536 



NATURE 



[October i, 1903 



more freely than if it is poor. Thence, and thence only, it 

 comes that the great English societies, which are often 

 very old and generally rich, give more days' pay than the 

 French societies, for example, which are bound to a rigorous 

 economy." Without necessarily assenting to all that M. 

 Bertillon says, it is easy to see that if the State were unwise 

 enough to say that such-and-such rates would be sufficient, 

 it would encourage laxity of management, and accept a 

 responsibility that does not belong to it. 



I may now proceed to show that the present voluntary 

 system, "unscientific as it may be supposed to be, works very 

 well on the whole. Its most useful feature is the valuation, 

 for a society which disregards the lessons of one valuation 

 finds itself pulled up sharply by the results of a second. 

 A deficiency that is frankly faced by an increase of con- 

 tributions, a reduction of benefits, or a levy, or by all three 

 together, will probably not only disappear, but be succeeded 

 by a surplus ; but a deficiency that is disregarded not only 

 grows at compound interest, but increases by the continued 

 operation of the causes which produced it. It is to be 

 remembered that a valuation deficiency or surplus, as the 

 case may be, in a Friendly Society is always hypothetical. 

 It means this in the case of deficiency — if you go on as 

 you are going and do not modify your contracts you will 

 ultimately be in a deficiency of which this is the present 

 value. In the case of surplus it means — if you go on as 

 you are going and do not allow your prosperity to tempt 

 you to recklessness you will probably have enough to meet 

 all your engagements, and this much over together with 

 its improvements at interest. 



When Friendly Societies are considered in their economic 

 aspect, they appear to be an excellent application of the 

 principle of insurance to the wants of the industrial com- 

 munity. Sickness may come upon a working man at any 

 time, and may disable him from work for an indefinite 

 period. In such an event, if he had nothing to rely upon 

 but his own savings accumulated while he was at work, 

 they would before long be exhausted, and he would be left 

 in distress. By combining with a number of others who 

 are exposed to the same risk, he can fall back upon the 

 contributions to the common fund which have been made 

 by those who have escaped sickness. It is an essential part 

 of every contract of insurance that the contributions of all 

 who are exposed to an equal contingent risk are equal ; 

 but the benefits are only derivable by those of the number 

 in whose experience the contingent risk becomes actual, 

 and they receive more than they have paid, the deficiency 

 being made up out of the contributions of those who have 

 escaped the contingent risk. 



This really seems too elementary a proposition to be 

 worth stating, but it is the fact that the principle of in- 

 surance is so little understood that many members of 

 Friendly Societies look upon themselves as having per- 

 formed an altruistic and charitable act in joining a society 

 when they have been fortunate enough not to make claims 

 upon it through sickness. Several intelligent witnesses 

 before Lord Rothschild's Committee on Old-age Pensions, 

 representing large and well-managed societies, actually 

 urged upon the Committee that the members of Friendly 

 Societies were more deserving of old-age pensions than 

 other people because they subscribed for the benefit of others 

 and not of themselves. 



Another economic point of view in which Friendly 

 Societies call for consideration is that of their relation to 

 the Poor Law. The old Act of 1793, which was the day 

 of elaborate preambles to statutes, affirmed that the pro- 

 tection and encouragement of such societies would be likely 

 to be attended with very beneficial effects by promoting the 

 happiness of individuals, and at the same time diminishing 

 the public burthens. The public burthen at which this was 

 pointed was no doubt the. Poor Law, which was then 

 administered in a very different manner from that which 

 has prevailed since the great reform of 1834, and one of 

 the items of encouragement which the Legislature provided 

 for the societies was that their members should not be 

 liable to removal under the Poor Law until they had actually 

 become chargeable to their respective parishes. This ex- 

 emption was no doubt of great value at that time, when the 

 law of settlement bore very severely uoon the poor. 



