§ Order read, for resuming Adjourned Debate on Question [4th March], "That Mr. Speaker do now leave the Chair."
§ Question again proposed.
§ Debate resumed.
SIR MINTO FARQUHAR,
in rising to move the Amendment of which he had given, notice, begged to ask the indulgence of the House, for he especially felt the difficulty of his position after the very extraordinary and exciting scene which had just occurred. He could not refrain from expressing his deep regret that personal feeling should have formed so large an element in this debate. The motives of the right hon. Gentleman were, he was satisfied, thoroughly pure and honest in bringing forward this measure, and no doubt he had done so with the feelings that it would be for the benefit of the industrial classes. The right hon. Gentleman had stated, that the Report of the Registrar of Friendly Societies was the foundation of the Bill; that Report having recorded many failures, and many very gross abuses. He (Sir Minto Farquhar) had referred to that Report, and he found that most of the complaints from members of Friendly Societies in different parts of the country had reference to the expenditure of funds in beer, dinners, processions, and what might be called outside charitable subscriptions. The Registrar had brought this question under the no- 212 tice of the late Attorney General (Sir William Atherton), who had given a distinct opinion that such expenditure was illegal, and that proceedings might be taken against any officers of a Friendly Society who might pay away a portion of the common funds for such purposes. He thought that the knowledge of this fact would lead to much improvement in some of the Friendly Societies, in many of which, however, if the members chose to have an annual dinner, they provided it at their own expense. The right hon. Gentleman had taken credit to himself for the unpresuming and unaggressive manner in which he had introduced his Bill. The truth was, that at first hon. Members did not know what to make of the Bill, the object of which appeared to be simply to give additional facilities with reference to Government Annuities, to which no one could be opposed. It was at the opening of the Session that his hon. Friend the Member for Lewes (Mr. Brand), had given notice of the intention of the Chancellor of the Exchequer to bring in this Bill, and on the 11th of February, the right hon. Gentleman introduced it, and stated that it would deal with small Life Insurances as well as with Annuities. Before that statement, not a soul in the House had the least idea that the Bill had reference to Life Insurances. He (Sir Minto Farquhar) had read the Bill, and put it aside, supposing it to be simply an amending Bill relating to Government Annuities. It was the hon. Baronet the Member for Evesham (Sir Henry Willoughby), who, with his usual sagacity, at once saw the necessity of deferring the second reading of the Bill long enough to give the country time to consider its provisions. The Bill was nevertheless read a second time on the 15th February. It was only on Monday week last that an explanation of the proposed machinery of the Bill was given by the right hon. Gentleman, and he (Sir Minto Farquhar) did not think that he had made out his case. The Chancellor of the Exchequer said that Parliament had interfered for the regulation of factories, and of companies, and had introduced sanitary Acts. These were totally different cases to the present one, and it was very questionable how far the Government ought to undertake such a measure as this. The right hon. Gentleman had said that—The Bill had grown, not out of the case of Life Assurance Societies, but out of a considera- 213 tion of the case of Friendly Societies, and of the wholesale error, but not error only, along with error, deception, fraud, and swindling, which are perpetrated upon the moat helpless portions of the community who find themselves without defence.Yet he had not omitted to assail certain smaller Insurance Offices in sweeping terms, and they should be permitted to vindicate their character if they could, and ought not to be condemned unheard. He maintained that if those Friendly Societies were not on a proper footing the law ought to be remedied, and as such a vague and general attack had been made, the parties ought to have an opportunity of coming before this House, and showing that they were not in the condition which the right hon. Gentleman said they were. He had no personal interest whatever in this question. The Company with which he had the honour to be connected was indifferent to the measure. It was an old office, and one of those first-class institutions to which the right hon. Gentleman referred. But was it to be said that the old Insurance Offices, because they were not affected by this Bill, were to turn round and say they would not lend a helping hand to those offices of a later origin, and which had done a great deal of good by enlarging the application of the principle of Insurance among the people and making it more freely known? It would be too bad on the part of the old offices if they did not express their desire that all the offices affected by this Bill should at least have an opportunity of stating their case. There was not one of them which did not declare that the right hon. Gentleman had overstated his case. The right hon. Gentleman said he was not to be frightened by the clamour against centralization. What did he mean by that? Was it to be said that hon. Gentlemen were not to protest against such a measure as that introduced? He (Sir Minto Farquhar) would, for one, join in the clamour against centralization, because he was opposed to it. The right hon. Gentleman had made use of the words "fraud and swindling" in reference to certain societies. No doubt there were some fraudulent societies. He acknowledged with regret that there were societies which had disgraced themselves; but that was no reason why those who desired should not be allowed to defend themselves. Take the invested capital in Life Insurance Offices generally, and it would be found to amount to £100,000,000, while the risk was £375,000,000, and the interest and premiums no less than £14,000,000 a year. 214 That, indeed, was a vast and wonderful fact. The right hon. Gentleman had spoken of the subsidy which the Friendly Societies received from the Government in the shape of interest on their investments, the rate which at the National Debt Office the Government was compelled to pay such Friendly Societies as existed before 1828 being £4 11s. upon every £100, and to those founded before 1844, £3 16s. per annum. It must be admitted that the Government subsidy, as the right hon. Gentleman had termed it, was a boon; but he had the authority of an eminent actuary for saying, that by far the greater number of existing societies received no benefit from it. What did he say?—No doubt this must be admitted as a boon and as a government subsidy, but how many of the existing societies are entitled to those benefits? It appears that in 1857 out of 3,073 societies which gave returns of their duration, 1,672 were under twenty years of existence, and 2,714 under forty; so that if this proportion holds good as to other societies the returns of which are not sent in, by far the greater number are not receiving the benefit of either rate to which the statement refers. Under the Act 1850 this privilege only amounts to an investment with the Commissioners for the reduction of the National Debt at a rate of interest of £3 0s. 10d. per cent.He (Sir Minto Farquhar) could not agree with the right hon. Gentleman that the present proposal was analogous to the Post Office savings banks system. In the case of a Post Office savings bank, a man made his deposit and he was without difficulty paid again; there was little or no risk of fraud and personation. But take the case of a man insuring his life. A number of forms had to be gone through; certain printed questions had to be sent by the office to a friend and to the medical man of the insurer for reply. Those questions related specially to the health, (habits whether active and sober), and the profession of the insurer. The printed questions were then returned to the office, and he had afterwards either to appear before the medical officer of the office, or if he lived in the country he had to be examined by a doctor appointed by the office, and at last before he was accepted his case had to be considered and approved by the board of directors. Then he had to pay the premiums upon his policy, and when he died, the office, upon the probate of his will, and the certificate of his death, paid the money. If the money happened by some mischance not to be paid to the proper person, the office was liable to have to pay it again. 