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THE FRIENDLY SOCIETIES' COMMISSION.

SENT OUT TO CURSE BUT RETURN : ':'•■' TO BLESS.

[From Oob Pabliamentahy Bbpobtkb.]

-WELLINGTON, October 12. The report of the Royal Commission who were appointed to inquire into the matters set forth in the petition of Henry M'Lauchlan, of Auckland, concerning the position of the Auckland Sugar Company's Benefit Society,.and to "inquire generally into the working of private benefit societies, theTelations existing between employers and their employes in connection with Buch societies, and the expediency or otherwise of bringing such societies under legislative control, ' was presented to Parliament this afternoon.' One hundred and sixty-five witnesses were examined. From inquiries made at the outset, the Commissioners arrived at the opinion that it was not necessary for them to visit the smaller centres of, population, inasmuch as almost every form of private benefit society was represented in the four chief cities of the colonv ; indeed, few (if any) exist elsewhere. Nor would an extended tour have justified the Commissioners in incurring the expenditure it would have necessarily involved, seeing that sufficient data for the report was available at Christchurch, Dunedin, Wellington, and Auckland, At Dunedin the affairs of eight societies were inquired into, at Christohurch nine, at Wellington seven, and at Auckland six—comprising all the organisations believed to come within the scope of the Commission. - There were thirty societies vi u With a meraber ship roll of 5,366. Membership appears to be (or to have been) compulsory in some cases, but in all other cases it is purely voluntarv. As to the manner in which these societies have been conducted, the report says : Thei scale of contributions varies very widely, and the benefits secured are also of a very diverse character, in some cases being limited to provision against accident or sickness only, and confined to the individual member; in others providing medicine, medical attendauce for members, or for members and their families, burial allowances for members only, or for members and their wive 3. In some cases a surrender value is paid to members withdrawing from the society, while in others there is no such provision. In some societies the employers contribute to a large extent, in others to a small extent, and in some have no connection with the society. Again, in some societies the control and management practically rests with .the employers, while in others there is no interference with the men, who carry on the society as they please. Further, the societies in one group have a continuous finance, carrying on from year to year, and accumulating funds for investment ; while the societies in another group are annually-terminating societies, distributing' among members all the surplus funds, less a small fixed reserve to commence the operations for the next twelve months. These last-mentioned societies nave in all cases purely voluntary membership, and appear to be working very satisfactorily. it nas been a source of gratification to your Commissioners to find so large an amount of thrift and" self-reliance among the industrial classes of the colony. This has its beneficial in< fluence, not only directly on the members of the societies and those dependent upon them, but also is an advantage to the community, in that it diminishes appreciably the burden on the general public for hospitals and charitable aid

In respect to any projected legislation affecting private benefit societies tho Commissioners recommend that provision should be made for the recognition of aunuallyterminating societies and the acceptance of their rules with as little departmental interference as possible. Tho registration of such societies and their rules, so a3 to give the latter the force of law, should be effected at a merely nominal charge. These annually-ter-minating societies are, in the Commisioners' opinion, the most valuable and moat secure of all private benefit societies. The permanent societies are divided into two groups—those assisted financially' by employers and those to which no such assistance. is given. In the former, the highest rate of subsidy on the employers' part is given to the Colonial Sugar Company's Benefit Society and M'Lsod Brothers' Benefit Society, being at the rate wu £ r{° r - £ ° n tne em P lo y^ J ' contributions. Tho Union Steam Ship Company and other companies have assisted their affiliate 1 societies by donations in the form of endowmebls, either by gifts of lump sums or by annual contributions, or both, for fixed periods of years. In return therefor the employers in some cases have secured either the balance of control or a large share in the direction of the societies. In regard to societies so assisted it becomes necessary to consider whether the contributing employer should, tie entitled to a share in the government of the society, and, if so, to what extent. A number of witnesses examined object to the employer having any voice at all, under 4 any circumstances whatever; but the Commissioners are of opinion that to refuse legal recognition of auy society which provided for a voice in the management by the contributing employer would in many instances absolutely prevent any contribution being made on the employer's part. They therefore think that in the c*se of assisted or endowed societies provision should be made for tha representation of the employer on the governing body, but that in no case should this be permitted to bs a preponderating- influence—that is to say, that assisted or endowed societies should be capable of registration, and that their rules should be accepted, provided always that, no matter how large the contribution of the employer, the balance of representation on tho governing body should always ba secured to the contributing employes. Secondly, in the matter of tho investment of accumulated funds, the Commissioners are of opinion that it should be required by law that all surplus funds—funds not required for immediate use—should be invented either in Government securities in the Post Office Savings Bank, in any other savings bank; or on mortgage of freehold property, subject to the approval in the latter case of . the Government Valuer-in-Chief. Subject, however, to this proviso :' that the obligation to invest in such securities shall apply: only to BUcll p ort j on 0 f the B uiplus funds'as shall arise in respect to the contributions pf_ members, and shall not bar the portion which arises in respect to the 'employers' contribution from being invested either. : by deposits at interest in the hands of the employer or in shares in the employes' own business, if a limited liability company. In other words, if the employer contribute a subsidy of 10s in the £, then of any surplus to'be invested one-half should fall within the requirements as to the securities first mentioned, and the remaining half only should be capable of investment with the employer, or in the employer's business, and so on in proportion to theamountof the respective' contribution of employers and employe's.

