ON GOVERNMENT INSURANCE AND GOVERNMENT LIFE ANNUITIES.
"It is difficult to estimate too highly the importance of
the tendency of the people to save their earnings, or the
duty of removing every obstacle and affording every
facility to its operation. It is a matter of deep interest
to the State; for the man who has invested a portion of
his earnings in securities,--to the permanence and safety
of which the peace and good order of society are
essential,--must be a tranquil and conservative
citizen."--W. RATHBONE GREG.
"Ah! who can tell how many a soul sublime
Has felt the influence of malignant star,
And waged with fortune an eternal war!
Checked by the scoff of pride and envy's frown,
Or poverty's unconquerable bar,
In life's low vale remote, has pined alone
And dropt into the grave unpitied and unknown."--BEATTIE.
Proposals for a Government Insurance Office, like those for National
Savings Banks, are not, as many have been led to think, the product of
the thought of the last few years. In 1807, for example, Mr.
Whitbread, in bringing forward his Bill for Poor Law Reform, earnestly
advocated, that, together with his plan for the investing of their
savings, some means should be provided for the poorer classes by which
they might insure their lives under the responsibility of Government.
Both as regards his plan of Savings Banks and his plan for Government
Insurance, Mr. Whitbread was fully half a century before his age. The
different schemes for the purchase of Government Annuities and the
Acts under which they were carried out are already familiar to the
reader. The Act of 1834 we may repeat, however, was the beginning of
legislation on the subject. The principal emendation[195] in the Act
16 and 17 Victoria, c. 45, passed in 1853, was supposed to be in the
introduction of a clause providing that a person buying a Government
Annuity could also insure the payment of a sum of money at death.
Notwithstanding this amendment, the Act was not nearly so productive
of good as might have been expected. In the matter of Insurances
effected under the arrangements of 1853, the Act has been for all
practical purposes quite inoperative; and from 1834 to 1864 the whole
of the annual payments in respect to Annuities did not reach
200,000_l._ In the latter year 6,500 annuities were in force, the
amount represented by this number being 140,000_l._ This is, in brief,
an account of how matters stood in 1864; and it is little wonder that
it should now begin to be felt that some fresh steps were required;
that there should be an entirely new organization for the work; and
the abolition of all unnecessary restrictions, especially that which
required that a person must deal perforce both in insurances and
annuities. The institution of Post Office Banks, which had been
rendered possible by the superior organization consequent on the
introduction of postage reform, had already demonstrated how the Post
Office machinery could reach every part of the country, and how well
it could bear the additional weight put upon it. Nor was this all.
From the experience of two or three years, those who were best able to
judge of the burden this machinery could bear without difficulty were
those who now proposed to add fresh wheels and contrivances to be
worked by the already existing motive power.
A few words will suffice to show how the further proposals which we
have to describe in this chapter were originated. Government Annuities
at this time were, under the authority of an Act spoken of in a
previous chapter, allowed to be granted either directly through the
National Debt Office or through the medium of the ordinary Savings
Banks. To a certain extent many of the Savings Banks had availed
themselves of this Act, and granted both Immediate and Deferred
Annuities. Among the banks which, as we have already shown,
transferred their business to the Post Office Savings Banks soon after
the establishment of the latter, were some which had done a little of
this business; the question thereupon arose whether the Post Office
Banks should not take up the duty which devolved on the old banks, and
receive the payments for the Annuities as they fell due. The result of
this was, that the gentlemen who in the Post Office had organized and
so far directed the machinery of the Postal Banks not only proposed to
carry on the business which others had in this way begun, but they
advised that the operations themselves should be extended, and that
this extension would be a legitimate offshoot of their original
scheme. Mr. Scudamore and Mr. Chetwynd, the gentlemen in question,
held that if the Post Office Banks were to become agencies for the
purchase and payment of Annuities, there would be a considerable
increase in the number purchased. They then proceeded to sketch the
outline of a plan on which it would be possible to undertake the work,
and showed how the course of the business in respect to the Annuities
would be easy, simple, and comparatively inexpensive. The most
important feature of the plan was, that the purchase and payment on
account of Government Annuities should have no immediate connexion
with the Post Office Savings Banks; and that the purchasers of the
former should not necessarily be depositors in the latter.
With regard to Insurances, the following sentence occurs in a report
which, referring to Mr. Whitbread's proposals, the same gentlemen
presented. "We believe that the time may come when the propriety of
attaching to the Post Office Savings Banks a scheme of Life Assurance
will again be seriously considered by the Legislature. The frequent
appearance and disappearance of bubble insurance companies, which have
been productive of very disastrous consequences during the last few
years, may probably induce a serious consideration of the subject at
no very distant date."
When the Commissioners of the National Debt came to speak of the
former of these proposals, they reported "that in their judgment, the
greater the extent to which the system of annuities can be carried,
the greater will be the amount of benefit conferred on that class of
the community on whose behalf and for whose security it was the
pleasure of Parliament to authorize the grant of such Annuities
through Savings Banks and by this department. The machinery of the
Post Office will give the opportunity to Lord Stanley largely to
extend these benefits, and the Commissioners will gladly unite with
him in doing so."
On the 11th of February, 1864, Mr. Gladstone took up this further
scheme--the matter of Insurances and Annuities having been combined in
the plan of operations prepared, during the interval. He then moved
for leave to bring in a "Bill to amend the laws relating to the
purchase of Government Annuities through the medium of Savings Banks."
