§ Order for Second Reading, read.
§ Motion made, and Question proposed, "That the Bill be now read a second time."
Mr. POINTERI beg to move to leave out the word '"now," and at the end of the Question to add the words "upon this day six months."
In moving this Amendment I want to make it quite clear that so far as this Bill is concerned those who are objecting to it, being persons interested in the main as members of the society or company, are not doing so because of any objection they have to the company requiring any better status under which to carry on their work. They realise quite well if, in the opinion and experience of the company, they believe that the acts under which they are now working are in any way preventing their due progress or preventing the legitimate expansion of their business, that is a very good reason, of course, why they should come to this House and ask for an alteration of the conditions under which they carry on that work. But they are objecting because they believe that the powers which are asked or sought to be perpetuated in this Bill will be detrimental to a very large section, and in fact to the bulk of the people, paying in the shape of policy holders into this particular company. I want to make it quite clear that we do not not set up the contention that this Bill creates injustice, so much 419 as the contention that the Bill seeks to perpetuate and to give further legal sanction to injustices which already exist and which cropped up in the past.
As I understand the position of this company, it is that a number of years ago they started in dealing in ordinary insurance policies, plus a scheme, which had for its object provision in time of sickness. As time went on, believing, I suppose, and judging from the experience of other companies, that the ordinary industrial policy was a paying business—and, of course, neither I nor anybody else will seek to blame them for that—they added an industrial policy to the inducements they held out to the people of this country. I want it to be clearly understood that this company, like most others, is in this position, that the bulk of the people who contribute to its finances in the shape of payments, either weekly, monthly, quarterly or yearly, belong to the working class, and by far and away, as I shall hope to show by figures later on, the greater number of their members belong to the industrial class, who pay for their insurance in the main by weekly instalments, and in consideration of which they take out policies mainly for very small amounts indeed. These are the class of persons—I use the word "persons" as I am rather hampered in my expressions, because this company has refused in the past to give them the status of members, and they are now trying to perpetuate that anomaly by putting it into this Bill which will give it further legal sanction. There is one argument which I think it is quite possible may be used, namely, that if these people took up their industrial insurance in the full knowledge that they would not become members, then this Bill, in seeking to perpetuate that, is not doing these people an injustice. I want to say a word in regard to that, because, having experience myself as an agent of insurance, I know something of what goes on inside, and I say most emphatically that the ordinary holder of an industrial insurance policy does not know the terms under which insurance is granted. He does not know, except in a broad and general way, the conditions that attach to it, and I may point out that, so far as the policy is concerned, the form they sign tells them nothing as to whether they are members or not members.
There is one feature which I feel sure the bulk of the Members of this House know 420 very little, if anything about, and that is the various arguments that are used, and the various inducements held out to those people, and I would add parenthetically that at least a great proportion of these industrial policy holders are women with no experience, who know nothing of business, or finance, or the ordinary rules governing a society and the rest of it, and, therefore, they are all the more easily taken in, if I may use the expression, by the wiles of the insurance collectors. Lest I should be thought to be unduly blaming the insurance agent, let me say one or two things which I think are of interest. In the first place, agents and collectors are very often driven by facts over which they have no control, to use unfair methods for getting business. One of them is this. There is in existence a gentleman called—I speak of him as a type, of course—a special canvasser. That special canvasser is a man who in very many cases has been drummed out of the society or company either for which he seeks to work afterwards, or some other company, for fraud or embezzlement, or for doing something which he ought not to do.
Mr. POINTERIt is absolutely true. It may not be true of the hon. Member's company, I do not happen to know in what company the hon. Member is interested, or connected with, either as a policy holder or otherwise, but I do know these men are very often driven out of active insurance work because of faults very often of a grave nature, and they trade on the very qualities which secure their dismissal from the positions they hitherto held, and use as assets in their new position. They go round with the ordinary agent. They secure business by all sorts of unfair methods and untrue statements, and they leave the agent afterwards to face the indignation, and very often the agent gets into trouble in consequence. That is one of the methods whereby people are inveigled into insuring in many of these companies. It is the practice in many companies to hold an agent responsible any any lapses which may occur. It is sufficient for my purpose to say that when an agent is held by his company—or if not by the headquarters of his company by his immediate superior—responsible for replacing any relapses, or if he suffers some fine, or is made to suffer in any way, then I think that you can quite see that there is an unfair pressure upon that agent 421 which leads him to adopt methods which he is very heartily ashamed of, and which he only adopts under the direst pressure. There is another system the agents are subjected to, which makes them bring unfair pressure upon people and induces them to make misleading statements to would-be policy holders. In this particular circumstance I am speaking not only of the companies generally but of the very company whose Bill we are discussing tonight. I happen to know one person to whom this has happened three times, and this particular man is only a type of many others. I mention his case because he happens to be a friend of mine. He has on three occasions been subjected to this experience. He has built up by patient devotion to business a book valued at £20—that is, the premiums in it amount to £20. On three occasions that book has been taken, and £8 have been taken on. He has been left with £12, and he has had to build up by laborious efforts another book, only to see that £20 divided again and part of his business given to some other persons.