215 He would like to know whether the right hon. Gentleman thought that attendance to all the requirements of an Insurance Office was a task the Government could undertake? and how he was going to regulate all that he could not understand, either from the Bill or the speech of the right hon. Gentleman? Now, if the measure were referred to a Select Committee, they would at least have the advantage of having before them Sir Alexander Spearman, Mr. Scudamore, and Mr. Chetwynd, who, as he understood, were the promoters of this Bill, and who could then show how they proposed to carry it out. In the second place they would give opportunity, which fair play and justice demanded, to the offices which had been attacked to come forward and offer an explanation. He (Sir Minto Farquhar) was sure that every hon. Member must regret to have heard what passed to-night. He saw opposite the hon. Members for York and Bradford, two Gentlemen of the highest position, and of great commercial knowledge and standing, and yet if one might believe the statement of the Chancellor of the Exchequer, who surely could not have intended it, they were, one the chairman, the other a director of a company, capable of entering into a fraudulent understanding with a bankrupt concern. It was only fair that individuals and associations, attacked in such terms, should be heard before a Select Committee. There were no fewer than 3,000,000 persons connected with Friendly Societies, and the Chancellor of the Exchequer could not be ignorant that his statement had excited among them great alarm and apprehension. Only a full and impartial investigation could quiet their fears. The right hon. Gentleman had said a good deal about the activity of insurance agents; he called them "Touters!" Was an agent to sit in his office twiddling his thumbs, or was it not rather his duty to get as much business as he could for his employers? There was not the slightest doubt that against these Insurance Offices there was a certain amount of fraud and personation constantly attempted. That was an important point, and one which would require the utmost caution on the part of the House in dealing with the subject. The noble Lord the Member for King's Lynn, the other night, put his finger upon that point in a moment; and no doubt this was the real difficulty and great defect of the Bill. Now, the agents of some 216 of these societies were obliged to go from house to house collecting the weekly and fortnightly pence required to keep up the policies of the persons insured; they thus became acquainted with all the insured, and, as they were responsible for their identification after death, they gave their employers a very valuable degree of security. How was it possible for the Government to transact such a business, to protect themselves against fraud—a point of so great importance, and to meet the convenience of the poorer classes as it was met by the existing societies. He could mention one of these companies connected largely with the industrial classes, which had frequently suffered from personation, and from numerous misstatements of age. He was informed that it was the custom of that office to pay the claims each Board day, but this was found so objectionable that it was compelled to adopt the system of paying claims every day which were delivered in the office before a certain hour. He understood that this company was necessarily obliged to have proper certificates as full as those for ordinary insurances, and the agents, who visited the houses of the assured regularly, had no difficulty in identification, and in the payment of claims at the head office. To a certain extent, the strict rules observable in the ordinary insurances had to be disregarded, and the claims were paid by what is called rule-of-thumb principle. If the assurers removed from one town to another, there were what are called transfer sheets, and the agents at that town soon became as familiar with the assured as he who introduced them. In a Government system, unless they adopted (which was not likely) the plan of collecting the premiums from door to door, the difficulty of identification would be incalculable, and in cases of removal from town to town all idea of identity must be cast aside, and the Government, or any company which did not adopt similar rules, would be exposed to very great loss. Another question which would affect all Government Assurances would be, that while their rates were calculated at £3 per cent, it was well known that if companies were to be restricted to £3 per cent for their investments, little if any margin could be secured. It was only by the power to advance money at £4, £4½, and £5 per cent, which companies possessed, that they were enabled to accomplish great results. Now, as to lapsed policies, the truth was 217 they were almost valueless until they had run a considerable number of years. What was termed the surrender value of a policy was known to all Insurance Offices; and it meant that the policy after a certain time acquired a certain value, and that if the holder wished to surrender it, the office would give him back a certain proportion of the premiums he had previously paid. As to the lapsed policies, which the right hon. Gentleman referred to on a former occasion, most of them could only have been a short time in force, and when they were allowed to lapse only a few pence or shillings could have been paid; and, after considering the risk of death during the continuance of the policies in question, in which case the office must have paid the full amount, it would be seen that the policies lapsing under such circumstances, had absolutely no surrender value at all. The Chancellor of the Exchequer had said something about returning the amount of five years' premiums on surrender, but he would find it rather difficult to carry that out. He (Sir Minto Farquhar) would ask for further information on this point, which he (Sir Minto Farquhar) probably misunderstood, for what would become of the claims on death in the mean time? for premiums were meant to provide for claims. The right hon. Gentleman spoke also of the romance connected with amalgamations. No doubt, in the case of the amalgamation of some offices, there had been circumstances of mismanagement or even fraud; but bankers and merchants sometimes failed as well as Assurance Companies, and as long as this continued the wicked world it was, there would always be rogues and scheming speculators whose only object was to rob innocent people of their money. That, however, did not prove that two companies might not honestly and advantageously coalesce, and be carried on at much less expense than if they remained separated. He would not dwell on the case of the Royal Liver Friendly Society, which the right hon. Gentleman had attacked, as the hon. Member for Liverpool, who was to second his present proposition, was well able to deal with that matter; but a petition from that society alleged that its rules had been submitted to the late Attorney General and approved by the Registrar of Friendly Societies; that they had also been sanctioned by Mr. Samuel Brown, Mr. Neison, and other well-known and experienced actuaries. The petition- 218 ers, moreover, courted the strictest and most searching investigation into the state of the affairs of their institution, and wound up by praying to be heard at the Bar of that House, or, at least, in a Select Committee. The right hon. Gentleman said that many of these offices insisted on having their arbitrations in London; but it turned out that the Royal Liver Society had its arbitrations at Liverpool. [The CHANCELLOR of the EXCHEQUER said, the society he had named was the Friend-in-Need Society.] He was not the defender of these societies, but he thought they were entitled to an opportunity of rebutting, if they could, the grave charges which had been made against them. If they were found, on proper investigation, to deserve the bad character imputed to them, they would suffer the consequences. If, on the other hand, they had been accused unfairly, the House should afford them the opportunity of exculpating themselves. Mr. Harben, an officer of the British Prudential Society, had written to The Standard impugning the accuracy of the right hon. Gentleman's statements, and a similar complaint had appeared from the secretary of the Friend-in-Need Society. Surely these gentlemen should receive a hearing before a Select Committee. Moreover, if the right hon. Gentleman's picture of the state of so many of these institutions proved on full inquiry to be correct, a much more radical remedy for the evil would be demanded than this Bill could supply. The machinery of the measure should also be closely examined in a select Committee, and care should be taken that its working was not likely to involve any risk to the public exchequer, as the taxpayers would have to make good any possible loss. The principle of insurance on lives was directly contrary to that of cancelling the public debt by terminable or Life Annuities. The former was in fact creating a new debt by undertaking to pay a certain sum at death in return for sums paid in, and unless there were some care in the selection of lives, and unless the premiums were accurately calculated and ample, there must be a loss, and who was to pay?—the public. It was clear that the prime motive which induced a poor man to join Friendly Societies, and Offices more particularly connected with the working classes, was that he might obtain assistance when ill—the sick pay was the attraction, that which especially helped him when perhaps on a bed of sickness, when his 219 family were hanging on his hands, and when it was possible that without such aid they might be thrown upon the workhouse. The Government surely could not think of adding a plan for giving sick pay to their proposed measure. If it were contended that these societies were not able, under existing arrangements, to keep their promises to those who joined them, let the regulations affecting them be amended, but let them not, by a measure of this kind, deprive such societies of the very elements of success. He (Sir Minto Farquhar) had had a good deal to do with the working classes. He should not be in the House of Commons but for the support of the industrial classes and small tradesmen. They had sent him to Parliament, although he was a Tory. Although he questioned the policy of Government interference, and although opposed, as he had already said, to centralization, yet if it could be clearly proved to him that the Government could undertake to work the machinery of this Bill, and that it would really be a benefit to the working classes, he should be prepared to waive his objections; and he believed that the Chancellor of the Exchequer was under the impression that the proposition was a good one. Let the question, however, be fully gone into. Let Parliament and the country know by the means of a Select Committee's investigations the whole machinery and working of the measure, and let that Committee have before it those who had been attacked. It was for these reasons that he must persist in his determination to move that the Bill be referred to a Select Committee, and that Motion he accordingly made.
§ MR. HORSFALL
said, he rose to second the Motion. He could not quite concur with the hon. Baronet who had just sat down in believing that there had been any intention to mislead the House on the introduction of the Bill.
SIR MINTO FARQUHAR
I do not make the imputation. I said the other night that I did not impute any such intention.