The Chancellor of the Exchequer briefly explained his object in
bringing about the new measure. He wished, without any unnecessary
interference with private establishments, to assist in offering
increased facilities for the extension of frugal habits among the
industrial population. This had been the principle upon which Postal
Banks had been founded, and now this new scheme might be regarded as
an extension of the principle. Mr. Gladstone wished, "under the
altered circumstances of the times and the improved machinery at
command, to further other measures intimately connected in their
ultimate object with the Savings Banks themselves." Sums, he
explained, could at present be received both for the purchase of
annuities, and even for the granting of life insurance policies, but
the arrangements were hampered by restrictions so as to render the law
almost inoperative. Thus, Deferred Annuities could only be purchased
in large amounts, and Insurances could only be effected where the
persons had previously purchased these Annuities. He thought it quite
possible to alter the system so that _small_ sums at frequent
intervals might be received; and not only so, but the restriction as
to effecting an Insurance, which was not only inconvenient, but
unreasonable in itself, might be done away with. The person who wanted
an Insurance was not the most likely person to want an Annuity also;
they were, indeed, generally people of different classes, or at any
rate different habits of mind. The Chancellor of the Exchequer, after
stating that he would give these increased facilities and remove this
unnecessary restriction, obtained leave to proceed with the
measure.[196]
His simple statement of the scheme was not long in securing ample
criticism; some of it was friendly, much more of it adverse. Then a
certain class of Insurance Offices and the principal Friendly Society
organizations believing their institutions menaced, set to work to get
up an agitation. The measure was represented by one class of persons
as embodying the very questionable principle of Government
interference with private enterprise, and taking as it were the bread
out of the mouth of institutions specially got up for such purposes.
Others pretended to criticize the proposals disinterestedly; they
dwelt on the difficulty the Post Office would find in attempting to do
the work, and that, if officers of higher attainments were obtained,
they would require proportionately higher remuneration. Savings Bank
deposits _might_ be managed, though that was not thought likely three
years before; but how all the details of Life Insurance proposals and
the intricate calculations necessary to the Annuities business could
be got through, was above comprehension! It was represented by leading
articles in influential papers that there would be but a poor security
against fraud; little supervision, and probably that little would not
be exerted; and everybody would conspire to defraud the Government.
"As it is intended," said one respectable organ, "to assure the lives
of the poorer classes chiefly, all payers of poor-rates and officers
of the Poor Law Unions would have a bias, _to say the least_, in
getting those persons assured who would otherwise be likely to leave
their families a burden upon the parochial funds." "It cannot be
denied that a few isolated instances of bad faith have occurred among
insurance companies, yet as a class there is none to excel them for
high and honourable dealing, and there is no pretence for interfering
with their operations or invading their privileges. Why should not
Government open a drapery or a dry-goods store?" This latter effusion,
which appeared in a letter to the _Times_, was prominently printed,
and headed, "A New Instance of Proposed Paternal Legislation."[197] A
more organized opposition soon, however, showed its face. The
actuaries of some of the Insurance Companies met and discussed the
measure, and came to the conclusion that, as it might only be the thin
end of the wedge, the measure ought to be opposed. The smaller
Insurance Companies eagerly fell in with this conclusion. During March
petitions were got up in great numbers from Insurance Companies and
Benefit Societies, and when they were presented to the House of
Commons several voices were raised in support of their prayer.
On the 4th of March, Mr. Gladstone moved the committal of the bill.
Mr. Turner, Mr. Powell, Mr. T. Hankey, Sir Minto Farquhar, and several
other members, protested against going on with the bill without an
opportunity for full discussion, and most of them expressing great
dissatisfaction with the Government proposals relating to Life
Insurance, the Chancellor endeavoured to separate the bill into two
parts, to pass that having reference to Annuities, and to defer the
consideration of the clauses relating to Insurances to a subsequent
period. The debate was adjourned.
Three days afterwards Mr. Gladstone made a long and elaborate speech
in defence of his proposals, and addressed himself with great
earnestness and power to the task of disabusing the public mind of the
many erroneous impressions which within a very short time had taken
possession of it. The history of his proposals was a short and simple
one. In the autumn of the previous year the Registrar of Friendly
Societies, in his Report for 1862, had recorded an unusual number of
very gross abuses and violations of trust on the part of those
Societies. The Report was in fact full of a multitude of complaints
from persons in all parts of the country, who called for redress. So
important had the facts been regarded that at least two important
journals[198] had published several articles calling attention to the
scandalous condition of these institutions. It had been suggested to
him (Mr. Gladstone) that the subject of small life assurances, having
already received in principle the sanction of Parliament, ought, under
these circumstances, and the fact of an excellent machinery in
connexion with the Post Office being ready for use, to be again
considered by the Government. He agreed with this view of the case,
and had now proposed to take action upon it. It is almost impossible
to give an account in detail of the speech which followed; next to the
Budget speech, it was the longest which Mr. Gladstone made in the
session of 1864. We can, however, and ought to describe its principal
points. Mr. Gladstone observed that no one considered Savings Banks,
Annuities, or Insurances to be, abstractedly, matters desirable for
the Government to deal with. But the Post Office Savings Banks which
that House had legalized, though interfering distinctly with other
interests, had produced great and lasting results; so likewise had the
Factory Acts, though they likewise had greatly interfered with the
liberty of private action. This bill, however, prohibited nothing
whatever. "I do not deny that it is Government interference, or that
it requires justification or apology; but I do deny that we are to be
frightened and terrified by clamours respecting centralization, or
respecting undue assumptions of power by the Executive." "All that is
requisite in such a case is to show that what the Government proposes
it can do safely, and likewise that what it proposes it can do
justly." Well, this bill, which was represented as entirely novel in
principle, simply offered to such members of the community as chose to
avail themselves thereof, certain facilities for self-help. It had not
grown out of any consideration of the case of Assurance Societies, but
from a consideration of Friendly Societies, and of the wholesale
deception, fraud, and swindling perpetrated upon a helpless and
defenceless portion of the community.
Mr. Gladstone then referred to some deputations of the largest
Friendly Societies that had waited upon him, and begged him not to
interfere "with private trade and private enterprise;" and answered
that these very societies were virtually and substantially subsidized
by the Government. After showing that they were exempted from
different duties, and received, like Savings Banks, more interest from
the money invested with Government than the money realized, Mr.