Id the case of the larger societies, which provide aiek pay, medical attendance," and funeral allowances, and have a surrender value, it is a matter of consideration whether it should not be a condition of registration that the scale of contributions should be to as being actuarially sound—that is, as sufficient to assure the benefits contemplated ; and also whether or not there should be a fixed limit of contributions on the part of' any wage-earner*—namely, not exceeding a stated maximum percentage of earnings. . There could be no doubt that mob:' provisions would be in the nature of useful _aafeguards against possible evils or abuses; but the Commissioners reeognise the difficulty of imposing too many restrictions in regard to societies of this nature, feeling as .they do that tho effect might probably be the refusal of the societies to take advantage of any Act enabling them to become registered.

The Commissioners, while of opinion that it is. desirable that legislative provision should be made to enable private benefit societies to obtain legal recognition and status, at the same time represent the undesirableness of attempting to impose any conditions of an irksome character involving .either undue trouble or expense.' In fact, they are of opinion that these organisations are generally of a beneficial character. They ahouW be encouraged, and not impeded, by the State. And .they fail to see how it would'be possible to compel such societies to discontinue operations while unregistered. All that the Commissioners think it possible to effect by legislation is to provide a simple aod inexpensive means for securing to such societies .■ as voluntarily take advantage thereof t the benefit of • obtaining legal recognition,as "societies coming within the provisions" of an easily-understood measure, and the.very, registration of which would therefore be in the nature of a guarantee that •they are organisations of a satisfactory •character in which the members could safely place confidence.

la view of the fact that the objections -hitherto taken in certain quarters to the existence of' these societies are founded largely on the belief that compulsion is exercised* by the employer upon the emthe Commissioners are pleased to be able to report that the largest of the sopieties, who in their rules avowedly make membership compulsory, have repealed this rule, and that in only one or two instances do they find the principle of compulsion enforced by rule. Upon the question as to whether it is or is not desirable that there should be power given to such societies to compel all i employe] to join, the Commissioners met 'with wide differences of opinion. On the one hand, it was shown that, in the absence of such a provision, a part of the employed stood out in some instances, and thus weakened the power of the society to provide the benefits contemplated; but, this fact notwithstanding, the large preponderance of opinion on the part of the witnesses was that it was not desirable to give power to a majority of employes, however large, to compel the adhesion of the minority. The Commissioners concur in this view. They point out that, were it proposed to confer on a majority of the employes a power of compulsion in respect to the minority, such compulsion could not be exercised without calling in the assistance of the employer; in a word, it would be necessary, to give effect to such compulsion—to compel the employer to compel. On the face of it, that was an impracticable state of things, since, all the employes being subject to the control of the employer, the latter, if disinclined to concur with the wish of the majority of his workpeople, might elect to discharge these very employes rather than carry out their wish as regarded the compulsion of the minority. The Commissioners therefore recommend that it be a condition of registration that the rules of the society shall not contain any compulsory provision. As regards compulsion on the part of the employer, while only in one or two instances was compulsion provided for by rule (and, even in these cases it was stated in evidence that the rule was not always enforced), yet it was alleged that a species of compulsion is exercised, in that the employed are permitted to understand that preference of employment—other things being equal—will be accorded to those who comply with the employer's wish by joining the benefit Bociety. The Commissioners direct special attention to this point. It is one that raises wide issues and requires vrry careful consideration, inasmuch as such -a' state of things would appear to be an interference with the liberty of the subject by the imposition of conditions such as should not attach to any employment. The question of how to provide against the exercise of a choice on the part of employers in favor of employe's who are willing to accept such conditions is an exceedingly difficult ooe, as such a choice is exercised without restraint or hindrance in other directions, as, for example, in regard to nationality and even religion of the employe ; and it is hard to see how a state of things which the Commissioners perceive to be evil can be remedied. They, however,, are bound to represent that a large number of witnesses regard the existence of such conditions as a grievance, and there is no matter in connection with this investigation on which there is a more general consensus of opinion that some remedy is needed, if it be possible for a remedy to be found.

