Part 45

On the actuarial side it is in the highest degree essential to the interests of their members that friendly societies should be financially sound,--in other words, that they should throughout their existence be able to meet the engagements into which they have entered with their members. For this purpose it is necessary that the members' contributions should be so fixed as to prove adequate, with proper management, to provide the benefits promised to the members. These benefits almost entirely depend upon the contingencies of health and life; that is, they take the form of payments to members when sick, of payments to members upon attaining given ages, or of payments upon members' deaths, and frequently a member is assured for all these benefits, viz. a weekly payment if at any time sick before attaining a certain age, a weekly payment for the remainder of life after attaining that age, and a sum to be paid upon his death. Of course the object of the allowance in sickness is to provide a substitute for the weekly wage lost in consequence of being unable to work, and the object of the weekly payment after attaining a certain age, when the member will probably be too infirm to be able to earn a living by the exercise of his calling or occupation, is to provide him with the necessaries of life, and so enable him to be independent of poor relief. There is every reason to believe that, when a large group of persons of the same age and calling are observed, there will be found to prevail among them, taken one with another, an average number of days' sickness, as well as an average rate of mortality, in passing through each year of life, which can be very nearly predicted from the results furnished by statistics based upon observations previously made upon similarly circumstanced groups. Assuming, therefore, the necessary statistics to be attainable, the computation of suitable rates of contribution to be paid by the members of a society in return for certain allowances during sickness, or upon attaining a certain age, or upon death, can be readily made by an actuarial expert. Accordingly, to furnish these statistics, the act of 1875, in continuation of an enactment which first appeared in a statute passed in 1829, required every registered society to make quinquennial returns of the sickness and mortality experienced by its members. By the year 1880 ten periods of five years had been completed, and at the end of each of them a number of returns had been received. Some of these had been tabulated by actuaries, the latest tabulation being of those for the five years ending 1855. There remained untabulated five complete sets of returns for the five subsequent quinquennial periods. It was resolved that these should be tabulated once for all, and it was considered that they would afford sufficient material for the construction of tables of sickness and mortality that might be adopted for the future as standard tables for friendly societies; and that it would be inexpedient to impose any longer on the societies the burden of making such returns. This requirement of the act was accordingly repealed in 1882. The result of the tabulation appeared in 1896, in a bluebook of 1367 folio pages, containing tables based upon the experience of nearly four and a half million years of life. These tables showed generally, as compared with previous observations, an increased liability to sickness. This inference has been confirmed by the observations of Mr Alfred W. Watson, actuary to the Independent Order of Oddfellows, Manchester Unity Friendly Society, on his investigation of the sickness and mortality experience of that society during the five years 1893-1897, which extended over 800,000 individuals, more than 3,000,000 years of life and 7,000,000 weeks of sickness.

The establishment of the National Conference of Friendly Societies by the orders and a few other societies has been of great service in obtaining improvements in the law, and in enabling the societies strongly to represent to the government and the legislature any grievance entertained by them. A complaint that membership of a shop club was made by certain employers a condition of employment, and that the rules of the club required the members to withdraw from other societies, led to the appointment of a departmental committee, who recommended that such a condition of employment should be made illegal, except in certain cases, and that in every case it should be illegal to make the withdrawal from a society a condition of employment. In 1902 an act was passed based upon this recommendation.

It is an increasing practice among societies of combining together to obtain medical attendance and medicine for their members by the formation of medical associations. In 1895 trade unions were enabled to join in such associations, and it was provided that a contributing society or union should not withdraw from an association except upon three months' notice. The working of these associations has been viewed with dissatisfaction by members of the medical profession, and it has been suggested that a board of conciliation should be formed consisting of representatives of the Conference of Friendly Societies and of an equal number of medical men.

The following figures are derived from returns of registered societies and branches of registered societies to the beginning of 1905:

+---------------------------------------------------------+-----------+-----------+------------+ | | Number of | Number of | Amount of | | | Returns. | Members. | Funds. | +---------------------------------------------------------+-----------+-----------+------------+ | Ordinary Friendly Societies (classes 2 to 8, 10 and 11) | 6,938 | 3,132,065 |L17,042,398 | | Societies having Branches (class 1) | 20,819 | 2,606,029 | 23,446,330 | | Collecting Friendly Societies (class 9) | 45 | 7,448,549 | 7,862,569 | | Benevolent Societies (class 12) | 75 | 26,509 | 317,913 | | Working Men's Clubs (class 12) | 913 | 236,298 | 318,945 | | Specially Authorized Societies (class 12) | 122 | 75,089 | 628,759 | | Specially Authorized Loan Societies (class 12) | 517 | 115,511 | 771,578 | | Medical Societies (see last paragraph) | 95 | 324,145 | 62,049 | | Cattle Insurance Societies (class 13) | 57 | 3,736 | 7,746 | | Shop Clubs (under act of 1902) | 7 | 10,859 | 773 | | +-----------+-----------+------------+ | | 29,588 |13,978,790 |L50,459,060 | +---------------------------------------------------------+-----------+-----------+------------+