Gladstone held that nothing could be more plain than that Parliament
was justified in looking to their circumstances. The country was
overrun with them, and it was necessary to inquire if they were safe.
Instead of finding them safe, he found them promising to pay amounts
of interest which it was impossible to pay under fair and honest
management. Such were the reasons which had induced him to interfere.
He had, however, chosen a very mild form of intervention, and, he
thought, a proper time for the remedy. The remedy, indeed, in this
case was precisely analogous to that adopted in the case of the Post
Office Banks.
"In the case of the Post Office Savings Banks," said the
right hon. gentleman, "we had to deal with Loan Societies
offering the most attractive terms to the public,
promising them a rate of interest which could not possibly
be paid under any sound and honest management, and then
ending in disappointment or ruin. We did not attempt the
foolish task of prescribing laws by which all Loan
Societies should be regulated, and under which alone the
poorer classes of the community should be permitted to
lend their money. That was utterly impossible. You could
not possibly defend the poor man against the abuses and
dangers into which he might choose to run head foremost
with his eyes open; but what you did was this:--you said,
'It is but just to them, and it is expedient and politic
in the highest sense, in discharge of the most sacred duty
of the Legislature, that we should give to the poor man,
to the owner of small savings, the advantage of a scheme
which will possess no meretricious attractions, which will
not promise a high rate of interest--on the contrary, the
rate will be a low one--but which will offer an absolutely
certain security.' That is precisely the basis of the
scheme now before the House."
After describing the success of the Postal Banks, and speaking of
those who had taken the principal part in carrying the measure into
practical operation, and arguing from their success, their ability,
and their judgment, that the same persons were entitled to the
confidence of Parliament, Mr. Gladstone went on to rebut many of the
objections and arguments which had been advanced against the plan. He
showed that the Post Office could, equally with the great majority of
existing Insurance Societies, attend to the selection of good lives;
that the attitude of the leading Societies in regard to his proposals
was either that of neutrality or favour. He said that the smaller
Societies had protested loud enough; but, he asked, what cause had
they to be afraid of Government competition? "We cannot possibly offer
such terms as they can; on the contrary, we must exact such conditions
as few private Societies ask." He offered, however, perfect security;
and if that was a thing valued by the people, there was no reason why
it should be withheld. Besides, however, this perfect security, Mr.
Gladstone pointed to two other considerable advantages which the
Government would offer, viz., more favourable terms on the dropping in
of policies, and facilities for the migratory portion of the
population, similar to those we have seen depositors possess in the
case of the Post Office Banks.
After speaking of the steps which would have to be taken to guard the
Government against loss, and to make the measure entirely
self-supporting; after referring to what he called the "fugitive
character" of many insurance companies, and eloquently denouncing
their proceedings; to the failure of numerous Friendly Societies,[199]
and the ruin and disappointment entailed on thousands thereby, Mr.
Gladstone brought his long and remarkable speech to a conclusion by
summing up as follows:[200]--
"I have endeavoured to prove that Parliament by
legislation is seriously compromised and responsible for
the present state of things, and is bound to do what it
believes to be best to mitigate the evils of that state of
things. I have endeavoured to show that the plan which I
propose, if it does compete with sound institutions, must
so compete with them at a disadvantage from the essential
conditions under which it is right and proper we must
work. I have endeavoured to show that the wide field of
the labouring classes is not occupied by sound
institutions--nay, that it is not fully occupied even by
sound and unsound institutions, such is the enormous
breadth of the subject. I have shown, I think, that the
present condition of many of these Friendly
Societies--indeed, I might go further, and, speaking
generally, might say that the present condition of these
Societies is more or less unsatisfactory. Some of them we
cannot call merely unsatisfactory, but must term them
either rotten or fraudulent. It is impossible for the
State to assume the direction and regulation of these
Societies so as to secure in the management of their
affairs a safe method of assurance; and what we propose
is, I believe, the most prudent, the safest, and the most
satisfactory mode of proceeding that can be adopted. I
make my appeal not to any one class, or to any party. I
forget that I am a member of the Government, except so far
as regards my responsibility as such. I recollect the
sacred trust we have in hand, and I entreat honourable
members to keep in view the serious nature of that trust,
the importance of the object, and the consequences
involved; and I am certain they will not be prevented by
any sentiment of political or party feeling, or of
hostility to the Government, from giving their careful
consideration to this question, and from determining in
their own minds and hearts how the British Legislature can
best acquit itself of this important part of its
obligations to the mass of the British people."
_Mr. Sheridan_, after replying vehemently to what he called a personal
attack on himself on the part of the Chancellor of the Exchequer when
dealing with unsound societies, disputed the need for the measure no
less than the principle upon which it was founded. As the spokesman of
Insurance Offices and Friendly Societies, Mr. Sheridan further
contended that the Post Office would never be able to manage all the
details of the business, and that, even if it did, the Government must
eventually be losers. "They might shut their eyes for a time," said
the member for Dudley, "but Government would ultimately have to come
to that House with shame, and with something like humiliation, to
confess that their experiment in commerce had failed, and that the
result had been to saddle the shareholders with a loss--those
shareholders being the already overburdened taxpayers of the country."
_Lord Stanley_ avowed his approval of the principles of the bill. He
thought it a great experiment, but an experiment which might very
possibly result in a reduction of pauperism. He urged the fullest
discussion; said it would do the bill no harm, but might on the
contrary tend to perfect its provisions. The speech of Mr. Gladstone
too, he thought, was a reason why the matter should not be hurried.
