An Address to the Members of New Zealand Friendly Societies
Printed at the Evening Star Job Printing Works. Dunedin Bond StreetMDCCCLXXXIX
An Address to the Members of the New Zealand Friendly Societies.
Although it is more than a year since I addressed the members of the Wellington friendly societies in the Oddfellows' Hall, I wish to refer to some criticisms passed upon the paper which I read on that occasion—subsequent criticisms, I mean, by persons who were not present, but who saw a printed copy. I may say that I received from many correspondents throughout the colony very complimentary expressions of their appreciation of my treatment of the subject, but I propose to refer only to those criticisms which were adverse, in order that I may reply to them. One friend said to me : "I see that you have been delivering an address to friendly societies. Rather full of padding, wasn't it?" I did not think it necessary to defend myself to my critic, who doubtless alluded to the numerous quotations with which I had supported and enforced my arguments. Now, those quotations were in every instance from the writings of actuarial experts and others, whose position entitles their words to the greatest possible respect; and if, in support of what I consider to be sound advice, I find passages in the works of recognised authorities setting forth in forcible language the views which I desire to advocate, I unhesitatingly say that, instead of restricting myself to words and arguments of my own selecting, I think it far better to ask my bearers, as I shall ask you to-night, to weigh well the statements of those who are manifestly and admittedly competent to speak on the subject. I readily acknowledge that the question should not be "Who says this or that?" but "Are the allegations true, and are the deductions logical?" And if the authorities Appealed to in support of my contention on any point can be shown to be illogical as to their reasoning or mistaken as to their facts, then my critics are welcome to include both them and myself in a well-merited condemnation. Another comment that was passed on my humble effort to convey instruction and information was that it was not sufficiently entertaining. Now, gentlemen, I am quite willing to be entertained, and if any of the friendly societies will arrange a social gathering and include me in the list of guests (as my friends of the Southern Cross Lodge did the other night), I will come and enjoy the evening with you. We will, for that night, forget that there are such words in the English language as inadequate contributions and deficiencies. All our thoughts shall be of surpluses and of long life without a pain, but, on occasions like the present, when the questions under review so clearly belong to the serious side of life, I take it for granted that you will approve of my determination to treat our subject in a serious manner. Another objection that what I said contained nothing new, and that it was but the repetition of an oft-told tale, I had anticipated, disclaiming originality. The methods of conducting a friendly society which I recommended have been by a consensus of opinion pronounced by experts to be sound. New views can be originated, therefore, only by the condemnation of those methods, and of the foundations on which they rest; and, as I am convinced that the wisdom of those methods cannot be impugned, I do not know how to avoid the charge of repetition, as from time to time I am called upon to offer advice or to urge reform No great advance is likely to be effected by one appeal. The settled conviction that results in continuous action is of slow growth in the minds of men. I ask your forbearance, therefore, if in my desire to see New Zealand societies occupy the front rank in respect both of their organisation and their success I keep on repeating, as occasion serves, established truths. I beg, too, that you will banish from your minds the idea that, because in the course of my official duties I find it incumbent on me to point out errors and defects in your system, I do not fully recognise the fact that the highest praise is due to those who have done so much and faced so many difficulties in the establishment and development of these institutions. Nor do I seek to detract from the value of the work in which you are engaged. While pauperism and kindred social subjects are continually presenting overwhelming difficulties to the mind of the statesman and the philanthropist, a section of the class most nearly affected solved for themselves and for those who joined their voluntary Association the anxious and complicated problem. With- page 4 out financial influence, without the leadership of men of mark, without, in fact, any of those advantages which are generally thought to be necessary to the success of great enterprises, struggling even for a time under the ban of public opinion, the pioneers and organisers of the affiliated friendly societies in England fought a noble battle. There were, undoubtedly, at first, mistakes and defects, and consequent loss and partial failure; but the history of the movement proves that the men who devised the scheme of mutual insurance for the masses knew what in the main was suited to their needs, and exhibits them persisting through good report and evil report in their efforts to carry forward the work which to day is so important a feature in the social life of the community. And with reference to the mistakes and losses made by friendly societies, are there no other institutions which also exhibit failure? To mention one class only: what a lamentable array of life insurance offices have collapsed utterly during the present century. There is not, I admit, any satisfaction to be derived to you from this fact, but it certainly should serve as a warning, for those failures were due to the very same errors which I urge you to correct. A recent utterance by Professor Seeley seems to me so appropriate to your founders and reformers that I will quote it, and I think that we, too, may flatter ourselves that our presence here to-night is a proof that, although we may not be able to claim that we have done very much for the cause, we are ready at least to approve and follow the counsel and guidance of the wisest and the most far seeing. Professor Seeley was addressing a society whose purpose is the cultivation of a higher standard in all social and ethical relations; but his words have a general application, and as such we will venture to appropriate them to ourselves. His words are these:—
I know no way in which a nation can acquire clear views except by the influence of the clearer minds upon the rest. In every generation some men can see their way even when the multitude is most bewildered, some men can grasp principles even when the most are without pole star or compass. These men must influence the rest, and the utmost that can be tried in such an extremity is to bring to bear upon the mass the greatest amount and the beat quality of influence from the better gifted and the better informed.