The Commissioners next refer to representations that were made as to the effectupon registered friendly societies by the existence and operation of private benefit societies. The contention was advanced that the latter were inimical to the former, and that the result of the existence of "the private societies had been to restrict and deplete the membership of the friendly societies, in that members of those societies had left them and ceased to members because of their being required or persuaded to join the private societies; and, further, that persons who would have become members of the friendly ,800'ieties were it not for the existence of the private societies had joined the latter. In connection with this branch.of their inquiry the Commissioners say '. — We And but very little ground for the objection stated. In a few instances there is justification for the view referred to, but we are bound to sayin so few as not to' be all an important factor in the case. We agree in finding that in the main the operations of the private societies are outside, and do not trench upon, those of the ordinary friendly societies, while they are the means of inducing a considerable number of persons to insure. Such persons are tenarally those who, by reason of disability of age or physical conditions, or by reason of want of appreciation of the necessity of thrift or insurance against the risk of sickness, accident, or death, would otherwise make no provision for such contingencies. It is, therefore, we think, unquestionable that the private societies fulfil a useful function, and that they do not clash, except in a very inappreciable degree, with the operations of friendly societies.

In connection with the banks' provident societies the Commissioners say it is not within their function to make any recommendation regarding these institutions, whose headquarters are outside thr> colony ; but" in regard to the Rank of New Zealand's Provident Society they feel called on to make very strong representations, which they proceed to do in thsse terms : In tins Bank there is an extraordinary state of things. The provident fund shows a total (in round figures) of £1.15,000, of which only £25,000 has been contributed by the Bank itself, and, allowing £IO,OOO as accrued interest, there remains a balance of £IOO,OOO, J which represents enforced deductions from the salaries of officers. Those officers are promised pensions on attaining the age of sixty, but it would appear that these promised allowances have been calculated on a basis of expected interest from investments at the rate of 6 per cent., and that, the value of' money having siuce fallen, that basis is unsound, and that the anticipated pensions must therefore be, and, as a matter of fact., have been already, on this ground "reduced. Further, that there is no surrender value attached to this'lund, and that therefore, ; while one employe who has reached the age of sixty may secure his pension (at a reduced figure perhaps) ou his retirement, notwithstandj ing that he may have contributed for only a few years to the fund, another who dies at fifty - nine years of age, and may have contributed many years longer than the former, has no interest whatever to leave to his representatives. Again, since the amalgamation of the Colonial Bank with the Bank of New Zealand, another provident fund, which your Commissioners will refer fo for convenience as " No. 2 fund," has been established, and officers newly joining the Bank of New Zealand have now the option of joining either the original or the No.' 2 fund, the latter having a surrender value, while the former has not. The result has been that, without exception, so far as your Commissioners can ascertain, the new officers have elected to join the No. 2 fund. The effect,.accordingly, is that the original fund-has no new contributors, while it has, of course, prospectively an increasing number of beneficiaries—a state of things which must necessarily result in the further reduction of the pensions promised. It is quite clear that the large majority of the officers of the Bank have no reasonable expectation of participating in the benefits of a fund to which they are compelled to contribute, and it is beyond question that at least 9Qper cent, of them regard the present state of things as a grievous injustice, and desire that Parliament should provide some remedy. It is perhaps scarcely necessary for your Commissioners to point out that this particular Bank occupies a different position as towards the State to that of any other Bank trading in the colony, and they are of opinion it is expedient that the case, being an exceptional one, should be treated as such and dealt with by special legislation'. There are, it appears to your Commissioners, three courses open in dealing with the provident fund of this Bank—namely, either (a) to distribute xhe existing fund among the contributors, and, if it be decided to continue any provident fund in connection with the Bank, to establish such fund on a new basis; or (6) to retain the balance to the credit of the existing fund as the nucleus of a new provident fund to be established under revised and largely altered conditions; or (c) that the existing balance be distributed, and no new fund established, the employe's being left to make their own arrangements as to provision for their future through the medium' of other existing organisations— i.e., organisations not connected with the Bank, such as insurance societies, etc.