§ MR. HORSFALL
Looking, however, at the important interests affected by the Bill, and the large amounts which had been invested in Friendly Societies by the humbler classes of the country, he would urge upon the House that the greatest caution ought to be observed in dealing with the subject. The pleasure with which he had listened to the Chancellor of the Exchequer's eloquent speech the 220 other evening, was in some degree marred by the conviction he then had in his mind, that the statements put forward by the right hon. Gentleman could not altogether be substantiated. It was easy to bring very serious charges in a very few words, but it often took time and some documentary evidence to rebut them. He must, therefore, ask the indulgence of the House if he referred to documentary evidence at greater length than was his wont in addressing them. The right hon. Gentleman said in his speech, "I am very anxious to have it understood that I state these things as I gather them from the published records, and not as matters privately or personally known to myself." Accordingly, he took it for granted that the right hon. Gentleman referred to the Report of the Registrar of Friendly Societies, and on taking up that volume he was very much surprised to find that a large portion of it consisted of fifty to an hundred anonymous letters, with no names, no places, and no dates, and of five extracts from leading articles in provincial papers. The book was edited, he believed, by Mr. Tidd Pratt; and one of the articles opened in these terms—Mr. Tidd Pratt, the Registrar of Friendly Societies, has rendered many a good service to the working classes of England, but none more likely to accomplish greater ends than that which he has just achieved with regard to the legal expenses which a Friendly Society may incur.He opened the volume hoping to obtain some valuable information, but with the exception of these leading articles, anonymous letters, and one or two balance-sheets, the Report was good for nothing. The right hon. Gentleman singled out for comment two societies existing in considerable strength in the town he had the honour to represent—the Royal Liverpool Friendly Society and the Liverpool United Legal Friendly Burial Society. As regards the first of these the right hon. Gentleman had misstated—he was sure unintentionally —some of the facts connected with the society. In the first place, he had taken the number of policies to the end of the year 1863, whereas he had only taken the accumulated fund down to June, 1863. The right hon. Gentleman said, "The Royal Liver last year made 135,000 policies; the number which lapsed in the same time was 70,000." He did not state that the rules of the society provided against the forfeiture of any policies in consequence of non-payments through omissions or derelictions on the part of the 221 officers of the society. Its rules also were most favourable to members in arrear of payments. Only members who by their own default were fourteen weeks, or more than a quarter of a year, in arrear were wholly excluded and out of benefit. All the large societies allowed but twenty-one days' grace, whereas the Royal Liver gave a quarter of a year to enable members to recover their policies. The right hon. Gentleman, perhaps, was not aware that great difference of opinion existed as to the state of the law. Parliament had not given to Friendly Societies the power of buying up lapsed policies. Parliament defined the payments Friendly Societies should make, and limited those payments to fixed contingencies. The fact that a large proportion of lapsed policies accrued in the Liver as in all other large Friendly Societies was not owing to any want of consideration for the depositors, but chiefly to the state of the law. The right hon. Gentleman, therefore, had not acted quite fairly in bringing a charge of want of consideration against the society. [The CHANCELLOR of the EXCHEQUER: I brought no such charge.] The charge had not been made in terms, but by implication. The right hon. Gentleman said—There is a rule in the regulations of the Royal Liver which authorizes the Committee of Management to grant to the widow or relations of any member dying out of benefit, in cases of want of employment, sickness, or anything else whereby he was necessarily rendered unable to pay, any sum not exceeding £5. The discretion is given to the committee; but," he added, "it is not for me to say how much has been distributed in that way.Again, the Chancellor of the Exchequer stated the premium income of the society to be£77,000 a year; and asked what did the House suppose to be the expense of management in raising and dealing with the income —£36,000! The whole cost of management, properly so called—namely, salaries to agents, treasurer, collectors, clerks, and committee of management would be found not to be a large percentage on a gross receipt of £83,000. The society's accounts were swollen by items for 'commission' and costs of collection, which scarcely ought to be regarded as a part of the cost of management at all. These commissions were, in effect, payments made by the depositors themselves to the collectors, who saved them the trouble and loss of time and labour incident to attendance at an office, to pay in their deposits. The commissions were cheerfully paid by 222 the depositors to the collectors, who called at their houses for their money. In the accounts of many societies the commissions were not thus accounted for; but the Royal Liver Society, since its reconstruction, had always kept those items on the face of its accounts, feeling that the true interests of Friendly Societies required that nothing whatever should be concealed from the members, but that every item of receipts and every item of expenditure, to the smallest fraction, should be brought into the balance-sheet. Such Friendly Societies as the Royal Liver wholly depended upon a system of house-to-house collection of small sums, not exceeding 1d. in the majority of cases, and rarely amounting to 1s. in any case. The commission was calculated for in the tables of the Royal Liver Society, and did not exceed the amount so allowed for. It could be wished that commissions for collection might be dispensed with. But how was that to be effected? Habits of providence and thrift had to be brought home to the dwellings and families of the poor; and when agents of the societies collected the money at the dwellings of depositors, regularity of payment was promoted and public-house temptations avoided. The right hon. Gentleman said that the Royal Liver held its meetings in public-houses, but that assertion he (Mr. Horsfall) denied. Then, as to the accumulated assets of the society, which the right hon. Gentleman stated at £39,000, with an income of £77,000, after fourteen years' existence. The Royal Liver Friendly Society had however, only in its present form, an existence of four years. In 1860, the members themselves entirely reconstructed the board of management, and that board caused to be framed new and most excellent rules, which were settled by Her Majesty's late Attorney General, and instituted a continuous and rigid audit of the accounts through Messrs. Harmood, Banner and Son, public accountants, of Liverpool. The result was, that the society had since enjoyed great prosperity, In 1861, its income was £27,000; in 1862 it had risen to £64,900; in 1863 to £83,000; and by July, 1864, at its then rate of increase, it would be £100,000. In 1861, the assets of the society were £18,000; in 1862, £25,600; in 1863, £39,000; and in the six months between July, 1863, and January, 1864, they increased to £50,000. Such were the true facts connected with the Royal Liver Society, which conducted the whole of its 223 proceedings in public. There was no concealment or hurrying up to London in case of arbitration. An application to the nearest magistrate was all that was necessary, and by him an arbitrator was appointed. The trustees of the society were well known to the right hon. Gentleman; they were Mr. Rathbone, of Liverpool, Mr. Rawlings, of Liverpool, and his hon. Friend the Member for South Lancashire. These names ought surely to be guarantee sufficient for the manner in which the affairs of the undertaking were conducted. But that was not all. He held in his hand a document signed by a gentleman whom the Chancellor of the Exchequer had deservedly complimented a few evening ago —the actuary of the Guardian Fire Life Assurance Company—and what said that gentleman?I have examined the burial branch benefit tables, and also the endowment and sick branch tables of the Royal Liver Friendly Society, and on the perusal of the rules of the said society, and ascertaining therefrom the restricted liability of the society under such rules, on information furnished me by a Committee of the said society appointed for such purpose, together with the statistics produced to me by such Committee, and in comparison of their rates of charges with the usual assurance rates, and taking into account the nature of their insurance and the class assured, and the modes of paying the premiums for securing benefits from the funds of the said society; and further taking into consideration the results of the previous and present working of the said society under such tables, so far as can be judged of by their balance-sheets for the last two years produced to me, and the continued progressive improvement of the said society in a pecuniary point of view, and also allowing a rate of working expenditure not exceeding 40 per cent per annum, I hereby certify, that I consider the said burial branch, endowment, and sick branch tables of the said Royal Liver Friendly Society perfectly safe, and calculated at rates which may be beneficially retained by the members of the said society.It was not necessary that he should say more with reference to the Liver Society, and he now came to the other society— the Liverpool United Legal Friendly Burial Society. The title of that society, as quoted by the right hon. Gentleman, was differently reported in different papers. In The Times it was called the Liverpool United Loyal Friendly Burial Society, in the other papers it was rightly called the Liverpool United Legal Friendly Burial Society.
§ MR. HORSFALL
said, the right hon. Gentleman must have quoted then the title of one Company, and the balance-sheet of another. Of course, when the subscribers to the Liverpool United Legal Friendly Burial Society read the Chancellor's statement, they went to the Committee and said, "You must be putting forth a false balance-sheet, as the Chancellor of the Exchequer says that your business is £10,000 a year, and after twenty-one years your accumulations are only £3,900." The Committee were naturally very indignant, and they had written to him (Mr. Horsfall) with a statement of their accounts, from which it appeared that, instead of the income of the society being £10,130, and its accumulated capital only £3,900 as stated by the right hon. Gentleman, its income was £12,725 and its accumulated capital £14,158. He was very glad that the right hon. Gentleman had withdrawn his accusation against this society, and he had no doubt that that withdrawal would be perfectly satisfactory to its members. The hon. Member for Dudley had referred to a society in Liverpool called the Liverpool Protective Burial Society, of which Robertson Gladstone, Esq., was the treasurer. Now, he (Mr. Horsfall) would not have alluded to that at all if it had not been for the difference between the statement put forward by that society and the statement of the Chancellor of the Exchequer. The right hon. Gentleman calculated the working expenses of that society at something like 48 per cent. The society made it—[The CHANCELLOR of the EXCHEQUER: I never mentioned it.] He was perfectly well aware of that, but the hon. Member for Dudley had mentioned it; and upon the mode of calculation adopted by the right hon. Gentleman, the expenses of the management of that society would amount to from 45 to 48 per cent of the receipts, but according to the calculations of the managers of the society themselves, they were only about 10 per cent. It would be for the right hon. Gentleman to explain how he made the amount between 40 and 50 per cent. Now that it was proposed that the business of all these societies should be taken under the patronage of the Government, it would be well to know a little of the results of Government management. He had in his hand a book published by an hon. Member 225 opposite, in which it was stated that the expenditure in the Post Office for the year 1861 amounted to £3,154,000, against a gross receipt of £3,530,000, leaving only £376,000 to be properly carried to revenue—a pretty large percentage for the cost of management. He had also a curious document relating to the "Customs' Insurance Benevolent Fund," the balance-sheet of which, he did not hesitate to say, was the most extraordinary one that was ever submitted to the public. The accounts were all mixed up together, but the receipts for the year ending the 5th of January, 1864, were estimated, subject to correction, at £33,000. These receipts were derived from a variety of sources. One was what was called "The Bill of Entry Income," which was estimated to produce from£25,000 to £27,000. Although this society had no office to pay for, the expenses of management of this branch of the society were something above 50 per cent. But what was its most remarkable feature was, that, although every Customs' officer was bound to contribute one penny in the pound of his salary to it, there were certain members who did not receive a farthing of benefit from it. As an illustration of the opinion which was entertained of the measure by those who were acquainted with the subject, he would read what was said of it by a gentleman who was evidently an admirer of the right hon. Gentleman. Mr. George Smyth, who described himself as having been for twenty years mixed up with Insurance Companies and Friendly Societies, said—When I read the speech of the Chancellor of the Exchequer—as I did over and over again—in support of his Annuities Bill, I was perfectly astounded. No one can admire more than I do the learning, the eloquence, the financial ability, and political integrity of the hon. Gentleman; but I did not think that by such a Bill he was capable of offending the feelings of self-help, self-respect, and self-reliance of, I may say, the entire working population of England; that he would despise and ridicule the mighty work which, almost unaided by legislative protection, they alone I have done to provide against the afflictions of sickness and death; that he could mistake or misrepresent important facts with respect to that work, the Friendly Societies of England; that he would sneer at or undervalue the good they have done, as it were, by stealth; and that, all of a sudden, he would introduce a Bill, not to reform these institutions, not to give protection to the members of them, and perpetuate them as a prominent feature of our social system and the loftiest and holiest objects of finance—in my mind an easy work for the Legislature—but that he should ask the representatives of the working 226 men of England in Parliament assembled to help the Government to establish a Friendly Society of its own, which proposes, not to insure persons under sixteen years of age, being rather a risky and troublesome as well as an unprofitable class of lives—not to insure against sickness, an unprofitable business also—but a society that, by virtue of the security it would offer, might induce the best lives of the working classes to become policy holders in it, leaving to the existing Friendly Societies all the sick business, which is bad, and all the bad lives in the life branch, without offering to the members that must remain by these societies the slightest hope of that legislative protection, the want of which alone has led to the evils of which the right hon. Gentleman complains.All the objections to the Bill were summed up in that sentence. It did not go to the amendment of the Friendly Societies Act, as it ought to have done. It went to sapping them all; taking the best Life Assurance business to be managed by the Government, leaving the rest to the managers of these societies, and depriving three millions of their members of the best portion of the receipts which should accrue to them. He had, therefore, great pleasure in seconding the Amendment.
