THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SUGGESTIONS FOR A SCHEME OF OLD AGE PENSIONS ^4 3 5 7< ft Suggestions for a Scheme OLD AGE PENSIONS "Mitb an ^ntroonctorg Cbapter Dealing witb tbe IReport of tbe Committee on ©lo Bge pensions BY LIONEL HOLLAND Member of Parliament EDWARD ARNOLD 37 BEDFORD STREET, STRAND 1808 7/OG Qr7H7 PREFACE. The " Suggestions for a Scheme of Old Age Pensions" is a reprint of certain proposals which I ventured to submit for the consideration of the Committee appointed in July, 1896. Encouraged by a few friends, who are interested in the movement towards securing for the deserving poor some better provision in old age than they now enjoy, to disinter this scheme from its peaceful tomb in the pages of a Blue-Book, I publish it without alteration in the form in which it was submitted to the Committee on Old Age Pensions. These proposals were framed with the object of avoid- ing the serious objections which can be raised to any contributory system, without disregarding the opinion that pensions should be conferred as a reward and en- couragement to thrift. I claim for the plan no more originality than can be attributed to the Report of the Old Age Pensions Committee, and no freedom from the errors of judgment which relieve the sterile monotony of the conclusions accepted in that document. No one, however, who is sincerely anxious to arrive at a solution 406163 vi Preface of this problem will deem any suggestions amiss which are not advanced without some study and consideration. The editor of the National Review has kindly allowed me to use as an introduction to this pamphlet an article I have contributed to his review. LIONEL HOLLAND. INTRODUCTION. THE REPORT ON OLD AGE PENSIONS. The Report of the Committee on Old Age Pensions, which was appointed in July, 1896, has at length been issued. The circumstances which led up to the appoint- ment of this Committee may be sufficiently indicated in a few sentences. For some years there has prevailed a "widespread expectation, in and out of Parliament, that some pro- vision other than that made by the Poor-Law should be devised for the assistance in old age of those among the poor who have led respectable and industrious lives ;" and in the year 1893 a Royal Commission was entrusted with the duty of ascertaining whether any alterations were desirable in the methods of Poor-Law relief to meet the case of the aged poor, or whether assistance could be otherwise afforded to them. The deliberations of that Commission, in so far as they relate to suggestions for a system of Old Age Pensions, were negative in result. The Commissioners had before them, among other proposals of less defined provisions, the scheme of the informal Parliamentary Committee associated with viii Introduction the name of Mr. Chamberlain, and that of Mr. Charles Booth ; they reported their inability to recommend the adoption of any of the schemes submitted to them, but expressed a desire that their inquiry should not pre- clude the future consideration of plans which might be thereafter proposed. A Minority Report was also pre- sented. This Minority of the Commissioners, including among them two members of the present Cabinet, Mr. Chamberlain and Mr. Ritchie, advocated more definite action : the appointment of a small Committee whose functions should not be limited to an " examination of all the schemes " which might be laid before it, " but should extend to the construction, if possible, of a practical scheme, either based upon, or altogether inde- pendent of, any of those submitted. ... It should," they were of opinion, " lay down the principles to which any scheme should conform," especially in relation to its financial aspect and its influence on habits of thrift and self-reliance. The Royal Commission on the Aged Poor presented their report in February, 1895. Between that date and the date of the General Election, the spring-time for projects of social reform, the movement in favour of State or State-aided Pensions developed rapidly. The leaders of the Opposition sanctioned the demand for State assistance to the industrious poor in old age, and when the defeat of the Radical Government occurred and the present Ministry came into office, the new Ministers accepted, as responsible advisers to the Crown, " Old Introduction ix Age Pensions " as an integral part of the legislative programme upon which they appealed to the country for support. They therefore took a step in advance of the position assumed even by the Minority section of the Old Age Commissioners. By including Old Age Pensions among the subjects upon which, if the electors confirmed them in power, the Government intended to legislate, the present Ministry crystallized " the wide- spread expectation " into anticipations which could be reasonably entertained, and gave the electorate to under- stand that they viewed the suggested departure, not only as just and expedient in principle, but as practicable in application. Among the projected social reforms commonly accepted by the party now in power, and endorsed by its leaders, to none was given greater prominence at the last General Election than to the " amelioration of the lot of the aged poor " by some system of pensions. In the purely agricultural districts of the eastern counties, in the manufacturing cities of the midlands, in London and in Glasgow, from the South of England to the North of Scotland, by the recognised chiefs of the party and by its rank and file, scarcely an Address was published, scarcely a speech delivered without some reference, more or less definite in its character, but invariably favourable, to the promotion of legislation with a view to improving the position and safeguarding the independence of in- dustrious people in their old age. It is, then, reasonable to affirm that the application of b x Introduction some scheme of Old Age Pensions to meet the problem of old age pauperism is an essential part of this Govern- ment's programme of legislation. Not only was the necessity of a departure in this direction publicly favoured by the foremost men in the Unionist forces, but they persevered in their advocacy subsequently to the publi- cation of the Report of the Commission on the Aged Poor, and undeterred by its nugatory character. That Report was issued, and its conclusions, or paucity of conclusions, widely canvassed in the spring of 1895, giving ample space for any reconsideration of policy before deciding upon the character of the appeal to be made to the constituencies. But no alteration of policy was announced ; the members of the Government and the rank and file of their followers continued to maintain the question of pensions for the aged poor in a prominent position in their electoral forecast. There is at present no reason to doubt that it was only after careful consideration and in all good faith that Ministers accepted the responsibility of attempting to grapple with this problem. The sense of political honour at Westminster is at least as reliable as the commercial integrity of the City. Occasionally a buoyant market and a multitude of investors will persuade a few gentlemen of solid financial reputation to support an unduly favourable estimate of some industrial venture, or to become enamoured of an African Eldorado ; and it may be that the prospect of a new Parliament and a change of Government inspires in ardent politicians ex- Introduction xi pectations of a prosperous era of halcyon days of trade and social improvement, which, if past experience is of value, years of plodding and painful progress would be unable to realize. But to suggest that a proposal for legislation thus commonly accepted as an urgent neces- sity by the representatives of the Unionist party at the General Election, and formally approved by the Unionist chiefs, is to be shelved or rejected, is to argue that the leaders in the public life of Great Britain are not one whit better than the shabbiest promoters of a bogus company. It is not necessary to impugn the good faith of the Government, to doubt the wisdom hitherto of their policy in regard to this question. Having accepted the principle of State-aid for the industrious poor in old age, this Government had to decide upon the most practicable and beneficial application of that principle. They apparently acquiesced in the recommendation of the Minority Report of the 1893 Commission, that a further investigation by a small Committee, with a view to formulating a scheme of its own or endorsing some scheme submitted to it, would be serviceable, and might indicate the lines which Parliament could advantageously pursue. But their acquiescence was only apparent. They appointed a small Committee ; but neither in the scope of the reference to it, nor in respect to its composition, did they fulfil the recommendations of the Minority Report. If the Government were actuated only by anxiety for further informed advice to enable them the better to b—2 xii Introduction apply a principle entertained in all sincerity, the pro- cedure most likely to