Class 7 was "dividing societies." These were before 1875 unauthorized
by law, though they were very attractive to the members. Their
practice is usually to start afresh every January, paying a
subscription somewhat in excess of that usually charged by an ordinary
friendly society, out of which a sick allowance is granted to any
member who may fall sick during the year, and at Christmas the balance
not so applied is divided among the members equally, with the
exception of a small sum left to begin the new year with. The mischief
of the system is that, as there is no accumulation of funds, the
society cannot provide for prolonged sickness or old age, and must
either break up altogether or exclude its sick and aged members at the
very time when they most need its help. This, however, has not
impaired the popularity of the societies, and the act of 1875, framed
on the sound principle that the protection of the law should not be
withheld from any form of association, enables a society to be
registered with a rule for dividing its funds, provided only that all
existing claims upon the society are to be met before a division takes
place.
Class 8, "deposit friendly societies," combine the characteristics of
a savings bank with those of a friendly society. They were devised by
the Hon. and Rev. S. Best, on the principle that a certain proportion
of the sick allowance is to be raised out of a member's separate
deposit account, which, if not so used, is retained for his benefit.
Their advantages are in the encouragement they offer to saving, and in
meeting the selfish objection sometimes raised to friendly societies,
that the man who is not sick gets nothing for his money; their
disadvantage is in their failing to meet cases of sickness so
prolonged as to exhaust the whole of the member's own deposit.
Class 9, "collecting societies," are so called because their
contributions are received through a machinery of house-to-house
collection. These were the subject of much laborious investigation and
close attention on the part of the commissioners. They deal with a
lower class of the community, both with respect to means and to
intelligence, than that from which the members of ordinary friendly
societies are drawn. The large emoluments gained by the officers and
collectors, the high percentage of expenditure (often exceeding half
the contributions), and the excessive frequency of lapsing of
insurances point to mischiefs in their management. "The radical evil
of the whole system (the commissioners remark) appears to us to lie in
the employment of collectors, otherwise than under the direct
supervision and control of the members, a supervision and control
which we fear to be absolutely unattainable in burial societies that
are not purely local." On the other hand, it must be conceded that
these societies extend the benefits of life insurance to a class which
the other societies cannot reach, namely, the class that will not take
the trouble to attend at an office, but must be induced to effect an
insurance by a house-to-house canvasser, and be regularly visited by
the collector to ensure their paying the contributions. To many such
persons these societies, despite all their errors of constitution and
management, have been of great benefit. The great source of these
errors lies in a tendency on the part of the managers of the societies
to forget that they are simply trustees, and to look upon the concern
as their own personal property to be managed for their own benefit.
These societies are of two kinds, local and general. For the general
societies the act of 1875 made certain stringent provisions. Each
member was to be furnished with a copy of the rules for one penny, and
a signed policy for the same charge. Forfeiture of benefit for
non-payment is not to be enforced without fourteen days' written
notice. The transfer of a member from one society to another was not
to be made without his written consent and notice to the society
affected. No collector is to be a manager, or vote or take part at any
meeting. At least one general meeting was to be held every year, of
which notice must be given either by advertisement or by letter or
post card to each member. The balance-sheet is to be open for
inspection seven days before the meeting, and to be certified by a
public accountant, not an officer of the society. Disputes could be
settled by justices, or county courts, notwithstanding anything in the
rules of the society to the contrary. Closely associated with the
question of the management of these societies is that of the risk
incurred by infant life, through the facilities offered by these
societies for making insurances on the death of children. That this is
a real risk is certain from the records of the assizes, and from many
circumstances of suspicion; but the extent of it cannot be measured,
and has probably been exaggerated. It has never been lawful to assure
more than L6 on the death of a child under five years of age, or more
than L10 on the death of one under ten. Previous to the act of 1875,
however, there was no machinery for ascertaining that the law was
complied with, or for enforcing it. This is supplied by that act,
though still somewhat imperfectly. When the bill went up to the House
of Lords, an amendment was made, reducing the limit of assurance on a
child under three years of age to L3, but this amendment was
unfortunately disagreed with by the House of Commons.