To leave out from the word "That" to the end of the Question, in order to add the words "the Bill be committed to a Select Committee," —(Sir Minto Farquhar,)
§ —instead thereof.
§ Question proposed, "That the words proposed to be left out stand part of the Question."
§ MR. HODGKINSON
said, that he failed to discover in the observations of the hon. Member for Liverpool and the hon. Baronet the Member for Hertford any reason why the Bill should be referred to a Select Committee. They had both adduced reasons why a Select Committee should be appointed to consider the management of Friendly Societies and Life Assurance Companies, but none why the Bill should be referred to such a Committee. It was quite immaterial to the consideration of the measure whether the Royal Liver or any other Friendly Societies were solvent or insolvent, or whether their affairs were well or ill-managed. It was impossible to have read the recent Reports of the Registrar of Friendly Societies without being aware that many of these societies were in a very unsound state. But those which were unsound were generally confined to certain districts. He was happy to be able to bear testimony to the general management of most of the Friendly So- 227 cieties in his own district. He could speak of the careful way in which their accounts were kept, the prudence with which their resources were husbanded, the economical and remunerative manner in which their savings were invested, the sound principle on which their benefits were granted, and consequently the great amount of good they had effected. It was true that the Bill would, in some degree, interfere with private enterprize, and it was equally true that the rule that Government should not interfere with private enterprize was a sound one, but it was not of universal application. Like most other rules it admitted of exceptions, and it should be remembered that Friendly Societies already owed much of their security to the interference which for some time had existed with respect to them; and he, for one, should be glad to see that interference go one step further. Something in the shape of an official audit or examination of their accounts should be—he would not say, forced upon them, but placed at their disposal. He did not mean an audit year by year, but a periodical valuation of their assets and liabilities. He believed every sound, well managed society would gladly avail itself of the offer, and those which refused must either have a character far above suspicion or they would very soon become powerless for evil. It was said this Bill would enable the Government to enter into active competition with Friendly Societies and Assurance Companies. In his opinion, it would do so to a very limited extent. It was only with reference to small Life Assurances that the Bill introduced any innovation. It had been stated, in the course of the debate on the subject which had taken place a few evenings before, that the Chancellor of the Exchequer would subsidize his Insurance Offices, because he had the National Exchequer at his back, and that he would thus be able to defy all competition. The House, however, had the assurance of the right hon. Gentleman that nothing of the kind was intended, and even if that assurance had not been given, it might be safely conjectured, that if a Vote were asked for such a purpose it would be almost unanimously rejected. But it was said that the scheme was to be self supporting, and the Chancellor of the Exchequer had himself stated that the rate of interest at which he could accumulate his premiums would be 3¼ per cent. From that amount, however, he 228 would have to deduct the expenses of carrying on the business, which would absorb at least a quarter per cent, and he would ask whether, accumulating his premiums at the remaining 3 per cent, he would be able effectually to compete with private companies? He did not believe that such would be the case, while he was of opinion that the Bill would have some operation, and that that operation would be beneficial in those districts in which the Benefit Societies had been badly managed, as well as advantageous to persons whose habits were migratory, and who would have an opportunity of paying their premiums at a post office. He maintained, however, that, like the Post Office savings banks, the measure would not have the effect of supplanting, but of supplementing existing societies. The Post Office savings banks, for instance, had not prejudicially affected any well managed savings banks which were previously in existence, and which, so far as his experience went—and he knew a great many of those institutions—were doing as great a business now as before. Taking, for instance, the new deposits in Newark savings bank, and he meant to speak simply of new accounts, he found that those for the year ending the 20th of November, 1860, were £11,841; for the year ending the 20th of November, 1861, 12,484; 1862, 11,324; 1863, 11,997; while for the period from the 20th of November last to the present date they exceeded those for the corresponding period of any former year. But, although his opinion of the probable operation of the present, which was a somewhat similar scheme to the Post Office savings banks, was such as he had indicated, he could not agree with the Chancellor of the Exchequer in his estimate as to the expense of working out the proposal, which the right hon. Gentleman seemed to think would be very trifling. Now, the first expense attendant on the insurance of lives was that for medical examination. The right hon. Gentleman stated, that the Government had already a most efficient staff of medical officers connected with the administration of the Poor Law, who might be called Government officers, and be made available for the purposes of the Bill. It was no doubt true that those medical men were, to a certain extent, Government officers; they were elected by the Poor Law Guardians; their election had to be confirmed by the Board in London; and one-half their sa- 229 laries was repaid out of the Consolidated Fund. But then their pay was fixed with reference to the special services which they had to perform, and the right hon. Gentleman would, he thought, find that he had got into a hornet's nest if he set about delegating the delicate task of examining lives for insurance to those gentlemen without giving them additional pay. Then the right hon. Gentleman seemed to think that it would cost little or nothing to collect his premiums, inasmuch as that could be done through the Post Office. Now, the hon. Member for Liverpool, at all events, did not seem to look upon that as an economic mode of collection, but although he did not agree with him in the opinion that the Post Office was the most expensive of our institutions, yet he would go the length of saying that if an addition were made to the labour of any department the allowance to the labourers must also be increased. It should, moreover, be borne in mind that policies of Insurance were subject to transfer; that in the case of a policy which remained in operation for twenty or thirty years, the transfer might take place, as in existing institutions, a great many times, and that many delicate questions must very frequently arise as to who the persons were to whom the money should be paid. Such were the difficulties which Insurance Offices had now to encounter, and he felt convinced that when the Chancellor of the Exchequer had got his scheme fairly at work, adhering to the principle that it was to be self-supporting, he would find that, so far as pounds, shillings, and pence were concerned, he would not be able to compete with those societies already in operation. The right hon. Gentleman in his speech had alluded to the enormous expense at which some of those offices were conducted, as the rock on which so many of them split, instancing specially the high premiums paid. There were, however, other expenses even still higher. There was often an unnecessarily large staff maintained, either to give the appearance of a large business being done or patronage to the directors. There were, besides, expensive buildings, and above all a system of advertising on a scale the most extravagant. In saying so he did not allude to the legitimate advertising in the newspapers, but to the custom of inundating men's tables with books and pamphlets, and placarding the walls of towns with statements, to the effect that Mr. So-and-So was a director of the particular office 230 named. He found, for instance, that the cost of advertising in an office which he would not mention, but which stood first in the list of the blue-book delivered in. June last, was no leas than £7,359 12s. 3d, the income of the office being £311,000, and its expenses of management £74,000, or 24 per cent on its receipts. The managers of those offices, he might add, were not satisfied with advertising in the way to which he referred, but sent about almanacks containing puffs of their several establishments. Another office which had an establishment in Pall Mall and one in Oxford Street, went beyond advertising, for it kept a poet to sing the praises of Life Insurance. He might be permitted to read an extract from a poem commencing—When dear Papa was ta'en to Heaven,And Ma was left to strive for seven,With scarce enough for burial fees,(So lingering was poor Papa's disease),Tho' full of grief, we'd no despair,Relations spoke so very fair.After describing how advice and a kiss was all the benefit derived from relations, the poem went on to show how a policy of Life Insurance in a certain office was found, and concluded—They took it to the office, and wasn't it funny,When they got there they received the money?There was one point upon which he was not quite clear, that the Chancellor of the Exchequer was correct. He doubted whether there was any royal road for the ascertainment of the solvency or otherwise of Insurance Offices. The Chancellor of the Exchequer seemed to think that giving the age of the office, the amount of the premial income, and the extent of the accumulation, it was easy to determine whether the society was solvent or not. The right hon. Gentleman instanced two offices of the same age, having been established in 1825. One office had a premial income of £247,000, and accumulations to the extent of £2,133,000, or between eight and nine years' income. That office was safe, according to the view of the Chancellor of the Exchequer. The other office had a premial income of £44,000, and an accumulated fund of £780,000, or seventeen years' premial income. Both offices professed to divide their profits among the assurers, so that if one was safe the other must have defrauded its deceased policy holders of a large amount of bonuses. However, the truth was that there was no royal road to ascertain solvency, as in the cases referred to one office might have done a large busi- 231 ness at first, and very little lately, while the other might have done quite the reverse. He was himself a director of an office which was established in 1823. It had already paid £6,000,000 to its policy holders, it had an income of £500,000, of which £283,000 was derived from premiums, and had accumulations to the extent of £5,200,000, or the amount of eighteen years' premial income; while the best feature was the fact that the total expenses of management, including agents' commission and directors' fees, was under 4½ per cent of its income. He could not but think the Bill might do much good, and could do no harm, and as he did not see any advantage that could accrue from sending it to a Select Committee, he should vote against the Amendment of the hon. Baronet.
