The Oamaru Mail. SATURDAY, SEPTEMBER 4, 1880.

Oamaru Mail, Volume IV, Issue 1319, 4 September 1880, Page 2

The Oamaru Mail. SATURDAY, SEPTEMBER 4, 1880.

Ix a recent issue we referred at some lenutli to the Government Life Assurance Department, ancl urged the necessity for the management of that department being removed from Ministerial control in order that it might bp freed from all taint of corruption. On that occasion we by no means adduced all the arguments in favor of our contention, We reserved for special comment one very strong point, and that a matter very closely affecting the interests of present or prospective policy-holders. In order tljat our readers may clearly understand tire matter, we will state briefly that hitherto'the accumulated funds of the department have been lent to policyholders on the security of their policies and to corporate bodies on the security of rates, &c., at 7 percent. The interest thus obtained has gone in part to pay the cost of management and all incidental expenses, and the law provides that the surplus shall be divided qiiinquennially amongst the policy-holders. Daring the late session the Public Accounts Committee enquired into the management of these trust funds, and as the result of their investigations, recommended that in future the funds should only be lent on Government securities^ —in other words that the Government shall monopolise the whole of the assurance fund-—that at any time the Colony is in need of money the Treasurer shall have the power to lay desperate hands upon the money of the policyholders—that he shall be permitted to abstract from the trust those moneys over which the Ministry should properly have no control, and substitute therefor pieces of paper designated Treasury Bills or Deficiency Bills. "VVe do ruat profess to know the reasons which actuated the Committee in arrivingatthisconclxision. But thiswedo know: That the principle sought to be introduced is calculated to very materially affect the interests of policyholders, and cripple the department and curtail its usefulness. As every policyholder knows, two of the strongest inducements held out by the canvassers of the department to persons about to insure tlieir lives to do so in the Government office, are—that thsy shall at any time be permitted to borrow to a certain extent on the security of their policies, awl that they shall participate in the profits. If, then, this decision of the Select Committee were strictly carried out, what would become of these promised advantages 1 In the, first place, a policy-holder, no matter what his pressing need, would be unable to borrow from the fund on the security of liis policy. If he wished to raise a small sum, and no other means were at his command, he would be compelled to surrender policy, lose a large portion of the money he had paid in premiums, arid deprive his .wife and family of all provision in case of his death. Under the present system, he is able to repay the sum borrowed at any time, and so long as he pays fcu-ly the mode-rate rate of interest charged upon the loan and keeps up the payment of his premiums, his policy holds good. Thisjit must be admitted, is a very great advantage, and its withdrawal would inflict a serious injustice upon the assured. But there is a still greater injustice to be mentioned. We j'hav# jaiready said that hitherto the ac[ctHxmlaiedfonds have been lent at 7 per

cent, interest, and that the use of the money in this direction is attended, so long as the security upon which it is. lent is good, -with advantage to policyholders, by enabling the department to give quinquennial bonuses to the assured. Under the proposed new arrangement the rate of interest obtainable upon the money will be only 5 per cent. Thus the department, or, to put the matter plainly, the shareholder —for eVery policy-holder is a sharer in. the de-. partment—will lose 2 per cent, annually upon their money. ' What then becomesof the promised bonuses T They must inevitably vanish, for wo take it that 2- per cent, will- be nearly, the full extent of the profits divisible amongst policy-holders. That the adoption of the proposed course would be not only a great injustice to, but a gross breach of faith with,-the policyholders must therefore be patent to everyone. That the knowledge that so radical Q. change in the management of the department would yerv seriously affect the popularity of the aepavtraent must also be perfectly clear. We cannot see upon what grounds the adoption of the new system can be justified. So long as the security obtained is unquestionable, tjje Commissioner should, for the sake of the policyholders, whose interests he is called upon to guard with watchful care, be permitted to secure the greatest possible rpyjirji for the use of the money held in trust for the benefit of the assured. The Legislature has no Fight whatever to make a stipulation that the Government alone shall reap the advantage of the use of the accumulated funds. With equal justice, Parliament might impose a similar condition upon foreign insurance companies doing b]jsines}3 in Qplony, Tjje proposal is a monstrous one, 'We can well understand that its adoption would prove a source of gratification to Major Atkinson, whose readiness to comply with the familiar injunction, " Put money in thy purse, boy," is well known. ]Bjit thfs is iiot, oj- at least should not be, a question pf assisting the Colonial Exchequer. It is a matter far removed from any such consideration, and full of grave import to the welfare of a department having no connection with the finances of the country. We, therefore, trust that the Ministry will not put into force the recommendation of the Select- Committee ; that they will see that the policy-holders are not 4pp?4 advantages held out as inducements to fliem when they took out their policies. The welfare of the department,' justice to the assured, and public policy, alike demand that the proposed course should not be adopted.