be of service to them seemed fairly plain : to appoint a small Committee — a Depart- mental Committee with some expert members, or a Select Committee, which to my mind would have been a preferable body for the purpose, and would have equally been able to avail itself of expert opinion — but in either case composed of gentlemen who might be supposed to favour, or at any rate not to be adverse to, the principle which it was the purpose of the Government to establish ; to arrange that this Committee should act under a reference wide enough to enable it to test every proposal submitted to it which might promise to repay examination, and with a specific direction to endeavour to construct a practical scheme or schemes for the con- sideration of the Cabinet and Parliament, and to indicate the principles to which any such scheme should conform. Unfortunately the more obvious course was not the course adopted by the Government. The Departmental Committee, which was constituted under a Treasury Minute of July, 1896, was somewhat unsuitable in its composition for the object for which it was avowedly established. An acceptable chairman was nominated in Lord Rothschild ; but of the eight other members of the Committee, four were permanent officials representing respectively the Treasury, Board of Trade, Post Office, and National Debt Office — representatives of a section of the community justly held in high esteem, but not popularly supposed to be Introduction xiii partial to legislative departures involving any addi- tional levy upon the National Exchequer. Of the other four members, consisting of Mr. Brabrook, the Chief Registrar of Friendly Societies, whose experience and advice were essential to any body charged with an investigation of this character, the actuaries to the Atlas Insurance Company and the Manchester Unity of Odd- fellows, and the Parliamentary agent of the Ancient Order of Foresters, one at least of them had publicly given expression to his dislike to any system of subsidized or State pensions, and, on the other hand, there was no reason to gather that any one of them was already favourably disposed to the movement. The Minority Commissioners of the Royal Commission on the Aged Poor had it " brought home " to them " only too plainly " during the course of their inquiry that the composition of that Commission, however admirable for the purposes of criticism, was " far from favourable to the work of construction." This opinion, passed by Mr. Chamberlain, Mr. Ritchie, and their co-signatories upon the composition of the Commission of 1893 upon which they served, applies with equal force to the Com- mittee appointed in 1896 by the Ministry to which Mr. Chamberlain and Mr. Ritchie belong. The work of construction must be consigned to men who have not only the ability but the desire to construct. When this Government decided that voluntary schools were deserv- ing and in need of pecuniary support, they did not hand the matter over to a council of Liberationists to advise xiv Introduction whether they could recommend any proposals to that end. Army reformers would scarcely care to depute the strengthening our forces and remodelling our army system to a Committee composed of officials of the War Department with a couple or so of the Little England party to assist them in their deliberations. No satis- factory scheme of Old Age Pensions will ever be formu- lated until the duty of devising such a scheme is confided to men who unreservedly accept the principle which is involved. But if the choice of the personnel of the Committee was unfortunate and not conducive to productive result, the reference under which it was required to act was. conceived even less happily; ill-conceived at once in* what it permitted and refused to permit. The investiga- tion of the Committee was not focussed by any clearly' specific direction upon the endeavour, after examining" " all the schemes" laid before it, to construct a practical scheme or schemes for the guidance of Parliament, and " to lay down the principles to which any scheme should conform." From the terms of the reference, it coujd not • be inferred that the demand for Old Age Pensions had been already acquiesced in by the Government, and that the business of the Committee .was to advise upon the best method by which effect could be given to a settled principle. But it is the limitations which were inserted in the"* reference, even more than those which were omitted, which have effectually operated to deprive the Report of Introduction xv this Committee on Old Age Pensions of any material weight, and of any degree of finality ; nor can the Government plead that these restrictions were imposed through mere careless oversight or ignorance on their part. They had warning of their destructive tendency ; but preferred to invite an impotent conclusion, and they have secured it. " We have found that of the numerous schemes sub- mitted to us, the greater number are excluded from con- sideration under the terms of our reference. . . ." " Within the limits marked out by our reference we have not received and we are unable to construct any scheme," etc. . . . " Any pension scheme coming within the terms of our refer - ■ cnce would be limited," etc. . . . Such is the refrain of the Report ; paragraphs per- forated with this depressing moral are to be found '"scattered through its columns. They supply the pass- word which the reader has to master before he can •thread its barren pages. " The terms of our reference " are to the Committee'what King Charles's head was to Mr. Dick. Upon Her. Majesty's Government must rest the re- sponsibility alike for the composition of the Committee and the limitations imposed upon its deliberations. But the members of the Committee have observed these limitations with a ready and loyal acquiescence, with a ■ faithfulness deserving of more recognition than Ministers on mature consideration are likely to extend. They might have petitioned the Treasury, had they so desired, xvi Introduction to widen the terms of their reference ; but they pre- ferred, on the contrary, to interpret the limiting words with a refinement and precision which go far to- justify their designation as an " expert " Committee, and with an appreciation of exact verbal values which will rejoice the soul of Professor Raleigh. The Committee was instructed to consider schemes " for encouraging the industrial population, by State-aid or otherwise, to make provision for old age ; and to report whether they can recommend the adoption of any proposals of the kind." " Encouraging " differs in degree from ' compelling' ; any scheme containing an element of compulsion is ruled out of court. ... "Encouraging the industrial population." — "The industrial population" is not to be confounded with. ' a part of the industrial population,' or 'a section of the industrial population.' The greater includes the* less, but the less is not the greater. The members of friendly societies, trade unions, and cognate associations form a portion only of the industrial population ; proposals there- fore suggesting preferential treatment for members of these societies cannot be entertained. " Encouraging the industrial population to make pro- vision " is not co-terminous with " to make provision." All methods which do not involve a direct contribution from the beneficiary are discarded. " Encouraging the industrial population to make pro- vision for old age " cannot strictly be construed to Introduction xvii include provision against sickness or any other con- tingency of life except old age proper. Thus the con- tribution of the beneficiary must be a contribution specifically applied towards his own maintenance in age, and no other test of thrift is acceptable. It might be argued, indeed, by the unsophisticated materialist, that old age is a relative circumstance dependent on the health of the individual and his capacity to follow with ordinary vigour his accustomed employment, that whilst some men may justly be termed old at 60 years of age, some could not be correctly so described at 65 ; and that a man who has provided for himself from the time when his health and energy have become impaired by advancing years has, in •fact, been providing for himself in old age, although his 65th birthday, the moment the Committee reckons old age. as existent,- has not been passed. So nice is the discrimination of the Committee, that it can differentiate between the case of a man who provides 5s. a week from 65 to 70 years of age for himself, and is rewarded from 70 years onwards, to 75 years of age — supposing him to live so long — by a weekly pension of 5s. wholly sustained by the State, and that of a man who provides 2s. 6d. per week for himself from 65 to 75, and receives from the State the other 2s. 6d. during these years. Although the respective contributions towards this old age pro- vision of the individual and the State would be identical in either instance, the latter case the Committee is at liberty to examine, the former it is precluded from