St*: > frX„t A r /a.f?/.a*i*~--- - - - A Ai^/cr. /$„ /&+/L, ^7^^r/k: y+,R /A flf> Vi^cAf^L a /fafi/7*.* ./Sy ? \ FRIENDLY SOCIETIES VERSUS BEERHOUSE CLUBS. SUGGESTIONS FOR LEGISLATION RELA.TINO TO FRIENDLY SOCIETIES, AND FOR A SYSTEM OF INSURANCES FOR THE WAGE-PAID CLASSES BY MEANS OF THE POST OFFICE. BY J. Y. STEATTON, RECTOR OF DITTON, KENT, AND SECRETARY OF THE COUNTY OF KENT FRIENDLY SOCIETY. LONDON : WILLIAM KIDGWAY, 169, PICCADILLY. W. 1868. Price One Shilling. FRIENDLY SOCIETIES, &c. In view of legislation on behalf of Friendly Societies, promised during the Session of Parlia- ment, an inquiry into their present condition, the resources of those who maintain them, and the means which these institutions possess of bene- fiting the industrial and labouring classes (pro- vided that they are properly applied), will, it is hoped, be of service. The question of the exten- sion of a trustworthy system of these Societies throughout the country will also claim attention, and, in the course of our remarks, suggestions will be offered which may in some degree help to clear the way for sound and beneficial measures of reform. A few words will suffice to describe the common construction of the Friendly Society. It is an institution intended to provide support for its mem- bers during sickness and old age, together with a sum at death. These benefits, as they are called, are secured by periodical contributions, which are in some Societies uniform, in others are graduated according to age. An entrance fee is not uncom- monly charged, and the benefit of medical attend- ance is frequently added to the foregoing, for which an additional charge is made. It will thus be seen that the Friendly Society is that kind of A 2 insurance best adapted to the requirements of the 1 wage-parld" classes. To them, provision during sickness becomes of the first importance : next in their estimation is the burial money. It is a com- mon and excellent practice to secure the double benefit of sickness and burial money by one insur- ance. For instance, A, aged 20, insures for 12s a week during sickness, together with£10at death, for which he pays, sick or well, eighteen pence a month. "Provision for old age, we will not say is as yet un- known, but it is extremely rare among those who live by manual labour. One reason among several for their indifference to this benefit deserves notice. Although many societies offer it, prudent men dis- trust their ability to make the offer good. They apprehend that, long before the time arrives when their old age pay should begin, the society will be broken up, and its funds dispersed. In the face of the constant and prevalent mortality of these societies, the apprehension is by no means groundless. Another class of insurance, offered by the Friendly Society, which only requires to be better known among artisans and mechanics, to become as popular as it deserves to be, is that called ' En- dowments,' by which the insurer may secure, either for himself or for his nominee, a sum not exceed- ing £200, which is payable at the end of a term of years, as agreed, usually not less than seven, or exceeding twenty. By means of this excellent and easily managed class of insurance, the apprentice fee for the boy, or the portion for the maiden when the time comes, is obtainable, and that by a better investment than the Savings' Bank affords. For in the latter case the depositor can easily withdraw his savings, and a slight pressure will often induce him to do so ; but an L endowed member' of a Society cannot thus readily dissipate his savings. He must prove his inability to continue payments, or show cause why the Society should return his deposits. We may add that no persons appear to be better pleased, when they come to receive their money at the expiration of the term, than those who, but for the wholesome stringency of the rules of the Society, would have withdrawn their deposits from its custody under some transient pressure. Further, as endowments are calculated at 3 per cent, interest, they have an advantage over the great majority ot Savings' Banks, which seldom pay so much, and over the Post Office Banks., which do not pay more than 2 j per cent. In a country blessed with peace and plenty, and an abundant and thriving population, we have the conditions required for the development of trust- worthy Friendly Societies. If life becomes hazard- ous, these institutions, the offspring of peace and goodwill between man and man, are the first to wither and die.* In Great Britain we ought to find, * Anions the earliest announcements of the effects of the iianvwhere in the world, these institutions in their healthiest forms and greatest vigour. Again, next to the influences of religion, there is probably no lever bv -which to raise the labour- ing classes in the moral and social scale, so power- ful as the independence to be acquired through the medium of the Friendly Society. There is. however, a lower, though still an important point of view. It is estimated that an annual reduction of two millions is effected in the poor-rate by Friendly Societies as at present constituted and managed ; and if it should appear, as is undoubtedly true, that they are for the most part untrustworthy, being in respect both of their funds and management in the last degree insecure, the consideration arises whether an improved system of Friendly Socie*: a - aid not, in addition to other advantages, materially leases the burden of the poor-rate. If it is true that in spite of all their shortcomings and mismanage- ment, which are not the exception but the rule, they reduce the rate by od or 4-i in every shilling, is it unreasonable to expect that with a trust- worthy system of societies such a redu c t io n would soon become much greater '.' On pecuniarv grounds alone therefore, if no higher exisfe . this question demands attention, and the treatment which Friendly Societies commonly receive at the late civ!", strife : .z America, ■ .