I have one more objection to deal with. I was charged with taking too gloomy a view of those societies whose financial position has, upon investigation, been declared, and that more than once, to be unsound. From the facts, as they are stated, it does not seem to me possible to evade the conclusions that I drew. I should greatly rejoice if either the facts or the con cessions could be disproved or gainsaid. A very long time may elapse before an unsound society goes utterly to the wall, but even within the short experience of this colony, commencing from the passing of the Act of 1877, several societies and branches have dropped out of existence; and there is not, nor can there be, any tangible record of the individual suffering which has resulted from such imperfect thrift. And I should not like it to be possible that men should say—whether or no I be alive to hear it—that I had helped, even by my silence, to deceive them to their rain. I am glad that public attention has been at length aroused to the insufficiency of the contributions of many of the societies. Hitherto there has been evinced by the majority an utter indifference to those warnings which the Registrar and the Public Valuers have given; to societies whose rates of contribution are inadequate to provide the benefits offered. I have had conversations with members who did not even know that a report showing the unsoundness of their lodge's financial position had ever been issued. Hat I would deprecate any attempt at compulsory legislation. My opinion is that education is the only possible means whereby to cure the evils that exist, and that a system of coercion would necessarily and lamentably fail. Existing members, and those also who are about to join their ranks, must be persuaded not to begrudge a few shillings a year for the sake of securing a safe insurance. I refuse to believe that the members of friendly societies in this colony will persistently remain blind to their true interests. Your Victorian brethren were face to face with the game difficulties, and they have done much to amend their position. New Zealanders will, I am satisfied, become not less alive to the necessity of action. Already some societies have taken steps in the right direction, and the present shaking among the dry bones is, I take it, a hopeful sign of coming improvement.
It will, I think, be both interesting and instructive to consider what is being done by friendly societies and other provident organisations outside of New Zealand, and to learn what we can from their example and experience; but, first of all, I will refer to two matters which possess for us a very direct and immediate interest.
Man has been variously defined-as a talking animal, as a reasoning animal, as a praying animal—but it is obvious that to single definition, even if it be sufficient to differentiate him from the rest of the animal creation, embraces every side of his character. I do not know whether anyone has yet labelled him as a cooperating animal; but, whether the expression be original or not, it will suit our purpose to night to adopt it. Friendly society organisation is one form of co-operation. Out of wages at the lowest rate it is page 5 Impossible for men to lay by a sum to meet extraordinary expenditure, especially that [unclear: tailed] by the sickness of the bread winner, and the only practical means whereby it is possible for this class to combine so as to [unclear: ert] pauperism is that which you have [unclear: dopted] in your various orders. To quote from the report of an English Parliamentary Committee in 1825:—
Whenever there is a contingency, the [unclear: deapest] way of providing against it is by [unclear: ting] with others, so that each man may subject himself to a small deprivation in [unclear: ler] that no man may subject himself to a great loss. He upon whom the contingency does not fall docs not get his [unclear: cey] back again, nor does he get for it any [unclear: ble] or tangible benefit, but he obtains [unclear: curity] against ruin, and consequent peace [unclear: ney] mind. He upon whom the contigency less fall gets all that those whom fortune [unclear: tea] exempted from it have lost in hard [unclear: cey], and is thus enabled to sustain an [unclear: ent] that would otherwise overwhelm [unclear: shos].