enter- taining. xviii Introduction And so the process of elimination is brought to a triumphant conclusion. Four only out of the hundred and more schemes submitted — including the proposals of the informal Parliamentary Committee and of Sir Henry Burdett — pass this rigorous preliminary test. This result is not surprising ; but it is surprising that, having once narrowed down their inquiry within these dimensions, the Committee contrived to spend two years on an investiga- tion which one might have supposed could have been adequately accomplished in two months. Discussion in any detail of the Conclusions at which the Committee has arrived must have about it an element of unreality. The limitations attached to its reference have deprived the Committee's Conclusions of the value which under happier conditions they might have possessed ; as it is, they have no title whatever to finality except in so far as they confirm the objections taken by the Royal Commissioners in their Report of 1895 to proposals based on the contributions of pensioners, the one class of schemes this Committee has held to be within the scope of its inquiry. Although for the pur- poses of destructive criticism the members of the Com- mittee relax the superstitious homage they otherwise pay to the " terms of our reference," only within the accepted limits of their reference can weight be given to their criticisms. In paragraphs 52 to 57 the Committee endeavours to depreciate the need of any system of Old Age Pensions by a somewhat elaborate train of argument. The evidence Introduction xix " appears" to it " to suggest" that men whose average weekly wages do not fall below 20s. can, with no serious difficulty, contribute 2d. a week from early manhood, or, if earning a slightly higher rate of wage, 4d. a week, to secure pensions of 2s. 6d. or 5s. a week at the age of 65 years. " These considerations," the Committee admits, " must not be pressed too far." From these considerations it derives, however, several somewhat crude deductions. Because, in its estimation, it is possible for a workman with an average wage slightly above 20s. a week to insure by his own efforts for a deferred annuity of thirteen pounds to begin at 65 years of age, the Committee infers that the only persons who may require State assistance in old age are those whose average weekly wage falls below 20s. ; that these persons form but a small proportion of the industrial population ; and that, even of them, but a small proportion above 65 years of age who are inmates of the workhouse — the bed- ridden, for instance, and " those who are no longer capable of the economical application of a small pension " — would under any system be able to support themselves independently. It may be noticed that the initial consideration upon which the members of the Committee base these deduc- tions is in itself not in complete harmony with a stricture they pass upon Sir Henry Burdett's proposals, in which they question the probability of men whose average earnings are from 15s. to 20s. a week being able for any continuous period to spare 9d. a week out of their wages xx Introduction for the purchase of the provision against sickness and old age combined contemplated by Sir Henry Burdett. The weekly sum required from the age of 25 onwards to secure a deferred annuity of thirteen pounds at the age of 65, together with ordinary Friendly Society assurance against sickness, is from 8|d. to g-|d. It is impossible to suppose that the Committee deem it desirable that any working- men should cease to make provision against the more certain and imminent contingencies of life, such as the drain upon their resources caused by sickness and funeral expenses, which they now are customarily enabled to meet through the agency of friendly societies. If, then, it is improbable that a man whose earnings are slightly below 20s. a week can spare gd. a week out of them for any continuous length of time, can it be asserted with any confidence that the individual whose weekly wage is only slightly in excess of 20s. is able without difficulty to devote 8^d. or g^d. a week for forty years of his life to insurance against sickness and old age ? Yet it is upon this precarious assumption that the Committee constructs the argument by which it aims at minimising the need of any system of Old Age Pensions. But even if we accept without reservation the inference of the Committee, that a working-man whose earnings exceed an average of 20s. can by his own efforts sub- scribe for a pension of 5s. a week from the age of 65 onwards, to acquiesce in a premiss does not necessarily imply acquiescence in a non sequitur. The Conclusions which the Committee arrives at from this proposition can Introduction xxi only be made acceptable by ignoring and misconceiving some of the essential conditions of existence among the poorer part of our industrial population. We must ignore the weighty objections to deferred annuities as a form of thrift which were expressed in evidence before the Royal Commission on the Aged Poor and in principle endorsed by the Commissioners. That deferred annuities are unpopular as a form of investment, and demand a greater degree of foresight than can be reasonably looked for among young people, is certain. That they constitute a prudent or valuable mode of thrift has been seriously disputed ; and the fear has been ex- pressed that to put a premium upon this form of saving might well be productive of economic harm by injuriously affecting other and more beneficial methods. Do the members of the committee hold a different opinion, and regard deferred annuities as a method of saving valuable in itself, preferable to other methods, and likely to be generally used ? If so, they can scarcely anticipate any general concurrence with their view, when they vouchsafe no reasons for rejecting the considered conclusions of the Commission on the Aged Poor. If, however, no such inference as to the opinion of the Committee is to be gathered from its suggestion as to a certain proportion of the industrial classes being in a position to purchase deferred annuities, what possible end is furthered by the statement of an irrelevant fact, and how can the state- ment be applied as an argument to depreciate the need of pensions ? xxii Introduction The reasoning of the Committee in these paragraphs is also vitiated by excluding any consideration of the claims of the female portion of the community, even of the widow who has assisted her husband in his efforts of thrift, foregoing during his life the present use of the savings which he was devoting in weekly contributions towards an Old Age Pension, savings entirely lost to her on his death. Women in their old age are at least as much in need of assistance as men ; few women among the industrial classes secure the average wage which the Committee regard as sufficient to enable the wage-earner to purchase a deferred annuity ; and the Conclusion of the Committee, that " the people thus in a position to require assistance must, in any case, form but a small proportion of the industrial population," can only be justified by reading a further limitation into its reference and interpreting "the industrial population" to mean the male industrial population only. But the deductions which the members of the Com- mittee come to by a process of abstract reasoning, based upon "evidence" which "appears to suggest," are so manifestly at variance with ascertained facts that it is astonishing that they did not suspect the presence of some flaw in their syllogism. How can their pronouncement be squared with the existing conditions — " that nearly 20 per cent, of the total population (rich as well as poor) above the age of 65 receive relief in one day, and nearly 30 per cent, in the course of one year ;" that while the proportion of paupers under the age of 65 to the popula- Introduction xxiii tion is only 8 per cent., it amounts to 25 per cent, in the years which follow 65 ; that although, for the most part, the members of the working-classes are " fairly provident, fairly thrifty, fairly industrious and fairly temperate," four out of every nine of them over the age of 65 years are numbered among the army of paupers ? No shower of acute syllogisms can sponge this record from the slate, nor pages of faulty deductions from doubtful pre- mises. The argument of the Committee receives no accession of strength from the rider, that " only a small proportion of those above 65 years of age who now appear as inmates of the workhouse or infirmary would, under any system of State-aided pensions, be able to support themselves independently." It is merely misleading. Returns for the years 1890 and 1892 show that more than two-thirds of the whole community of paupers over 65 years of age receive outdoor, not indoor relief ; and figures of a striking character will be found in an Appendix accompanying the Report, which disclose an ominous growth in the tendency to give outdoor in preference to indoor maintenance since the electoral changes of 1894. Even although it were