_British Empire._--In many of the British colonies legislation on the subject similar to that of the mother-country has been adopted. In those forming the Commonwealth of Australia and in New Zealand the affiliated orders hold the field, there being few, if any, independent friendly societies. The state of Victoria has more than 1000 lodges with more than 100,000 members and nearly 1-1/2 million pounds funds, averaging nearly L14 per member. Besides the registrar there is a government actuary for friendly societies, by whom the liabilities and accounts of all societies are valued every five years, a method which ensures uniformity in the processes of valuation. The friendly societies in the other Australasian states are not so numerous nor so wealthy, but are in each case under the supervision of vigilant public officials. In New Zealand a friendly society was established at New Plymouth in 1841, the first year of that settlement. The formation of a society at Nelson was resolved upon by the emigrants on shipboard on their passage out, and the first meeting was held among the tall fern near the beach a few days after they landed. The societies have now a registrar, an actuary, a revising barrister and two public valuers. Investigations have been made into their sickness experience, with results which compare favourably with those of the Manchester Unity and the registry office in the mother-country until the higher ages, when greater sickness appears to result from lower mortality. The average funds per member are L19, 10s. Nearly four-fifths are invested in the purchase or on mortgage of real estate.

In Cape Colony no society is allowed to register unless it be shown to the satisfaction of the registrar that the contributions which it proposes to charge are adequate to provide for the benefits which it undertakes to grant. The consequence is that little more than one-third of the existing societies are registered.

In the Dominion of Canada, province of Ontario, extensive powers of control are given to the registrar, and societies are not admitted to registry without strict proof of their compliance with the conditions of registry imposed by the law. Very full returns of their transactions are required and published, and registry is cancelled when any of the conditions of registry cease to be observed. These conditions apply not only to societies existing in Ontario, but to foreign societies transacting business there.

In several of the West Indian Islands statutes have been passed on the model of British legislation and registrars have been appointed.

_European Countries._--In foreign countries the development of friendly societies has proceeded upon different lines. Belgium has a _Commission royale permanente des societes de secours mutuel_. Under laws passed in 1851 and 1894 societies are divided into two classes, recognized and not recognized. The recognized societies were in 1886 only about half as many as the unrecognized. There were in 1904 nearly 7000 recognized societies with 700,000 members. They enjoy the privileges of incorporation, exemption from stamp duty, gratuitous announcement in the official Moniteur and may have free postage.

In France under the second empire a scheme was prepared for assisting friendly societies by granting them collective insurances under government security. The societies have the privilege of investing their funds in the Caisse des Depots et Consignations, corresponding to the English National Debt commission. The dual classification of societies in France is into those "authorized" and those "approved." By a law of the 1st of April 1898 a friendly society may be established by merely depositing a copy of its rules and list of officers with the sousprefet. Approved societies are entitled to certain state subventions for assisting in the purchase of old-age pensions and otherwise. A higher council has been established to advise on their working.

In Germany a law was passed on the 7th of April 1876 (amended on the 1st of June 1884) which prescribed for registered friendly societies many things which in England are left to the discretion of their founders; and it provided for an amount of official interference in their management that is wholly unknown here. The superintending authority had a right to inspect the books of every society, whether registered or not, and to give formal notice to a society to call in arrears, exclude defaulters, pay benefits or revoke illegal resolutions. A higher authority might, in certain cases, order societies to be dissolved. These provisions related to voluntary societies; but it was competent for communal authorities also to order the formation of a friendly society, and to make a regulation compelling all workmen not already members of a society to join it. Since then the great series of imperial statutes has been passed, commencing in 1883 with that for sickness insurance, followed in 1884 by that for workmen's accident insurance, extended to sickness insurance in 1885, developed in the laws relating to accident and sickness insurance of persons engaged in agricultural and forestry pursuits in 1886, of persons engaged in the building trade and of seamen and others engaged in seafaring pursuits in 1887, and crowned by the law relating to infirmity and old-age insurance in 1889. Mr H. Unger, a distinguished actuary, remarks that the whole German workman's insurance and its executive bodies (sickness funds, trade associations, insurance institutions) are constantly endeavouring to improve the position of the workmen in a social and sanitary aspect, to the benefit of internal peace and the welfare of the German empire.