Hon. Members will see that under circumstances like this, you cannot expect agents to be over scrupulous as to the way in which they get business. When I am told in this House that these people who are now holders of industrial policies in this particular company have gone in with their eyes open, and have nothing to complain of, I say most emphatically that, taking all the facts into consideration, that is not so, and you cannot argue as if these people had had all the facts placed before them, and in a calm and judicial manner had been able to make up their minds as to the policy they were asked to take up. I want to put a further consideration. I think every hon. Member will realise that the type of man or woman—and especially the woman—who takes out the ordinary £10, £20, or £30 policy is not usually a class who has had much experience of finance or the conduct of societies. Therefore, I think they have a special claim upon the consideration of this House. If we were considering a class who, like the bulk of hon. Members, have had experience such as I suggest these people lack—I know some hon. Members are experts in finance, and all of us have had some experience of the conduct of societies, and the rest of it—I would not be in the position of coming here and asking this House to interfere, and I should say that the intelligence and 422 the experience of persons such as ourselves ought to be sufficient to allow them to look after their own affairs without any help from us. I ask whether or not these people, who wish to make some provision for their future or for the future of their wives and children, and being more or less obsessed with the importance of making that provision, and not having the wherewithal to make a calm judgment as to what is the best provision to make, have a claim upon the consideration of this House.
There is a matter to which the attention of hon. Members and others who are objecting to this Bill has been drawn, and it is—What is a member? Ordinarily, of course, without any regard to legal status or anything of the sort, one would suppose that anyone paying a premium of any kind would be regarded as a member, but it appears that the practice of this society or company has been in the past to regard only those persons who have taken out ordinary policies, or who have been members of the sick scheme, as members, and that all the vast number of persons who have been paying on industrial policies, have been ruthlessly ruled out. If you could say in any real sense that these people deliberately adopted that choice I would say that they had nothing to complain of, but this Bill seeks to perpetuate that grievance, and I, for one, think that that grievance is a very real one. I know nothing about the law, except that I subscribe to the assertion that "the law is a hass!" As far as the technicalities of the law are concerned I know very little. I notice in the statements set forth by those who have petitioned against this Bill, that they point out that a recent decision was received as late as January of this year in regard to the Glasgow Friendly Society, which lays down that, all persons who have paid into the funds of a society ought to be members. The Chief Registrar-General at one time subscribed and backed up that opinion, but I have learned to-day that he has now gone back upon that view, and has admitted his mistake.
I know nothing about the legal position at all, but the statement of the Registrar-General did seem to me so very definite that I should be very interested to learn from those who are favouring this Bill and supporting it, upon what point the Registrar-General has now come to the conclusion that the considerations which weighed and decided this matter in 423 January in this year are no longer applicable to this case. It seems important that men who are contributing should have some voice in the conduct of the affairs of the company if there is to be anything like representative opinion to be gathered from any source whatever. I think that very important point shows the relative position of the industrial policy holder and the ordinary policy holder. I was somewhat interested to find that at the end of 1912 the number of industrial policy holders in this particular company was somewhere about 1,300,000, and that the premiums paid in respect of them in that year amounted to £761,808, whilst the premiums received in respect of ordinary policies was only £185,205, or an excess of industrial premiums over ordinary premiums of £576,503. At the present time I believe there are industrial policies in force to the amount of 15,000,000, whilst the ordinary policy holders number about 3,500,000. What appears to me as very striking is that the people who are contributing the greater part of the money, and who are responsible for the bulk of the income of this company, are to be ruthlessly thrown on one side, whereas the conduct of the society and the responsibility for it, whether that results in good management or bad, is to be vested in a number of people who represent a very considerable minority. That may or may not be what Members of this House think is fair and right, but, as far as I can see, it is a piece of injustice that this House ought in no way to encourage at all. There is one other point of importance.
Amongst other powers which this Bill will give if it passes from the stage of a Bill to that of an Act, is to authorise the company to extend their business in all sorts of ways. It authorises them to indulge in fresh business, and to enter into any arrangement or agreement with other companies or societies in order to prosecute that business. It is quite evident, of course, that in doing so they will be taking on fresh business of which they have had no experience. The result of that experiment may mean a loss, in which case the industrial policy holders will be contributing to profits, which may be dissipated by unwise management or unwise speculation of one kind or another, or, what I suppose after all is more likely, industrial insurance being a more or less profitable business, it may mean a profit, in which case the 424 industrial policy holders will be contributing to profits and reserves which may be used for further business or investments creating more profits upon which they will have no claim. I would like the House to know that the chairman of this company admits—perhaps it is not an admission, because I do not suppose he made the statement voluntarily—that the profits of this company are derived to the extent of two-thirds from industrial policy holders.
We shall, therefore, if this Bill passes, have this anomaly. The class of policy holders who contribute two-thirds of the profits will be in the position of having no possibility or anticipation of sharing in any profits which may be made. I ought perhaps to qualify that a little. Rule 68 says that the directors may allocate certain profits to industrial policy holders. That is optional, so I suppose it is also true that they may not allocate them. There is in this Clause, therefore, no real safeguard for industrial policy holders. It is quite true that during the last two years—I am speaking entirely from memory, but I think from 1908 to 1912—a total sum of about £49,000 was allocated by way of bonus to this class of policy holders. In that time, of course, the amount of bonus given to the ordinary policy holders was very much greater. They now apparently seek to put in a permissive clause to give them power if they wish to give industrial policy holders some little crumb of justice. I do not know whether that will be held in this House to be a virtue, or whether it will be held, as I hold it, to be a tardy repentance of past misdeeds. I am of the opinion that these people have put in this proviso more as a sop realising the absolute injustice that has been dealt out in the past to industrial policy holders. In order to make their present Bill a little more palatable they come forward and say, "If you will give us the increased powers for which we are asking then in all probability we may distribute a little of the profits to these people, to whom in the years 1908–12 we gave small sums. It is interesting, however, to notice that during last year this practice, which was evidently of a temporary and experimental nature, was discontinued, and so far as I am informed no bonuses were granted during 1913 in any way or shape whatsoever.