the case, as the Committee infers, that the bedridden and " those who are no longer capable of the economical application of a small pension " would not, if possessed of a small annuity, be frequently able to find in the cottage of a relation or friend a more acceptable home than the workhouse, at any rate the remaining two-thirds of the industrial population over 65 years of age, who XXIV Introduction now in a greater or less degree receive assistance under the Poor-Law, but receive it outside the workhouse, might be enabled by State-aided pensions to support themselves in independence. The members of this Committee have failed to realize the motive which animates the demand for State-aid to the aged poor. State pensions are not only sought for those people who under existing conditions are reduced in old age to actual pauperism, but, at least as impera- tively, for those also who are kept off the rates by the assistance of friends or by private charity, or by their own painful and penurious struggles. " Such persons," the Commissioners of 1893 pointed out, " must sometimes endure great privation in their effort to avoid application for official relief, and they form a class quite as deserving of consideration as others who are actually numbered in the return as paupers." Does it in any degree satisfy this requirement to prove that a section of the male working-class can by continuous effort, even granting such effort to be wise, secure for themselves a deferred annuity of thirteen pounds after 65 years of age ? A sum of 5s. a week may in many instances enable an old person to obtain an honourable asylum with relations or friends ; as a State endowment it will supplement any savings an individual has been able to lay by, it will relieve him of the apprehension that a few years or months of enforced want of employment will dissipate any little capital he has collected, and that in his age he will be left naked to the Poor-Law authorities. But, dissociated from any Introduction xxv other resources, an income of 5s. a week is not sufficient to supply bare means of subsistence. The reasoning pursued by the members of the Com- mittee has no appropriateness to their Conclusion, unless it is their thesis that a man who is in receipt of an annuity of ^13 in old age, as a result of his personal efforts through life, has no actual need of, nor ethical title to, any assist- ance from the State. Although this view may harmonise with the destitution test of our Poor-Law procedure, the advocacy of State or State-aided Old Age Pensions is grounded by the majority of those who favour their crea- tion upon a principle which is almost the converse of that which the Committee approves. Thrift and the possession of small hard-earned savings is not to be the disabling but the enabling test for the enjoyment of the bounty of the State. Instead of the command of a small self-secured annuity destroying a man's claim to consideration, it goes far to establish it. The Committee in making these criticisms wanders beyond the limitations with which it consented to hedge round its investigation ; but its theorising is instructive, because it indicates at once the disposition with which the majority of its members approached their task, and the insufficiency of the reasoning upon which they are content to dispute the need of any system of pensions. In a fine optimistic vein of prophecy they ultimately pass judgment, that improved conditions of labour will deprive the whole problem of Old Age Pensions of im- portance. They are careless of the warning that prophecy c xx vi Introduction should be grounded upon experience. From year to year the actuality of the demand has not waned but waxed, until it has but now won formal notice and approval from a responsible Government. This phenomenon may be attributed in part, no doubt, to the increased potency of popular expression, and to the increased tenderness of the public conscience and sentiment, rather than to any aggravation in the necessities of the poor in old age. But is it not also the case that the tendency of modern industry is to favour the young ; that its methods demand a higher rate of speed than formerly, as well as of excel- lence, and, therefore, a more rapid expenditure of energy ; that the reserve of vital force in the worker is more quickly used up ? And while every year it is becoming more difficult for the poor to obtain employment in old age, for good or for evil the personal relationship of employer to employed tends to be less intimate, and an artisan must be content to shift for himself when the fulness of years impairs his productive powers. Three other of the Conclusions which have been approved by the Committee may repay brief examina- tion. Accepting the view that State-aid should be afforded only to a person who has exercised some degree of thrift, and that it is inexpedient to ascertain whether this condition has been conformed to by an investiga- tion into the applicant's history or earnings, the Com- mittee proceeds to enunciate the doctrine that " the only test that can be applied is the possession at the pension Introduction xxvii age of an income within the limits laid down as qualify- ing for the aid." A test of income as a standard of thrift is something of a novelty. The gambler who had reduced an income of thousands to one of " not less than 2s. 6d. and not more than 5s. a week " by the time he reached the age fixed for the pension to commence, or a burglar who successfully engineered a lucky haul a few hours before his sixty-fifth birthday, would, under this test, be acknowledged as paragons of frugality, and as having proved by careful economy their title to State maintenance outside the walls of a gaol. Of course, every possible test of thrift that can be sug- gested must fall short in some degree of exactness and comprehension. But that one relied upon by the Com- mittee, as the " only test " applicable, is manifestly illusory. A pension test should accept some habit of saving and frugal investment which is customary among the poor, and which can be not unreasonably demanded from a man in receipt of low wages, and who out of them may have to support a family. For a working-man earning a moderate wage to secure himself against the eventualities of illness and death, medical attendance and funeral expenses, and to maintain his independence of parish relief during the more active years of his life, affords a fair presumption of thrift and credit. Long-continued insurance against sickness, whether through a friendly society or other organisations, may not improbably be considered the most convenient and satisfactory evidence of an enabling standard of thrift. The Committee, how- c — 2 xxviii Introduction ever, did not deem itself authorised to entertain any scheme framed in accordance with this view. The Committee inclines to the opinion that a State- aided pension will diminish the wage-rate ; that the rate is fixed subject to the requirements of a wage-earner in old age, and " the wage payment will tend to fall by a percentage approximating to that contributed by the State to the pension fund." Every attempt to dogmatise upon the considerations which influence the rate of wages has hitherto conspicuously been brought to naught. Professor Marshall does not anticipate that pensions to the old would affect its natural rise or fall; and the Com- mittee apparently ignores the actual condition, that nearly half of the working-classes over 65 years of age are now either wholly or partially supported by the State through the Poor-Law. Experience has shown that any general grant of doles to able-bodied men will militate against high earnings ; but if the State-aid is restricted to aged persons, it is improbable that it could do more than pos- sibly influence in some degree such wages as old persons may at present receive. Under an organised system of industry such as now obtains, the endowment of certain old people with pensions will open no new cheap labour market to the employer. It is the efficient labour which settles the remuneration of labour throughout a trade, nor, in most commercial undertakings, would it be worth the while of an employer to engage men of an inferior capacity or activity, even at a reduced cost. The sug- gestion that recipients of State-aided pensions should be Introduction xxix debarred from engaging in remunerative work is, at the same time, brusquely dismissed by the Committee, as an attempt which " must assuredly fail." A provision that pensions should begin only with cessation from regular work might be inexpedient, and could not be enforced with uniform certainty; but it is the custom of trade union societies to confine their superannuation allow- ances to members incapable of earning the ordinary rate of wages, and the evidence of witnesses before the Royal Commission of 1893 intimates that no material difficulty would be found in seeing that such a condition was generally observed. This abrupt dog- matism of the Committee needs more examination and authoritative support