Or, as a recent writer has expressed the [unclear: ne] idea:—
From the day of entrance the member becomes possessed, in some measure, of the [unclear: antages] of property, not indeed to the [unclear: tant] of setting him free from the necessity favor, but as enabling him to face life with light heart."
It is true that he may not finally stand in and of such a provision. He may be [unclear: sucful] in business, and, having acquired a [unclear: petency], may withdraw from his society, [unclear: isa] be may remain in it as an honorary members This contingency, doubtless, accounts a part for the high rate of secession [unclear: obsesrvle] in the statistics of this colony's friendly [unclear: cety] experience. Or he may have been throughout life singularly free from sick[unclear: isa] But, if such has been his favored lot, [unclear: ald] he regret the method of his thrift? [unclear: ght] he not rather to congratulate him [unclear: of] on his successful career or on his combative immunity from sickness, as the [unclear: sho] may be?
Moreover, the bond of union between members of a friendly society is not to be [unclear: ured] merely by the selfish standard of [unclear: necey] value. There exists a closer tie of [unclear: therhood] among those who have high [unclear: ms] and abundant charity, not limited by [unclear: the] walls of their lodge room, whose [unclear: symthies] with every effort for the happiness [unclear: any] their fellowmen. Such are some of the [unclear: re] friendly society co-operation for its [unclear: hab] members. Let us briefly consider what benefits it confers upon the community at [unclear: mita] The Charitable Aid Society would, [unclear: qine], have ample funds at its disposal for [unclear: vodeable] casus of distress if every man in [unclear: shou] colony were a member of a well-[unclear: ised] friendly society. Where do the [unclear: ners] that fill our gaols come from? Are by recruited from your ranks? Think for a moment what the idle and the improvident and the criminal classes cost the State year by year. Nor is this vast present expenditure for judges and magistrates and police and gaolers and prisons the only burden that has to be borne by the thrifty and the law-abiding. What is this compared with the consequences of the transmitted vice which by heredity and evil influence and example is engendered and developed in the children of pauper and vicious parents? I will give you a startling illustration of this inherited and perpetuated career of misery and crime, for which my authority is the 'Edinburgh Review' of April last.
"Every guardian of the poor is familiar with the case of individuals who are chronic paupers, and of families which have been 'on the rates' for generations. A striking instance comes from New York, in a recent report of the Children's Aid Society in that city. The descendants of a pauper girl and her sisters were traced to the number of 709. Of these, 368 were legitimate, 91 were illegitimate, 250 doubtful, 128 were known prostitutes, 18 kept houses of ill fame, 67 were diseased and cared for at the public cost, 172 had received outdoor relief for 734 years in all, 64 had been in alms-houses for 96 years in all, 76 were publicly recorded as criminals."
There is, it must be admitted, an unfortunate lack of information as to the number of the original sisterhood, as to the number of generations over which the observations had extended, and as to the manner in which the observations had been taken; but I think that we may accept the statement in evidence of the distinction which I wish to emphasise between the conduct of the thrifty and the conduct of the unthrifty in its effect upon the happiness and upon the prosperity of the entire community.
Once again, the pecuniary relief afforded by friendly societies is not confined to members of their own Order. They have raised considerable sums for specific purposes—as, for instance, at the time of the cotton famine, as it was called, when the Lancashire weavers were thrown out of work, as a consequence of the American Civil War. In England special grants have been made by the Ancient Order of Foresters towards the equipment and maintenance of the lifeboat service; and of the American Order of Oddfellows it is recorded that when fire demolished the city of Chicago, or yellow fever decimated the inhabitants of Memphis, or the grasshopper plague made a desert of the States of Kansas and Nebraska, then the generosity of the Order was displayed by gifts of tens of thousands of dollars.