I wish also to call attention to one or two other features of this Bill which I regard as being very important. The policy holders, as I have tried to explain, 425 holding industrial policies amount to 1,300,000 in number. They not only rule out ruthlessly all these people, but they are taking means and measures to perpetually cut down and cramp the operations of all the smaller ordinary policy holders. The way in which they are doing that is manifested by two or three provisions in the Bill. One is that twenty-five or more members holding aggregate policies of £100,000 may call a special meeting. The company in the main consists of people who are contributing small sums. Leaving out the industrial policy holders, the great proportion of the ordinary policy holders hold policies of from £50 to £200. Some of them are endowment policies, by which, of course, is meant that they pay, with the expectation of receiving a certain sum of money after a lapse of a certain number of years, ordinarily from fifteen to twenty-five years. The bulk of the ordinary policy holders are not people who hold big policies; they hold comparatively small policies, ranging from £50 to £200. Here is a provision whereby any twenty-five members, if they happen to hold on an average policies of £4,000 each, may call a special meeting. I quite understand that there ought to be some rules and provisions with regard to calling a special meeting, but if twenty-five members are sufficient when they happen to hold aggregate policies of £100,000, then twenty-five ought to be a sufficient number, whatever those policies may amount to; or, in the alternative, they ought to be put upon the same level, so as not to give the power to the rich men in the society. That is a common feature of the industrial companies to-day, namely, the way in which the big policy holder is little by little getting the whole conduct of the society or company, as the case may be, in his grip, and is strangling the small policy holder and using him as a convenience whereby he may become himself more rich more rapidly. Then as to the qualifications for the directors. Here is a provision which does not allow a person to become a director except on certain conditions. There is a reference to past services, but, generally speaking, no ordinary policy holder can become a director unless his policy is one for over £1,000. Here, again, I submit that if the House should give its sanction to such a provision as that in the case of a society consisting mostly of poor men, it would give its sanction to a provision which I think 426 should not commend itself to us. We find the same sort of thing in the provision as to voting power. It is to be by a show of hands unless challenged, and is then to be by the character of the holding. A holding of £25 gives one vote. If a man has £100 he gets four votes. If he has £1,000, forty votes. I should have thought that a man with £100 policy was in most cases a man who had his all at stake. Very few people of that kind would have £100 in this society and £100 in another society. But take the big policy holder, supposing £4,000 is his all, even then he has no more at stake relatively in this society than the man of smaller means might have.
It has been said that only twenty-five persons have signed the petition which has been circulated. That is quite true, but I would point out the reason for that. It is very largely the great difficulty in getting together people who are so scattered as in this case, and then the notice of the presentation of a Bill like this—I say this without any offence to the company; I am not saying it was done deliberately, it is in the nature of the case—the notice was not very prominent, and even now many members and contributors and policy holders, I am quite prepared to believe, do not know that such a Bill is in progresss before this House. When you are dealing with an unorganised mass of working men and working women, to get a consensus of opinion is a very difficult matter indeed. When you are asking for an expression of opinion from a friendly society or a trade union, there you have an organised body of men. You have a vehicle or machinery through which and by which their expression of opinion may come. But in a case such as this you have a great mass of unorganised people who are not in touch with each other, who happen quite fortuitously to be members of the same company, who do not know each other, and the difficulty is to get an expression of opinion from them promptly. Instead of putting that as an argument to which we should listen, I think it should be put the other way—that is to say, that in spite of the difficulty of getting those people together they have subscribed their money and have made their protests against what they believe to be a gross injustice.
To sum up my points: First, we object to the permanent exclusion of the industrial policy holder, seeing that he contributes by far the greater amount to the income of the society, because from his policy two-thirds of the profits are derived. 427 Secondly, we think it is an injustice if this House gives its sanction to any such agreement, and consequently, if there is to be a division of profits at all, we want that the permissive word "may" should be removed and the word "shall" inserted in its place. We want a provision in the Bill so that the amount of distribution of the bonus of profits to the industrial policy holder shall be in strict proportion and relation to the amount they contribute to the profits. In the third place, we object to the Clause under which the £1,000 qualification for directors is allowed to remain, and on the same lines we object to the great powers given to the larger policy holders to control the business of the society as represented by the provisions for calling meetings. These are more than Committee points. They raise grave principles, and we hope that this House in its wisdom will not grant to a company such as this—a company which admittedly is out for the making of profits—permission to perpetuate an injustice and to continue, if not for all time, for a considerable number of years to put people who enter into insurance upon an inferior footing to those who do not contribute so much as they do towards the success of the undertaking.
§ 9.0 P.M.