Class 10, annuity societies, prevail in the west of England. These
societies are few, and their business is diminishing. Most of them
originated at the time when government subsidized friendly societies
by allowing them L4: 11: 3% per annum interest. Now annuities may be
purchased direct from the National Debt commissioners. These societies
are more numerous, however, in Ireland.
Class 11, female societies, are numerous. Many of them resemble
affiliated orders at least in name, calling themselves Female
Foresters, Odd Sisters, Loyal Orangewomen, Comforting Sisters and so
forth. In their rules may be found such a provision as that a member
shall be fined who does not "behave as becometh an Orangewoman." Many
are unregistered. In the northern counties of England they are
sometimes termed "life boxes," doubtless from the old custom of
placing the contributions in a box. The trustees, treasurer, and
committee are usually females, but very frequently the secretary is a
man, paid a small salary.
Under Class 12 the commissioners included the societies for various
purposes which were authorized by the secretary of state to be
registered under the Friendly Societies Act of 1855, comprising
working-men's clubs, and certain specially authorized societies, as
well as others that are now defined to be friendly societies. Among
these purposes are assisting members in search of employment;
assisting members during slack seasons of trade; granting temporary
relief to members in distressed circumstances; purchase of coals and
other necessaries to be supplied to members; relief or maintenance in
case of lameness, blindness, insanity, paralysis, or bodily hurt
through accidents; also, the assurance against loss by disease or
death of cattle employed in trade or agriculture; relief in case of
shipwreck or loss or damage to boats or nets; and societies for social
intercourse, mutual helpfulness, mental and moral improvement,
rational recreation, &c., called working-men's clubs.
Class 13 was composed of cattle insurance societies.
These are the thirteen classes into which the commissioners divided
registered friendly societies. There were 26,034 societies enrolled or
certified under the various acts for friendly societies in force
between 1793 and 1855; and, as we have seen, 21,875 societies
registered under the act of 1855 before the 1st January 1876, when the
act of 1875 came into operation. The total therefore of societies to
which a legal constitution had been given was 47,909. Of these 26,087
were presumed to be in existence when the registrar called for his
annual return, but only 11,282 furnished the return required. These
had 3,404,187 members, and L9,336,946 funds. Twenty-two societies
returned over 10,000 members each; nine over 30,000. One society (the
Royal Liver Friendly Society, Liverpool, the largest of the collecting
societies) returned 682,371 members. The next in order was one of the
same class, the United Assurance Society, Liverpool, with 159,957
members; but in all societies of this class the membership consists
very largely of infants. The average of members in the 11,260
societies with less than 10,000 members each was only 171.
Such were the registered societies; but there remained behind a large
body of unregistered societies. With increased knowledge of the
advantages of registration,[2] and of the true principles upon which
friendly societies should be established, the number of unregistered
societies, in comparison with those registered, ought to become much
less.
On the actuarial side it is in the highest degree essential to the
interests of their members that friendly societies should be
financially sound,--in other words, that they should throughout their
existence be able to meet the engagements into which they have entered
with their members. For this purpose it is necessary that the members'
contributions should be so fixed as to prove adequate, with proper
management, to provide the benefits promised to the members. These
benefits almost entirely depend upon the contingencies of health and
life; that is, they take the form of payments to members when sick, of
payments to members upon attaining given ages, or of payments upon
members' deaths, and frequently a member is assured for all these
benefits, viz. a weekly payment if at any time sick before attaining a
certain age, a weekly payment for the remainder of life after
attaining that age, and a sum to be paid upon his death. Of course the
object of the allowance in sickness is to provide a substitute for the
weekly wage lost in consequence of being unable to work, and the
object of the weekly payment after attaining a certain age, when the
member will probably be too infirm to be able to earn a living by the
exercise of his calling or occupation, is to provide him with the
necessaries of life, and so enable him to be independent of poor
relief. There is every reason to believe that, when a large group of
persons of the same age and calling are observed, there will be found
to prevail among them, taken one with another, an average number of
days' sickness, as well as an average rate of mortality, in passing
through each year of life, which can be very nearly predicted from the
results furnished by statistics based upon observations previously
made upon similarly circumstanced groups. Assuming, therefore, the
necessary statistics to be attainable, the computation of suitable
rates of contribution to be paid by the members of a society in return
for certain allowances during sickness, or upon attaining a certain
age, or upon death, can be readily made by an actuarial expert.
