STATE AID AND CONTROL IN

INDUSTRIAL INSURANCE.

THE earnestness of conviction and the warmth of heart with which Mr. Blackley advocated his scheme of National Insurance in this Review in November 1878, led him to extreme proposals which have been severely criticised. His suggestion was to include the youth of every class in the realm in a system of compulsory contribution to a vast insurance fund. Mr. Edwards, in the number of this Review for November last, asserted that this was bad political economy and impracticable; but I venture to think that in denouncing the principle of compulsion altogether in reference to the question at issue, Mr. Edwards has been carried into the other

extreme.

Mr. Edwards is in error in saying that an association has been formed for the furtherance of the scheme propounded by Mr. Blackley. The object of that association is described to be 'to disseminate information and create opinion in favour of some such measure.' And I believe that some such measure can be pointed out which will not be open to the condemnation pronounced by Mr. Edwards upon Mr. Blackley's too comprehensive proposals; and that a certain degree of compulsion, calculated to promote the objects in view, is defensible on the grounds both of political economy and justice.

In order that the point at which the question has now arrived may be clearly seen, it is necessary to carry the view back a few years, to the inquiries of the Royal Commission on Friendly Societies from 1870 to 1874, which resulted in legislation in 1875 and 1876, but not to the extent desired.

In December 1872 a memorial was presented to the Commissioners which they describe as numerously and influentially signed, recommending that (1) the system of Government Life Insurance through the Post Office, (2) the system of Deferred Annuities, (3) the Insurance of Small Endowments, that is to say, sums to be paid at a certain time,' should be so extended as to bring those benefits within the reach of the humbler classes; and (4) that the Government should undertake the business of payment in sickness.

That the memorialists, in submitting these proposals, were not likely to commit themselves to indefensible propositions, may be

gathered from the terms in which the memorial is noticed by the Commissioners:

Amongst the names attached to this memorial will be found those of the Archbishops of Canterbury and York, 6 bishops, 17 lay peers, including Lords Shaftesbury, Lichfield, Eversley, Lyttelton, Ebury, &c., 35 M.P.'s of all shades of political opinion, headed by Mr. Gathorne Hardy and Mr. Cowper Temple, Sir Baldwyn Leighton, Sir Charles Trevelyan and several other baronets; Sir James Hannen, Mr. H. S. Tremenheere, formerly Commissioner on the employment of children, young persons, and women in agriculture, and two of his assistant commissioners, 37 chairmen and 8 deputy-chairmen of Boards of Guardians, headed by the Dean of Winchester and the Hon. Francis Scott . . . several chairmen and deputychairmen of quarter sessions, 52 Justices of the Peace not included in previous categories, among whom may be mentioned Mr. T. B. L. Baker and Mr. J. Spedding, nearly 90 clergymen not included in previous categories . . . and a considerable number of other persons who come within the description of the Commissioners as having given a great deal of time and thought to the subject of Friendly Societies.'1

...

Of the four points presented for their consideration, the Commissioners expressed their concurrence in the first three. The first two-the system of Government Life Insurance through the Post Office, and the system of Deferred Annuities-have been carried into effect; the third, which aimed at giving the Government power to reduce the minimum sum that can be insured for at death, from 201. to 51. or less, yet remains to be dealt with; and I shall show further on why it should receive the early attention of the Government.

Upon the fourth point, the Commissioners state (Fourth Report, § 848) that they are inclined to think that the danger of imposition and the difficulty of preventing "malingering" would be great in a Government Friendly Society; but without entering fully into this controversy, they are, upon other grounds, of opinion that it is not desirable that the State should, under present circumstances at all events, undertake what is called sick-pay business.'

The suggestion of the memorialists that the Government should undertake, to its full extent, the business of insuring sick-pay, and therefore in time entirely supersede the Friendly Societies, was prompted by the apparently very unsatisfactory state at that period of nearly all the Friendly Societies in the Kingdom, as set forth in the annual Reports of the then Registrar of Friendly Societies. The legislation in 1875 and 1876, consequent upon the inquiries of the Royal Commission above referred to, although to a considerable extent simply permissive, has laid the foundation for great improvements in those Societies. But there is nevertheless still a field open in which the interposition of Government, in undertaking to insure sick-pay to a limited extent, would be most salutary, not only to the working classes, but to the Societies themselves. I hope to show that the objections which weighed with the Commissioners in 1874 may be removed by the mode in which I propose that the subject should now be dealt with

And in adopting to that end the principle of compulsion suggested

Note to Section 845.

by Mr. Blackley, I beg leave to bear my testimony to the value of his arguments as to the expediency and justice of applying it to the matter in question.

Without attempting a full summary of them, it will suffice in this place to say that Mr. Blackley reminds his readers that both personal and social duties are already in numerous cases enforced by Act of Parliament; that in the case of Poor Law Relief, it is in fact contributed by rate-payers a large proportion of whom have perhaps worked harder, have been more temperate, frugal and self-denying, and yet are hardly less poor, than the very paupers whom they have to support;' and that consequently a tremendous compulsion exists now in this matter, but it is exercised on the wrong persons, to the injury of the provident and to the moral ruin of the wasteful.'

The objections against compulsion, and other objections raised against such a plan as I am about to propose, will be more conveniently dealt with after I have explained the plan itself. Some of them, I take leave to think, will be answered by the explanation.