§ Mr. JOHN WARDI wish to second the Amendment. I do so not necessarily in order to criticise the details of this Bill, though there are some of them that ought to be considered by the House before giving this great corporation the franchise they are asking for. In Clause 13 enormous powers are given to the directors, the power to wholly control the society is placed in their hands, either to dismiss or deal with the servants of the company without any appeal whatever. Then there is the question that the directorship of the company would not be drawn from the ordinary members of the society, but from a sort of class ring of those who happen to be policy holders to the extent of £1,000. I think the House will see at once that that may mean the handing over to them of interests quite as valuable, though not on the same scale, in a way that we should not contemplate in a measure of this description. There is another peculiar rule in this society which I do not find in any other society. That is on the inspection of books, Clause 31. I have not seen such a rule in a Bill of this description. It says that books of the society shall be open at all convenient times for the inspection 428 of any of the directors, but it goes on to say that no member can ever inspect any of the books without he gets authority from the directors. It looks almost as though you were making it nearly impossible that a man who has some personal interest in some account connected with the society has not leave unless he also-gets a written authority from the directors to examine his own accounts and the affairs relating to his own accounts. There is no such thing as that in any other class of society. So far as the trade unions of the country are concerned, any member who gives seven days' notice to any officer or trustee, or in the case of any ordinary friendly society if any member who has ever paid a penny into the society gives seven days' notice to the officers that he wants to examine his account, the books, by law, must be open to that member. If the Bill passes in its present form, apparently no member belonging to this society can ever inquire into his account unless he first obtains the permission of the directors. I know that with regard to companies of this description some peculiar legislation is already on the Statute Book, but I do not imagine that it has gone as far as that yet, and I imagine that the House would not be in favour of extending the principle in the way suggested in that Clause. As to the alterations of rules in the future, we are clearly, by this Bill, handing the society over to the directors, holus-bolus, without any appeal to anybody. Clause 34 says that the rules in the Schedule shall be the rules of the society. You would imagine that that is definite, but it goes on "for the time being." If they wish to do so, the directors can alter the rules of the society, and those alterations have then to be submitted to a meeting which must be held at Birmingham. It is a moral certainty that the number of members who would get to Birmingham to agree to the rules or otherwise would be but a very small proportion of those interested in the finances of the society. Therefore, we may say that the control of a general meeting reduces the whole business to a farce. I am not going into the details of the Bill, because I dare say that those who reply will say that they are Committee points. I may inform those who defend this Bill, that, unless these points are altered in some way or other by the Committee, this is not the last they will hear of the opposition to the Bill. We shall have to 429 make a desperate effort on the Third Reading, unless there is provided more democratic control than appears to be the case as the Bill stands now. They may be Committee points, but if those who are promoting the Bill imagine that they are going to get out of the difficulty, and that they will never need to refer to this Clause again, and that there is no necessity to put their house in order, I can assure them that the opposition to the Bill will go much further than it will probably go to-night. There is another class of men who have not been considered. A petition has been sent round to Members of this House signed by members of this society, but I have also received a petition—I do not know whether other Members have received it—from the agents of this society asking this honourable House to oppose the Bill. The petition, says it is inimical to their interests. They are the people who really get the members for the society, collect the premiums, and who do by far the most important part of the work in a society of this description. They think their interests are being very seriously prejudiced by this Bill. I am not going into the details of the petition they have sent to me. I dare say they are well known to the defenders of the company and to those who are going to suggest to the House that this Bill should be adopted. If they are, it would be well for those who are promoting the Bill to take the matter into account before it is too late. I suggest that those promoting the Bill should consult the agents themselves, and see whether something cannot be done to allay their suspicions. I suggest that all the more because the agents of a company like this are in a very peculiar position. They are financially and otherwise personally interested in the affairs of this company in their own way quite as much as any director can possibly be, yet the peculiar position in which they stand in relation to the management of a society of this description makes it impossible for them to appear before the Committee or state their case. Anyone with any experience knows that it would be all up with an agent who engineered opposition to this Bill in a Committee upstairs, or who came forward to give evidence against the Bill and stated reasons why he thought it would injure himself and his comrades. I suppose that the moment after the Bill got through his position could be described by a 430 cypher, and that they would be in a position to dispose of and dispense with him, or, in other words, to reward his services during the passing of the Bill. That is all the more reason why the House should be careful if it thinks that these agents, who are deserving men and who have built up the company's business, believe that their interests are being jeopardised by Clauses in the Bill. They do think so, and they have pointed it out in a written statement to myself and other Members.
The peculiar circumstances in which they are placed, the impossibility of their appearing personally to state their case for fear of the consequences that might come to themselves and their future in the society, should give the House pause on the Third Reading if not now, and cause it to consider their interests before the Bill goes too far. This House ought to be particularly concerned in looking after a special interest which cannot protect itself. The ordinary members of the society may be able to do so. They have already issued a petition against the Bill, but any hon. Member can see that it would not be possible for the agents to sign a petition of that description, for not one of them would be alive as an agent of the company even now, and, if he were kept on now, it would only be while the Bill was being got through. He would have punishment inflicted upon him the moment after. Therefore there is a form of opinion against this Bill which cannot be heard in this House or before the Committee. We want some definite statement, especially with regard to the latter part of the business. I am not so much concerned about those who have invested their money in the concern, because I suppose they have done so with the idea of getting a quid pro quo out of it. They have taken the risk themselves, perhaps it may be sometimes on wrong information, as my hon. Friend suggested, but presumably with their eyes open. On the other hand, the agents are deserving servants of the company who have built up its business, and if their interests are likely to be prejudiced by the passing of this Bill, then most certainly it is the duty of the promoters, knowing that the men themselves cannot be heard, to make some statement on the subject which will allay the fears of these men.
§ Sir EDWIN CORNWALLThe Mover and Seconder of the Amendment have made very interesting speeches in regard to industrial insurance generally, and 431 there is a good deal which could be said with regard to that subject, not only tonight, but any other time the House cared to debate the subject as a whole. But neither of them would desire to pick out this particular society, and hold it up as carrying on its business in any different way from that in which industrial insurance is carried on throughout the country. I hope some day that matter may be dealt with generally. Hon. Members realise themselves that the main points that they have raised are Committee points, rather than Second Reading points, except with regard to the agents, and there I notice that in the House of Lords—I do not quite square this with what the hon. Member (Mr. Ward) said—one petition was presented by the National Union of Life Insurance Agents, and the Committee of the House of Lords amended the Bill so as to remove the objections expressed in their petition. So the fact that the agents were permitted to petition, and that the House of Lords Committee conceded their point, should count for something.
§ Mr. J. WARDI have never been informed by the agents, who supplied me with the first petition, that their point had been conceded.
