National health insurance and the friendly societies

Front matter

NATIONAL HEALTH INSURANCE

AND THE

FRIENDLY SOCIETIES

Preface

The present address was prepared at the request of the Fraternal Congress, to make accessible to those responsible for the conduct of fraternal societies the essential facts bearing upon the relation of British friendly societies to the British system of national health insurance. It is realized that within the necessary limitations of such an address no particular aspect can receive adequate or entirely satisfactory consideration. An effort, however, has been made to present the subject entirely from the friendly-society view-point, and the references given will make it conveniently possible to extend the inquiry in whatever direction may seem advisable. The material for a thorough investigation is of truly enormous extent, including, as it does, literally thousands of publications of friendly societies for the period since national health insurance went into effect, in 1912. It would have been truly impossible to review this mass of data for the present purpose, but a selection has been made with discrimination and a reasonably thorough knowledge of the past history of the friendly-society movement.

The British friendly societies represent an inspiring aspect of mutual thrift, instituted and fostered entirely by wage-earners in their endeavors to achieve a well-perceived objective, the raising of the wage-earner's standard of life. It is the judgment of those who have impartially considered the facts of friendly-society history that no other social institution has been of equal benefit in developing a democratic spirit of initiative and self-help on the part of those who, in England, are still referred to as "the working class." For a hundred years past these societies have been the subject of Parliamentary solicitude, and the long series of Parliamentary investigations which is extant reveals a truly amazing amount of evidence regarding wage-earners' thrift and the far-reaching value of voluntary effort, practically disregarded on the part of those who fatuously in 1911 forced the system of compulsory health insurance upon the British people. The foremost British economists have seldom failed to bear witness to the efl&cacy of friendly societies in developing the widely diffused abhorrence of poor-relief and the desire for economic independence on the part of wage-earners struggling against economic adversity. They were looked upon one hundred years ago as the mainstay of the effort to oppose the iniquitous workings of an overliberal poor-law, construed on every occasion in favor of the idle and the shiftless and against the best interests of the self-respecting independent workman. It would be utterly impossible even to briefly review the long and honorable history of the British friendly societies, but a few observations may not be out of place if but to emphasize a vast and neglected field of social and economic research full of promise to the impartial investigator free from the bias of socialism and pseudo-social reform.

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Probably the best general treatise on the subject is the English translation of a treatise by J. M. Baernreither on "English Associations of Working Men," published in London, 1893. Equally useful as a general introduction is the treatise on "Mutual Thrift," by the Rev. J. Frome Wilkinson, London, 1891. An earlier and extremely valuable work is "The History, Present Position, and Social Importance of Friendly Societies," by Charles Hardwick, London, 1859. Technically, "A Treatise on Friendly Societies," by Charles Ansell, London, 1835, is practically indispensable to those who would understand the long and arduous struggle from a condition of practically universal insolvency to a decidedly more satisfactory financial status more or less in conformity to the principles which underlie legal-reserve insurance. Of more recent date is a small treatise on "Provident Societies and Industrial Welfare," by Sir E. W. Brabrook, late Chief Registrar of Friendly Societies, London, 1898. Also of much technical value and most useful is a "Treatise on Friendly Societies, containing an Exposition of the True Law of Sickness," by Arthur Scratchley, London, 1859. One of the earliest references to friendly societies as a factor in the social economy of the British people occurs in "The State of the Poor," by Sir Frederic Morton Eden, London, 1797. Eden was one of the very foremost authorities on poor-laws in his day and the conditions favorable or otherwise to the social progress of the people. At about this time developed a considerable literature favorable to the formation of friendly societies as a safeguard against reliance upon the poor-laws, perhaps best illustrated by a small tract on "The Prevention of Poverty, by Beneficial Clubs," by Edward Jones, London, 1796.

The Rev. T. R. Malthus, best known as the author of an essay on population, discussed in 1807 the proposals of Samuel Whitbread, which to this day rank among the classics of economic literature. Particularly suggestive is "An Appeal to the Public on the General Utility of Benefit Societies, Instituted by and for the Relief of Their Respective Members: Proving the Necessity of Securing Their Property by the Sanction of an Act of Parliament; with Remarks and Observations on the Present System of the Poor Laws," London, 1792. Of similar import is "A Proposal for Improving the System of Friendly Societies, or, of Poor Assurance Offices; and, by Increasing Their Funds, Rendering, in Process of Time, on the Principle of Accumulation, All Parochial Taxation for the Relief of the Poor Unnecessary," London, 1814. The author of this essay was Jerome Count de Salis. The essay includes rules of benefit societies, etc., reflecting the insurance knowledge of the period. One of the earliest works on friendly or benefit societies was a report, with that title, drawn up by a committee of the Highland Society of Scotland, including a statement of the law of sickness as deduced from returns of friendly societies in different parts of Scotland, rates of contributions for different allowances, etc. This report was published at Edinburgh in 1824, being generally considered one of the most important contributions to early friendly-society theory and practice. By about this time iv some of the foremost actuarial ability of Great Britain was giving concern to the necessary improvements in friendly-society theory, one of the most important works being a series of "Tables Shewing the Amount of Contributions for Providing Relief in Sickness and Old Age, for Payments at Death, and for Endowments for Children," computed by John Finlaison, Government Actuary, London, 1833. Two years later there was published a "System of Accounts, Adapted to every Description of Benefit Societies," by Mr. R. C. Norman, examined and approved by Mr. Griffith Davies, a well-known actuary of the period, the. book being published in 1835. Twenty years later John Tidd Pratt, the first Registrar of Friendly Societies, published his "Suggestions for the Establishment of Friendly Societies," including tables of rates of contributions, and reflecting the gradually increasing understanding based upon observed experience. Mention requires to be made of the important work by Mr. Francis G. P. Neison, Jr., whose contributions to vital statistics retain their value to the present day. Finally, I may refer to "Remarks and Suggestions on the Report of the Commissioners on Friendly Societies, and the Bill of the Chancellor of the Exchequer," by G. Poulett Scrope, London, 1874, introduced at the time for more effective government supervision and control.