§ MR. SALT
said, that having taken a deep interest in the objects of Friendly Societies, he differed from many hon. Members on that side of the House in regarding the Bill as a small matter. He believed the principle of that and all Bills of a similar character was simply to declare that there were occasions when it was necessary for the Legislature to interfere for the protection of certain classes of the community, who either from poverty or want of education, or the peculiarity of their position, were unable fully and adequately to help themselves. But the protection which the State afforded in cases of that description was necessarily limited by another principle of equal importance—namely, that the Government ought never to interfere with the business and the commercial transactions of private companies, unless such an interference were absolutely necessary and for the benefit of the community at large. He believed that principle applied to the Bill before the House. The first clause of the present Bill related to what were called Deferred Annuities, which were better understood by the term of "old age pay." The principle of giving old age pay under the guarantee of the Government was no new one, and the clause simply extended an already existing power by permitting Deferred Annuities to be paid for by periodical contributions instead of, as at present, in one lump sum. He could not conceive a greater boon that could be offered to the poor labouring man than a measure of the kind. There were certain things which the poor man required. The provision usually made for him was usually for old 232 age pay, sick pay, and pay for medical attendance; and the question was, whether Life Assurance Societies were competent to deal with all these matters, or whether there were any of these particular requirements with which the Government should interfere. It was the opinion of authorities who were experienced in such matters, that Government interference was necessary where the payments were long deferred, or where the benefit was not immediate. But as to payments at death and Deferred Annuities there were some difficulties which required the interference of the Government to be overcome. He had taken great interest in small parish societies, founded in pure honesty and good faith, and some of them dating seventy or eighty years ago; and he was satisfied that, under a proper system, safe societies might be established by which sick pay could be adequately provided for poor men. Much evil had arisen, however, from the true principles of Life Assurance not being properly understood, and from the funds not being kept up through young men not being induced to enter. They had young men beginning at the age of twenty with their small payments, thinking that when they reached the age of sixty, they would be possessed of sick pay and all the advantages these societies were supposed to possess. But too often, when forty years had elapsed, the shillings and the pence, which had been hardly wrought for and which economy and self-denial had treasured up, were found to have vanished, and the poor man's hopes of independence were doomed to disappointment. He was unable to tell any poor man who came to him for advice where he could deposit his earnings with safety. The old savings banks had not done what they should have done in that respect; and in one instance when he had written to a manager about a small annuity he received for answer that they knew nothing about it. He was connected with one Friendly Society which he believed to be perfectly stable. Its rules had been carefully considered. It was under excellent management. The clergyman and the gentry took an interest in it, but where was the security that forty or fifty years hence the members would have the services of such able administrators? For these reasons he thought the subject was one which eminently demanded the interference of Government, and that it was the duty of the Government to popularize and systematize a plan of 233 old age pay. He was sorry that in that Bill the phrase of Deferred Annuities was used, because it was apt to mislead and withdraw attention from the real point to be considered—namely, the benefit of the labouring classes. For the grounds he had stated, however, so far as Clause 1 was concerned, he gave it his hearty and unqualified support. As to the Life Assurance Clause he did not believe that the Bill would interfere in the least with long established companies. The Government savings banks had in no way interfered with well established Banking Companies, and beyond providing £3 or £4 for burial expenses, he never knew or heard of a poor labouring man entertaining the notion of Life Assurance. The small insurers for £50 or £100 at death were men earning £2 or £3 a week—men who could reason acutely, and in matters of business were quite as well able to take care of themselves as those in the higher classes. He accepted with unfeigned thankfulness and heartfelt satisfaction the first clause of the Bill. He believed it would confer one of the greatest boons which could possibly be given to the poor, and was likely to bring comfort and plenty to many an aged couple in their declining years, as well as preventing as many aged couples spending the last days of their life in the solitude of the Union Workhouse. He was not quite so certain about the operation of the second clause, but on the whole he thought it would be of benefit, and when the Bill passed, he hoped steps would be taken to make its provisions fully and efficiently known to those whom it was calculated so materially to benefit. If a scheme could be devised which would secure to poor men old age pay, with a moderate sum at their death for burial, with the possibility of repayment of premiums according to the scheme already adopted by the Government, and by no other office, an incalculable benefit would be offered to the working men of this country.
§ SIR FRANCIS GOLDSMID
said, he was of opinion that the House ought not hastily to proceed with the Bill. If working men were discouraged from insuring by the loss which they might sustain through the failure of Insurance Societies, and it was suggested that the mischief might be remedied by legislation, any measure introduced for that purpose was certain of receiving favourable consideration, particularly when it was recommended by so eloquent a speech as that of the 234 right hon. Gentleman the Chancellor of the Exchequer. But he must say that when he ceased to listen, and began to reflect, he felt that the right hon. Gentleman had failed to satisfy him, either that the business proposed to be undertaken was one that could be transacted by the State with safety to the public—with safety to the finances of the country, or that the scheme of the Chancellor of the Exchequer would really serve the interest of the classes for whose benefit it was proposed. First, with regard to the finances: it was said that the insurance business intended to be carried on under the Bill was identical in its character with the business of Deferred Annuities. The two were quite distinct. In the case of Deferred Annuities, all that was required was to ascertain the age of the person and to receive the money. In the case of Life Assurance it was necessary to inquire into the state of health of the party whose life was to be insured, and that was attended with more difficulty than the right hon. Gentleman seemed to suppose. Indeed, when introducing the measure he informed the House that it was easy to ascertain all that it was requisite to know when it was proposed to insure the life of a working man. The right hon. Gentleman said the only things necessary to be known were the age, the employment, and the habits of the man.
§ SIR FRANCIS GOLDSMID
A medical examination was the main security at present, and it now appeared to be admitted that there could be no simplification in that respect. Then it was said that a periodical Report would be laid before Parliament, showing the nature of the business transacted, and enabling the House to put a stop to operations with which it might be dissatisfied. But was this a matter over which it was possible for the House of Commons to exercise any effective control? They knew that in ordinary Insurance Offices, the business was, as a general rule, managed by the directors, and that the shareholders could not interpose except in cases of the grossest abuse. It was vain to expect that as to transactions of this character the House of Commons could do what was found impracticable by shareholders. The next consideration was whether the scheme was for the benefit of the working classes. With re- 235 ference to that point, two arguments were used which were the twin offspring of the same fertile brain, but which appeared to him to be fratricidal. First it, was admitted that the Government ought not to undertake the business except for the advantage of the classes for whom it was intended, and then it was admitted that there were many companies at present engaged in the business which were of a solid character; but it was said those offices would not suffer by the Bill. If they told him that the working classes did not understand, and could not be made to understand, the difference between solvent and insolvent companies, then he contended that by interfering with Life Insurances in the way proposed by the Bill, they must withdraw support from both sound and unsound offices in an equal measure. If, on the other hand, he was told that the working classes were capable of distinguishing or being taught to distinguish between sound and unsound offices, then he said the whole foundation, of the Bill disappeared. He believed the latter supposition to be the true one. He thought it was an unfair imputation on the working men, looking at the advances they had made of late years, to say that they could not be taught to make the distinction between sound and unsound societies, and he contended that it was the duty of statesmen not to pass such a Bill as this, but to spread among the people that knowledge of insurance which would enable them to make a judicious selection of an office or a society. As one means of enabling them to do so, Parliament ought to require the publication of accounts and rules as recommended by Mr. Tidd Pratt. Employers, both in towns and in country, would also do great service by helping to find for Friendly Societies places of meeting, distinct from public-houses. In a letter to The Times, a clergyman of much experience—the Rev. Mr. Girdlestone—stated that in his opinion the principle of the measure was a most valuable one; but he added that it would bestow no real benefit upon working men, unless the Chancellor of the Exchequer applied his proposal to relief in sickness as well as to a sum paid down at death; but how was this to be done by the right hon. Gentleman? In the Report on Friendly Societies for 1862 it appeared that a member of one of these societies had, after joining it, taken to keeping pigeons, and that he had had a severe fall when going 236 on the roof in the snow to tend his birds; and Mr. Tidd Pratt was consulted whether payment should be made to the sick man "after him meeting with his accident with his own foolish excursions after his pigeons." Let the House only imagine the right hon. Gentleman adding to his already multifarious occupations the duty of sitting as supreme arbiter in cases like that of the unlucky pigeon-fancier. Yet the Life Assurances of those societies were only a subordinate part of their business; and therefore a measure applying only to insurances could not possibly check the main evils arising from abuses connected with such institutions. He thought that no sufficient case had been made out for departing from the great general principle, that the Government ought not to undertake business which the people were capable of conducting themselves.