§ Sir E. CORNWALLI think the hon. Member will find that the Committee sat only recently in the House of Lords, and the agents won their point. With regard to the general points which have been raised, I see a difficulty. No one is more anxious than I am that all Bills of this nature should be thoroughly thrashed out in Committee. I should like all the arguments which the hon. Members have used to be thoroughly dealt with in Committee. When I say thoroughly, I mean both sides, because we must all admit that statements here are ex parte, but when you get before a Committee and get counsel employed on both sides, you can sift out the real truth, and where there is a case made there is no better tribunal in the country than a Committee upstairs to deal with points such as those mentioned by the hon. Member (Mr. Pointer). But I see a difficulty. This petition does not pray to be heard. The hon. Member says that one difficulty is that the cost of counsel upstairs is too much for these people. I dare say that the Committee would let some of these appear without counsel, but I am very anxious that the case should be heard, and the hon. Member for Wolverhampton (Mr. G. 432 Thorne) has upon the Paper the following notice:—
That it be an Instruction to the Committee on the Wesleyan and General Insurance Society Bill, that the holders of industrial insurance policies in the society who have presented a petition against the Bill, may be heard by their counsel, agents, and witnesses upon the allegations contained in their petition.So that I think if we all agree to that Instruction being passed, it gives an opportunity for the case to be heard. But I do not think that the hon. Member (Mr. J. Ward) should threaten the promoters of the Bill that if the ease is not heard upstairs, there will be some very fierce opposition on the Third Reading, because any question of the case not being heard upstairs would in no sense be the fault of the promoters, who are quite anxious and desirous that every point should be raised in Committee.I should like to tell the House what this Bill is. This society was founded in 1843, first of all to undertake sickness business. Soon after that it carried on ordinary insurance business with ordinary management. They were members of the society. But forty years ago they went into the business of industrial insurance, and they have now 1,400,000 industrial policy holders, and so far as I know no one has said anything at any time against the society, and no one says anything against it to-night. The ordinary department numbers 70,000 and the industrial department 1,400,000. The income from the ordinary department is £211,000, and the premiums from the industrial department £763,000. The total accumulated funds of the society at the end of 1913 amounted to £2,108,000. Every other society of this nature which started many years ago under the old Friendly Society Acts, and these friendly societies differ according to the Acts they came under, and the year they came into existence, has been obliged from time to time to come to Parliament and get itself put upon a basis to enable it properly to carry out a very large business, when it becomes a large business, and several other societies have had to come to Parliament, and Parliament has never hesitated to give every organisation of this nature exactly what this society is asking Parliament to give it now. The first object of the Bill is incorporation. The incorporation of the society would enable it to manage its own estate as a corporate body instead of 433 being, as it is now, partly a friendly society and partly a collecting society. It would enable it to have an up-to-date constitution, and would give it wider powers of investment. Their auditors have told them that their present method of investment is not as satisfactory as it ought to be for such a large business, and it is necessary to have some such Bill as this to enable it to adopt modern and wider powers of investment. It also gives them power to legalise the bonuses paid to industrial policy holders.
The hon. Member (Mr. Pointer) made a good deal of the fact that the profits belong actually to the ordinary members and not to the industrial policy holders. That is true, and hitherto the society has given bonuses to the industrial policy holders, but the question has been raised in law as to whether they are legally entitled to give these bonuses. This Bill proposes to make it legal to give the bonuses to those very people the hon. Member for Sheffield has been referring to. To suggest that this society, which is going to legalise these bonuses, is going to penalise the people, and take away or withhold the bonuses, is not a true representation of the position; because a society of this size and importance knows very well that if it wants to hold its position in competition with its rivals, it must give the same bonuses as other similar societies give. This Bill puts them in the position which they ought to hold in that respect. It only asks that Parliament should enable it to have the same legal position and status that Parliament has given to similar societies already. If the Bill passes it will enable the society to maintain and extend its business. With regard to the agents, I am sure that my hon. Friend will realise that nothing could be more important than that the society should be in a position to maintain and extend its business, and I venture to say that if the Bill is wrecked no greater disservice could befall the agents of the society at this moment. I cannot imagine anything more detrimental to the agents of the society than that we should prevent them having this opportunity of extending the business. On the main point of this Bill passing or not passing into law, on behalf of the agents, I say that it would be a thousand pities if it was not carried this Session. When the Bill was first brought forward the Registrar of Friendly Societies made this report:—
I have the honour to report that this Bill is for the very desirable purpose of removing the society from 434 the anomalous class of friendly societies, which are exempt from all the Friendly Societies Acts passed after the Friendly Societies Discharge Act, 1854 (17 and 18 Vict., c. 56), and therefore are still subject to the provisions of the earlier Acts. The difficulties of such a situation are obvious, and similar Bills have been promoted in several other cases, this being the last of the societies, I think, except the Clergy Mutual, which is promoting a similar Bill this year, which now exists under the old conditions. A possible further exception is the Friends Provident Society of Bradford, which has had a special Act, but has not, I fancy, been incorporated.I think that all goes to show that this society is doing what a society in its position ought to do. It would be negligent in its work, if it did not go forward with the Bill. Look at the question of membership. The case for those objecting to the Bill is that these 1,400,000 policy holders ought to be made members. Let me say, first of all, that when a society of this description is a small society and working in a given area, the idea of membership is of the very essence of its existence, but when its work is extended throughout every county in England until the policy holders number 1,400,000, how can you really make out a case that all these policy holders should by law be made members and should take part in the management of the society? The hon. Member for Stoke (Mr. J. Ward), in referring to the twenty-five who signed the petition, used the very argument which I am going to use against that proposal. In explaining why only twenty-five signed the petition the hon. Member referred to the difficulty of getting a large mass of people together. If it is difficult to get them together to sign a petition against the Bill, bow are you going to get them together to manage the affairs of the society? I submit to the House that the proposal is unworkable.These people for forty years have been coming into the business under contracts. The hon. Member says they do not know what the contracts are. Nevertheless they are contracts, and they have come into the business as customers of the society. Every business has customers. For forty years they have been customers of the society under contracts without profits and membership. Why should it be asked to-day that these 1,400,000 policy holders should have their contracts cancelled, and that they should be put into a different position? For forty years they have never asked that. I would like to point out that the inclusion of these 1,400,000 as members, taking part in the management and working of the society, would go to weaken the management. In these days of serious competition the management of 435 a large business has to be continuous. Those engaged in the management have to look years ahead, and if you are going to have an uncertain management, not knowing who are going to be directors at one time and directors at another time, you are only going to weaken the organisation and injure the society. One might refer to the statements in the petition, but they all seem to me to be matters either for Committee or matters dealing with the general management of a business of this description. Of course, it is always easy to criticise the management of a business, but it is not so easy to carry on that business. I could go into my office and find fault with those who are carrying on my business, but it would be futile to do so. You have to have confidence in people, and be careful how you do carry on business in these days when there is so much pressure. Therefore, I say to hon. Members that they should not be too ready to tear up the organisation which, I believe, is going to maintain the success of this society, although they might conceive that there are better ways, if they had the responsibility. I say, "Do not be in too great a hurry in tearing up the organisation of the business which these people are carrying on." I think the House will agree with me that this Bill ought to have a Second Reading, and ought to pass into law in the interest of policy holders, agents, and all those who are responsible for the management.