Accordingly, to furnish these statistics, the act of 1875, in
continuation of an enactment which first appeared in a statute passed
in 1829, required every registered society to make quinquennial
returns of the sickness and mortality experienced by its members. By
the year 1880 ten periods of five years had been completed, and at the
end of each of them a number of returns had been received. Some of
these had been tabulated by actuaries, the latest tabulation being of
those for the five years ending 1855. There remained untabulated five
complete sets of returns for the five subsequent quinquennial periods.
It was resolved that these should be tabulated once for all, and it
was considered that they would afford sufficient material for the
construction of tables of sickness and mortality that might be adopted
for the future as standard tables for friendly societies; and that it
would be inexpedient to impose any longer on the societies the burden
of making such returns. This requirement of the act was accordingly
repealed in 1882. The result of the tabulation appeared in 1896, in a
bluebook of 1367 folio pages, containing tables based upon the
experience of nearly four and a half million years of life. These
tables showed generally, as compared with previous observations, an
increased liability to sickness. This inference has been confirmed by
the observations of Mr Alfred W. Watson, actuary to the Independent
Order of Oddfellows, Manchester Unity Friendly Society, on his
investigation of the sickness and mortality experience of that society
during the five years 1893-1897, which extended over 800,000
individuals, more than 3,000,000 years of life and 7,000,000 weeks of
sickness.
The establishment of the National Conference of Friendly Societies by
the orders and a few other societies has been of great service in
obtaining improvements in the law, and in enabling the societies
strongly to represent to the government and the legislature any
grievance entertained by them. A complaint that membership of a shop
club was made by certain employers a condition of employment, and that
the rules of the club required the members to withdraw from other
societies, led to the appointment of a departmental committee, who
recommended that such a condition of employment should be made
illegal, except in certain cases, and that in every case it should be
illegal to make the withdrawal from a society a condition of
employment. In 1902 an act was passed based upon this recommendation.
It is an increasing practice among societies of combining together to
obtain medical attendance and medicine for their members by the
formation of medical associations. In 1895 trade unions were enabled
to join in such associations, and it was provided that a contributing
society or union should not withdraw from an association except upon
three months' notice. The working of these associations has been
viewed with dissatisfaction by members of the medical profession, and
it has been suggested that a board of conciliation should be formed
consisting of representatives of the Conference of Friendly Societies
and of an equal number of medical men.
The following figures are derived from returns of registered societies
and branches of registered societies to the beginning of 1905:
+---------------------------------------------------------+-----------+-----------+------------+
| | Number of | Number of | Amount of |
| | Returns. | Members. | Funds. |
+---------------------------------------------------------+-----------+-----------+------------+
| Ordinary Friendly Societies (classes 2 to 8, 10 and 11) | 6,938 | 3,132,065 |L17,042,398 |
| Societies having Branches (class 1) | 20,819 | 2,606,029 | 23,446,330 |
| Collecting Friendly Societies (class 9) | 45 | 7,448,549 | 7,862,569 |
| Benevolent Societies (class 12) | 75 | 26,509 | 317,913 |
| Working Men's Clubs (class 12) | 913 | 236,298 | 318,945 |
| Specially Authorized Societies (class 12) | 122 | 75,089 | 628,759 |
| Specially Authorized Loan Societies (class 12) | 517 | 115,511 | 771,578 |
| Medical Societies (see last paragraph) | 95 | 324,145 | 62,049 |
| Cattle Insurance Societies (class 13) | 57 | 3,736 | 7,746 |
| Shop Clubs (under act of 1902) | 7 | 10,859 | 773 |
| +-----------+-----------+------------+
| | 29,588 |13,978,790 |L50,459,060 |
+---------------------------------------------------------+-----------+-----------+------------+