I think, therefore, that with such a record it is surely not unreasonable to ask that your institutions should be exempt from local as well as general taxation.
There is one matter to which I have to page 6 refer with mingled feelings of satisfaction and disappointment. It has been urged by all experts and generally admitted that to complete and to materially strengthen the financial position of friendly societies, the establishment of a superannuation fund is necessary, and New Zealand societies have, from time to time, been urged to devote any available surplus to the carrying out of this recommendation. At the instance of the Executive of the Independent Order of Oddfellows a scheme was drafted and submitted to the last biennial meeting of the society for the formation of such a fund, there being a surplus in the funeral fund which it was proposed to assign as a nucleus of the said superannuation fund. I regret to say that a majority of the delegates not merely voted against the scheme, but expressed their opposition to the principle. I beg, therefore, to ask your attention to a passage on this subject in the writings of Mr Watson, the actuary to the Manchester Unity in England.
"The true mission of friendly societies is only partly fulfilled while superannuation or annuities for aged members remain unpro-provided. The sentimental outcry against centralisation will have to be modified. . . . If a friendly society is formed, individual interests are sunk for a community's good, and centralisation, in a degree, is established. There can be no combination for mutual help without more or less centralisation. The centralisation of such associations as the Independent Order of Oddfellows, the Ancient Order of Foresters, and other large affiliated bodies is consolidation, the moulding into a compact integral body of the various branches or parts of which each is composed. The central bodies of the large societies have no power beyond that which the society and the rules give them, and they generally have to be reelected by the representatives of the whole society, year by year."
The above was written about eleven years ago, and since then the two societies to which Mr Watson refers by name have adopted a scheme of superannuation. It has not, however, found favor as yet with members in England, but I hope that New Zealand societies which have a surplus will, before long, come to regard this method of allocating it as the most suitable and effective.
The address of the Grand Master of the Manchester Unity in 1882, the year in which the superannuation scheme was introduced into that Order, contains these words:—"By your acceptance of this additional element of thrift in the constitution of this society, you will . . . have strengthened the lever wherewith the better to elevate the working man to the level of comparative independence."
The objection made to this form of insurance is that a large percentage of the subscribers to the fund will not live to be recipients of the benefit. But surely this objection, if it have any validity, is applicable in greater or less degree to the general principle of friendly society co operation so far at least as relates to the sickness benefit. I wish most sincerely that candidates for admission into a friendly society would give to this objection its full weight so far as unsound societies and branches are concerned, and be deterred from joining such by the consideration that there is is very great probability that, although they may live to need the benefits promised, they well not enjoy their due share as offered and contracted for. Then the unsound societies would soon either cease to be, or would put themselves upon a solvent footing, the sound ones would flourish, and such a state of confidence would be established that their membership would be largely increased, and success be crowned with success yet greater
The following passage, also on the same subject, occurs in a paragraph which I inserted in my recently issued official report extracted from the Rev. J. F. Wilkinson's paper in the 'Oddfellows' Magazine on 'Fifty years of friendly society progress': "The first society that popularises a sound scheme of superannuation, and educates its younger present members and all future initiants to take shares in it, will be the premier friendly society of the future will never capitulate to the attacks of want and pauperism, but will provide a shelter to the end against the ills industrial life is their to."
Let us now turn our attention to matters of interest connected with our subject is other countries.