§ Mr. WORTHINGTON EVANSI wish to support the hon. Member (Sir E. Cornwall) in asking the House to give the Bill a Second Reading. I really cannot understand the object of the hon. Member for Sheffield in opposing the Second Reading. I listened to most of his speech, and it seemed to me to be full of Committee points. The point made as to the industrial policy holders is that they ought to have a share of the profits. They came in on a non-profit basis, and since then I understand the company has given them a share in bonuses. It is doubtful whether the action of the company in giving bonuses to the policy holder is legal, and one of the objects of the Bill is to make that legal, and to secure to them a share of the bonuses. Another point was he thought that industrial policy holders ought to be treated as full members, and he quoted a decision given in the case of the Glasgow Friendly Society, and seemed to think that that decision bound this case. 436 I understand that the difference is this: The Glasgow Friendly Society was a friendly society properly so-called, and this is not, and though the word "members" is a term which is usually applied both to ordinary policy holders and industrial policy holders, yet, if you are going to deal with it in a legal sense, it only includes the ordinary policy holders.
Mr. POINTERWill the hon. Member explain how, as the collecting societies advertise this as binding in some particulars, it is not binding in this particular?
§ Mr. WORTHINGTON EVANSI will only do it in a general way, without a long legal argument. The general statement is this: The Registrar-General, in a subsequent second report, has emphasised the distinction. This is not a friendly society governed by the Friendly Society Acts, except by one Act, which does not make it a friendly society for any purpose except the purpose in that particular Act. If this Bill goes to a Committee upstairs there is power to insert in the Bill, if the Committee thinks fit, Clauses which would make the industrial policy holders members for all purpose. I am not going to prejudge that. What I suggest to the House is that we ought to give the Bill a Second Reading, and let the Committee take into account all the arguments which the hon. Member has put forward; and if the hon. Member, or those who represent the policy holders, can convince the Committee that the policy holders ought to be treated as full members, then let the Committee treat them as full members, and insert Clauses in the Bill accordingly. The hon. Member also said that the industrial policy holders might be damaged by the Clause which allows the society to extend its business. There is something in the argument which he put forward, that if this society is allowed to extend its business on speculative lines the assets of the society to which the industrial policy holders look for their security might possibly be diminished at a risk to the policy holders without any prospect of corresponding benefit, if benefit came, from those transactions. But that is the sort of question which the Committee will look into most closely before granting those powers at all, and obviously it will limit those powers in such a way that they cannot harm the policy holders of the society whether they be profit-sharing members or members not entitled to profit. Then the hon. Member said that although these industrial policy 437 holders might not be members in the full sense yet they were induced to join the society on such conditions that they never understood the nature of the contract into which they entered, and he developed an argument which seemed to me ought not to be allowed to pass without some protest. He said that the policy holders were an easy prey to the insurance agents, who induced them to become policy holders by unfair methods. That is a sweeping statement, and I do not believe that it represents the truth either in this or in any other case. Insurance agents as a whole are honest men, who are earning their living in an honest way, and ought not to be stigmatised by the hon. Member for Sheffield in the general terms which he employs in connection with them. He even went further and said that to assist their unholy efforts special canvassers who had already been discharged from the society on the ground that they had committed fraud were employed to induce people to become policy holders. He had no right to make that charge.
Mr. POINTERThat is not right. I tried to make clear that these people were sent to assist the agents in spite of the agents, and not at their request.
§ Mr. WORTHINGTON EVANSThe hon. Member said that special canvassers were employed to assist the agents, and that those canvassers have been frequently drummed out for fraud.