- Hie collapse of its Frk " '- _ now appear to be in a flourishing condition. hands of the Poor Law, in return for such benefits, may well give rise to unfavourable remark. There are upwards of 23,000 certified Friendly Societies in England and Wales, of which their learned Registrar may well say that he cannot satisfy himself of the solvency of 20. There can be no doubt that the vast majority of these societies (composed, be it remembered, of persons who prove their desire to secure solvency and good manage- ment by availing themselves of the advice and pro- tection afforded by the law) are at this moment eminently unsafe. It behoves the managers and the members of these societies to bestir themselves with- out delay, and ascertain by means of an Actuary what their financial position is. So general is the ignorance both of managers and members on this vital question, that it is a common practice to assume that the few hundreds of capital, the bulk of which is probably invested at a high rate of in- terest in some local speculation, means surplus capital. The prospective liabilities are not taken into account at all, and a distribution of a portion of the capital among the members is made. An Actuary would tell them whether they were in a position of hopeless insolvency, or of insolvency which by care and prudence and increased contri- butions might be retrieved. Had the praiseworthy efforts of the Registrar of Friendly Societies been supplemented by the assistance of Actuaries, for the purpose not merely of graduating the rates of pay, 8 but of valuing assets and liabilities, much distress would have been already averted from the indus- trial and labouring classes. One important step in legislating for the Friendly Society will be to secure the appointment of such a staff, who shall value assets and liabilities at stated intervals of three, four, or five years, as may be thought best. If such is the evil case of societies which are re- cognised and protected by the law, what shall be said of the c Brummagem' or ' Sharing Out Clubs,' which are supposed greatly to out-number the cer- tified societies, and which, from the terms of their constitution, cannot have their rules certified to be in conformity with the law ? In almost every parish one or more of these clubs will be found, the management of which is usually in the hands of the landlord of the public house or beershop. " Sometimes," says Mr. Tidd Fratt, " the club is sold with the goodwill of the house." The Sharing Out Club is formed on the principle that a halfpenny a week from each member will secure a shilling a week for each sick member for a term which (indepen- dently of all further calculation) is sometimes three, sometimes six months. When this term is expired a similar one commences, during which half the amount only is payable, which is in turn succeeded by superannuation pay, of which more anon. An extra levy is made in case of the death of a member, or member's wife, or child. All the members pay alike, and each one on joining the club makes a verbal declaration that he is in sound health and of good constitution, or states truly and plainly whether he is more than ordinarily liable to sickness or disease. If his statement is false, he runs his own risk, and on the discovery which his continuance in the club would not fail to make, he is expelled and forfeits all his contributions. The clever but unscrupulous device of the annual dissolution of the club deserves notice. This Phoenix of the taproom, the Benefit Society, so called, dies once a year, usually on the first Monday in May, and forthwith arises from its tobacco ashes with new plumage, destined for a speedy plucking. By means of its annual rejuvenescence, it contrives to free itself of old or burdensome members, who are left to the care of the poor-rate. The poor-rate is in truth the virtual superannuation pay of these clubs ; and hence the device of the annual dissolution. When a member becomes so infirm as to render him a greater burden than can be conveniently borne, he is reminded that out-door relief at 2s Qd is a better thing than superannuation at Is 8d. The advantage of his leaving the club is obvious, and he goes, generally with a good grace, ' to relieve the club and better himself.' He oftentimes re- ceives a donation from the ' sharing out ' proceeds ; but, whether he likes it or not, he will be passed over in the new list of members for the year ensuing. 10 Iii the course of the last Session the Earl of Lichfield moved for a return of the number of paupers, in Union "Workhouses in England and Wales, who had formerly been members of benefit societies. The return was obtained for the last week in August, when the numbers were reported to be 4015. By the kindness of Mr. Owen, of the Poor Law Board, we are enabled to state that the number of male paupers in the AVorkhouses at that time was 32,497, whence it appears that about 12 per cent of such inmates were formerly in friendly societies. At first the proportion does not seem to be large ; but when it is considered that the workhouse is the refuge of destitute infirm persons, whose constitutions, and also of the idle and vicious whose characters, would alike debar them from admittance to such societies, the percentage will be thought a high one. At the same time we believe that if returns were forthcom- ing of the number of out-door paupers formerly in benefit societies, a much higher percentage would be the result. Of all these poor men, there is but too much reason to conclude that had the money wasted by them in insolvent or fraudulent clubs been properly applied, they would at this moment have been in the receipt of a sufficient sum to raise them above pauperism, unless in those cases of ex- ceptional distress in which help, whether from poor rate or parish charities, entails no moral degradation. 