NEW ZEALAND GOVERNMENT LIFE INSURANCE ASSOCIATION. A Note of Warning.

Waikato Times, Volume XXVII, Issue 2184, 8 July 1886, Page 3

NEW ZEALAND GOVERNMENT LIFE INSURANCE ASSOCIATION. A Note of Warning.

TO THE EDITOR. Sir,— -Questions relating to the managemem; jjQJj^'abow will sboitly b; judcod before policy-holders throughout theeo'ony. The-mam, question is, shall we vote toy the control being handed back to the Oo\eminent displaced in tho hands of a Board of Directors? As it is a question of mtemt,t, not merely to policy-holdcis but to tlie general public, I trust you will peimitm 1 the use of yom* coluums to state, a few ot the ,mast>ns for voting 1 that it be handed back v t<> the Govemmtait. It is trequentlv urged that the Government has no business interfering at all m such a Im-iue^s as life insurance, that it should lene it entuely to be conducted as in othei colonies ,i.ni countrios'by-private companies, but 1 maintain <that life insurance is one of those things \yhich above all otheis should be - entifely by the State. Thencaiei we can attain to absolute seeuuty, tlie nearer approach we have to true assurance. Th,e further lemoved lit can be from ewiy element of speculation tlie nearer it approaches true assurance. In assurance business, $he insurer wants above .ill tiling . to bd'htfre— to know that the funds ar<* BecuteJy' invested, and that when wanted they will be forthcoming. He does tiot - look for big profits, for these are not attainable withtoqt risk 1 of big losses. Better that^fcb^ funds should he invented secmely at a low^ate.of interest, or no interest at »U. wian "" invented in rL<ky securities yielditfg* m*gh rates of interest. And for this reason alone, I think it better that the j whole of the funds of tlie association already invested by the Board of Directors in freehold securities and fixed deposits in financial institutions should be withdrawn as faSt as the agreement upon which they are lent permit, and that the whole 1 fund*" * <l t>e > 'invested in Government .seexuities,' * and those only. If this is done there will be no occasion for a board of directors, and it will be . fount), t.ibtvt all their anxiety to secure Beats in such boards will evaporate. Without the handling of the association funds, such seatsjwfoild'lose'' their principal attraction. And why id this*? Need I give a reason ? I will presently. The institution of a boaid of directors to control the investment of the funds in the Government association was only the introduction of the weakest feature in the jiuuch self lauded mutual societies That *wfyk is this, that the whole of the moneys contributed by the policy holders to the common fund are handed over to the unc uitrnlled and uncontrollable handling of a knot of individuals who, not having a penny at stake in tho event of collapeajtiare- frequently mixed up in all njanner of speculativrf syndicates and companies which work on fund* fieqoently borrowed j f rqni • the.se societies. Need I point out 'the yisk of the innocent policy holders' of thejr funds being considerably diminished 1 if not entirely dissipated in this way ? In a period of depression such as we are now peeing through, when speculations in land riro bringing syndicates, companies and individuals to utter grief on all sides, is it to be expected that the funds of tlie.se associations freely lent on so-called excellent securities to aid the^e speculative syndicates, rings, and companies will come through undiminished? Ye policy holders of unbounded faith m mutual societies and big bonuses, through ye may answer now with confidence Yes, I would not caie t> be in your directors' boots when you have ascertained your true position. That position I will state presently in a form blunt enough for the dullest amongst ye to comprehend. Meanwhile let me urge upon New* Zealand Government policy holders to be warned bv the expeiience we have already had of the doings of tne board, and ha\<3 done with them for once and all. The mischief his not gone too far to be,repaued. Hid the association of the boa-rd, ud it of the board's in\ cements in freehold land and buildings ar.d nvntgages on freehold land, put all the funds into Government guaianteed secnnt.es, lid it of its highly paid agents for when the public coma to see tlie ti tie position of a mutual policy-holdei as compare! wit'i that of a State, .guaranteed policy-holder there will-bo mf need of employing sinait agents at high salaries to cope with lival societies. And what is the true position of a idmui ii policy-holder? Simply this : That of .: man who, with the blimle-t cn.'j.i nee in the high commercial moiah'v a> d mt yr:t\ of a small ring of h<ilf-,i do/eu t:u'u ("t whom he, as a nile, d<>e- n<.t "\m kn^w tinnames,, jnuch le-s the di.iinetui) hands over regularly n poition ot his ii i:.,-r uiu« ready money (which, together wife t1)t 1 ) it ■>' his fellow believers, aniounts. ,n nm cases, to hnndieds of thou-au'i- a se.i 1 ;. t'> be dealt with as they think nr '|v'. \> it < " check or control of any hoit but t!:i u o\,n innate conscientiousness. What tins s >nn times to we have an example ot m the case of the Glasgow Bank. It is tin* that m the Government Assnciation we have this advantage over the oidmaiy mutual, that whereas they can find -nil absolutely nothing more than their directois (invariably most true and honourable men) choose to let them know, we can; institute, through the House of Representatives, a most searching inqusition into every transaction and get some in sight into its) proceedings. But why have anything to do with so manifestly risky an innovation upon the original d'e«jgu of a Goverritnent guaranteed association pure «nd simple? Some, forsooth, would have us reduce the control the Government and Parliament already has over then proceedings, gfye /the 'board carte blanche to make dttcfts atfd 'drakes of the funds and at the same time retain the State guarantee. Judging by what we have seen of the proceedingsJi^EV.b^ard pretty well under our control, "rtna ivnose proceedings are open to our inspection and criticisms, what might we expect if the<e checks were removed and the boaid placed on the same footing "as that of a mutual, having the absolntely, l U|ici)ntrolled manipulation of the whole funds without check or hindrance I leave policy holders to imagine. All I gay is, Don't be fools. Vote for handing the management o\er to the Government »nd agitate for an Act requiring that all funds be invested in State guaranteed securities, that all offices be part and parcel of tb© ordinary Governmenc buildings, and that the, whole -business of the association be earrie'd'on by post office officials as far as possible, and that commission be, allowed only to policy holders introducing new business, enabling them thereby to considerably reduce their own premiums. 2^ever fear the mutual*. I \enture to predict that in less than ten years there will baldly be a mutual policy holder in the colony, if m any of the colonies. No man is a prophet in his own country, but let fti this be made a note of by ye increduous ones and see. it will gradually dawn upon those who are auch now that their position i«, to say the ieaafc, slightly insecure, that if their vrtirectois should happen to be of a higher grade than those of the Glasgow Bank {when the means of chocking their little games were much'greater than is the case with any mutual) there might be some slight risk of a similar collapse, and consequent ruin and misery. What extraordinary! proßts are usually associated with extraordinary risks of lo&s. That success depending upon continuous inflation and the introduction of new business is apt, when that inflation meets with a check, to collapse, like other bubbles, and with a nuddenn.ess even greater than that of its expansion. That big bonus certificates fiiay be mere sops given to shut their tnouth«,a« far as asking awkward que?tions is concerned, and creating a feeling of (satisfied contentment. Check any inquisitiveness that might otherwise develop itself. That after all these big bonus certificates are mere I. 0. U.s payable in Jdngdom come to themselves by themselves one to another, for the j payment, of which they are nmtually responsible one to another. That their cash value is comparatively small, but, small as it may be, ifc is better to take it together with the ' Rurrandar value of their policies now " before the inevitable .smash comes than r>»k waiting until the collapse of Ai«ne of the wealthiest of the associations creates a panic, a rush for surrender balances, and a spirit of inquisitiveness that must inevitably tend to the total collapse of many if not all the mutual, create a universal demand for state j jnjaranteed associations everywhere, and olauing all lif» insurance business upon the £f>und basis which we policytiolder* in Government, if we .are wi«o enough, will now see that our institution is placed upon. I promised t<» *fcate why, if the control of the fund«6f au awwciation were withdiawn from its board «l directors, all anxiety to .obtain seats upon siwh boards would evaporate To prevent any ambiguity on the .point. I will st*W why some, not so fami Jiar with the. way in which these things are \ .worketfWfiiaPpen to be, mierht be endowed j with |aitlu sufficient t> belwve t' • >. *hongStX>£ feathering h.H own ue-t . (..»■ f ■the piakingfl which the manipulnt'-m of <arge sums of money are &u*e to thrusfc in ]