§ Mr. WORTHINGTON EVANSWhen there was disagreement with that statement the hon. Member said that it was agents not only of this society, but of other societies. I do not think that any hon. Member has any right in the absence of those canvassers to attack their action, and their action has been in my judgment just as honourable as the hon. Member's action has been in bringing this matter forward. We have just as much right to impute motives to the hon. Member in bringing this matter before the House now as he has to say that the agents are guilty of some sort of conspiracy to bring people in without any knowledge of what they are doing. The points which have been taken by the hon. Member for Sheffield, and those who have supported him, are possibly points which ought to be considered by the Committee. They are no answers to the general case, that this is a society carrying on a large business for the 438 benefit of policy holders and employing large numbers of agents, whose operations are hampered by being under a constitution which no longer fits the need of their work, and who come to this House as many other similar societies have done before, and ask this House to grant them wider powers which they will use for the good of the policy holders, and for the increase of their business. That is the general case. Nothing has been said which disposes of the general case, although there may be special points which ought to be dealt with in Committee.
§ Mr. GOLDSTONEThe hon. Member for Colchester has made a very indignant protest against the speech of my hon. Friend the Member for Attercliffe (Mr. Pointer), which in my view is entirely unwarranted. The hon. Member for Attercliffe, as I understand him, pointed out that it was only canvassers who were brought in against the wishes of the agents and not on the suggestion of the agents, who were using whatever arguments came first to their hand to induce people to join, and, if things did not come up to expectations they left the agents to face the difficulty; and it was rather that practice which my hon. Friend condemned, and there was not the imputation of any motive to the canvassers who are, as I understand, very much the same in all types of societies.
§ Mr. WORTHINGTON EVANSHe said that they have been drummed out for fraud. Does the hon. Member suggest that that is so?
§ Mr. GOLDSTONEI am not suggesting that. I am only pointing out what was the argument.
§ Mr. WORTHINGTON EVANSThat is the point to which I am replying.
§ Mr. GOLDSTONEThe practice which my hon. Friend condemns is a practice—which I should condemn also—of canvassers against the interests of the agent being brought in to get policy holders, and then being transferred, or possibly drummed out. I have no doubt that my hon. Friend has instances which he can quote, or he would not have made the statement which he did; and it is a practice which should be condemned, in the interests of the legitimate agents as well as in the interest of the legitimate work of these various insurance companies. The hon. Gentleman was on safer ground when he suggested that, when this Bill went to a 439 Committee, the Committee would be entitled to consider whether the policy holders should not retain their old rights of membership. That, m our view, is a very important point. Under the old constitution of this society the industrial policy holders are members. I am assured that it is so, because the old Friendly Society Acts under which the society was constituted, accorded to the old policy holders of the industrial type the full rights of membership, and the importance of this Bill now is this: that in giving powers of incorporation it may deprive the policy holders of their rights under old Acts, and these rights ought to be safeguarded. If the Committee upstairs will reconsider the matter and insert a Clause or words which will secure to the old policy holders the rights which they now enjoy, then I think it is very important, and goes a considerable way to meet my hon. Friends and myself in our-opposition to this Bill. We desire to retain the old democratic control of the industrial policy holders. Those who suggest that this cannot be done I think entirely ignore the existing practice. Let me take any old friendly society. Of course it never attempts to get all its members together in any centre. What it does do is to appoint delegates—which is the plan of the Royal Liver Society—and those delegates receive their instructions from the members of the society, who exercise control through them.
It seems to me that in giving away the democratic power you leave it within the power of the directors to vote themselves considerable salaries and the like, entirely without reference to the policy holders, whose case we are now making, and they may possibly make a diversion of profits into directors' fees. That is a reasonable fear, and it is one which they entertain. It seems to me, therefore, that this fear should be voiced in the House. We may take it that the agents of the society are not going to take action which would be prejudicial to its interests. They would not appeal to us as they have done to voice their protest against the Second Reading if they were not satisfied that the Bill proposes to give powers under the incorporation which the directors ought not to have and should not obtain. It is obviously against the interest of the agent to do anything prejudicial to the society, on whose success he depends. His livelihood is at stake, and he will not suggest any 440 change which would be inimical to his own life interest. The agents have more at stake in the interests of the society than any other section of the members, whether directors or policy holders. It is in the interests of the agents who have a life interest at stake, and in the interest of the policy holders, that we say the Second Reading of this Bill should be resisted. But if we are to have the Instruction which has been spoken of, and if the Committee upstairs will consider the rights of the industrial policy holders in regard to control, our case has been considerably met. If we receive the assurance that the Instruction will be accepted, and also the point which the hon. Member for Colchester made with regard to the course of the Committee upstairs, I think my hon. Friend and the Seconder of the Amendment, and those who are opposed to the Second Reading, might be prepared to withdraw their opposition and allow the Bill to go through. I think if we have that assurance the opposition to the Second Reading will be withdrawn.
§ Mr. GEORGE THORNEI have an Instruction standing in my name on the Paper in regard to this Bill. The measure has three main objects, which have already been fully explained by the hon. Member for Bethnal Green. Those objects are to make the status of the society perfectly clear and to deal with the industrial policy holders and other matters. Not the slightest objection has been raised to any of the proposals of the Bill by those who oppose the Second Reading. Its principle seems to be accepted. That is the whole thing with which we are concerned in this House, and all the others are matters of detail which, in my view, certainly ought to be referred to the Committee upstairs for careful scrutiny and consideration. This being a matter in which I take the greatest personal interest, I have carefully looked into it, and it is because of that I have placed an Instruction on the Paper to the effect that the holders of industrial insurance policies in the society who had presented a petition against the Bill may be heard by their counsel, agents and witnesses. It will be seen that the Instruction provides for counsel, but what a man can do by counsel he can do by himself; and I am told that many of those who are applying are poor, and do not feel able to spend money on counsel; but they can appear personally, if they so desire, and of this I am sure, that, constituted as the 441 Committee will be, it will give more consideration to representations made by an individual on his own behalf than if they were made through counsel. If the Instruction is accepted, all those whose interests are affected by this Bill will be heard. I understand that the promoters do not think that those interests are prejudiced, and that they do not desire to affect them. But we want to make sure that is the case, and we cannot decide that in this House; it is only the Committee which can decide it; hence the Instruction I have put down, and I was glad to hear the hon. Member who has just spoken, as representing the Labour party, state that if the Instruction were accepted they did not propose to press their opposition to the measure. I should like a distinct understanding from the Member for Bethnal Green that the Instruction will be accepted if the Second Reading is passed.