Mr. Gladstone had made statements which, however true they might
be--"and I am afraid that there is a good deal of truth in them--I
wish I did not think so,"--might require to be answered, and to give
an opportunity to answer them would only be fair play. After pointing
out one or two defects in the provisions, Lord Stanley promised his
valuable aid by saying, that he should be prepared to go into
Committee on the bill with a very sincere hope that it would pass, and
that they might find it, or make it, a workable scheme. _Mr. Hibbert_
and _Mr. Roebuck_ both warned the House against suffering a
"Constitutional Government" to be converted into what was termed a
"Paternal Government." In a characteristic speech, the latter
gentleman held that whatever concerned the individual was best left to
be done by the individual himself; that the Government was sure to
fail, as it had failed before, in interfering in matters of this kind;
and that the effect of such measures would be to make the people a set
of helpless imbeciles totally incapable of attending to their own
interests. _Mr. Newdegate_ and _Mr. W. E. Forster_ approved the
measure, but urged full consideration of it. _Mr. Bovill_ spoke very
strongly in favour. He believed, from the facts which had come within
his own knowledge and had been elicited in courts of law, that Mr.
Gladstone had rather understated than overstated the delinquencies of
Friendly Societies and Insurances Companies. One of the effects of the
Chancellor's speech, he thought, would be that a cloud of error and
prejudice which had been raised against the bill would be dispelled.
On the other hand, Sir Minto Farquhar, Mr. Ayrton, Mr. Urquhart, Mr.
Henley, Mr. Baines and others, either expressed strong objections to
the bill as a whole, or else took exceptions to some of its
provisions. The debate was then adjourned.
During the interval, and when the bill was under discussion in the
House, a great meeting of the working classes was called in London,
and held in Exeter Hall, Mr. Ayrton presiding. The object of the
gathering was to petition against the measure; but independent working
men--by which is meant those who had no interested motives in opposing
the scheme--mustered so strongly on the other side, that the Chairman
could not decide on which side the majority lay. There were other
public meetings held, some in favour, others in opposition; and
although hundreds of petitions were presented from members of Friendly
Societies, most of which were got up on one form, there were many
others of a far more important character emanating from Corporations
and Boards of Guardians, who expressed a hope that the House would not
withhold so great a boon to the working classes.
On the 17th of March, _Sir Minto Farquhar_, in a long speech, moved
that the bill should be referred to a Select Committee. _Mr. Horsfall_
seconded the motion. Both members replied to Mr. Gladstone's attack on
Friendly Societies, though with little effect. Several members warmly
supported Mr. Gladstone, and thought no cause had been shown for
delay. _Mr. Estcourt_, while approving the principles of the measure,
saw great difficulties about it, and thought it ought to be referred
to a Committee. _Mr. Göschen_, in an able speech, which showed that he
had mastered the subject in all its bearings, answered the objections
which had been raised to the bill, and said that though he represented
in that House more insurance managers and directors than any other
member, he was not afraid to say that the opposition to the bill was
entirely owing to the efforts of those who fancied it would deal a
blow at their private interests. He was convinced of the wisdom and
policy of the measure, which was well worthy of the character of the
right honourable gentleman who had proposed it, and which would
without doubt leave a mark on the history of the session. The debate
was again adjourned.
A month afterwards the debate was resumed by _Mr. Ayrton_ in a very
long speech, during which he attacked the Post Office Savings Bank
system; stated that just when they were most prosperous, 1859 and
1860, Government had brought out their scheme, which was working and
would continue to work with telling effect upon the old banks. So with
the present proposals; they would interfere with safe private
agencies. "The Government would pursue a much better plan," continued
Mr. Ayrton, "if they were to encourage the establishment of
associations among the people themselves; for it was through the
exercise of local administration that a nation became most fitted for
the enjoyment of political rights." In place of this, "they proposed
to place a stipendiary of the Crown in every parish and hamlet to
institute an examination into the private affairs of individuals."
_Mr. Hubbard_ thought the proposed measure one which they ought and
might very well entertain. He looked upon it simply as an extension of
the principle of the Post Office Savings Banks, which had now received
the sanction of the entire country.
_Mr. Gladstone_ then replied. After referring to some of the
objections that had been made to the measure itself, he said he would
not object to submit it to a Select Committee; but he could not
consent to refer the whole subject-matter to a Committee, as that
would indefinitely postpone legislation on it. He believed that the
public were growing more and more in favour of the plan, and that this
feeling would be increased as its objects and provisions became better
understood. He also stated that, during his long public life, he
himself had never received so many letters as he had upon this measure
from all classes of the community, and all expressing approval and
gratitude for it. A few days afterwards a Committee was appointed, to
consist of Mr. Gladstone, Mr. S. Estcourt, Mr. M. Gibson, Mr. Henley,
Sir M. Farquhar, Sir S. Northcote, Mr. Horsfall, Mr. Göschen, Mr.
Charles Turner, Mr. H. Herbert, Mr. Hubbard, Mr. Sheridan, Mr. Ayrton,
Mr. Hodgkinson, and Mr. Paget.[201] After an ineffectual attempt to
enlarge the scope of the inquiry, which partook of the nature almost
of a party struggle,--104 members voting with Sir M. Farquhar, and 127
with the Government--the Committee commenced its sittings.
The bill as amended by the Committee was passed on the 20th of June.
On this occasion many of its members described the benefit which the
bill had received from the inquiry, and none now complained of the
limited nature of that inquiry. It originally consisted of three
clauses; it came out with seventeen, sixteen of which were new. It
provided that no policy of Life Assurance should be granted for more
than 100_l._; and, not to interfere unnecessarily with Friendly
Societies, that none should be granted for less than 20_l._ _Mr.
Estcourt_, especially, warmly espoused the measure. "No one now more
desired to see it passed than he did. If a master or employer wished
to make a provision by way of annuity for a faithful servant in his
old age, he could do so with perfect security under the bill." He also
thought, "that if the working classes of this country did not derive
great advantage from the measure, it would be their own fault." _Sir
M. Farquhar_ was equally hearty in his praise of the scheme, and
speaking of Mr. Gladstone said, "The country had every reason to thank
him." Mr. Gladstone observed, that it was a matter of great
satisfaction to him that as the bill entered the House in peace and
quietness, so it was likely to quit it with general expressions of
good will.