before it can be accepted as a dogma by those who have faith in the policy of Old Age Pensions. The Committee approves a Conclusion that only under a system of pensions which are at once identical and universal can a State or State-aided allowance be exempt from the taint which attaches to allowances made under the Poor-Law. " Any discredit must depend," it is of opinion, " not on the form in which the relief is received, but on the causes which have led to it." This opinion, again, although it contains a considerable element of truth, appears to have been pronounced with- out mature deliberation. It is easily conceivable that the causes which have reduced a man to destitution may reflect no discredit upon him ; he may, for instance, have been forced by ill-health to resign his affairs or business xxx Introduction for a time to the hands of a friend or partner in whom he had every reason to rely, but who betrays his trust. If from such a cause he is brought low, and is reduced to soliciting assistance from the Poor-Law Guardians, is no pauper taint, either in his own estimation or in that of others, attached to the relief he receives ? When in the workhouse, is he less a pauper than his companions because the cause of his entering it is devoid of shame ? The converse to the proposition of the Committee, though also not completely satisfactory, contains not less of truth than the proposition itself : that the pauper taint depends not on the causes which have led to the relief, but on the manner in which it is received. The pauper stigma is involved by the element of personal selection and discrimination, the inquiries as to character and opportunities which precede the dole of relief ; the appli- cant has to submit to an examination upon his means of subsistence, he makes his application in forma pauperis, as a poor man craving for the most the Guardians will bestow. But this stigma is lightened if the tenure of the pensioner is of legal right, not of grace ; and the shame of dependence is eliminated. Accepting, for instance, the general test I have suggested in a former paragraph, insurance over a period of years in some society or organisation against sickness and funeral expenses — such a test would seem to escape the definition of pauper taint which the Committee relies upon. To have been a member of a friendly society for some length of time, to have guarded against the eventuality of ill-health, is not Introduction xxxi a cause to which any discredit can attach. On the other hand, it avoids an investigation into character or means of subsistence, any personal selection, any discrimination between classes of individuals. Should the State decide to pay an identical pension at a certain age to persons so situated, to qualify by thrift for the bounty of the State will rather be meritorious than discreditable. Although the members of the Committee held them- selves debarred by their reference from entertaining any proposal based on such a test, they nevertheless hazard a conjecture which, should it be realised, certainly points to an undesirable resultant of any measure making insurance against sickness, in a friendly society or other- wise, a condition precedent to the receipt of a pension. On the one hand it is contended that sickness is one of the most imminent and serious contingencies of a wage- earner's life, and probably the most fruitful source of pauperism ; that insurance against sickness is the most customary form of thrift exercised by the working-classes, and, if exercised continuously over a number of years, affords a sound presumption of the credit of the individual. It is suggested that a State pension might be paid to every person arriving at the pension age who could show that he had during his manhood established his independence of Poor- Law relief by securing for himself an adequate sick-allowance by some approved and easily ascertain- able method, as by insurance in a registered friendly society. On the other hand the members of the Committee are xxxii Introduction of opinion that this plan would imply a contract with every member insured in a registered society that even should it become insolvent and unable to meet its obliga- tions the State would nevertheless grant him a pension. In effect the State would be guaranteeing the solvency of each registered society ; and would certainly be con- sidered to do so if the present registration were rendered more effectual, and registration made contingent upon the solvency of a society. It will be observed that their reply contains, in fact, two distinct criticisms. The Committee is of opinion, as I understand its comments, that to offer a State pension under certain conditions to members of registered friendly societies is to guarantee the stability of those societies ; it is also of opinion that to institute a more stringent system of registration will have the same result. Pensions can be accorded to members of registered friendly societies without any alteration in the requirements of registration ; or the registration requirements can be altered apart from the institution of any pension scheme. In either instance I gather the Committee to suggest that a State guarantee of solvency is implied. It seems, indeed, in its argument rather to confound the two issues ; but they are manifestly distinct. To insist upon the latter objection, the members of the Committee must be prepared to reject the emphatically expressed opinions of the Select Committee on National Provident Insurance of 1887, and of the Select Com- mittee of 1889 on the Friendly Societies Act. Both Introduction xxxiii these Committees commented upon the imperfections of the present system and made various recommenda- tions towards enabling the registrar to refuse to register societies unless subtantially sound, and to suspend any which might have become unable to fulfil their obliga- ,tions unless prepared to remedy their position. It must also be remembered that the very course which the Committee deprecates was last year adopted without dissent by Parliament in regard to societies connected with industrial undertakings. The registrar is called upon under the Workmen's Compensation for Accidents Act of 1897 to satisfy himself as to the solvency of these societies before granting them a certificate. Is the State, then, to be held to have guaranteed their solvency, and to be responsible to their members in the event of their default ? But whether some degree of efficiency is to be im- parted to the formality of registration or not, can it be assumed that by offering pensions in their old age to members of registered societies, any State guarantee of the solvency of these societies is necessarily involved ? This objection was advanced by the Royal Commissioners of 1893 to contributory schemes which it was proposed to work in connection with friendly societies ; but the members of the Old Age Pensions Committee misapply it if they mean to extend the objection to non-contributory schemes. If Parliament demands that an individual aiming at a State-aided pension must pay over a sum, however trivial, to the Government, the State enters into xxxiv Introduction a contract with the individual, and is responsible for its complete fulfilment. But if no deposit and no payment is required, if the pension is in the nature of a free gift and endowment, such liability is not created. The con- tributions of a member to his society are to cover the ordinary risks which the society accepts, and no more. If it fails, however grievously its failure may press upon the individual, he has not paid for a pension, and if he does not receive it through lack of qualification, he cannot complain of any breach of faith on the part of the State. The State merely offers a gratuity in the form of a pension to those who can show that for a certain number of years they have not come upon the parish for relief, and have been insured against sickness and funeral expenses. The Report runs to some seventy paragraphs ; but beyond the findings and arguments which I have essayed to discuss, there is, I believe, no judgment of material importance, and no criticism of any novelty to be met with in its pages. Nor could anyone fully apprised of the limited terms of the reference to the Committee on Old Age Pensions, and of the literal construction of the reference which commended itself to the members of the Committee, anticipate any other outcome from their deliberations than the impotent one which has in fact ensued. The Committee confined itself to the considera- tion of proposals which insist upon a pensioner making direct contributions towards his pension, and any wider criticisms it may have ventured upon are mere obiter Introduction xxxv dicta, irresponsible comments on matters admittedly ex- cluded from its cognisance. From whatever standpoint this result is regarded, there will be a consensus of opinion that it is eminently unfortunate. Even those most disinclined to favour any distinct system of State - aid for the aged poor will acknowledge that their