In an excellent treatise on "Provident Societies and Industrial Welfare," Sir Edward W. Brabrook, late Chief Registrar of Friendly Societies, takes occasion to say "Friendly Societies can claim an even greater antiquity than Trade-unions. In their earliest form they were burial societies. . . . The oldest existing societies, founded in 1687, 1703, and 1708, are those which were founded among the refugee Huguenot workmen, etc. . . . Friendly Societies first appeared upon the statute-book in the year 1793, when an Act was passed for their encouragement and relief. The preamble of that Act affirmed that the protection and encouragement of such societies would be likely to be attended with very beneficial effects by promoting the happiness of individuals and at the same time diminishing the public burdens. . . . The Friendly Society has done so much for its members, and contributed so largely to industrial welfare by increasing their self-respect and independence — it has been so powerful an instrument of foresight and economy, and has led so many men to positions of influence and dignity — that it has strong and genuine claims upon the community, whose interests it has largely promoted. . . . There is no evidence whatever that the class of men from whom the members of Friendly Societies are drawn is the class of men who would otherwise be paupers. Such evidence as there is is all to the contrary. ... The considerations which induce a man to belong to a Friendly Society are the same considerations which keep him independent of public aid in his old age."

This eloquent testimony in behalf of the social utility of friendly societies was ruthlessly scorned when compulsory thrift, under national health insurance, was forced upon British wage-earners as a poor substitute for voluntary thrift and voluntary enterprise.

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These references will be sufficient for the purpose of illustrating the really extraordinary historical, technical and practical foundations upon which the modern structure of friendly societies was reared and to which is directly attributable the astounding success which had been attained by 1911, when the Government decided to replace voluntary thrift by compulsory contributions, and a simple but effective democratic form of self-management by a bewildering mass of governmental rules and regulations extending to the most minute affairs of the private life of the individuals concerned.

The evidence presented in the discussion following fully sustains the point of view that state interference has been of disastrous effect on the old friendly-society spirit and the character-building effect of a theory of mutual aid in all essentials infinitely superior to coercion and control on the part of the State. The results of the present investigation show that the friendly societies have reached a practically stationary condition and that about the only way to avoid complete absorption of them by the societies approved by the State is the employment of paid solicitors or collectors, paid visitors and paid officials, in place of the large amount of voluntary services rendered in response to a true fraternal spirit in the past It is for American fraternal organizations to profit by the lessons of British experience and to oppose with all the powers they can command the insidious and un-American propaganda for the establishment of compulsory health insurance in this country. That this is the prevailing point of view among those who are most concerned with fraternal-society management is made evident by much that has been said or written on the subject, suggesting, however, the need of a much more comprehensive study of the question than has thus far been made. It is hoped that the present contribution to the literature of the subject will give furtherance to this purpose, while at the same time giving expression to the writer's profound conviction that among the institutions making for the social and economic betterment of our wage-earners none ranks above the friendly or fraternal societies, which hold together men of kindred spirit by an appeal to the highest sense of altruism that inspires the souls of men.*

*The following are the more important Parliamentary reports on friendly societies, the first of which was made as early as 1825: (1) Report from the Select Committee on the Laws Respecting Friendly Societies, July 5, 1825, (2) Report from Select Committee on the Laws Respecting Friendly Societies, June 29, 1827, (3) Report of Select Committee of the House of Lords on the More Effectual Suppression of Societies Established for Seditious and Treasonable Purposes, etc.. Session 1847-48, (4) Abstract of Returns Respecting Frieudly Societies, by Sir William Joliffe, P''ovember 29, 1852, (5) Copy of Report and Tables Prepared under the Direction of the Lord of the Treasury, August 1, 1853, (6) Further Report ?nd Table Prepared imder the Direction of the Lord of the Treasury by the Action of the National Debt Office, June 1, 1854, (7) Report from the Select Committee on the Friendly Societies Bill, July 3, 1849, (8) Report from Select Committee on Friendly Societies, June 25, 1852, (9) Report from the Select Committee on Friendly Societies Bill, July 20, 1854, (10) First Report of the Commissioners Appointed to Inquire into Friendly and Benefit Building Societies, London, 1871, (11) Second ditto, 1872, (12) Third ditto, 1873, (13) Fourth and Final ditto. Parts I and II, 1874, (14) Reports of the Assistant Commissioners on Friendly and Benefit Building Societies, Including Special Report on The Prudential Assurance Company, London, 1874, (15) Abstract of the Quinquennial Returns on Sickness and Mortality Experience by Friendly Societies, 1855-1875, Vol. I, August 20, 1880, (16) Ditto, Vol. H, July 17, 1896. In addition to the foregoing, annual reports of the Registrar-General of Friendly Societies have been issued for a long period of years, the earliest available to me dating from 1880.

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Table Of Contents

Page

Preface iii

Introduction 1