§ MR. GREGSON
said, he should support the Bill as he believed it to be essential for the security of the working classes. At present they did not know where to go if they wished to insure their lives—did not know which of the small offices were sound and which unsound. The Bill would supply that want, and allowing the premiums to be paid by small instalments it would give a great incentive to Life Assurance. He agreed with the hon. Baronet who had just spoken, that the position of existing societies would be much improved if compelled to publish their accounts. He declined to follow the hon. Baronet (Sir Francis Goldsmid) into the question of the clergyman's view of sick pay, or into the hypothesis of the pigeons, because there was no necessary connection between Life Assurance and sick clubs. When Life Assurance Societies were first established, some seventy or eighty years ago, the principle of them was so little understood that the same premium was taken for all ages. But the principle was now understood, and that class of business could be conducted with perfect safety. As to the examinations, he did not attach much importance to them. He had often found in his experience of Life Assurance that the most robust persons died the soonest, simply because they thought they could take liberties with their constitutions, whereas persons whose health was less robust took more care of themselves and lived the longer. If, therefore, a great number of lives were insured, and the date of birth, the occupation, and the habits of the insurers were ascertained, he 237 would just as soon take those lives as others selected with more care by the great Insurance Companies. It was well known that men entered these existing societies generally when young, and when they arrived at the age of sixty or seventy years they found themselves utterly disappointed in their hopes of receiving a substantial benefit from them in their old age. He therefore hailed the measure of the Chancellor of the Exchequer as a great boon to the industrial classes, who knew very well that, if they availed themselves of its advantages, they would have the most unquestionable security for their money. He objected altogether to refer the Bill to a Select Committee. All the circumstances were known, and a Select Committee would delay the Bill to another year, which would be very undesirable. The effect of the Bill would be, in his opinion, largely to increase the appreciation of Life Assurance in this country. Persons insured their houses, though these might not be burnt down, while they did not insure their lives, though they were sure to die. He believed that the Bill, while interfering with the large offices or the substantial provident societies, would largely increase the number of insurers, and so tend greatly to the welfare of the community. In his opinion it was a wise and a sound measure, and he hoped that the Chancellor of the Exchequer would persevere with it, and would decline to refer it to a Select Committee.
§ MR. SOTHERON ESTCOURT
said, I think, Sir, that the main object of this Bill appeals to the feelings of all men, and that if we were only to listen to our feelings we should at once declare ourselves in favour of the measure. But if we listen for a moment to our judgment, and consider the means by which it proposes to carry its object out, I am afraid we cannot assent to the Bill. If I have rightly collected the intentions of the hon. Gentlemen who have addressed this House in favour of the proposition, I believe I have expressed what was in the mind of every one of them. The object of the Bill commends itself to the benevolence and kindness of every gentleman, but I doubt whether the means which are proposed to effect that object are such as we can approve. I certainly listened with attention to the eloquent statement of the Chancellor of the Exchequer, and so far as my humble tribute of admiration goes I willingly tender it to him. But however great my admiration, of the eloquence of the right hon. 238 Gentleman, I confess my admiration is far greater for the courage which he manifested in attempting to deal with so hazardous and difficult a subject. I cannot help thinking, however, that if the right hon. Gentleman had been less courageous he would have been much more successful; and that he has raised up a great amount of opposition in the work he has undertaken by the mode in which he unfolded his story in introducing the Bill. Upon one point I entertain a strong opinion. I think that this Bill, if carried into law, will do little or no harm to Friendly Societies properly so called. If I venture, then, to criticise any of the details of the measure, I wish to say that it is not because I anticipate any sort of opposition will result between the offices it proposes to establish and those institutions in which for many years I have taken a great interest. I repeat, I do not think that this Bill will interfere with the existing Friendly Societies, and for several reasons. It is perhaps enough to give one reason, and that is—I do not believe that the working classes, scattered as they are over the face of this country, will take advantage of the Bill if it should become law. I do not believe that those classes enter into Friendly Societies or clubs for the sake of the benefits of such societies so much as companionship. And of the benefits which they offer to them, the only one I think they much care about is the provision in time of sickness. I have also read in the public papers the letter which has been referred to in the course of this debate. That letter was written by a worthy clergyman, a neighbour of mine, and he, while approving the object of the right hon. Gentleman, says—"the Chancellor of the Exchequer will do nothing at all unless he introduces some mode of amending sick clubs." That gentleman, I am sure, speaks the opinions of the greater part of the clergy of this country. But no Chancellor of the Exchequer, nor any Member of this House, will venture to undertake so gigantic an operation as that of dealing with the sickness of the working classes. Why, it is as much as any of the ordinary clubs can do, with all their local and personal knowledge, and all the local checks and restraints exercised by those who manage the club, to prevent imposition in the matter of sickness. How then would it be possible for the Government, without any such local knowledge or local checks, to prevent fraud? There is another view of this matter deserving attention. If this Bill 239 comes into operation it will to a certain degree affect all the working men in this country, and unless it is more guarded in its provisions than it is at present, it will greatly interfere also with the independence of individual action. This was the point raised the other day by the hon. and learned Member for Sheffield (Mr. Roebuck), and I entirely concur in the conclusion to which he arrived. I believe that the only safe mode in which his Bill can be brought into operation will be to limit it with due regard to the amount and character of its operation, to that species of business which is not profitable even to solvent societies. If you trench upon the field of profit you will do harm to those institutions already established, and to that extent interfere with the self-action of the people for whose benefit the Bill is intended. But if you had an opportunity of moulding the clauses of this Bill in such a manner as to avoid that difficulty, all would be well. You ought so to draw your Bill as neither to run the risk of interfering with the independence and self-action of the people, or of interfering with the real business of Assurance Offices. But if you take the Bill in its present shape, you will have no guarantee against the evils to which I have called attention. I think it will be more than the Chancellor of the Exchequer can expect that we should pass this Bill in its present shape. The Bill on the face of it gives us very little information of its object. It is drawn in such technical language that any person reading it would suppose that its object was to amend the Act passed seven or eight years ago giving the Government the power of granting annuities. The whole language of the Bill from first to last bears reference to that former Act. Now, if we are able to do that good which Gentlemen opposite expect from carrying out the professed object of the Bill, assuredly it would be better for the character of the House and the Government, and for the good of the people, that that object should appear plainly upon the face and in the Preamble of the Bill. Our object, I believe, is this—that whereas, not annuities only, but assurances of a sum of money to be paid on the occurrence of death, form the business of certain societies, many of which are insolvent, we are desirous of affording the working classes the offer of a secure payment however long the day to which such benefit may be postponed. I think it is far better 240 that the Government should go further in this direction, and that the principle upon which it is to act should be distinctly enunciated in the preamble. It should also be distinctly stated, that it was not contemplated by the Bill to carry on any business of a profitable nature which might be conducted by a solvent company. If they were to go beyond the point where profit began, wherever that point was, then, assuredly, they would do harm. There is one evil which I think is likely to arise from the discussion of last week and perhaps of this evening. I am afraid it will be supposed that the observations of those who have pointed out certain glaring defects in certain existing societies will apply to existing solvent societies; and, partly in order to set this right, my hon. Friend (Sir Minto Farquhar) proposes to send the Bill to a Committee. I do not know how far he proposes that reference to be extended; but I should object to the Bill being sent to the Committee if the reference would allow a committee to take evidence upon the conflicting claims of different societies. That would introduce not merely a temporary delay, but would cause the entire postponement of the Bill. I am entirely with the right hon. Gentleman the Chancellor of the Exchequer in his object to afford the working man a security which he cannot obtain otherwise. So far I am favourable to the Bill. I hope the Chancellor of the Exchequer will succeed in carrying it; but I hope it will receive considerable alteration before we are called upon to pass it. I understand it is not the intention to ask permission to take evidence. If the intention is to give the Committee a reference to the other matters, of inquiry into the solvency of a number of small Insurance Societies, I should object; but no doubt we shall have this fully explained. In giving my consent to the Select Committee, I wish that the order of reference to the Committee should be a simple direction to amend the Bill. For what is the alternative? It is either to agree to that proposition, or to pass the Bill in its present shape. Many Amendments have been suggested. The hon. Gentleman who last spoke has an important Amendment to propose—to fix a maximum for the operation of these Government annuities. There is no proposition — I think there ought to be a proposition—to fix a minimum, because it was most important that they should not transfer to Government the furnishing of the expenses of burial. 