§ Sir E. CORNWALLI have already said that we shall be very happy to support the Instruction if the hon. Member for Wolverhampton will move it.
§ Mr. BOOTHI think the hon. Member for Sunderland has put the point very reasonably and is entitled to take it as a genuine and bonâ fide rule that those who are critics of a Bill may wait to see whether their points are dealt with in Committee, and reserve their rights until then. I think that is a perfectly fair attitude. In regard to the remarks of the Member for Attercliffe, I regret his reference of a general character relating to insurance canvassers. The hon. Member for Colchester, with a certain amount of warmth and energy, of which I do not complain, repelled a charge which he thought to be unfair. A suggestion was made that against the will of a local agent a special canvasser was brought in to canvass against the interests of the local agent. But surely no special canvasser can be brought in in that way except to increase the book of the local agent, to extend the number of policies, and to increase the amount of the premiums. The man who principally benefits by this special canvasser is the ordinary canvasser, who frequently finds it very difficult to obtain policy holders. The special canvasser comes in as a sort of expert, and he can train the ordinary canvasser how to get business and how to induce persons to take out policies on new tables. That is usually the work of the special canvasser, and he is a man rather higher 442 in rank than the ordinary agent. He cannot be any good at all to the society unless he helps along the agent or canvasser; otherwise the money would be thrown away. That, I submit, is the ordinary description of the duty of a special canvasser. The hon. Member suggests that this special expert is a man who in reputation can be challenged, and whose career has been an ignominious failure. Can you conceive any body of business men promoting an ordinary agent to do special work at special remuneration who is below the ordinary agent in rank and character? The hon. Member suggests that these special canvassers are people who have been found guilty of fraud and defalcation, and are men who have been drummed out of ordinary agencies.
§ Mr. BOOTHYielding to no one in the knowledge of what goes on in the industrial insurance world, I say that that statement is entirely foreign to the truth. I challenge the hon. Member to name any society in which that occurs, not even to mention this one, the reputation of which stands in the very front rank. This Wesleyan and General Assurance Society has a special reason for looking to men of character and men of position. The House may have noticed that one of its regulations prescribes that the meetings of the directors are opened with prayer. Hon. Members below the Gangway here are perhaps inclined to make light of that. This House opens with prayers every day, and the origin of those prayers is in the remote past, I mention the fact to show that this particular society did not come into existence as a profit hunting or business concern, but that it had another origin, and I do not think that on that account it is entitled to less confidence. Not any of the societies for a single moment would tolerate even as an ordinary agent, or as the humblest worker in the service of the company, men guilty of defalcation and of fraud. These industrial companies work together in a certain measure in friendly harmony. They are most particular in taking an agent who has served in one society and who wishes to transfer his services to another. If there is the slightest hint that the man in his previous service has been guilty of any fraud, there is no industrial company or society would look at him, I do not care what ability he had, or how plausible his 443 tongue was, or how presentable his appearance might be. I do not think since I entered the House have I heard a more unfounded charge brought against any person than that which is brought in this instance. Being to a certain extent in touch with these people, the House will excuse me when I say that I am amazed that a statement like it should have been made. It has never been made outside.
§ Mr. BOOTHNo, no. I read the reports, and I challenge the hon. Member to say that it was made, either at the Trade Union Congress or in his own Constituency, that a large majority of these companies employ as special canvassers men guilty of fraud and defalcation. There is not a vestige of truth in such a charge. I challenge the hon. Member to give the name of one man or mention the name of a village or a town where an agent of that kind has been appointed on behalf of an industrial insurance society. The Members of this House will recollect that, apart from the law, there is such a thing as public opinion, and there is as well the keenest competition in the industrial insurance world. At the present time, as the House knows, my interests are connected with another company, but that is no reason why I should allow a suggestion of this kind to be made against this company because I am interested in a competitive institution. There is, as I say, the keenest competition amongst these companies. Hon. Members who are in touch with the democracy are aware that there is not a working-class house or tenement in the whole of the United Kingdom but is canvassed in the course of the year by agents. If this company did not manage its business properly, and if it had the reputation of having criminals in its service, then the business would leave it. The public would not transact their business and would not trust a company which acted in that way to provide funeral money and to provide money for their old age. If any society were misguided enough to employ even a small group of men of the type suggested, of these criminals guilty of breaking the law, and of defrauding the public, they would lose in reputation and undoubtedly would go straight to liquidation. No society or company would be mad enough to do such a thing. 444 I was very sorry to hear the statement made, and I took this opportunity of having a contradiction put on record. There is not a word of truth in, or foundation for the charge.
Mr. POINTERI view of the general agreement for a Second Reading, if the Instruction of the hon. Member for Wolverhampton is accepted, I ask leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ Question, "That the Bill be now read a second time," put, and agreed to.
§ Bill accordingly read a second time, and committed.
§ Ordered, "That it be an Instruction to the Committee on the Wesleyan and General Assurance Society Bill [Lords] that the Holders of Industrial Insurance Policies in the Society who have presented a petition against the Bill may be heard by their counsel, agents, and witnesses upon the allegations contained in their petition."—[Mr. G. Thorne.]