In Holland it is stated that the number of burial clubs and sickness benefit societies appears to be greater in proportion to the population than in any other country; but that the burial clubs do not rest upon a scientific basis, and have an unfavourable influence upon infant mortality. Half the population are insured in some burial club or other. The sick benefit societies are, as in England, some in a good and some in a bad financial condition; and legislation follows the English system of compulsory publicity, combined with freedom of competition.

In Spain friendly societies have grown out of the religious gilds. They are regulated by an act of 1887. Their actuarial condition appears to be backward, but to show indications of improvement. (E. W. B.)

_United States._--Under the title of fraternal societies are included in the United States what are known in England as friendly societies, having some basis of mutual help to members, mutual insurance associations and benefit associations of all kinds. There are various classes and a great variety of forms of fraternal associations. It is therefore difficult to give a concrete historical statement of their origin and growth; but, dealing with those having benefit features for the payment of certain amounts in case of sickness, accident or death, it is found that their history in the United States is practically within the last half of the 19th century. The more important of the older organizations are the Improved Order of Red Men, founded in 1771 and reorganized in 1834; Ancient Order of Foresters, 1836; Ancient Order of Hibernians of America, 1836; United Ancient Order of Druids, 1839; Independent Order of Rechabites, 1842; Independent Order of B'nai B'rith, founded in 1843; Order of the United American Mechanics, 1845; Independent Order of Free Sons of Israel, 1849; Junior Order of United American Mechanics, 1853. A very large proportion, probably more than one-half, of the societies which have secret organizations pay benefits in case of sickness, accident, disability, and funeral expenses in case of death. This class of societies grew out of the English friendly societies and have masonic characteristics. The Freemasons and other secret societies, while not all having benefit features in their distinctive organizations, have auxiliary societies with such features. There is also a class of secret societies, based largely on masonic usages, that have for their principal object the payment of benefits in some form. These are the Oddfellows, the Knights of Pythias, the Knights of Honour, the Royal Arcanum and some others. Many trade unions have now adopted benefit features, especially the Typographical Union, while many subordinate unions and great publishing houses have mutual relief associations purely of a local character, and some of the more important newspapers have such mutual relief or benefit societies. The New York trade unions, taken as a whole, have paid out large sums of money in benefits where members have been out of work, or are sick, or are on strike or have died. The total paid in one year for all these benefits was over $500,000.

It is impossible to give the membership of all the fraternal associations in the United States; but, including Oddfellows, Freemasons, purely benefit associations and all the class of the larger fraternal organizations, the membership is over 6,000,000. Among the more important, so far as membership is concerned, are the Knights of Pythias, the Oddfellows, the Modern Woodmen of America, the Ancient Order of United Workmen, Improved Order of Red Men, Royal Arcanum, Knights of the Maccabees, Junior Order of United American Mechanics, Foresters of America, Independent Order of Foresters, &c. These and other organizations pay out a vast amount of money every year in the various forms.

Assessment insurance.

Since about the year 1870 a new form of benefit organization has come into existence. This is a life insurance based on the assessment plan, assessments being levied whenever a member dies; or, as more recently, regular assessments being made in advance of death, as post-mortem assessments have proved a fallacious method of securing the means of paying death benefits. There are about 200 mutual benefit insurance companies or associations in the United States conducted on the "lodge system"; that is to say, they have regular meetings for social purposes and for general improvement, and in their work there is found the mysticism, forms and ceremonies which belong to secret societies generally. These elements have proved a very strong force in keeping this class of associations fairly intact. The "work" of the lodges in the initiation of members and their passing through various degrees is attractive to many people, and in small places, remote from the amusements of the city, these lodges constitute a resort where members can give play to their various talents. In most of them the features of the Masonic ritual are prominent. The amount of insurance which a single member can carry in such associations is small. In the Knights of Honour, one of the first of this class, policies ranging from $500 to $2000 are granted. In the Royal Arcanum the maximum is $3000. This form of insurance may be called co-operative, and has many elements which make the organizations practising it stronger than the ordinary assessment insurance companies having no stated meetings of members. These co-operative insurance societies are organized on the federal plan--as the Knights of Honour, for instance--having local assemblies, where the lodge-room element is in force; state organizations, to which the local bodies send delegates, and the national organization, which conducts all the insurance business through its executive officers. The local societies pay a certain given amount towards the support of the state and national offices, and while originally they paid death assessments, as called for, they now pay regular monthly assessments, in order to avoid the weakness of the post-mortem assessment. The difficulty which these organizations have in conducting the insurance business is in keeping the average age of membership at a low point, for with an increase in the average the assessments increase, and many such organizations have had great trouble to convince younger members that their assessments should be increased to make up for the heavy losses among the older members. The experience of these purely insurance associations has not been sufficient yet to demonstrate their absolute soundness or desirability, but they have enabled a large number of persons of limited means to carry insurance at a very low rate. They have not materially interfered with regular level premium insurance enterprises, for they have stimulated the people to understand the benefits of insurance, and have really been an educational force in this direction.