1)3 wa\ ) ever enters the head of a candidate for a scat in such a boaid with a meu'ly noinunl salary attached ; that it is out of pmo li^tf and affection for the thousands of teilow-beings, who exhibit such unbounded confidence in hi> intefliity that ho undertakes such arduous and responsible dutie-. .is are attached to the position ; that ali directors are as honest as the d.iy and soon. Let me simply state tli.it fiuin my experience lam of opinion that such a one is never kno»vn to acquire i -uch a seat. Those in pow t r tako \eiy tfnod care that would- be conscientious, and therefore troublesome candidates do not got in. Rules are ,i rule, as so framed as' to keep the control entirely in the hands of the directors ,is legaids the introduction of fiesh blood upon their boards. The nn ti.unmoiied manipulation of the funds of a P'>.,d mutual association is considered one of tlie tattost things attainable by a man of business. Hence/ the ea^ernc^s to secme iho seats, and the tei'iatkable phcnonionon of a haul -headed man of biisine-s .speudinp; £120 to mipiovo his chance of securing a se it \v.»rth (nominally) only £100, and this e\en subject to Parliainentaiy cheek and ime-titfation, and without the s.nne untrammelled oppoi tunities that a seat on the b mi d of . i mutual affords. I trust I have luoiitiht forw.ird enough to c.iuso policyholders t> think a bit. — Yours, faithfully, A Nkw Zevland (tOVEhnment Lifk InSUKANCE POUOY-HOLDEIU Cambridge. July Cth.

Yes !It is certainly true. Ask any of your friends who have purchased there. Gailitk and, Cranwell have numerous unasked for and very favourable commendations from country customers on their o\c»>ll«Mit packing of Furniture, Crockery, and Glass, &c. Ladies and gentlemen about to furnish should n-member that (iarlick and Cranwell's is thk Cheap Furnishing Wharehoirse ot Auckland. Furniture to r suit all classes ; also Carpets, Floor Cloths and' all House Necessaries. It your new house is nearly finished, or, you ace troinjj to get niarr.6d, visit Garlick and Cianwell, Queen-street anJ Lome-street Auckland Intendfnjj pur rh isfT>. r \n \\avp t cat ilntfiii* sr>nl free