241 I think it is impossible to arrive at a satisfactory conclusion on these points in this House. I think it is a question that fairly ought to go to a Committee, and therefore I shall vote for that proposition. I have heard no answer to another point not admitting of easy solution, namely, the great risk which the Government is about to undertake. That, I think, has not been fairly considered or satisfactorily explained by the right hon. Gentleman the Chancellor of the Exchequer. Observe, now, what is his position. What the Chancellor of the Exchequer is doing is to place himself in the position of a young actuary, who proposes to set up a large Insurance Office. The first few years will probably seem years of success and triumph. You do not know the risk that you run till after many years of business—perhaps the whole of the present generation may be swept away before you find out your risk. You cannot fairly say that because your Post Office savings banks have been a great success the like result will attend your annuity scheme, as if the one were germane to the other. In the savings banks you at all times know the amount of your liabilities. The risk in the savings bank is of a different description, and altogether unlike the risk of an Assurance Office. There was a sum of £40,000,000 belonging to the old savings banks, and supposing that in a few years there should be £40,000,000 in the new savings banks, then, with regard to the last £40,000,000, the risk was that the Government might be called on at any moment to return the amount received in gold; but with regard to the repayment of the other £40,000,000, notices were required and delay intervenesd; besides, the name and character of the managers, known in their own locality, would act as a buffer in case of a panic. But whatever the risk is you know the amount of it. But when you come to insurance it is a case of estimate. The liabilities of to-day may not be in proportion to what you have received. You may have received a premium of £3 or £4 and be called on to pay an assurance of £100. Therefore, this is a new career on which the Government is entering, and it will have difficulties and liabilities of a more extended kind. If it is to be a boon to the country, it is of the greatest importance that all these points should be well turned over in the Committee upstairs. I do not at all despair of seeing the Bill put into a shape in which it will realize the anticipations 242 of the hon. Member who last addressed the House. The Bill is fraught with difficulty. I do not see the mode of getting over it; and I do not think we have heard any satisfactory solution of the difficulty. Grant us the permission to discuss the matter in Committee, and we may arrive at the conclusion not only that by means of Government agency the working classes may have the opportunity afforded them of providing for themselves and their relations an annuity in old age, and furnishing them with what some of them so much want—but which many of them, I am afraid, will not avail themselves of—a provision for their wives and families after their decease. By means of this Committee you may get rid of that important objection to the Bill—namely, that you may seriously interfere with the independent action of the people; and, in the next place, you may avoid the danger which at present stares you in the face, that while you seek to do good you may do great injury to the Friendly Societies and Insurance Societies spread all over the country.
§ MR. GOSCHEN
said, that he felt himself unable to give a silent vote on that occasion, though personally he had every reason to be silent; for he was not only a director of an Assurance Company himself, but he probably represented more directors and managers of Assurance Societies than any other Member of the House. But so convinced was he of the wisdom and policy of the measure, that he felt it to be his duty to do the little he could in answering the objections to it which had been raised. It was universally admitted that the bearings of the question had been scarcely exaggerated—that it was a measure of the greatest consequence and importance; and no one could suppose that the great anxiety that was felt and the strong opposition which was manifested in certain quarters to the Bill was entirely owing to the efforts of those who fancied it would deal a blow at their own private interests. The Bill, no doubt, had some strong and weighty objections to it, and they must, be fairly met; but he thought that they might be fairly disposed of, and that the Bill would be one which was well worthy of the character of the right hon. Gentleman and of the House, and leave a mark upon the history of the Session. Although the Bill was laid on the table at the commencement of the Session, it was not till the statement of the Chancellor of the Exchequer was made that 243 the House saw that a great measure was about to be proposed. The statement of the right hon. Gentleman the Chancellor of the Exchequer was so luminous, so complete, and to his mind so exhaustive, that the House, notwithstanding the novelty of the proposition, saw the full extent of the question, and the points on which the measure rested were accurately understood. No argument had been used in the course of the discussion which had not been shadowed forth and anticipated by the Chancellor of the Exchequer himself. The Bill was opposed on five different grounds. There was an objection to the principle of the Bill; there was an objection to the practicability of the Bill; there was an objection to the necessity of the Bill; there was an objection to the evidence on which that necessity was grounded; and there was an objection that it clashed with private interests. He did not propose to enter into the objections raised to the evidence, and he was glad that the discussion had latterly lost the somewhat personal character it assumed in the beginning of the evening. He did not think that the evidence with regard to the existing Friendly Societies and Insurance Companies should be too rigorously sifted. It was not so much a question as to which of these societies was solvent; that was an important matter for the societies themselves; but the passing of a necessary Bill ought not to be made dependent on particular evidence respecting particular Friendly Societies or Insurance Offices. The question was, whether it was possible to find that absolute security and honesty in Friendly Societies to which every man who made a painful sacrifice of the present for the sake of the future—for such it was to the working man—was entitled. He did not propose to go into the question of the insolvency of these Friendly Societies. But he proposed to deal with the objections on other grounds, There were two points which he would mainly deal with — the objection against Government interference and the argument against the practicability of the Bill. He thought it perfectly natural and legitimate that hon. Members who thought as he did, that the interference of Government should be jealously watched, should require that most satisfactory evidence should be brought before they sanctioned any unwarrantable interference with private enterprise. It was quite natural, 244 also, that hon. Gentlemen acquainted with the difficulties of administration should feel rather anxious lest the State should prove unequal to the task about to be imposed upon it. But these two arguments were in themselves quite distinct. No one had spoken with more force about the anticipated loss to the revenue than the hon. Member for Dudley, whose imagination was so excited at the idea of a loss to the revenue, that he talked of an addition of £200,000,000 to the national debt. Sharing the belief of the hon. Gentleman that every possible encouragement should be given to insurance, and that not even considerations of Imperial taxation should be placed side by side with it, he voted in the majority against the Government on the question of the Fire Insurance duty. Now, however, the hon. Member and the Chancellor of the Exchequer had changed positions, and while the latter was the patron of insurance the former was the champion of the revenue. He himself held that they ought, as far as they could, to foster the tendency of all classes to insure. Every policy taken out by a working man was a guarantee, not only to himself but to the community, upon whom otherwise the care of his family would fall. As long as the Poor Laws existed in their present state, and every parish or union was bound to provide a minimum support for those who had no other means of existence, so long every working man who bought an annuity or insured his life was doing a service not only to himself or family, but also to his parish, his county, and even to the nation at large. From self-interest, therefore, as well as from philanthropy, they ought to support this measure. It did not force anything on the working classes, and that was quite right, for they ought not to be regarded as mere clay in the hands of the potter. Without, however, interfering with their liberty of action in any way, it gave them help to be self-helpful. The opposition to the Bill had rested, in a considerable degree, on the probable loss to the revenue which would result from it. Now, the elements on which the success of a system of insurance would depend were these — the scale of premiums, value of lives, rate of interest at which the premiums were invested, the expenses and the profits which accrued to the shareholders. Assuming, in the present case, that the scale of premiums of the Government would be identical with that of the Insurance Offices—although it was fair to argue that if the 245 risk, as was said, was greater, the premiums should be higher—and that the value of the lives would be the same, then the Government would lose on the rate of interest, but would gain the commissions paid to agents, and the 10, 12, 20 per cent, or whatever it might be which constituted the shareholders' profits. Thus the Government would have advantages as well as disadvantages to deal with, and if they were put together it would be found, on the whole, to have a margin in its favour. The average of lives, not of working men, but of general policy-holders in the offices was, he was told, about fifteen years, and he would assume that the Government invested at 3¼ per cent, and the companies at 4½. Meanwhile the Government saved at least 6 per cent, in commissions paid to agents, and had besides the margin of at least 10 per cent, which he had been told by persons of experience was the minimum rate of profits on insurances paid to the shareholders. Balancing these profits and savings against the loss of interest, it would be found that on policies running fifteen years there was a margin of 6 per cent in favour of Government to cover any increased expenditure. In an adverse statement which had been circulated and seen by many hon. Members, it was estimated that the Government were likely to issue 1,000,000 of policies, and these would require 1,000 additional clerks. Now, 6 per cent on a million policies, bearing £3 premium each, would give Government £180,000, which, if they even knocked off £80,000, would leave £100,000 