contentions receive no additional force from the substance of this Report, that it fails to advance the understanding of the question beyond the point reached by the Commissioners of 1893 5 — an< ^ they were agreed upon the expediency of a further inquiry being undertaken to meet the widespread expectation as to the desirability of affording by legislative action some independent provision to the deserving among the poor in old age. Those whose minds are yet clouded with a doubt, who contemplate with approval altered conditions for old people, but distrust the feasibility of any attempt to establish them, and fear that the expense to the State would be more than it can properly encounter, can gather no instruction from a Report which is avowedly inconclusive and incomplete. In regard to two points only will they meet with substantial directions : the Committee endorses the objections taken by the Com- mission on the Aged Poor to all contributory schemes, and expresses its conviction that the problem of cost is not the most serious, that it does " not question that the " State could bear the necessary additional burthen if the " welfare of the community really demanded it." The presence upon the Committee of Sir Francis Mo watt, xxxvi Introduction the permanent secretary to the Treasury, lends to this expression of opinion an unusual degree of authority. But if the publication of this Blue-Book can give no satisfaction to those who are averse to any measure of State pensions, or to those whose views are still un- decided, with what tolerance is it likely to be regarded by advocates of the movement, by the Members of Parliament who, with the sanction of the Unionist leaders, declared themselves favourably towards it, and by the electors who gave credence to the declarations of Unionist Ministers and Tory candidates ? Already the cry of bad faith has been raised against the Government. It is alleged that their electoral pronouncements of policy were mere gipsy predictions ; that this Committee was a sort of feather-bed device to break the fall of their " Old Age Pensions" pledge, and enable the Ministry to escape from it, if not without dishonour, without imme- diate risk. But even if we could credit the charge of bad faith which this theory imputes to the Government, it also infers on their part a degree of stupidity of which it is difficult to believe them capable. Had the Govern- ment aimed at escaping their assurance of legislation by the appointment of a committee of inquiry, they would at least have authorized the Committee to undertake a complete survey of the question. By a judicious selec- tion of its personnel they might in any event have ensured a finding adverse to any system of State pensions, but, had they acted with malice prepense, they would have taken care to impart to the investigation an appearance Introduction xxxvii of thoroughness. An unfavourable Report might then have afforded a colourable pretext for diffidence and delay, which the result of no truncated inquiry can possibly engender. Ministers are fortunate in still enjoying the opportunity to disprove the suspicion of indifference provoked by their ill-judged methods of approaching the problem hitherto. Prior to the appointment of this Committee the present Government had publicly tendered their adherence to the principle of Old Age Pensions, and their will to incorporate that principle in legislation. Unless it was their fixed determination to initiate a system of contributory pensions, in defiance of the dis- approval expressed by the Royal Commission on the Aged Poor to any such plan, nothing has occurred to justify any change of attitude ; and that they had no such fixed determination the appointment of this Com- mittee is sufficient evidence. The direction, then, of this Committee to the Cabinet is merely one of " As you were." The obligations of the Unionist Government and of Tory Members are unaffected by its abortive deliberations. Two years, however, which should have been spent in fruitful investigation and construction have been wasted, and Ministers cannot reasonably complain if their future action is followed with jealous anxiety. Mere lapse of time is the only altered feature in the situation since the General Election, but it is a factor which is shadowed by grave consequences. A deliberate policy which might xxxviii Introduction have been defended as prudent two years since would now be justly held to be a symptom of timidity and insincerity. By the appointment of the Committee on Old Age Pensions the Government gave the country to understand that, while anxious to improve by legislation the condition of the aged poor, they were not prepared finally to commit themselves to a scheme of their own manufacture without a preliminary inquiry, which would enable the merits of various alternative ideas to be sifted, and the structural lines brought into prominence in accordance with which a measure might most advantage- ously be framed. The actual inquiry which has been undertaken has conspicuously failed to supply them with this assistance ; its total effect has been to reduce the time at their disposal to make good their profession. To refer the subject now to a Select Committee, however direct its instructions and however admirable in constitu- tion, would spell further delay. A Select Committee could not terminate its work during the present session, would be dissolved at the close of the session, and be able to gather little material to form the basis of legisla- tion in the coming year. Two courses remain : either for the Government to give notice of their purpose to tackle the problem next year upon their own initiative, upon such information as is now at their disposal or can be acquired through the channels open to them ; or that they should appoint a small Commission specifically directed to submit some scheme or schemes for their consideration, with such criticisms as commend them- Introduction xxxix selves, and upon the distinct understanding that it should complete its deliberations during the recess, so as to allow members of the Cabinet to avail themselves of its Report and the evidence taken before it in formulating legisla- tion for submission to Parliament next session. At any rate the time has gone by for trifling with this demand that independent provision should be made for the poor in old age. Electors are capable of distinguish- ing between those who regard a project as an agreeable plaything, and those who are sincere in their attempt to realise it. If another General Election overtakes us while a Unionist Government is still extending to this problem their best consideration, or when they have enlarged the Statute Book by one of those measures, dear to Ministers, which vary the letter of the law without disturbing its practical operation, no protestations of good faith will have much weight with the constituencies. If members of the Cabinet have repented their former assurances, however illogical their change of attitude, they would be wise to screw up their courage to the confessing point. Their candour will alienate the sympathy of electors who put confidence in their undertaking to ameliorate the lot of the aged poor, but that sympathy cannot be retained by any mere expressions of continued goodwill towards the movement, nor by any mere tinkering and inoperative measures ; and they will at least regain the esteem of the comparatively small but influential section of the com- munity who view with alarm all suggestions for Old Age Pensions. SUGGESTIONS FOR A SCHEME OF OLD AGE PENSIONS ARRANGEMENT OF SUBJECT-MATTER. (The headings to the paragraphs are merely to facilitate refer- ence, and are not intended to indicate the whole subject- matter of a paragraph.) Para- graph. i. Introductory. I. Nature and Extent of the Evil. 2. I. — Old Age Pauperism. 3. II. — Extreme Poverty in Old Age. II. The Evil not met by the Poor-Law. 4. I. — Resulting Laxity of Poor-Law Administra- tion. 5. II. — Poor-Law Relief lacks Discrimination. 6. III. — Is bestowed Unequally. 7. IV. — Objections to, summarized. 8. V. — Discrimination in, entails Expense. III. 9. Some Proposals for State Pensions. 1 — 2 4 Arrangement of Subject- Matter IV. Objections to any Scheme of Deferred Para ; Annuities. graph. 10. I. — Unpopular as an Investment. ii. II. — Other Methods of Saving Preferable. 12. III. — Of Doubtful Wisdom, and demanding un- usual Foresight. 13. IV. — Beyond the Reach of the very Poor. 14. V. — Tending to Injuriously affect Friendly Society Insurance. 15. VI. — Benefits too Remote. 16. VII. — Objections to, summarized. 17. VIII. — Involving Interference with Friendly Society Management. V. 18. Universal Endowment and Compulsory Insurance. VI. General Objects and Principles of the Submitted Scheme. 19. I. — General Objects of. 20. II. — General Conditions it aims at Satisfying. 21. III. — Their Application to other Schemes. VII. Test of Thrift under Scheme. 22. I. — Not by Direct Inquiry. 