Great advantages would arise if it were rendered possible for the youths of the wage-earning class to accumulate in the Post-Office Savings' Bank, before the age of twenty-one, a sum which, paid down at once, would purchase for them one or more of the following benefits: (1) a certain payment in sickness up to a specified age, (2) an annuity after that, and (3) a certain sum at death, 'sufficient,' according to their well-known desire, 'to prevent the cost of their burial from falling upon their children, and to guard them against the risk of being buried as paupers '-(Fourth Report, § 851).

A principle embodied in the Factory and Workshop Act 1878 (consolidating the previous Acts) affords a precedent which might be fairly extended with the view of meeting as far as practicable the above objects.

By Sect. 25 of that Act, power is given to the occupier of a factory or workshop to deduct from the wages of a child a weekly sum not exceeding one-twelfth of such wages, and to pay over such sum as a school-fee to the School Board or to the manager of an efficient school; and the sum may be recovered as a debt from the occupier. I leave out of sight the amount to which the school-fee is limited— threepence-as not bearing on the principle adopted.

The liability of the child to submit to this deduction of one-twelfth of his wages (I confine attention at present to male children), in case. his parents either cannot or will not pay the school-fee, begins from the first moment of his employment, at the age of ten years, and continues until he is fourteen, unless at thirteen he has attained the required standards of proficiency or of school attendance.

For the purpose of the proposed insurance, that liability to submit to the deduction of one-twelfth of their wages might be very properly continued from the age of fourteen until they attain the age of twenty-one, in the case of all youths employed in factories and

workshops in England and Wales, and also extended to all such youths employed in agriculture. And the proceeds should be paid to the credit of each contributor, into the nearest post-office, either by the employer or by convenient arrangements which it would not be difficult to point out.

Hereafter it would doubtless be desirable to extend the system to all employed in coal and metalliferous mines, and to the large number of persons brought under the Act of 1877 relating to those living in canal boats; thus embracing all who, being subject to protective legislation, are well-defined classes, and already habituated to certain degrees of administrative regulation. But the peculiar conditions as to health and mortality belonging to the class first mentioned would require adjustments which would probably too much complicate the question on its first introduction; and the administrative regulations of the latter are yet incomplete.

2

It would, doubtless, also be desirable, if possible, to include the youths between fourteen and twenty-one, belonging to other branches of employment within or just above the line of weekly wages, if they could be brought within any practicable definition. I am unable to suggest any such definition. The numbers brought within the very wide definitions of the Factory and Workshop Act, and those employed in agriculture, would be so considerable as fully to justify a commencement being made with those two classes. Hereafter it may be found possible to include the mining and canal populations. The only other classes of labourers named in the Census are those engaged in 'transport service' on railways and roads and in docks, and the class of 'general labourers,' amounting together to about 800,000 (vol. iv. of Census, 1871, p. 53). The indefinite class,' the last in the Census, is mentioned as consisting of those whose occupations have been imperfectly or vaguely described, and most of whom ought to have been included among the industrial classes. The exclusion, possibly only temporary, of the classes adverted to, and also of females, from the benefits of the legislation proposed, can afford no good ground for refusing those benefits to the three millions who, as I shall show presently, would in the course of a generation be included in it. Many railway servants are already included in a compulsory contribution to the insurance funds of their respective Companies.

2 The inquiries of our Assistant Commissioners in the Children's Employment Commission (1862-6), embracing all trades and manufactures not already regulated by law,' induced Parliament to extend the legislation that had been previously confined to textile factories in which steam or water power was used, to all factories and workshops in the kingdom. By Section 93 of the Consolidating Act of 1878 the expression workshop' means ' any premises, room, or place, not being a factory within the meaning of the Act, in which premises, room, or place, or within the close or curtilage or precincts of which premises, any manual labour is exercised by way of trade or for the purposes of gain, in or incidental to the making of any article, or of part of any article, or in or incidental to the altering, repairing, ornamenting, or finishing of any article, or in or incidental to the adapting for sale of any article.'

What would be the probable sums so accumulated at the age of twenty-one by the respective contributors?

The means of arriving at a fair approximation upon this point are afforded by a Return of the Inspectors of Factories to Parliament, 1871 (there is no later one), giving a statement of the average earnings of operatives in the principal places in Mr. Redgrave's district (nearly half the kingdom), 'chiefly prepared by the manufacturers themselves,' and by the accounts of earnings in the agricultural districts in the Reports of the Agricultural Employment Commission (1867-70), collected by our Assistant-Commissioners.

It may be gathered from those sources that the lowest average rate of wages for the seven years between fourteen and twenty-one may be placed at 88. per week, and this only in small manufacturing industries, and in a few localities in the agricultural districts. The general mean in manufacturing and agricultural employments for youths between 14 and 21 may be stated as ranging between 10s. and 128. per week for the seven years. But the numbers whose average earnings for that period would have amounted to 138. and 148. would be found to be considerable. In the highest paid branches of manufacturing work youths before arriving at 21 can earn from 20s. to 258. per week, and in agricultural labour, in some parts of the country, up to 208.

Assuming first broadly that full employment has continued during the whole period (the contrary supposition will be dealt with hereafter), there would have been accumulated at the end of those seven years about the following sums :—

and correspondingly larger sums by those who had been earning the

highest rates of wages.

What would be the best way, in the interest of the respective contributors, of applying these sums with the view of laying the foundation of their future independence?

Of the three objects which an intelligent and thoughtful working man aims at as a provision against the future-(1) securing a payment in sickness, (2) payment for burial expenses on the death of himself and his wife, (3) an annuity in old age--the first will always have the preference. The second he seeks to attain either through the same society which he joins in order to receive sick-pay, or through a separate burial society, including also his children. The third, although offered on liberal terms by the Government, he has hitherto for the most part considered as beyond his reach.