The Waikota Times AND THAMES VALLEY GAZETTE. SATURDAY, APRIL 12, 1890.

Waikato Times, Volume XXXIV, Issue 2769, 12 April 1890, Page 2

The Waikota Times AND THAMES VALLEY GAZETTE.

SATURDAY, APRIL 12, 1890.

Equal and exact justice to all men, 01 whatsoever state or persuasion, religious or political.

Mr Edmund Mason, Registrar of Friendly Societies, has just delivered in Dunedin an interesting and address to the members of New Zealand Societies, whom he warns, in emphatic terms, against allowing themselves to fall into an unsound financial condition. Mr Mason's position enables hiui to speak with a certain degree of authority, and the subject is one of great importance to very large numbers of people in the country. He points out that, soundly organised and efficiently worked, the Friendly Societies are the best of all Saving Banks. But if these conditions be neglected, they must sooner or later prove a delusion instead of the blessing they so well might be. The question to be settled is how far, and in what way, shall the Societies be subject to supervision on the part of trained actuaries or other experts, and of the Government of the country. Carried too far, interference will be likely to sap their efficiency and independence, deprive them of the vital energy which self-reliance has hitherto so markedly developed. The first point to which Mr Mason draws attention is the high rate of interest assumed as the basis in valuing assets, and calculating the burden of liabilities. He con-

siders that the rate adopted by the Lifts Insurance Offices of Australia, is the only one applicable to Friendly Societies in New Zealand. The, rate is 4 per cent—a rate considered too low by those representing our Friendly Societies, but which Mr Mason considers as high as safety will allow.—He admits that 4 per cent is below the rate that may be obtained .for the present, but points out that the operations of the Societies can only be safe when based on what is likely to be the average rate for a number of years and after making all necessary deductions for loss of time in re-in-vesting and in other ways. In the valuation of assets and liabilities, the rate of assumed interest is the first point, and upon 4 per cent Mr Mason is very firm on grounds of safety. His quotations are numerous from the reports of committees and grand masters lamenting the insecure position of many of the Lodges attached to their respecoive Orders. The Independent Order of Oddfellows, (Manchester Unity and American), Foresters, and others are in the list. Many of the lodges have been admittedly in difficulty, attributed to an insufficient scale of fees fixed in the early days when actuarial experience was not available to them.. Filled with healthy young men, their casualties were few and their funds rapidly increased. The ages of their members were increasing also, but the additional liability thus created was neglected in the valuation of assets or, when not neglected, was based on a current rate of interest high, but fleeting. Climate is another element to be taken into account. On this point the tables compiled from the statistics of New Zealand are much in our favour. Of an equal number of persons entering at the age of 18, the survivors, according to these statistics, are at the age of 50 nearly six per cent more than the experience of English Actuaries. At the age of 60 the difference in our favour is above 10 per cent, and at 70 above 20 per cent, a very important point in the valuation of assets in the respective countries. As population increases in the towns and the conditions of life are rendered less favourable by crowding, it has yet to be seen how far this advantage will be retained. Nor must it be forgotten that among the people who emigrated to the colony, few were old, unhealthy, or constitutionally weak, an advantage from which we may reasonably expect to benefit for a generation or two. On lapses, or secessions, Mr Mason touches with considerable force. He points out that although the Society may profit to a certain extent, it is also injured by depreciation in the average health of the members, consequent on the loss of the strong, healthy, and young, among whom the lapses usually occur. Added to this, Mr Mason considered it morally injurious for Societies based on brotherhood, to calculate on a profit obtained at the expense of those who were contributors to the common fund. This reason alone would, in his opinion, justify its omission altogether from calculation.

Having touched oil these points, the lecturer concluded by appealing to the good sense and good feeling of all connected with Friendly Societies. He urged them to seek and take the counsel of actuaries in the valuation of their assets on a fixed and sure basis. He urged them also to recast and raise their subscriptions wherever experts advised them to do so. He knew that such advice would not be palatable, but laid stress upon the fact that the additional penny or two a week so paid would not be lost. It would still be theirs, for they were paying into a mutual and not a proprietary company. The accumulated fund would remain in their own hands. The truth of chis is plain, and Mr Mason's statements are worthy of grave consideration. One point remains. What additional expense will the proposed supervision entail ? At present the low cost of working, in comparison with Insurance or any other Companies, is the leading feature in the operations of Friendly Societies. In comparison, it is the merest bagatelle, but we do not observe that Mr Mason has taken it into account. Some cheap mode of valuation, if by experts, must be devised, for it will be a poor inducement to raise the rate of subscription if additional expenses of management are to absorb a large portion of the money so raised. On this point the Societies will naturally require clear evidence before adopting suggestions to take more money from their members than they have hitherto deemed necessary.