_British Empire._--In many of the British colonies legislation on the
subject similar to that of the mother-country has been adopted. In those
forming the Commonwealth of Australia and in New Zealand the affiliated
orders hold the field, there being few, if any, independent friendly
societies. The state of Victoria has more than 1000 lodges with more
than 100,000 members and nearly 1-1/2 million pounds funds, averaging
nearly L14 per member. Besides the registrar there is a government
actuary for friendly societies, by whom the liabilities and accounts of
all societies are valued every five years, a method which ensures
uniformity in the processes of valuation. The friendly societies in the
other Australasian states are not so numerous nor so wealthy, but are in
each case under the supervision of vigilant public officials. In New
Zealand a friendly society was established at New Plymouth in 1841, the
first year of that settlement. The formation of a society at Nelson was
resolved upon by the emigrants on shipboard on their passage out, and
the first meeting was held among the tall fern near the beach a few days
after they landed. The societies have now a registrar, an actuary, a
revising barrister and two public valuers. Investigations have been made
into their sickness experience, with results which compare favourably
with those of the Manchester Unity and the registry office in the
mother-country until the higher ages, when greater sickness appears to
result from lower mortality. The average funds per member are L19, 10s.
Nearly four-fifths are invested in the purchase or on mortgage of real
estate.
In Cape Colony no society is allowed to register unless it be shown to
the satisfaction of the registrar that the contributions which it
proposes to charge are adequate to provide for the benefits which it
undertakes to grant. The consequence is that little more than one-third
of the existing societies are registered.
In the Dominion of Canada, province of Ontario, extensive powers of
control are given to the registrar, and societies are not admitted to
registry without strict proof of their compliance with the conditions of
registry imposed by the law. Very full returns of their transactions are
required and published, and registry is cancelled when any of the
conditions of registry cease to be observed. These conditions apply not
only to societies existing in Ontario, but to foreign societies
transacting business there.
In several of the West Indian Islands statutes have been passed on the
model of British legislation and registrars have been appointed.
_European Countries._--In foreign countries the development of friendly
societies has proceeded upon different lines. Belgium has a _Commission
royale permanente des societes de secours mutuel_. Under laws passed in
1851 and 1894 societies are divided into two classes, recognized and not
recognized. The recognized societies were in 1886 only about half as
many as the unrecognized. There were in 1904 nearly 7000 recognized
societies with 700,000 members. They enjoy the privileges of
incorporation, exemption from stamp duty, gratuitous announcement in the
official Moniteur and may have free postage.
In France under the second empire a scheme was prepared for assisting
friendly societies by granting them collective insurances under
government security. The societies have the privilege of investing their
funds in the Caisse des Depots et Consignations, corresponding to the
English National Debt commission. The dual classification of societies
in France is into those "authorized" and those "approved." By a law of
the 1st of April 1898 a friendly society may be established by merely
depositing a copy of its rules and list of officers with the sousprefet.
Approved societies are entitled to certain state subventions for
assisting in the purchase of old-age pensions and otherwise. A higher
council has been established to advise on their working.
In Germany a law was passed on the 7th of April 1876 (amended on the
1st of June 1884) which prescribed for registered friendly societies
many things which in England are left to the discretion of their
founders; and it provided for an amount of official interference in
their management that is wholly unknown here. The superintending
authority had a right to inspect the books of every society, whether
registered or not, and to give formal notice to a society to call in
arrears, exclude defaulters, pay benefits or revoke illegal resolutions.