It appears to me that the proper relation of the Friendly 

 Societies to the Poor Law is a negative one. The main 

 object of the societies should be, as indeed it is, to keep 



NO. 1770, VOL. 68] 



their members independent of the- -Poor Law. They have 

 done so with great success. The returns which have more 

 than once been presented to Parliament of persons receiving 

 relief who are or have been members of Friendly Societies 

 have frequently been shown to be untrustworthy. The 

 number of actual members of such societies who seek relief 

 is small absolutely, and still smaller relatively to the popula- 

 tion. It was therefore not without regret that I observed 

 the passing of an Act in 1894 which empowered Boards of 

 Guardians to grant relief out of the poor rates to members 

 of Friendly Societies, and if they . thought fit to exclude 

 from consideration of the amount of relief to be granted 

 the amount received by the applicant from his Friendly 

 Society. That Act has just been followed in the natural 

 course of events by a bill for taking away from the 

 Guardians their discretion in the matter, and requiring 

 them to grant full relief to the applicant in addition to 

 the weekly sum, not exceeding five shillings, which he 

 receives from his Friendly Society. In other words, they 

 are to provide a pauper who is a member of a Friendly 

 Society with a free income of five shillings a week more 

 than they would grant as adequate relief to a pauper who 

 was not a member of a Friendly Society, however deserving 

 in other respects that pauper might be. Poor-law relief, 

 instead of being a painful and deplorable necessity, is 

 elevated into a reward of merit in the one case, in which 

 that merit has been displayed by joining a society. A kind 

 of old-age pension is provided for the member, but instead 

 of being an old-age pension without the taint of pauperism, 

 it is a condition of obtaining it that the man must become 

 a pauper. This seems to me to be topsy-turvy legislation. 

 The very bodies the aim and proud boast of which it should 

 be that their members never are paupers have been con- 

 tented to claim for their members the rank of privileged 

 paupers. 



The discussion of the subject of old-age pensions which 

 has now been proceeding for the last twelve or thirteen 

 years has had one good effect in bringing under the con- 

 sideration of the Friendly Societies the practical methods 

 by which they can obtain these pensions for themselves. 

 The impression that some day and somehow the State would 

 provide pensions for everybody, or at least for everybody 

 who is thrifty, has had a bad effect ; but the wiser members 

 of the societies have seen that it would be a good thing 

 to substitute for their present plan of continuing sick-pay 

 to the end of life a plan of insuring a certain annuity after 

 a given age. For this purpose they have had to overcome 

 a natural reluctance on the part of the members to lock up 

 their savings in the purchase of deferred annuities, and 

 they have done so with some success, several thousands of 

 persons having agreed to subscribe for these benefits. It 

 is anticipated that the report of Mr. Alfred Watson on his 

 investigations into the sickness experience cf the Manchester 

 Unity of Oddfellows will add force to this movement by 

 showing how great a burden old-age sickness at present is, 

 and how slight an additional sacrifice would secure a de- 

 ferred annuity. It need hardly be said that it is more 

 desirable that the members generally should do this for 

 themselves than that they should get the State to do it for 

 them. 



Registered Friendly Societies are becoming more popular 

 and more wealthy under the present system. The number 

 of returns from societies and branches increased from 23,998 

 on December 31, 1891, to 26,431 on December 31, 1899, and 

 27,005 on December 31, 1901 ; the number of members from 

 4,203,601 to 5,217,261 in eight years, and to 5,479,882 in 

 ten vears ; the amount of funds from 22.695,039?., or 5Z. 85. 

 per member, to 32,751,869/., or Q.. 5s. 6d. per member, after 

 eight years, and 35,572,740/., or 6/. 9s. 9^. per member, 

 after ten years. It is necessary to observe, however, that 

 some of the numerical increase is due to greater complete- 

 ness in the later returns. The increase in ratio is not 

 affected by this. It may be worth noting that, on the 

 average, the proportion of members under fifty years of age 

 to those above that age is as 81 to 19 ; and that of the total 

 aggregate receipts per annum, 73 per cent, goes in benefits, 

 II per cent, in management, and 16 per cent, is added to 

 capital. The average annual contribution per member is 

 i/. IS. 6d. 



Uo to this point I have referred merely to the Friendly 

 Society of the ordinary type, the sick club and burial fund. 

 Societies of the collecting group, while registered under the 