As to the future of this particular provident fund the Commissioners leave to the Government to say whether it should be absolutely terminated or remodelled, but in the event of the first-mentioned course being adopted they suggest that

All who have contributed to the creation of the fund or, at any rate, all who hayp so contributed for a period of, say, five years or more, should be entitled to participate in such distribution pro /ate of their contributions, whether or not such persons he or be not now actually engaged in the service of the Bank-

. If reconstruction be decided on, the Commissioners recommend That the regulations should be largely revised and amended, those at present in operation being manifestly unsatisfactory and, indeed, unjust. For example, the trustees ate now practically, both as regardsi their personnel and their powers, altogether beyond the control of the contributors to the fund, and even the benefits professedly secured to the contributors are liable to reduction, or even withdrawal, at the will of the trustees, subject only to the concurrence of the directors of the Bank. In any reconstruction of the fund and revision of the

rules no such power as this: should be accorded to the trustees, and the contributors should certainly be given a freer hand in regard to, the selection of the persons in whom the management of the fund is vested. ■ ...-,. .■■'

In regard to the two societies affiliated with the Colonial Sugar Refining Company the Commissioners cannot make any suggestions for improving the rules of the sick benefit sooiety at Sydney. Membership of the employes' provident society, however, ia compulsory as regards the salaried staff, but it is stated to be optional in regard to all other employes. It was asserted by the petitioner that compulsion, was exercised'notwithstanding, through preference of employment being given to men who belonged to the society. ■ This was denied by the company, but the weight of evidence went to show that there was a belief on the part of the men that, such preference was exercised, at least when it became necessary to shorten the number of hands. Assuming the rule as to voluntary membership to be ', faithfully carried out, the fund is a desirable one. Attention is drawn to the fact that the fund is liberally assisted by the Sugar Company, who gave an original donation of £2,000 and subsidise the employed' contribution £ for £ up to £3,000 a year. There is also a very liberal surrender value, a contributor for five years or more being entitled on leaving to withdraw the whole of his contributions; and a contributor, if be leave prior to the expiration of five years, to the refund of half his contribution. If he is discharged at any time, except for fraud or dishonesty, he is refunded his contributions in full. But that the whole of the accumulated funds are invested with the company is regarded as unsatisfactory, and the Commissioners think that that moiety of the fund which represents the subscriptions of the employes should be invested in outside securities^

The following are the observations of the Commissioners upon the societies existent in Dunedin:— UNION S.S. COMPANY'S BENEFIT SOCIETY. This is the largest society of the kind existent within the colony. They have a membership of : 860, out of a total number of 1,100 employes. The society were established in 1891, the company giving an initial donation of £SOO to the fund, and undertaking to contribute for the first five years 20 per cent, per annum on the subscriptions of ordinary members. Membership was at first compulsory as regards employe's joining the service after the date of the fonnatioa of the society. This rule was subsequently modified by a provision exempting such employe's as were in good standing on the books of a registered "friendly society. It has been stated by some witnesses, that, this exception notwithstanding, men have been required to join who were members of friendly societies, but on the part of the company it was shown that such instances were exceptional, and that circulars had been issued to officers of the fleet enjoining that na compulsion'should be exercised as regards members of friendly societies. In May last, in parsuance of an agreement between the Federated Seamen's Union and the Union Steamship Company, the element of compulsion was altogether withdrawn, and membership of the society is,' it is understood, henceforth to be purely voluntary. It is not necessary for your Commissioners to set out here the scale of contiibutions or benefits.,' With whatever motive the society may have* been established, your Commissioners are of opinion that the existence of this society is of great advantage to the employes of the. company, as providing means ot support iu time of sickness, etc., to men many of whom would probably otherwise have made no provision to meet such contingencies. The subsidy hitherto granted by the company is a liberal one, and enables much larger benefits to be secured by the contributors than would otherwise be possible.. Your Commissioners, however, consider that it would be much more satisfactory if the society's funds were vested in trustees pot connected with the directorate of the company, and they further think that the representation of the contributors on the Committee of Management should be enlarged so as to transfer the balance of power to members of the society, instead of resting, as it now does, with the company.

NEW ZEALAND CLOTHING FACTOR!' RELIEF FUND. This society, established in connection with the New Zealand Clothing Factory in Dunedin, was endowed by Mr Hallenstein originally with the sum of £IOO, to which he subsequently added further sums, bringing up the total endowment to £237 10s. The society provide a doctor, medicine, and benevolent grants in cases of sickness or distress. The subscription to secure these benefits is exceedingly small —namely, Ud per week; Membership is compulsory, the rule of compulsion being that of the employes themselves. The contributions to the fund are not subsidised by the employer, save by the payment of interest on the original capital fund and on the accrued: subscriptions, all of which are deposited with the firm.

