FRIENDLY SOCIETIES' REPORT. Wellington, August 1.

Otago Witness, Issue 2059, 10 August 1893, Page 35

FRIENDLY SOCIETIES' REPORT. Wellington, August 1.

The sixteenth annual report of the Registrar of Friendly Societies was this evening presented to Parliament in pursuance of the requirement of "The Friendly Societies Act 1882," and shows but little variation in the number of societies registered during 1892-3. The statistics in the report are only brought down to 31st December 1891, and show that the number of lodges whose returns are tabulated is 365 and of the central bodies 31, while the members of these lodges totalled 27,372. The following are particulars of balance sheets, shewing the total funds (including those of central bodies) as at 31st December 1891 : — Funds : Sick and funeral, £425,070; medical and management, goods, &c, £51,063 ;— total, £476,133. Assets: Investments at interest, £329,359; value of land and buildings, £116,423; cash not bearing interest, £18,878 ; value of goods, £10,163 ; other assets, £1410 ;— total, £476,133. The following summary shows the disposition of various investments at interest, together with the respective average rates per cent, of interest :— On deposit with Post Office Savings Bank, £9150 and £19,701 ; interest 4-5 and 4'o. On deposit with other banks, £57,253 ; interest, 48. On mortgage of freehold property, £221,585 ; interest, 77. In Government and municipal debentures, £12,320; interest, 64. Other investments, £9350 ; interest, 6 6.° Total, £329,359; average interest, 6 5 per cent. The report is the work of Mr Edmund Mason, registrar of friendly societies and trade unions, and contains some very direct and plain-spoken passages, from among which I select those of special interest to the large numbers of persons concerned :— -'" While it is true that if members of a society enter into a contract no individual outsider has a right to object, there is yet no reason why the actuary in reporting on methods of finance should not criticise the conditions of such contract so far as they are likely to affect the societies' solvency. Societies have abandoned the uniform contribution, not so much because of its unfairness as because it was proved unworkable. It cannot be denied that the right principle on which to base f a mutual assurance society is that each entrant shall -pay according to the liability he brings with him, which liability obviously increases with each increase in age. It is easy to affirm that an adequate total contribution can be obtained by demanding from each member his average share, but as the ages of the members at entry cannot be known beforehand, end as the calculation of the total contribution depends upon this knowledge, 'it follows that the average is not calculatable. No unsound methods os finance can be successfully defended. The object of thrift is to provide against risk. Though absolute security may be unattainable, a provision against risk which still retains an "element of unavoidable risk is a manifest incongruity. The oft-repeated story of losses on funds invested in halls is again a feature of the valuation reports of the year. Frequently the estimate put upon freehold property greatly exceeds the capitalised value of the interest earned. Sometimes the actual valuer has written down the property. In other instances, while expressing disbelief as to the correctness of the figures supplied to him, he has transferred: them unaltered to the balance sheet. Where an estimate in excess of the true value has been accepted and entered in the valuation balance sheet, either the surplus is wholly or in part fictitious or the deficiency is understated by the amount of such excess. If there is no reasonable probability that property will in future yield interest clear of all charges at the rate of 4 per cent., at least one of two courses should be adopted. Should the society be unwilling to dispose of the property for what it will fetch in the open market, such a sum must be written off for depreciation as will leave a true estimate of its value. It is useless to retain the cost price on the books. The loss has to be faced, and it can be of no possible advantage to defer recognition of the fact that an unwise investment has been made, Some lodges show a serious deficiency. In these the claims of exiptJDg members cannot be met except by an increase. of contributions, or by the introduction of new members. As the latter method is not capable of indefinite extension, the burden, although transferred to other shoulders, cannot' be got rid of, and the greater the number of claims, that are paid in full the greater the average deficiency per member surviving. As it cannot be supposed that men join a mutual benefit society without hoping to share fully in its advantages, it is surprising that before entering' a lodge men'do not inquire whether their thrift is to be stored up against their own day of need or is to be expended in making good the inadequate reserves of prior claimants."