saved. They had already 3,000 post-offices which were savings' banks, and he believed that on the average a third of a clerk additional at each post-office would be sufficient to meet the demands of the case, and the margin he had referred to would be amply sufficient to cover the increased outlay as well as that for the medical officers. Fears were entertained that the postmasters would not be competent for the work. He saw no reason why postmasters should not be as efficient in the discharge of the duties as the tradesmen who often acted as agents of Friendly Societies. Even if they were not very competent, all they would have to do was to keep the accounts, and the other duties might be left to the medical officers of the union, and partly to the Guardians of the Poor. It seemed to him that the Government could exercise greater 246 supervision than the agents of the offices, who were, moreover, personally interested in bringing lives to the offices for which they acted. With regard to identification, there was a vast number of persons in the country receiving pensions for service in the army or navy, but there was no particular difficulty in identifying them, and fraud happened but rarely. There must be regulations, and those regulations must be enforced. It was said that the working classes would not be able to understand them. That he could not believe, because he knew that the working classes were able to understand the most difficult and intricate questions of settlement better than many hon. Gentlemen who were then listening to him. A working man knew his rights as well as possible, and he would not find more difficulty in mastering the simple regulations which Government must impose with respect to identification of policies than he found in acquainting himself with all the details of settlement. Nor did he think that the valuation of the lives of working men would present greater difficulties than that of the lives of persons moving in a higher sphere. The disorders of the working classes were more simple, and Union officers would, in their cases, be more reliable authorities than London physicians who pronounced upon the value of lives after a brief conversation with the persons proposing to insure. It had been said that the present Bill had a centralizing tendency, that it was new, that it was un-English. Why, even in Anglo-Saxon times, the people were compelled to insure, not only their properties against theft, but their souls against eternal perdition. But he did not wish to rest upon an antiquarian argument, though, at the same time, he hoped the doctrinaire argument would not be pushed beyond its due limits. He agreed that the Government ought never to interfere so long as private enterprise could do the business as well. He quite accepted that proposition, but he doubted whether Friendly Societies could do that as well which the Government proposed to do. The Government proposed to give something which no one else could give—absolute security. He did not wish to say a word against Friendly Societies, except that he would not insure his own life in one, and why should they not try to give the working classes every advantage in the way of insurance that hon. Members would desire for themselves? But it was said to be quite easy for work- 247 ing men to discern between a good and a bad society. For his own part, however, he did not see how they could possibly distinguish between the two. ["Divide."] He trusted the House would allow him to proceed. They had already had one personal discussion that evening, and it was only human nature that they should desire to proceed to the other which they were expecting; but the Bill before them was a most important one, and he trusted they would not vote against it upon arguments which they did not wish to hear refuted. There was one other point on which he desired to offer a few remarks. He considered that the measure before the House involved no real interference on the part of the Government. A man that took out a policy would be no more under the control of the Government than one that bought Consols. [Cries of "Divide."] He must yield to the feeling of the House, but, in sitting down, he might be allowed to add that the Bill had this further advantage, that it would create among the working classes a numerous body of State creditors, who would have a not less deep interest in the national welfare and tranquillity than those who, at present, were too apt to regard themselves as the only persons who had what was called a stake in the country.
§ THE CHANCELLOR OF THE EXCHEQUER
The House had an understanding at the commencement of the evening, that this debate should be brought to a conclusion in time for another matter to be discussed, and therefore I comply with that understanding by assenting to the adjournment of the debate. I wish, however, to say one word in justice to a respectable body of men. A deputation from the working men of London waited upon me this morning under the presidency of a gentleman of the most distinguished philanthropy, to assure me that those trades' unions, to which I referred on a previous occasion as involving in their system a principle of coercion towards the minority of their own body, were working themselves out of what they—or at all events those who came to me—seemed to feel to be a vicious system. I cannot refrain from taking the earliest opportunity of expressing the very great gratification which I feel at learning that such was the case. As to what fell from my right hon. Friend (Mr. Sotheron Estcourt), my right hon. Friend stated— 248 and he appeared to express the opinion of many hon. Gentlemen sitting near him—that he was not disposed to connect this Bill with a general inquiry into the condition of Friendly Societies and Insurance Offices; but that he thought that it would be better considered in a Select Committee on clauses, as such committee is generally understood, and as distinguished from a committee to inquire into the subject. If we had been debating this as a contested matter, my hon. Friend the Member for Hertford (Sir Minto Farquhar) will admit that his Motion, though in terms only it is a Motion to refer the Bill to a Committee, yet that his speech and the speech of the hon. Member who seconded it, proceeded entirely upon the supposition that it was to go to a Committee in order that various societies should be examined into and investigated. To that proposition we entertain the most insuperable objection. Nothing would induce me to encounter the responsibility of undertaking to carry forward this Bill in such a shape. I do not say that there may not be a Committee on Friendly Societies, but I am aware of no analogy or precedent that will warrant the appointment of a Committee to call before it an insurance officer, even though the rules on which they act may not be altogether such as can be approved and endorsed. They enjoy no exemptions, they take no special benefit from the law, they are acting upon the privileges of British subjects, and I am not prepared to be a party to calling them before a Committee, and to examining into the state of their concerns. We should consider such a Committee entirely foreign to our object. As to a judicious inquiry into the question of Friendly Societies, apart from this Bill, that is a different character, and upon it I do not wish to give any opinion whatever. If I understand from my hon. Friend (Sir Minto Farquhar) that he is satisfied to prosecute elsewhere, or in any other way, those inquiries in reference to these Societies in general, and that the desire entertained by many gentlemen is for considering the clauses of the Bill in a Committee upstairs rather than in a Committee of the House, I can only say that if we could conclude at present upon a Motion of that kind, and be able shortly after the financial statement to go into that Committee, I should be very willing to close on those grounds. I wish the House to very clearly understand the position in 249 which I stand in reference to existing Societies. I quoted the cases of various Societies, and of those which I cited, I think there were four which I mentioned only for the purpose of commendation, I quoted several other Societies, the British Prudential among others; but I did not presume to take upon myself to say that they were insolvent societies. I pointed out facts connected with their balance-sheets, and merely went to the point of saying that they were not societies which carried with them sufficient evidence to guarantee the minds of the public, and entitle them to say to the Government "Don't enter upon our field, which is satisfactorily occupied already." I admit that I quoted the case of societies not existing, which had not been solvent, and that I said one was a case of a fraudulent society. As regards the present question, I hope that what I have said is distinctly understood, that to a general committee I have an insurmountable objection, but that if the desire is to go into a committee upon the clauses, not taking evidence upon the general question, I am willing to accede to such a proposition.
§ MR. SOTHERON ESTCOURT
said, that it would be for the convenience of the House, and would save time, to adopt the course proposed. The proposition now made by the right hon. Gentleman was a very fair one, and he trusted that the House would agree to it.
§ MR. THOMSON HANKEY
said, that he could not vote for sending the Bill to a Committee, because he objected to the principle of it. There was no evidence to satisfy him that the business was such as could be safely undertaken by the Government; and he did not wish to see the Post Office have another heavy business annexed to it.
I entirely understand the objection to inquire into the general question of the constitution and solvency of Friendly Societies in a Committee upon this Bill. Such an inquiry would be one of almost interminable length; it would render impossible the passing of the Bill in the present Session, and there are other reasons which would make such an investigation difficult in the present Parliament, if it is meant to be complete and thorough-going. There seem then to be but two alternatives. We must either proceed with the Bill after a continuance of the debate, or else accept the compromise of the Chancellor of the Ex- 250 chequer and go into Committee, not upon the subject of Friendly Societies but upon the clauses of the Bill. I confess that, for my own part, I should be very glad if that compromise could be arranged. Obviously, however, it is a thing that can only be done by the general consent and understanding of the House, and it is impossible not to see that there are a number of hon. Members who wish to postpone the debate in order that they may have an opportunity of expressing their opinions. I, therefore, think it better that we should accept the proposition for adjournment, and that the question should be again raised at the earliest opportunity after the House meets. The right; hon. Gentleman may then be able to carry: his Bill without the necessity of sending it upstairs.
§ THE CHANCELLOR OF THE EXCHEQUER
I have no objection to the adjournment of the debate, but it must be understood that if the debate is adjourned the Government will be entirely free to; take their own course.
§ Debate adjourned till To-morrow.