In England a very strong feeling has gradually grown up among the members of the affiliated orders that the general application of the term "friendly societies' so as to include "collecting" societies, as they are called, is calculated to injure the good name of those institutions whose members are banded together for mutual succor and support. The collecting society is simply private venture, and the contributors to its funds are, for the most part, the poorest of the poor. The expense of management is necessarily enormous. The insurance if chiefly, and in some societies wholly, for a money payment at death, and the lives of children form a very great part of the risk. At a recent conference of the affiliated orders the following resolution was passed—"This Conference is of opinion that the time has arrived when the sections in the Friendly Societies Act, 1875, having reference to the collecting societies should be eliminated therefrom, and that they should be embodied with any other sections these societies may deem necessary as a separate Act for their special guidance and government; also, that the words 'Friendly society' be not inserted page 7 [unclear: is] any sections of their Act, such appellation being in our opinion, misleading to the public when associated with the collecting societies." In July, 1888, a Select Committee of the House of Commons was appointed to inquire into and report upon the operation of section 30 of the Friendly Societies Act, 1875, as amended by subsequent Acts, and into the organisation or general condition of societies and companies is which the said section applies, and to suggest what amendment of the law (if any) if required to ensure the better management of such societies and companies, and the more complete protection of the interests of the members; and in February last the Committee was reappointed. The evidence given before the Committee last year dealt with three principal points. More stringent regulations as to children's insurance were aged, in order that no premium might be offered to baby-farmers and others having pecuniary interest in the death of the assured. The helplessness of the members against the perpetration of fraud or injustice was also suggested as a matter requiring Ether legislation. And the waste involved in this method of thrift was dwelt upon, 40 per sent and upwards being absorbed as expense of management, managers and collectors making a living, and even a handsome income out of these weekly pennies. It is said in reply that, according to the law of supply and demand, if there were no room for such institutions they would cease to exist, and that the contributors belong to a class which either will not or cannot join a mutual society. The probable result will be that in England they will continue their work. What I would suggest is that in New Zealand the affiliated orders should occupy the field, so as to render the establishment of of such a wasteful form of thrift unnecessary and impossible.
While speaking of the cost of management I wish to show you what New Zealand societies are spending under this head. The average expense of management per member is less than 5s 6d in every £ paid as or for benefits. But this ratio diminishes continuously for many years after the establishment of a society. It is therefore more useful to calculate the ratio of the average expense of management per member to the average contribution. This ratio is less than 4s in the £. Again, if to the contributions be added the amount received as interest on the accumulated funds, the ratio of the total expense of management to the Total income is a little over three shillings in the pound. The explanation of this economy in management is that so much time and work is given for the honor of the cause without any pecuniary remuneration. And the economy is all the more conspicuous when we consider the small value of the average benefit per member as compared with that in any life insurance office, and when we also take into account that in this colony the cost of travelling and of other items of necessary expenditure is unavoidably high.
In England also, among recent proposed legislation, it is sought to insist upon an actuarial certificate as a condition precedent to registration. I must confess that I do not agree with those who propose to reintroduce this system. I scarcely think that, with English ideas as to the liberty of the subject, it would be possible to legislate so as to prevent persons from establishing societies working under scales of contributions and benefits to which no actuary would affix his name, and, as a matter of fact, the "certificate system" has been tried and failed. The law in England from 1819 to 1834, and again from 1846 to 1850, refused registration to societies unless they produced an actuarial certificate. The result was that comparatively few were brought within the protection afforded by the Act to registered societies, or within the control exercised by the officer charged with the administration of the Act.
There is one other matter of interest for us in the "Home" experience. The friendly society system, originated by working men, is thence growing into favor with the classes that can afford to pay a higher premium than the rate fixed by working men for themselves, and I think that the example might advantageously be followed in New Zealand. I will not say that there is too much life insurance in the world, but I consider that the amount of it is out of all due proportion to insurance for sickness and old age. In England an association has been formed among medical men on friendly society lines. At Edinburgh has been established a sickness Assurance Association, which grants a weekly allowance of L1 and upwards according to the premium paid. I think that it would meet the needs of many if they could join a society in which they would be entitled to sick pay ranging from L1 to L2 a week, together with a medical benefit; also to a deferred annuity varying in amount from L30 to L50 per annum, and commencing at the age of sixty or sixty-five; also to a payment at death ranging from L20 to L100. It may be thought by working men that the premium for such an insurance would be beyond their means; but I take this opportunity to express my belief that such a scheme would prove attractive to many, if established as a mutual society, by men who would be willing, like the members of friendly societies, to give time and services to the affairs of the Association.
