TRANSACTIONS OF SECTION F. 733 



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 denciency that is frankly 

 faced by an increase of contributions, 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 v/ill 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 indus- 

 trial community. 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 lie would be left in distress. By combining 

 with a number of others who are exposed to the same risk, he can fall back upou 

 the contributions to the common fund which have been made by those who have 

 escaped sickness. It is an essential part of everj' 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 contin- 

 gent 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 insurance is so little understood that many members 

 of Friendly Societies look upon themselves as having performed 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 

 Eothschild'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 considera- 

 tion 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 protection and 

 encouragement of such societies would be likely to be attended with very bene- 

 ficial ert'ects by promoting the happiness of individuals, and at the same time 

 diminishing the public burdens. The public burden at which this was pointed 

 was no doubt the Poor Law, which was then administered in a very difierent 

 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 exemption 

 was no doubt of great value at that time, when the law of settlement bore very 

 severely upon 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 their members independent of the Poor Law. They have done so with 

 great success. The returns which have more than once been presented to Parlia- 

 ment 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 population. It wad therefore not without regret that I observed 