The bill was carried through the Lords under the charge of Lord
Stanley of Alderley, and, passing through its several stages without
discussion, received the Royal Assent July 14, 1864, and arrangements
were ordered to be made to carry its various clauses into practical
operation.
During the long recess the Tables were prepared under the eye of the
Commissioners for the Reduction of the National Debt; and, working in
harmony with the Commissioners and with a common purpose, the Post
Office authorities at the same time arranged the Regulations under
which, and the organization by means of which, the whole of the plans
should be carried out. The Regulations themselves were, we understand,
arranged under the immediate superintendence of Mr. Scudamore, one of
the two gentlemen who organized the Post Office Banks; the machinery
chosen for the purpose was that of the Receiver and Accountant-General's
department. At the commencement of the session of 1865 both the Tables
and the Regulations were laid before Parliament and received the
proper sanction. The Tables, like all ordinary Insurance Tables, show
the various kinds of benefit which Government can now offer to the
community, and the price at which these benefits may be purchased. The
Regulations, on the other hand, describe the means to be used to
obtain these benefits, and give in full the conditions under which any
kind of purchase may be made.[202]
The principal features of the new measures taken together may be
stated, simply, to consist in a person now being able to insure his
life for any sum between 20_l._ and 100_l._; that he does this on
Government security; that he may do it without buying an annuity; that
he may pay his premiums of insurance in almost any amount, and at
almost any period that will best suit his convenience; and lastly,
that, attended with the same facilities and advantages which only an
institution like the Post Office can offer, a person may now purchase
a Government Annuity, either immediate or deferred, of not more than
50_l._ a year, either with or without the proviso of "money being
returnable" in the event of death before the annuity falls due.
* * * * *
It only remains for us to seek to draw the attention of our readers to
the special inducements which the Government now holds out to the
practice of a wise economy and frugality, prefacing our account with
the remark that a careful study of the "Regulations" from which we
glean it, will well repay any time or thought which the masters of
workmen, as well as working men themselves, may give to them.
And first as to _Insurances_. In the course of a short period,--for
the offices for the transaction of both kinds of business are being
opened rapidly,--every one of the three thousand and odd money-order
offices of the United Kingdom, embracing, as is well known, every
large village as well as the numerous receiving offices of our large
towns, will be formed into an Insurance Agency. When this is the
case,--and to a great extent it is so already,--any person, whether
male or female, and _both_ if man and wife, of not less than sixteen
years of age and not more than sixty, will be able to propose for an
insurance on his or her life in a sum of not less than 20_l._ and not
more than 100_l._ The steps which a person proposing to insure must
take in those places already on the list, and the steps which must
universally be taken when the whole of the agencies are arranged, may
be easily comprehended, and need but few words. If he wants to insure
on the security of Government, he must go to the nearest Post Office
and apply for the proper printed form. With this form, to which is
attached every necessary instruction for his guidance, almost all his
trouble begins and ends. It is true that the questions propounded are
many, and that they are most minute, and may be thought by the poorer
classes who are unused to this sort of thing unnecessarily precise and
tantalizing. Any one, however, familiar with the routine of the
ordinary Insurance Societies, will not fail to see that the Government
are scarcely more rigid than they are, and that, if there are more
questions to be answered, it is simply because of the varied modes and
unique facilities now first offered to the choice of the insurer. The
insurer must fill up this form, and must further produce certificates
of age or baptism, and furnish the names and addresses of two
householders who know him and can speak as to his identity. What
follows, and indeed a great part of the foregoing, is simply the
course followed by all well-managed Insurance Offices in the kingdom.
The proposal is forwarded to London, the referees are corresponded
with, and, if all seems right and straightforward, the person seeking
an insurance policy is desired to present himself before the appointed
medical referee in order to go through the indispensable examination.
The doctor examines the proposer, questions him to the extent he
thinks proper, takes down his answers, and then gets the person to
sign his name to what may be called his deposition. If nothing
unsatisfactory occurs, the policy is made out in the way the proposer
originally desired.
The contract being duly drawn up, the insurer may pay his recurring
premiums at any of the Offices which have been opened, or which may be
opened, as shall at any time be most convenient to him. As in the case
of Savings Bank depositors, the life insurer will be furnished with a
"Premium Receipt-book," and whenever he makes a payment he must
produce this book, when the clerk or postmaster will enter the amount,
sign his name in the way of receipt for the payment, and stamp the
date of the transaction and the place of payment with the ordinary
official dated stamp. With regard to the time at which the insured
must pay his premiums as agreed upon, whether yearly, quarterly,
monthly, or fortnightly, the arrangements are necessarily strict; but
every means will be, or at least ought to be taken, to make him
understand his agreement. If he should fail, say through
forgetfulness, to make his payment, he will not be hardly dealt with;
for, on an application that the contract may be renewed and the
production of evidence of good health, the Postmaster-General will
renew the contract, only fining the person in the sum of four
shillings if he is insured for 60_l._, and eight shillings if he is
insured for more than that sum.
Once more: should the insured wish to surrender his policy, he will be
allowed to do so after the expiration of five years from the date of
it, and will receive at least one-third of all the sums he may have
paid during the time he has held it. The authorities have not as yet,
we believe, stated exactly how much they will be able to offer for
surrender policies; but this is scarcely a matter which can be
considered pressing, as no policy will acquire a surrender value till
1870.