Let us now turn our attention briefly to what is being done in Germany. An elaborate system of compulsory insurance has been gradually growing up in that country; insurance against accident, against sickness, and for old age annuities is now in page 8 operation. The scheme does not yet cover the entire working population, hut in its complete development is intended to do so. It is reported that the scheme is generally acceptable to the persons assured. Although under State control considerable voice in the management is given to the members, and facilities are afforded to the representatives of the associations to suggest and carry out measures for the prevention of accidents, the improvement of sanitation in workshops, and other like matters. Sir Edward Malet, the British Ambassador at Berlin, in one of his late public despatches, speaks of the scheme as "a social experiment on a vast scale, which, if it succeeds, will form the most enduring title of the late Emperor William and Prince Bismarck to the gratitude of their countrymen."
The working out of such a scheme naturally possesses a world-wide interest, and as it appears to be in harmony with the institutions of the German people, it is to be hoped that it will prove practicable and beneficial. But it by no means follows that this example of State Socialism could be successfully imitated by us. I do not think that it is compatible with British freedom. German ideas on social questions may be in advance of ours, or our ideas may belong to a higher plane than theirs, but, whichever it be, the fact remains that the two nations differ so materially in temper and genius that the success of this experiment in Germany would not necessarily prove that its adoption would be equally beneficial to ourselves. It is, without doubt, an attractive idea that for every man, out of his own savings, should be secured a provision against absolute want; and if compulsion were to be tried at all, it would seem reasonable that those upon whom the experiment should first be made are the men who make no attempt to provide for the future, the men whose improvidence expos s them to the risk, I might say to the certainty, of pauperism; exposes not themselves only, but wife and children also, to the degradation of dependence. Those who have denied themselves are called upon to support the thriftless, and the tax weighs with heaviest pressure upon those who have to exercise the greatest self-denial in order to maintain their own independence. It is, without doubt, the greatest possible hardship that the improvident should thus drain the stream of charity, so as to deprive those for whom it should run full and free. But, until for us compulsion is brought within the range of practical politics, I commend to the ambition of friendly societies the effort to strengthen and complete the edifice of voluntary thrift.
In France, friendly societies have increased rapidly during the past forty years. As compared with our societies they present several distinctive feature in their constitution and management There are two classes—one class being admitted to the full privileges conferred upon such institutions, the other being merely recognised as possessing a legal status; but all have to register and make annual returns to what in England is called the House Office. Honorary members represent 14 cent of their number; women and children are enrolled and represent respectively [unclear: be a] per cent, and 2 per cent, respectively of the total membership. There are deferred annuities and pension funds in aid of the aged and infirm. For the "approved" societies there is partial exemption from taxation, and in addition the allowance of a liberal rate of interest upon moneys in the public funds deposited for the purpose of providing annuities, as well as State grants in aid of such annuities, Other privileges are conferred upon them—the use of municipal buildings for their meetings, the supply of the necessary books for the management and accounts, and reduced charges for their members in departmental convalescent institutions.
In the United States of America there has been, as you know, during the present century, vast progress in every direction—a vast increase of population, a vast increase of settlement, a vast addition to the agriculture, the commerce, the manufactures, and the wealth of the nation. And whereas is this rapid growth many of the American institutions have developed new forms, in respect to friendly societies it appears to be recognised that the model of the Affiliated Order, which Englishmen have the credit of inaugurating, is found to be equally suitable to the citizens of the great Republic. The American Order of Oddfellows, which is, I believe, the largest friendly society in the States, is, in fact, an offshoot of the Manchester Unity, and until the recent disruption, caused by the "color" question, the Foresters there formed a Subsidiary High Court of the English Order.
In conclusion, I repeat my satisfaction at the turn that affairs have lately taken. I hope that it will prove the turn of the tide which, taken at the flood, may lead friends societies on to fortune. I am told that some have taken great offence at my outspoken language. As I said to you last year, I personally have nothing to gain by calling the attention of societies and the public to these unpleasant truths, but if I had failed to do so you might justly have charged me with negligence in the discharge of my duty. I have pointed out the malady. The remedy can be effected by yourselves, and say again that I refuse to believe that you will not prove equal to the task of reform which lies before you.