A higher authority might, in certain cases, order societies to be
dissolved. These provisions related to voluntary societies; but it was
competent for communal authorities also to order the formation of a
friendly society, and to make a regulation compelling all workmen not
already members of a society to join it. Since then the great series of
imperial statutes has been passed, commencing in 1883 with that for
sickness insurance, followed in 1884 by that for workmen's accident
insurance, extended to sickness insurance in 1885, developed in the laws
relating to accident and sickness insurance of persons engaged in
agricultural and forestry pursuits in 1886, of persons engaged in the
building trade and of seamen and others engaged in seafaring pursuits in
1887, and crowned by the law relating to infirmity and old-age insurance
in 1889. Mr H. Unger, a distinguished actuary, remarks that the whole
German workman's insurance and its executive bodies (sickness funds,
trade associations, insurance institutions) are constantly endeavouring
to improve the position of the workmen in a social and sanitary aspect,
to the benefit of internal peace and the welfare of the German empire.
In Holland it is stated that the number of burial clubs and sickness
benefit societies appears to be greater in proportion to the population
than in any other country; but that the burial clubs do not rest upon a
scientific basis, and have an unfavourable influence upon infant
mortality. Half the population are insured in some burial club or other.
The sick benefit societies are, as in England, some in a good and some
in a bad financial condition; and legislation follows the English system
of compulsory publicity, combined with freedom of competition.
In Spain friendly societies have grown out of the religious gilds. They
are regulated by an act of 1887. Their actuarial condition appears to be
backward, but to show indications of improvement. (E. W. B.)
_United States._--Under the title of fraternal societies are included in
the United States what are known in England as friendly societies,
having some basis of mutual help to members, mutual insurance
associations and benefit associations of all kinds. There are various
classes and a great variety of forms of fraternal associations. It is
therefore difficult to give a concrete historical statement of their
origin and growth; but, dealing with those having benefit features for
the payment of certain amounts in case of sickness, accident or death,
it is found that their history in the United States is practically
within the last half of the 19th century. The more important of the
older organizations are the Improved Order of Red Men, founded in 1771
and reorganized in 1834; Ancient Order of Foresters, 1836; Ancient Order
of Hibernians of America, 1836; United Ancient Order of Druids, 1839;
Independent Order of Rechabites, 1842; Independent Order of B'nai
B'rith, founded in 1843; Order of the United American Mechanics, 1845;
Independent Order of Free Sons of Israel, 1849; Junior Order of United
American Mechanics, 1853. A very large proportion, probably more than
one-half, of the societies which have secret organizations pay benefits
in case of sickness, accident, disability, and funeral expenses in case
of death. This class of societies grew out of the English friendly
societies and have masonic characteristics. The Freemasons and other
secret societies, while not all having benefit features in their
distinctive organizations, have auxiliary societies with such features.
There is also a class of secret societies, based largely on masonic
usages, that have for their principal object the payment of benefits in
some form. These are the Oddfellows, the Knights of Pythias, the Knights
of Honour, the Royal Arcanum and some others. Many trade unions have now
adopted benefit features, especially the Typographical Union, while
many subordinate unions and great publishing houses have mutual relief
associations purely of a local character, and some of the more important
newspapers have such mutual relief or benefit societies. The New York
trade unions, taken as a whole, have paid out large sums of money in
benefits where members have been out of work, or are sick, or are on
strike or have died. The total paid in one year for all these benefits
was over $500,000.
It is impossible to give the membership of all the fraternal
associations in the United States; but, including Oddfellows,
Freemasons, purely benefit associations and all the class of the larger
fraternal organizations, the membership is over 6,000,000. Among the
more important, so far as membership is concerned, are the Knights of
Pythias, the Oddfellows, the Modern Woodmen of America, the Ancient
Order of United Workmen, Improved Order of Red Men, Royal Arcanum,
Knights of the Maccabees, Junior Order of United American Mechanics,
Foresters of America, Independent Order of Foresters, &c. These and
other organizations pay out a vast amount of money every year in the
various forms.
Assessment insurance.