Then there are the _kinds_ of payment under which a person may now
purchase the benefits of Life Insurance through the medium of the Post
Office. And certainly the most important arrangement, associated as it
is with several novel features, is that of paying down the premium in
one sum. Not that this need be the whole transaction of a proposed
insurer. He may make his policy, if we may employ such a term,
_cumulative_. Thus, if a person doubts whether he will be able to pay
regular premiums for a number of years, he may perhaps be able to
effect a small insurance, say of the lowest sum allowable, 20_l._, by
the payment of a single premium. He may afterwards find himself able
at subsequent periods to effect another small insurance,--and this he
will be allowed to do, even if it only be to the extent of five
pounds,--and may thus, whenever he has the money to spare, at regular
or irregular intervals, go on increasing the original amount in
transactions which, while complete in themselves, continually augment
the sum to be received at death.[203] We are not informed in _Plain
Rules_ whether the insurer will in each case have to pass a medical
examination, or produce certificates of health; but there can scarcely
be a doubt that he will be required to do one or the other. The proof
of age, however, and other particulars which the insurer furnished in
the first instance, will doubtless suffice for all subsequent
negotiations.
The principal objection to insurance effected by a single payment, at
any rate among the poorer classes, is apparent. It is not that they
can make better use of their money; as a security against an early
death or reduced circumstances no better investment could be found for
a working man who is in possession of a sufficient sum with no
pressing need for it. The real difficulty is the one of keeping his
savings until they amount to a sum sufficient for any object of this
kind. Here, however, the institution of Post Office Savings Banks may
be of service; and this has not been lost sight of by the authorities,
who offer them as a medium for the collection and keeping of such
fugitive sums as may be most easily spared with a view to taking a
Life Insurance premium. Thus, all a workman has to do is to put his
savings into the Post Office Banks in such amounts and at such times
as will best suit him; and when he has saved a sufficient sum for the
purpose, the Postmaster-General will direct that the transfer of the
amount shall be made from the Bank to the Insurance Office without the
necessity of the depositor seeing the money. Of the general plan of
paying the premium in one sum we cannot speak too highly. Those whose
wages or salaries are not fixed and regular, or those who are liable
to be thrown out of work--and few are not--could not do better than
employ their savings in securing such a provision; and the younger the
better, seeing how young and old are alike taken in the grip of the
Destroyer. Not the least of the advantages following from this kind of
insurance are the absolute freedom from all risk of lapses, from
either carelessness or more serious causes, and the fact that the
policies on this principle will have the highest surrender value.
Should the person wishing to insure not like, or liking not be able,
to take out a policy after this fashion, he may choose one of several
other methods. If he thinks he can more conveniently pay a small
premium every year, he is at liberty to do this in different ways. If
at thirty years of age he will pay a pound a year, he may secure for
his friends forty-three pounds at his death; if he prefers to pay two
shillings a month, he will secure forty-six pounds; and for an annual
payment of two pounds six and sevenpence, he may secure payment of
100_l._ to his nearest relatives, _immediately on proof of death_.
Again, if a person thinks, as many do think, that his payments should
cease at a certain age, he may insure on that principle. Commencing at
thirty years of age, and paying two pounds thirteen and tenpence a
year till he is sixty, he may secure 100_l._; by paying two shillings
a month, between the ages of thirty and sixty, he may effect an
insurance of forty pounds at death. It will be understood that these
are only a few specimens of the working of these Tables, given more
especially to show the characteristic features of the plan. By
consulting the Tables themselves, any person may plainly see how it
will affect him to insure by any of the above methods; and he may
calculate his payments either at the times we have given, or at other
times, such as half-yearly, quarterly, fortnightly, or weekly, with
great nicety.
We will only refer at any length to another very important provision
made for the carrying out of this useful and important public measure.
It has to do, as indeed almost all the provisions have, to a great
extent, with the wants and necessities of working men, especially such
as must pay their premiums by small and frequent instalments. Seeing
that working men are proverbially slow to look the distant future in
the face, we urge, in the strongest terms, the claims of the provision
in question on the attention and study of all large employers of
labour. In no way could masters better fulfil the heavy moral
responsibilities under which they lie to the less educated portions of
society whose energies they employ, than by co-operating with them in
the way of advice and assistance, in such a plan as that which remains
to be described. The arrangement in question has doubtless been
suggested by a scheme which, for several years, has been in full and
excellent working order in the Post Office itself. We think it was in
1859 that Mr. Scudamore of the Post Office devised a plan, which was
approved by the then Postmaster-General, by means of which and the
concurrence of a large number of first-class Insurance Companies a
considerable number of Post Office _employés_ were enabled to make
suitable provision for their families. In connexion with this plan,
substantial assistance was given, to those who took this rational and
necessary step, out of the Void Money-order Account. Under the
arrangements then made, the Insurance Companies give the required
policies to any officer of the Post Office, without any _direct_ or
preliminary payment, looking to the Post Office authorities entirely
for the collection of the premiums as they become due; the latter, on
their part, deducting the payments at such times as are agreed upon
from the regular salary or wages of the assured persons. Thousands of
Post Office officials, from the highest to the lowest grades, have
insured their lives on this principle; they are not only assisted to
do so, but secured from all risk of default, while the deductions are
so small as to be scarcely perceptible.[204] The success of the plan
has led to its partial adoption by the proprietors of large private
mercantile establishments, where it works well; and this again has
doubtless led to the extension of the plan, by means of the Act and
the machinery we are considering.
It is now perfectly easy for any of the other Government departments,
for railway companies, merchants, manufacturers, and other large
employers of labour, to make arrangements under the 32d clause of the
Regulations, to do for their workmen (and we are at a loss to
understand why this has not been done before) what the Post Office
authorities have done for their servants. The clause to which we have
alluded provides, that if boards of management or masters of workmen
will undertake to collect the sums by means of deductions from the
wages of their officers or servants, with a view to paying the
premiums over to the officers of the Postmaster-General, then the
latter shall, "if he think fit, make arrangements with the said
employers for such purpose, and shall constitute the departments,
offices, or places of business of such employers, offices for the
receipt of proposals, and for the receipt of premiums and instalments;
and shall pay to such employers such remuneration for the work done by
them, or their officers or servants, as shall be agreed upon between
him and them."