23. II. — Membership of a Benefit Society. VIII. 24. Outline of Scheme. Arrangement of Subject-Matter 5 IX. Para / Rough Estimate of Cost. graph. 25. I. — Inclusive Estimate. 26. II. — Reduction in, if not extended to Persons in Regular Work. 27. III. — Affected by Condition as to Non-receipt of Poor-Law Relief. 2S. IV. — Proposed Exceptions to such Condition. 29. V. — Gradual Augmentation of Cost. 30. VI. — Accompanied by a Reduction of Poor-Law Expenditure. 31. VII. — Restriction of Outdoor Relief. 32. VIII. — Relief to Charitable Allowances. X. ^. Condition as to Income of Pensioner. XI. Position of Benefit Societies in Relation to a Pension Scheme. 34. I. — Friendly Society Superannuation Schemes Unsuccessful. 35. II. — Merely Deferred Annuities. 36. III. — Beyond Reach of the very Poor. 37. IV. — Juvenile Insurance no Solution. 38. V. — Superannuation by Continuous Sick Pay In- jurious. 39. VI. — Self- Management of Societies not to be in- terfered with by Government. 40. VII. — Efficient Registration of Societies. 41. VIII. — Trades Union and Employers' Societies. 42. IX. — Dissolution of Societies. 43. X. — Membership prevented by Ill-health. 6 Arrangement of Subject- Matter P«f XII. graph. 44. The Pension Age. XIII. Amount of Pension. 45. I. — Five Shillings a Week. 46. II. — Supplemented by Endowed Charity. XIV. Old Age Pensions as affecting Wages. 47. I. — Summary of Advantages of Scheme. 48. II. — Pensioners not to be in Regular Employ- ment. XV. 49. Application of Scheme to Women. XVI. Administration of the Pension Scheme. 50. I. — Division of Cost between Imperial and Local Taxation. 51. II. — Formalities of Administration. 52. III. — Advantages of Method. XVII. 53. Alternative Scheme upon Same General Lines suggested. XVIII. 54. Summary of Provisions of the Submitted Scheme. List of Sources of Information. INTRODUCTORY. i. The suggestions made in this paper for a positive scheme of old age pensions are, with some amendment, those put forward in an article I contributed to the National Review for February, 1896 ; and I have not attempted to depart in any considerable degree from the form or substance of that article, merely omitting any discussions of a more general character which were included, and amplifying passages which bore upon the details of the scheme. It seemed to me that, as the pro- posals I desire to make are little more than an adaptation of the plans given in evidence before the Royal Commis- sion on the Aged Poor by Mr. Chamberlain and Mr. Charles Booth, I could best formulate some of the argu- ments with which my suggestions may be supported by indicating what I deem to be the objections to those plans. Mr. Booth advocates universal endowment ; I hold the view that the assistance after a certain age should be made contingent upon what a man has done for himself up to that age. The method explained by Mr. Chamberlain was, roughly speaking, for the State to pay half the contribution required to obtain a pension, or 8 Introductory to double the amount of the pension secured. I propose that the whole cost of the pension, to the man who has qualified himself to receive it, shall be borne by Imperial and local taxation, the ultimate gratuitous annuity being in the nature of an encouragement to the individual to make independent provision for himself, through man- hood and comparative old age, up to the date of the pension becoming payable. The lines, therefore, of the scheme I submit for consideration can be best justified by stating what I conceive to be the extent and nature of the evil which any system of pensions must be devised to remedy, the general principles upon which such a remedy should be applied, and the degree in which the proposals initiated by Mr. Chamberlain and Mr. Booth fail to satisfy such principles, or to supply a remedy for the evil. I have appended a list of the sources from which I derive authority for the statements contained in the paper. This list is not intended to be exhaustive, but merely to facilitate reference to some of the main evi- dence which bears upon the points dealt with in any paragraph. I. NATURE AND EXTENT OF THE EVIL. I. Old Age Pauperism. 2. After more than 50 years' trial of our present Poor- Law system we have arrived at a result, so far as the aged poor are concerned, which the Commissioners describe as " unsatisfactory and deplorable." It appears that 3 in every 10 of the total population of England above 65 years of age are recipients of parish relief during the 12 months of each year. Of the working-classes of a similar age, 4 out of every 9 are paupers. In London, 35 per cent, of its citizens over 65 years old are in receipt of relief other than medical relief. And the bulk of these people are paupers through no traceable fault of their own. The Commissioners admit that, for the most part, the members of the working-classes are " fairly provi- " dent, fairly thrifty, fairly industrious, and fairly temper- " ate." That this pauperism in old age is accounted for, in the main, by the declining physical powers and the difficulty of obtaining work which accompany the increase of years is established by the fact that the proportion of io Suggestions for a Scheme of Old Age Pensions paupers under the age of 65 to the population is only 8 per cent., while it amounts to 25 per cent, in the years which follow 65. II. Extreme Poverty in Old Age. 3. But the pressure of poverty in old age which any scheme of pensions must be designed to meet cannot be gauged by the statistics of actual pauperism. The Com- missioners point out in their report that " the number of ' persons receiving relief at some time in the course of a ' year does not by any means represent the number who ' are continuously destitute. Relief is in many cases ' only sought at intervals to tide over sickness and other ' special emergencies. . . . The ordinary condition of ' such persons must be only just removed from pauperism, ' and calls for sympathy and consideration. There are ' also many aged poor who are destitute so far as their ' own resources are concerned, but who are kept off the ' rates by the assistance of friends and by private charity. ' Such persons must sometimes endure great privation ' in their effort to avoid application for official relief, and ' they form a class quite as deserving of consideration ' as others who are actually numbered in the return as 4 paupers." II. THE EVIL NOT MET BY THE POOR-LAW. I. Resulting Laxity of Poor- Law Administration. 4. It is not disputed that the present method of dealing with the aged poor fails to relieve the pressure of excessive poverty on the most deserving class — those who make every effort to avoid application for official relief — and is obnoxious to a widely-entertained sentiment that it is unjust to force deserving persons in their old age to submit to workhouse discipline. At the same time, it is established that the success of our Poor - Law system depends upon the rigour with which it is administered ; that the advance in independence among the mass of the- people attendant upon it is only to be achieved by the restriction of outdoor relief within the narrowest limits, and by compelling those who apply for parish relief to receive it inside the workhouse. So long as nearly half of the members of the working- classes in their old age have to seek Poor-Law relief, and the sentiment continues to exist and grow stronger that it is unjust to force them to submit to workhouse 12 Suggestions for a Scheme of Old Age Pensions discipline, it is manifest that the principles of sound Poor-Law administration will not be observed. Until some alternative provision is offered to the deserving poor in old age, it will be impossible to discountenance laxity of administration of Poor-Law funds, or to insist upon a strict application of the workhouse test. The members of the Royal Commission on the Aged Poor were influenced in the recommendations they make by this desire to relieve deserving old persons from the discipline of a workhouse, and express themselves in favour of a further extension of out - relief, and more adequate in amount, to aged and deserving poor. It is also probable, with Boards of Guardians elected on a democratic franchise and their ex-officio members abolished, that the proportion of outdoor relief to indoor relief will increase. Whether this is already the case in regard to the maintenance of the aged poor could be conveniently tested by a comparison of the figures supplied by Mr. Burt's return of 1890, with a return made for the 1st day of January, 1897, if such a return were obtained; but it is shown by Mr. Burt's and Mr. Ritchie's returns for 1890 and 1892 that more than two-thirds of the whole number of paupers over 65 years of age receive out- door relief. "There is no doubt," say the Commis- sioners, " that the pauperism of this large class is, to an " extent which has been variously estimated, due to lax " administration and the absence of proper inquiries." The Evil not met by the Poor-Law 13 II. Poor-Law Relief lacks Discrimination. 