The Evening Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, and Echo. MONDAY, APRIL 21, 1884.

Auckland Star, Volume XXIV, Issue 4349, 21 April 1884, Page 2

The Evening Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, and Echo.

MONDAY, APRIL 21, 1884.

For the cause that fecks assistance. For the wrong that needs resistance, For the future in the distance. And the stood, that we can do.

The earliest legislation affecting friendly societies in England took place in the laat years of the eighteenth century. Since that time about 20 Acts have been passed to regulate them, none of which can bo said to have given much satisfaction. It was at last determined (in 1870) to appoint a Royal Commission to make an exhaustive examination into the working of these bodies with the view of framing a comprehensive statute aiming at something like finality. This Commission, of which the Chairman was Sir Stafford Northcote, nnd which had among its members one of the most eminent English actuaries —the late Mr W. P. Pattison—conducted an inquiry extending over four years, and collected a mass of evidence which is, to this day, the richest mine of information in ex-

istence relating to friendly societies. As a result of their labours, all previous Acts wero repealed, and the Imperial Friendly Societies Statute of 1575, which is still the law in England relating to this .subject, was passed. As this statuto is substantially identical with the Act now in forco in Now Zealand, it may be interesting to mention some of its leading provisions. The main object of the Act is i iinilar to that which dominates the existing legislation in regard to life assurance companies, namely, the enforcement of publicity. It is not meant by tills that any attempt is made by the Legislature to violate the secrecy of the great affiliated orders, but i-imply that the financial transactions and actuarial solvency or insolvency of the societies are to be made known to Government officers, and reported on by them to the Parliament of the country. There is, however, this difference between friendly societies and life insurance offices, that whereas the latter are compelled, without exception, to come under the Act, the friendly societies are not so compelled, inasmuch as they are at liberty if they please to remain unregistered, the consequence being merely that they necessarily forfeit the privileges attaching to registration. These privileges are very numerous, but the principal one is that a registered society lias an easy legal remedy against its trustees and other officers for defalcation, whereas, in tho caso of an unregistered body, (he remedy is both expensive and doubtful. Let us oxaroine a little more closely what laattors a registered society is required to make public. It is first of all asked to send annual returns to the Registrar—the Government officer charged with the administration of the Act—of its receipts and expenditure, funds and effects, number of members, and experience of sickness and mortality. Secondly, it is required to make ii n actual valuation once in every five years. What is a valuation ? It is a periodical stocktaking, analogous to that which every prudent merchant would make. But there id this difference —that the assets are calcul.ited for the purpose of covering liabilities that are yet to accrue, and have present elements of uncertainly about them. Still the uncertainty is not so great as persons unskilled in acturia! science might suppose. The law •• of averages, when applied to probabilities of sickness and death under nnalagous conditions, bocomes almost absolutely accurate—so certain indeed that variation may be calculated upon only whon roasonablo proof can be given that the conditions are essentially different.

Now, tho dissatisfaction with tho present Act and tho officers who administer it, which has led to tho agitation among various sociotios for tho total repeal of tho law, arises from two causes. Tho first is the work thrown upon lodgo ofiicors in tho compilation of very claborato returns required by tho Government Actuary; and tlio second, tho perennial controversy botwoon tho actuaries and the lodges concerning their solvency, and the adequacy of their fees to covor tho probabilities of claims under their guaranteed scale of benefits. J\lr Frankland'.s mission to Auckland has been undertaken with the object of meeting the representatives of tho various societies, and discussing these and other questions with them. The result of his conforenco with the Auckland dolegates his not been made public, but wo aro told that it was of a satisfactory character, and will, it is hoped, produce useful results.

With respect to tho first objection, thero does seem some reason in the complaint of tlio societies that tho expense of making up tlieso returnß, which aro not required by the lodfCß is thrown upon them. The (iovernment may, no doubt, reply that tliia work is enforced without rocompenso in England and Victoria, and in tho latter polony registration is compulsory, and the law Is in other rospoots moro stringent than it is here; but tho fact remains that tho domand for returns causos very great irritation, and interferes with that good understanding which it is most deairablo to promote among these admirable societies'. The alternative of discontinuing the returns is out of tho question. For tho good of the societies, and for their own information and guidance, as well as for tho public protection, a basis of acturial calculation, founded upon New Zealand experience, is absolutely indispensable. Wo aro sure that the leadors of tho societies who have fairly considered tho question will agree with this, and will acknowledge that the Government, in doing for all tho societies what any one Lodge or Order coujd not accomplish for itself, is acting for their common good. The societies, however, have a claim to consideration ; they are doing a great public work already, and Bhould bo encouraged rather than harrassed and disheartened. And we believe it would be generally accepted as a conciliatory act on the part of thoGovernmontif a moderate feo were allowed, adequate to cover tho actual cost of compiling these returns. Tho total expense would not bo very great—profa ibly not moro than £150 or i.200 for the entire colony, and it would get rid of that grievance. The other ground of complaint, in the present condition of the law, is moro sontimontal than real. The Government actuaries may declare lodges to be offering benefits which their tees can never give, and to be incurring responsibilities to their members which will, a few years hence,bring them down to a condition of insolvency ; but so long as thoy do nothing to constrain the lodges into adoptit g any other scale of fees, or to enforce their opinion by legal process, the societies have not much to complain about. Thoy can continue to set what they believe to be their experience against the decimations of the actuaries until a long enough period has elapsed to baso an average upon. The acturial reports will have a wholosomo effect on the management of tho societies, producing watchfulness, and educating the officers in tho mysteries of acturial science. Those who dispute the fairness of the acturial figures contend that four per cent, interest, tho rato upon which the acturial calculations are framed, is far too low—that tho actual average obtained is very much higher. The objoction has, wo believe, considerable force, and the Department might meet it half-way by publishing two scales of fees, one intended, as nt present, to cover every possibility of failure; the othor allowing a higher rate of interest and showing the probabilities of safety in the event of a society escaping extraordinary disaster. The existing Friendly Societies Act is a very excellent measure; it is, however, capablo of improvement. Registration should, we think, be made compulsory, as in Victoria, but without insisting upon any scale of f 668 or code of rules. The Revising Barrister might be dispensed with, getting rid of a lot of useless red tape and expense which sej-ves no purpose. Any benefit society might be registered, no matter what its rules may be, if the Government enforce the conditions for regular returns and institute a quinquennial valuation, the results of which, with the opinion of the actuaries on the solvency or tho society, is published in the district where the society carries on its operations. Provision should be made for doing this, and then members would join with a full knowledge ' of the facts. The societies exist by mutual agreement and for a mutual benefit, and tho less State interference there is with them the better. The Government while doing everything that can be accomplished in the way of collectine evidence and employing aeturial skill, should depend entirely upon the growtli of opinion within the lodges favourable to the views of the actuaries. When they are fully persuaded, that their societies lack the element of stability, the members will only be too glad to initiate measures for placing them on a better foofng.