Surely, with all such facilities, and with such inducements to the
workman to make provision for those who are nearest and dearest to
him,--this provision to be payable at once, on the security of the
nation, when he is no longer able to contribute to their
support,--little persuasion should be needed to make him do that which
is now one of the first duties of a man who has a wife or family
dependent upon his exertions. It is only too true that workmen and the
less educated portions of the lower middle classes may be blinded and
cajoled into believing that those institutions will serve their
interests best which, depending upon all kinds of meretricious
attractions, promise immediate benefits for little payment, but only
end in disappointing, if not in swindling them. It seems to us,
however, that those who, like the majority of large employers, have
both the capacity and the opportunity for directing these classes
aright, are not only warranted, but, in all fairness, are expected to
attempt to do so.
We must now speak of the Regulations for the purchase of _Government
Annuities_. It is well to make provision for our families after we
have left them; it is no less wise to make some provision for old age,
or for the misfortunes of life. Many a working man, taking the
expression in its widest significance, sees little before him in the
future but a life of hard, unyielding work. There is a time, however,
after which bodily strength must rapidly fail, even supposing that
nothing has occurred during his years of toil to break him down
prematurely: many a hard worker lives on long after the grasshopper
has become a burden, and is little cared for, it may be, if he has
never cared for himself. Let philosophers inveigh as they will on the
selfishness of such conduct, that man has acted wisely who, under some
such circumstances, has taken care to relieve himself of thought and
much anxiety by having something in the shape of an Annuity to look
forward to in his declining years. "Most men, as old age comes on,
find themselves every year less and less able to procure by their
labour those comforts which every year become more and more necessary
to them. A man, by paying small sums out of his earnings while he is
strong and active and in full work, may purchase an Annuity to
commence as old age comes on him, and which will take the place of his
salary or wages when he can no longer earn a livelihood." In these
words the Postmaster-General introduces his new Annuities' scheme, and
offers to sell these Annuities through his department to any one who
will comply with the Regulations.
The commencement of an Annuity transaction must be exactly similar to
that described in connexion with an Insurance. After obtaining a form
of application, the person must reply to the questions which it is
deemed necessary to ask, and then return the paper to the Post Office
for transmission to the Postmaster-General. For obvious reasons, he
will not be required to say anything about his health, nor to pass any
medical examination. The Government must take care, in insuring a
person, that he is in good health; on buying an Annuity, the person
himself should take care that he is not in bad health, or otherwise he
might rush into a bad bargain. Almost the only preliminaries gone
through in the case of Annuities are, a satisfactory proof of age, and
answers necessary to identification. If the authorities in London are
satisfied with the answers and the references given, a policy or
contract is entered into by the Post Office on behalf of the
Commissioners of the National Debt, setting forth, that, in
consideration of certain payments made at certain periods, the payment
of a certain sum is guaranteed to him as an Annuity on the security of
Government.
As in the case of Insurances, the person seeking to purchase an
Annuity has the choice of several kinds of annuity, and of annuities
of any amount up to 50_l._ a year. He may purchase an _Immediate_
Annuity, though in this case the purchase-money must always be paid in
one sum. Thus, if he be twenty years of age and will pay down the sum
of 198_l._ 3_s._ 4_d._, he can begin to receive an Annuity of ten
pounds a year for life, however long that life may extend. Women, we
must add, seeing that they are usually longer livers than men, must
pay more than men. He may purchase also a _Deferred_ Annuity; that is,
an annuity payable after a given term of years from the commencement
of the purchase. This Deferred Annuity may either be purchased in one
sum, or by a yearly payment over that given term. If the former, it
may be for any amount between one pound and fifty pounds per annum, to
begin at a certain period; in the latter case, the amount may range
between four pounds and fifty pounds, to begin immediately after he
has completed his payments. Deferred Annuities may also be purchased
gradually, or on the same cumulative principle spoken of in connexion
with Assurances, and just according as a person finds himself able to
spare the money; or they may be purchased by annual payments in the
same manner, beginning on a small annuity, and increasing it from time
to time as he finds himself able to increase his annual payments. Once
more, by making payments half-yearly, quarterly, monthly, fortnightly,
or weekly, during a certain number of years, he may purchase a monthly
allowance of any amount from four shillings to four pounds a month,
immediately after that term of years.
The first Tables which were ready in time for the operations for the
purchase of Deferred Annuities were those known as the "Non-returnable
Tables," under which money paid was not returnable in the event of
premature death, but "altogether sunk and lost." Soon afterwards,
however, the "Returnable Tables," which had been under preparation
from the first, were brought out. Now, therefore, if the annuitant
chooses, he may purchase a Deferred Annuity with the proviso, that if
death occurs before he should have reaped any benefit all the premiums
shall be returned to his representatives; and also, that, at any time
during his life before his Annuity is due, he may have his payments
returned to him, subject of course to some deductions should he choose
to close his account.
In all the above cases it is difficult to explain the method of
working without giving examples; but the interested reader may
receive, as he will doubtless seek, every information from the popular
Abstract which will be presented to him free, on application, and from
the Official Tables which may be seen at any Post Office. It only
remains to add, as regards the payment of Annuities or Monthly
Allowances, that they will be made half-yearly or monthly, as the case
may be, at any of the offices opened for this business, _i.e._
eventually every Money Order Office; and that if a person be prevented
by age, infirmity, or illness, from going to a Post Office to receive
this allowance, it will be taken to him by an officer of the
department.
As the operations of the Government Insurance and Annuity Office have
only extended over a few months, and as the scheme is only in process
of introduction into many localities, it is manifestly impossible to
get exact information respecting the amount of business done, or tell
how far the prediction, freely hazarded soon after the measure became
law, as to its importance and utility, is likely to be realized. In
the Report of the Post Office recently issued, the Postmaster-General
states that this information will be supplied, in proper course, in
his Report for 1865. Meanwhile, the following facts, which have been
ascertained by the examination of some hundreds of proposals, will
probably interest some of our readers.