Since about the year 1870 a new form of benefit organization has come
into existence. This is a life insurance based on the assessment plan,
assessments being levied whenever a member dies; or, as more recently,
regular assessments being made in advance of death, as post-mortem
assessments have proved a fallacious method of securing the means of
paying death benefits. There are about 200 mutual benefit insurance
companies or associations in the United States conducted on the "lodge
system"; that is to say, they have regular meetings for social
purposes and for general improvement, and in their work there is found
the mysticism, forms and ceremonies which belong to secret societies
generally. These elements have proved a very strong force in keeping
this class of associations fairly intact. The "work" of the lodges in
the initiation of members and their passing through various degrees is
attractive to many people, and in small places, remote from the
amusements of the city, these lodges constitute a resort where members
can give play to their various talents. In most of them the features
of the Masonic ritual are prominent. The amount of insurance which a
single member can carry in such associations is small. In the Knights
of Honour, one of the first of this class, policies ranging from $500
to $2000 are granted. In the Royal Arcanum the maximum is $3000. This
form of insurance may be called co-operative, and has many elements
which make the organizations practising it stronger than the ordinary
assessment insurance companies having no stated meetings of members.
These co-operative insurance societies are organized on the federal
plan--as the Knights of Honour, for instance--having local assemblies,
where the lodge-room element is in force; state organizations, to
which the local bodies send delegates, and the national organization,
which conducts all the insurance business through its executive
officers. The local societies pay a certain given amount towards the
support of the state and national offices, and while originally they
paid death assessments, as called for, they now pay regular monthly
assessments, in order to avoid the weakness of the post-mortem
assessment. The difficulty which these organizations have in
conducting the insurance business is in keeping the average age of
membership at a low point, for with an increase in the average the
assessments increase, and many such organizations have had great
trouble to convince younger members that their assessments should be
increased to make up for the heavy losses among the older members. The
experience of these purely insurance associations has not been
sufficient yet to demonstrate their absolute soundness or
desirability, but they have enabled a large number of persons of
limited means to carry insurance at a very low rate. They have not
materially interfered with regular level premium insurance
enterprises, for they have stimulated the people to understand the
benefits of insurance, and have really been an educational force in
this direction.
Railway relief departments.
A modern method of benefit association is found in the railway relief
departments of some of the large railway corporations. These
departments are organized upon a different plan from the benefit
features of labour organizations and secret societies, providing the
members not only with payments on account of death, but also with
assistance of definite amounts in case of sickness or accident, the
railway companies contributing to the funds, partly from philanthropic
and partly from financial motives. The principal railway companies in
the United States which have established these relief departments are
the Pennsylvania, the Philadelphia & Reading, the Baltimore & Ohio,
the Chicago, Burlington & Quincy, and the Plant System. The relief
department benefits the employes, the railways, and the public,
because it is based upon the sound principle that the "interests and
welfare of labour, capital and society are common and harmonious, and
can be promoted more by co-operation of effort than by antagonism and
strife." The railway employes support one-twentieth of the entire
population, and most of their associations maintain organizations to
provide their members with relief and insurance. The Brotherhood of
Locomotive Engineers, the Order of Railway Conductors of America, the
Brotherhood of Locomotive Firemen, the Brotherhood of Railway
Trainmen, the Brotherhood of Railway Trackmen, the Switchmen's Union,
the Brotherhood of Railway Carmen, and the Order of Railway
Telegraphers, all have relief and benefit features. The oldest and
largest of these is the International Brotherhood of Locomotive
Engineers, founded at Detroit in August 1863. Like other labour
organizations of the higher class of workmen, the objects of the
brotherhoods of railway employes are partly social and partly
educational, but in addition to these great purposes they seek to
protect their members through relief and benefit features. Of course
the relief departments of the railway companies are competitors of the
relief and insurance features of the railway employes orders, but both
methods of providing assistance have proved successful and beneficial.
For a history of the various American organizations, see Albert C.
Stevens, _The Cyclopaedia of Fraternities_ (New York, 1899); _Facts
for Fraternalists_, published by the _Fraternal Monitor_, Rochester,
N.Y.; for annual statements, "The _World_ Almanac," "Railway Relief
Departments," "Brotherhood Relief and Insurance of Railway Employes,"
"Mutual Relief and Benefit Associations in the Printing Trade,"
"Benefit Features of American Trade Unions," _Bulletins_ Nos. 8, 17,
19 and 22 of the U.S. Department of Labour. (C. D. W.)