11 In 1865 the Post Office, which, mainly owing to the zealous and able efforts of Mr. Scudamore, had previously undertaken a considerable share of what may be termed the banking business of the wage- paid classes, came into the field of work of the Friendly Society. It is true that it was empowered to grant no more than two of the classes of insu- rance (omitting their subdivisions), namely, annuities and sums payable at death. The former unprofit- able branch of insurance, as the companies have commonly found it to be, was already open to the public, though in a less degree, at the office of the Commissioners of the National Debt. Unpopular as it still remains, it will perhaps ere long be much sought after by the labouring classes. It may be noted that annuities have hitherto been offered at advantageous terms to purchasers, and it is not im- probable that as soon as tables can be framed to show the extraordinary length of life which annuitants commonly attain, the rate at which they are sold will be raised. But however welcome the Post Office may have been to insurances of so unprofitable a kind as the latter, we doubt whether the remunerative business of life insurance is gladly shared with it by the Companies. Be this as it may, the Post Office is at present restricted to granting sums payable at death not exceeding £100, although Friendly Societies, by the last change which the capricious and troublesome alterations in the law have per- 12 mitted tlicm, may insure to double the amount.* Nor can the Post Office effect insurances on less than £20. Thus this most valuable and trust- worthy ally in the great work of extending safe means of insurance throughout the United Kingdom has been grievously crippled at the very outset. Skilled labourers who would gladly insure for upwards of £100 are debarred from going to the Post Office, and their proposals, unless they drop them, which is not unusual, fall into the hands of some keen agent of an Assurance Company. On the other hand, farm labourers and men of small means are excluded, for they cannot afford to insure so large a sum as £20, even if circum- stances in their opinion justified their securing so much ' burial money.' And lastly, Endowments, the most easily managed of any class of insurances, requiring no medical evidence or proof of age, and causing no trouble beyond receiving the contri- butions for them and paying them when due ; and which, moreover, are remunerative, and in all respects would have been the best for the Post Office to have started with — arc not as yet to be obtained by means of the Post Office. We have thus endeavoured to show the actual state of Friendly Societies, certified and uncertified, together with the facilities for insurance already * By an Act passed in August List, such policies cauuot bo legally assigned so as to give any interest therein to tlie as- signee — hence an injury to the Friendly Society. 13 afforded by the legislature, and it is a true state- ment that there is at present no trustworthy system of insurances suited to the requirements of the indus- trial and labouring classes of this country. That the higher class of labourers would reform and improve their societies, provided that they had help in the way of valuation of assets and liabilities and of audit, is far from being improbable. But it must be remembered that labourers in husbandry, who have contrived societies which do not debar them from their presumed right to a share of the poors' rate, are not commonly permitted to join the clubs of the more intelligent and better educated work- people. The heart aches to record that their weekly savings, though sufficient if invested in a trustworthy and durable provident institution to raise them above pauperism, are devoted to the maintenance of treacherous refuges for poor men in distress, all of which have a trap-door through which their members eventually fall into the Union workhouse, or otherwise burden the rate. We lay stress on the statement that labourers in husbandry have sufficient to secure them a better lot than the Poor Law can assign them, and in corroboration of its truth, point to the sums which they contrive to pay in support of their benefit so- cieties. Taking the cost of the club, paying say 10s a week in sickness, and £5 at death, at the mode- rate estimate of 8c? a-week, which does not include expenditure in beer beyond that provided for in 14 tlie rules, but not uncommonly incurred at club meetings held on a Saturday night in the tap-room, we have the labourer providing a premium of in- surance, quantum valeat, of about 35s a-year. On the supposition that the same labourer could join a safe and well-managed institution, which legislation has never yet offered him, and which he can do only in a very exceptional way, if he happens to live in a county where there is a trustworthy society with sufficient inducements to join it, we will ascertain what provision he might secure : (1.) A man of 21, (most able-bodied men join their clubs at an earlier age), living in a neighbour- hood where wages are low, and where the sickness* and burial money will be low also, will pay — For sickness at 8s a-week and burial money £6. . 16s a-year For an annuity at 4s a-week, commencing at 65 . lis „ Or, do. do. do. . at 70 . 6s „ He will thus pay, dependent on the commence- ment of the annuity, 27s or 22s a-year. (2.) A man of the same age, in a locality where wages are high and insurance corresponding, will pay— For sickness pay at 12s a-week and ^610. at death . 21s a-year For an annuity at 6s a-week, commencing at 65 . 16s Gd „ Or, do. do. do. . at 70 . 9s 0J „ He will thus pay, according as his annuity begins at G5 or 70, £2. 0s 6