The average age of the persons who make Life Insurance proposals to
the Government is thirty-five years; the sum for which they propose to
insure is, on the average, 76_l._ Out of the whole number of persons,--
40 per cent. propose to pay their premiums annually.
25 " " " " monthly.
22 " " " " quarterly.
6 " " " " half-yearly.
6 " " " " weekly.
One proposer in each hundred proposes to pay his premium in one sum;
and twenty-three per cent. wish the payment of their premiums to cease
on their attaining the age of sixty.
The proposals come from all classes of the community; thus--
per cent
Clerks in public and private offices contribute 32
Porters, messengers, letter-carriers, and labourers 22
Mechanics, artisans, and skilled labourers 18
Tradesmen 17
Clergymen, and professional men generally 6
Women 6
Of those who make proposals for the purchase of Annuities, 56 per
cent. are men, and 44 per cent. are women; and the amount of Annuity
which they propose to purchase is, on the average, 26_l._ The average
age of the proposers for the purchase of Annuities is fifty-eight
years.[205]
A longer time will doubtless be necessary to develop this further
measure into the same successful operation which has followed the
adoption of the scheme out of which it sprang. It is more elaborate
than the Post Office Bank scheme; it will appeal, as has been properly
said, to a higher class of men, to a higher quality of prudence. Time,
perhaps, more than anything else, must mature it into success. It
rests entirely with the public,--especially with employers of labour,
and the more intelligent portions of the working and small tradesmen
class,--whether or not the unique and comprehensive facilities which
we have been engaged in discussing shall have been framed and offered
in vain, or whether or not a new era has dawned on those who are
desirous of making small, sure, and safe investments for their own old
age, or provision for those they may leave behind. We wait, as it were
pen in hand, to chronicle the result. Meanwhile, those who have the
interests of the humbler and more defenceless portions of the
community at heart could not do better than endeavour, at any rate, to
spread a knowledge of a scheme which, while benefiting the people
individually, must also, by giving to each a stake and an interest in
the prosperity of the country, tend to increase the stability of
existing institutions.
In justice to Mr. Gladstone and the Legislature, it ought to be widely
known and remembered that these measures have not been originated to
be a source of profit to the revenue of the country; that, however
successful they may eventually be, they will bring no gain to the
National Exchequer. The Tables of working, and the mode of working,
have been prepared with great care; the former by eminent actuaries,
and the latter by equally eminent official men: and although some of
this care and attention have had for their object the security of the
Government against loss, the premiums are intended to cover the
liabilities and working expenses, and no more. If, therefore, those
classes who _can_ do it will not now secure themselves against
misfortune and disaster, it is plainly no one's fault but their own.
[195] We have not space to go over the ground of the change; nor
is it necessary, seeing how imperfect was the amendment introduced
in 1853. Mr. McCulloch, however, in his _Statistical Account of
the British Empire_, vol. ii. p. 712, may be said to have summed
up in the following sentence the reason which sufficed to induce
the Legislature to amend the Act of 1834:--"The influence of the
Act (1834), so far as it extends, is subversive of accumulation,
and goes to encourage the selfish and unsocial propensities by
tempting individuals to consume their whole property during their
lifetime, without caring anything for those who might come after
them. Had Government given facilities to the middle and lower
classes for insuring sums for their wives and children in the
event of their death, it might have been highly advantageous. But
the system they have set on foot does not encourage providence,
but extravagance; and if extensively acted upon, would be so very
hostile to the public interests, that it would have to be put down
by legislative interference." We should think that there could not
be much chance of successful legislation if it were based upon
such arguments as the foregoing; and successful it was not.
[196] _Hansard_, vol. clxxv. p. 479.
[197] "Seriously speaking," said another writer, who signed, "One
well behind the Scenes," in the _Times_ of 18th February, and had
been indulging in all kinds of pleasantry on the impossibility of
the Government undertaking Life Insurance, "if Mr. Gladstone must
go into business, he had better take an easy business first, and
have Government ginshops at one corner of the street, and
Government tobacco-shops at the other, and leave the delicate
matters of Assurance for the present."
[198] The _Times_ and the _Daily Telegraph_.
[199] Between 8,000 and 9,000 of these Societies have failed since
the passing of the Friendly Societies Act. It has been calculated
that about 100 Societies fail in each year.
[200] _Hansard_, vol. clxxii. p. 1581.
[201] _Hansard_, vol. clxxiv, p. 1474.
[202] Both Tables and Regulations may be obtained quite easily at
any Post Office opened for the transaction of this business, and
an Abstract of the Regulations, entitled _Plain Rules for the
guidance of Persons desiring to Insure their Lives or to purchase
Government Annuities_, has been and still is distributed widely,
and may be had gratis from any postmaster or letter receiver.
[203] Thus, at the age of thirty, a person with 8_l._ 14_s._ 9_d._
to spare may buy an assurance of 20_l._ to be paid at death. Two
or three years afterwards, and after a prosperous interval, he may
be disposed to increase that amount to 25_l._, 40_l._, or 50_l._
Suppose the latter sum, and he has attained the age of
thirty-three, he pays down another sum of 13_l._ 13_s._ 10_d._,
and then finds himself insured by these two single payments in the
sum of 50_l._ whenever death may occur. Of course he may stop
here; but he may also, if he thinks fit, go on adding, at such
intervals and in such amounts as may best suit his convenience, to
his original policy, till at last it acquires the value of 100_l._
[204] Many postmen and rural letter-carriers are insured in this
way for a sum of 100_l._
[205] It will be remembered that under the Act 16 and 17 Vict., c.
45, a person could only insure his life on condition that he
purchased an annuity. It is not so generally known that in the
course of eleven years not one proposal for this twofold contract
was ever received. It is not a little remarkable that now, this
arrangement being no longer compulsory, one in every hundred
proposers for Life Insurance also proposes for the purchase of an
Annuity.