evidence gathered officially and not by an amateur; furnished by the officials of the Friendly Societies themselves; paid for by the contributions of their members; calculated in every case by actuaries of their own appointment; tabulated, not by a prejudiced doctrinaire, as I may be supposed to be, but by dispassionate State officials; and recently published in his Report by the chief Registrar of Friendly Societies.

How many of those societies are we then led to suppose by this startling report to be financially unsound?

Here is The Times's summing up (December 26, 1883) of the Registrar's Report on the point.1

"Taking the figures given in the memorandum, it would appear that somewhat more than one out of six of the societies are in a satisfactory financial position. As a measure of the financial extent to which these Societies are involved beyond their existing means; it appears that, grouping all together, bad and good, their existing capital is £8,380,851, a sum less than it should be by £4,270,434, or about 50 per cent. If the good returns be eliminated, and only the bad ones dealt with, it appears that their existing capital is deficient to the extent of some 118 per cent. ! "

I refer my readers, for more exact details on this point, to the memorandum (from which the extract is quoted), furnished by Mr. Sutton, the Actuary to the central office, and published in the Chief Registrar's official report.

2. Another means of coming still more closely to a calculation of the average security of funds to be shown by existing Friendly Societies, is afforded us by a communication to The Times, from Mr. Ansell, one of the public actuaries appointed under the Friendly Societies Act, summarising the condition of two hundred societies, who availed themselves of his well-known actuarial skill to prepare their valuations. By an entirely different and independent calculation from the official one, otherwise reached, a striking parallelism in result is obtained. For Mr. Ansell also shows us only thirty-one societies out of two hundred, or rather less than one in six, to be sound! Moreover, he proves even a larger average deficiency in each unsound club, and that for a simple enough reason—namely, that those which availed themselves of his high professional experience to make their valuations were probably numerically stronger in membership

(1) The Report leaves out of view for the present such societies as have been registered, as branches, of the affiliated orders.

than the general average of Societies returning valuations to the Registry of Friendly Societies.


Having established the deplorable but officially vouched fact of fivesixths in number of the Sick Benefit Societies being insecure, we come next to inquire the reason, since reason there must be, of such a general and most discreditable condition of things.

The root of the evil lies in the fact very few Societies are started on a sufficient basis at all; in other words, that the amount of contributions they receive from members is, ab initio, less than necessary to secure the benefits they contract to pay. As this assertion may be disputed, I will prove it by a suggestive observation-namely, that (at all events until very recently) we may examine the rules and tables of registered Sick Benefit Societies by the dozen or the hundred, and only find, in the rarest exceptional cases, any authoritative statement that the rates of contributions have been certified as sufficient by any actuary. Let any reader whom this assertion startles into disbelief examine the rule-books of the first ten certified Sick Benefit Societies he can lay his hands upon, I care not of what class, order, or affiliation, and he will find me borne out in my allegation. As all these societies place their main dependence for success in vigorous competition with their fellows, it is plain that the absence of actuarial certification of rates cannot arise from indifference or thoughtlessness, for managers know too well the advantage such certification would give to their societies, in competing with others, if any actuary could be found to make it. The absence of any skilled opinion in favour of the soundness of such societies in cases where its presence, obtainable, would be of immeasurable advantage, affords strong ground for the presumption that the societies are insecurely based. The question next occurs, Why should so many of these societies put forward contribution tables so low as to be manifestly insecure? The answer is plain. Some of them are really fraternal in their intention, not willing that any should fill their own pockets, but that all should be secure ; but, on the other hand, a number of societies are founded to put money in the founders' pockets, and exist, not for the true good of the working man, but for the profit of proprietors, collectors, and officials. Were these speculators to give safe rates to their contributors, besides paying themselves, it

(1) I am glad of this opportunity of bearing admiring testimony to the prevalence of this fine spirit in the affiliated orders. No more striking illustration of the fact can be given than that the Manchester Unity presents to its Grand Master for his year's service (with all its responsibilities and calls upon his time, which are and must be countless, while the chief representative of a body numbering 500,000 members), an honorarium of only twenty-five guineas, and pays him second class railway fare and one guinea a day for his attendance at the Annual Conference.

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