Railway relief departments.

A modern method of benefit association is found in the railway relief departments of some of the large railway corporations. These departments are organized upon a different plan from the benefit features of labour organizations and secret societies, providing the members not only with payments on account of death, but also with assistance of definite amounts in case of sickness or accident, the railway companies contributing to the funds, partly from philanthropic and partly from financial motives. The principal railway companies in the United States which have established these relief departments are the Pennsylvania, the Philadelphia & Reading, the Baltimore & Ohio, the Chicago, Burlington & Quincy, and the Plant System. The relief department benefits the employes, the railways, and the public, because it is based upon the sound principle that the "interests and welfare of labour, capital and society are common and harmonious, and can be promoted more by co-operation of effort than by antagonism and strife." The railway employes support one-twentieth of the entire population, and most of their associations maintain organizations to provide their members with relief and insurance. The Brotherhood of Locomotive Engineers, the Order of Railway Conductors of America, the Brotherhood of Locomotive Firemen, the Brotherhood of Railway Trainmen, the Brotherhood of Railway Trackmen, the Switchmen's Union, the Brotherhood of Railway Carmen, and the Order of Railway Telegraphers, all have relief and benefit features. The oldest and largest of these is the International Brotherhood of Locomotive Engineers, founded at Detroit in August 1863. Like other labour organizations of the higher class of workmen, the objects of the brotherhoods of railway employes are partly social and partly educational, but in addition to these great purposes they seek to protect their members through relief and benefit features. Of course the relief departments of the railway companies are competitors of the relief and insurance features of the railway employes orders, but both methods of providing assistance have proved successful and beneficial.

For a history of the various American organizations, see Albert C. Stevens, _The Cyclopaedia of Fraternities_ (New York, 1899); _Facts for Fraternalists_, published by the _Fraternal Monitor_, Rochester, N.Y.; for annual statements, "The _World_ Almanac," "Railway Relief Departments," "Brotherhood Relief and Insurance of Railway Employes," "Mutual Relief and Benefit Associations in the Printing Trade," "Benefit Features of American Trade Unions," _Bulletins_ Nos. 8, 17, 19 and 22 of the U.S. Department of Labour. (C. D. W.)

FOOTNOTES:

[1] The word "friend" (O.E. _freond_, Ger. _Freund_, Dutch _Vriend_) is derived from an old Teutonic verb meaning to love. While used generally as the opposite to enemy, it is specially the term which connotes any degree, but particularly a high degree, of personal goodwill, affection or regard, from which the element of sexual love is absent.

[2] These may be briefly summed up thus:--(1) power to hold land and vesting of property in trustees by mere appointment; (2) remedy against misapplication of funds; (3) priority in bankruptcy or on death of officer; (4) transfer of stock by direction of chief registrar; (5) exemption from stamp duties; (6) membership of minors; (7) certificates of birth and death at reduced cost; (8) investment with National Debt Commissioners; (9) reduction of fines on admission to copyholds; (10) discharge of mortgages by mere receipt; (11) obligation on officers to render accounts; (12) settlement of disputes; (13) insurance of funeral expenses for wives and children without insurable interest; (14) nomination at death; (15) payment without administration; (16) services of public auditors and valuers; (17) registry of documents, of which copies may be put in evidence.

FRIENDS, SOCIETY OF, the name adopted by a body of Christians, who, in law and general usage, are commonly called Quakers. Though small in number, the Society occupies a position of singular interest. To the student of ecclesiastical history it is remarkable as exhibiting a form of Christianity widely divergent from the prevalent types, being a religious fellowship which has no formulated creed demanding definite subscription, and no liturgy, priesthood or outward sacrament, and which gives to women an equal place with men in church organization. The student of English constitutional history will observe the success with which Friends have, by the mere force of passive resistance, obtained, from the legislature and the courts, indulgence for all their scruples and a legal recognition of their customs. In American history they occupy an important place because of the very prominent part which they played in the colonization of New Jersey and Pennsylvania.

The history of Quakerism in England may be divided into three periods:--(1) from the first preaching of George Fox in 1647 to the Toleration Act 1689; (2) from 1689 to the evangelical movement in 1835; (3) from 1835 to the present time.

George Fox.