' DAILY TIMES ' MUTUAL PROVIDENT SOCIETY. This is a society originating with the.employe's. The membership is nominally compulsory—that is to say, compulsory membership is provided for bv rule—but it does not appear that tbe-rttle is in all cases enforced. The society's benefits are sick nay and funeral allowances, and a part of the fund is banked with the company, who pay 6 per cent, iuterest. The company take no part in the management, and pay no subsidy. Generally, the working of the society appears to give satisfaction to the members. KAITANGATA RAILWAY AND COAT, COMPANY'S EMPLOYES' FRIENDLY SOCIETY. This also is an organisation of which member-' ship is nominally compulsory, but it does not appear that the rule is enforced. The benefits are sick pay, funeral allowances, medical attendance, and medicine both for members and members' wives, and the subscription Gd or 3d per week, according to the status of the employe. The society is managed entirely by the members, and is not interfered with by the company. A noticeable feature is that it includes a number of young persens who would be unable to join ordinary friendly societies, and its popularity is evidenced by the fact that, of a total number of ISO employes, all with the exception of less than a dozen are included in the membership. Iu regard to other provident societies connected with banks, etc., the Commissioners say : BANK 01' AUSTRALASIA OFFICERS' PROVIDENT FUND. There is a provident fund connected with this bank, but it is administered in London, and no documents are available to show how it is worked. It, however, appears to be on a much more liberal scale as regards the benefits to the officers than that of any other bank trading in the colony. Full pay for three to six months is given in case of sickness, and half-pay for three to six months thereafter. If an officer dies his widow or children receive his pension for five years. The bank subsidises the fund handsomely, and it is stated that the fund and its administration give great satisfaction to the large majority of the officers. No surrender value is provided. BANK OF NEW SOUTH WALES OFFICERS' PROVIDENT FUND.. There is a provident fund in connection with this institution, a surplus above £25,000 of the guarantee fund being set apart as the nucleus of a provident fund. The latter provides only for pensions, the bank itself dealing liberally with its officers in case of sickness by paying full salary up to six months. In case of the death of an officer his widow or representative is entitled to his pension for five years. There is no surrender value in the provident fund. UNION BANK OF AUSTRALIA OFFICERS' PROVIDENT FUND. . The rate of contribution to this fund on the salaries of officers is stated to be £5 5s per centum for the first live years, and thereafter 3J per cent., such contributions covering guarantee abo. A pension accrues at fifty-five years of age, and in the case - of death after ten years' service the widow is entitled to a pension allowance for five years. There is also in this case no surrender value, a fact that is much complained of in all similar cases. AUSTRALIAN MUTUAL PROVIDENT SOCIETY OFFICERS PROVIDENT.FUND. The provident fund of the officers of this society wa3 established at Sydney with an endowment of £25,000 voted by the policy-holders. The rate of contribution on the part of officers is 2J per cent, of their salaries, and pensions accrue at the age of. sixty, wbileih the case of officers becoming-in-capacitated after' ten years'-service an allowance equal to one month's salary for each year of sep vice is granted. There is no surrender, value, and no provision for widows and children...-'. NEW ZEALAND LOAN AND MERCANTILE AGENCY COMPANY'S OFFICERS' PROVIDENT FUND. . As this fund is now in process of liquidation under an order of the English Court, it is not uecessary to further refer to it. ANNUALLY-TERMINATING SOCIETIES.

These societies, thirteen in number, are formed very much on the same lines, providing only for six pay, or sick pay and funeral allowances. As they never have any large amount of accumulated funds the question of, safeguards as to investments scarcely arises. The societies which have formed the subject of investigation are the following : M'Leod Brothers' Mutual Sick and- Accident, Phoenix Company Sick and Accident, Sargood, Son, and Ewen's Boot Factory Yearly Benefit, Roslyn Worsted and Woollen Mills Yearly Benefit, Christchurch Railway Annual Sick Benefit. Kaiapoi Clothing Factory Sick and Accident Benefit, Christchurch Railway Employes' Sick Benefit, Ward and Co.'s Employes' Benefit Club, Kaiapoi Woollen Factory Sick and Accident Benefit, Stewart and Co.'s Workmen's Sick Club, 'Palace" Boot Factory Employes' Sick Benefit, Kauri Timber Company's Employe's Accident Relief, and Timber Workers' Accident Relief.'

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THE FRIENDLY SOCIETIES' COMMISSION., Evening Star, Issue 10443, 12 October 1897, Supplement

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THE FRIENDLY SOCIETIES' COMMISSION. Evening Star, Issue 10443, 12 October 1897, Supplement

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