5. Mr. Loch declares, " It is almost entirely a question " of Poor-Law administration whether 4 or 56 per cent. " of the population over 60 are paupers or independent." This is not a satisfactory conclusion to be forced to arrive at in regard to the working of a system which has enjoyed a trial of more than half a century, and after every effort has been made to inculcate strict principles of administra- tion ; yet there is no sign or likelihood of the law being more strictly administered in the future so long as the deserving poor have to rely for their maintenance in old age upon the Poor-Law. " There is," the Commis- sioners report, " unfortunately no doubt that the system- " atic investigation and supervision contemplated by the " regulations are very far from general, and that, in the " case of the aged especially, the relief is often given " without adequate knowledge of the circumstances, and " continued for long periods without inquiry as to the " changes in their condition which may have taken " place." III. Is BESTOWED UNEQUALLY. 6. There is nothing more dangerous in Poor-Law economy, more productive of mendicancy and thriftless- ness, than irregular or variable doles or benefactions ; from the point of view of the poor nothing is worse than " uncertain action." The dispensing of outdoor relief is essentially uncertain and variable. The practice is widely different in different unions. At Bradford and at Brix- 14 Suggestions for a Scheme of Old Age Pensions worth, till quite lately, in the country, and at White- chapel and St. George's-in-the-East in London, outdoor relief is practically never given, or, at any rate, only in cases of long standing ; in some unions it is given as ten to one of indoor relief. The ratio of outdoor to the total number of paupers varied, for instance, last February, in the Metropolitan unions alone, from i*i in St. George's- in-the-East to 6 1*3 in Lewisham. So, whether an aged person gets it or not, is a matter of luck, depending upon what union he is chargeable to. And, again, in many unions the investigation into the means or necessities of applicants is of the most casual character. One Board of Guardians knocks off applica- tions at an average rate of 200 in under two hours ; on one occasion it disposed of 177 cases in one hour and eleven minutes. It is to be presumed that the majority of these were not new cases ; but it is absurd to suppose there can be any certainty or uniformity in the just treatment of applicants for out-relief when they are dealt with at the speed of some two a minute ; but the Commissioners go on to state that they " have other evidence showing " that this manner of conducting inquiries is far from " uncommon." IV. Objections to, summarized. 7. I have attempted at this point to indicate four of the main grounds on which it appears to me to be justly con- tended that the provision made for the aged poor under the Poor- Law is inadequate and unfair, as it affects The Evil not met by the Poor-Law 15 the deserving old persons themselves, and an injurious impediment to the proper administration of the law. It gives no assistance to those who are practically destitute, but strain their resources to the utmost and endure considerable privation so as to maintain indepen- dence of official relief. The existence of a large number of deserving old persons dependent on the Poor-Law for subsistence militates against any reform in the direction of stricter administration, and renders it impossible to discourage outdoor relief, and reduce it within narrow limits. Old people, though of equal worthiness, do not receive equal treatment ; but whether they obtain outdoor relief or whether it is refused to them, and also the amount of the relief afforded to them, depends entirely upon the custom of the locality to which they happen to be charge- able. Even in the same union it is not improbable that two old people of equal merit will receive dissimilar treatment through the insufficient character of the investigation into their cases. V. Discrimination in, entails Expense. 8. To mitigate this last objection, it has been recom- mended that further Poor-Law officers and inspectors should be appointed, and their staff substantially in- creased. At the same time, it ought to be remembered that the proper conduct of such investigations by a suf- ficient staff of officers — especially when taken in conjunc- 16 Suggestions for a Scheme of Old Age Pensions tion with the recommendation in favour of the out-relief allowance being more adequate in amount than is often now the case — will add very materially to the present Poor-Law expenditure. The salaries of the Poor-Law officers in 1892 came, in London, to a quarter of the whole expenditure on relief, and in England to some ^1,629,000. III. SOME PROPOSALS FOR STATE PENSIONS. g. Various methods have been suggested by which the State may maintain or contribute towards the maintenance of the aged poor outside the Poor-Law. These may be roughly classed in three groups : (i) Compulsory insurance assisted by the State ; (2) Uni- versal State endowment ; (3) State - aided deferred annuities. The most important of the schemes included in the third group is the scheme suggested by Mr. Chamber- lain on behalf of an informal committee of Members of Parliament interested in the movement for Old Age Pen- sions. The proposals, which are modified and extended by a variety of provisions, embrace three alternative plans : (1) A non-returnable pension of 5s. a week at 65 years of age, obtained by the payment of £2 10s., to which the State adds £10 at 25 years of age, and 10s. a year after- wards till the pension age is reached. There is power to augment the pension by increased payments ; the State aid is limited to £10. 1 8 Suggestions for a Scheme of Old Age Pensions (2) A pension of 5s. a week at 65, secured by the pay- ment of £5, to which the State adds ^"15 at 25, and £1 a year afterwards. If death occurs within three years of paying the deposit, the deposit is returned ; if subse- quently, but before reaching the pension age, provision is made for the widow for six months and for the children to the age of 12, but such provision is not to exceed 12s. a week in all. If there is no widow, £5 is paid for funeral expenses. In both cases there are special rates and benefits for females, and provisions as to arrears of payment. (3) This case is contingent upon the co-operation of friendly societies. A male person has to make a deposit of 30s., and a female of 25s., in the post-office, and to insure in a society for a pension of £6 10s., and £3 10s. a year respectively at 65, when the State doubles the society pension. As to the cost of the whole scheme, Mr. Chamberlain reckons that if the whole male population took advantage of it the cost would somewhat exceed ^"5,000,000 a year ; if one-tenth of the male population, some ^300,000 a year. He anticipates a gradual saving as a set-off against this expenditure of two-thirds of the ^3,000,000 spent annually on the relief of the aged through the Poor- La w. The State fund is to be aided out of local rates. IV. OBJECTIONS TO ANY SCHEME OF DEFERRED ANNUITIES. I. Unpopular as an Investment. io. A mass of evidence was adduced before the Com- mission to the effect that facilities for saving in the shape of deferred annuities have hitherto failed to tempt the members of the working-classes, and that there is no sub- stantial prospect of this form of thrift becoming more popular in the future. Of the 700,000 members of the Manchester Unity of Oddfellows only 5,000 have insured for its annuity benefits. In 1892, the year for which, I believe, the last complete return is available, 167 persons only subscribed for returnable, and but 47 for non-return- able, annuities under the post-office scheme. Mr. Watson in his evidence said that he has never come across a single case of a working-man thus insuring for his old age. Mr. Bartley, a Member of Parliament who has had wide experience and opportunities to judge the inclinations of the people in regard to such matters, has convinced himself that nobody will take advantage of an 20 Suggestions for a Scheme of Old Age Pensions annuity scheme ; that the danger a man foresees as to whether he will be able to keep up his payments or not, the remoteness of the benefit, the preference of young men to spend their money on some object which gives a more immediate return, would outweigh any inducement the State can offer. Miss Octavia Hill emphatically declares : "I have always found them " most unpopular with all classes." The chief registrar of the friendly societies is much of the same mind. He agrees with Mr. Bartley that a man demands some con- current and more immediate benefit before he will stake his money on the uncertain contingency of living to the age of 65. The method has no attraction to the English mind, which rather regards it with aversion. " It has," the Commissioners state in their report, " been generally " agreed that deferred annuities are at present unpopular, " not only with the working-classes, but with every " section of the community. ... It is only when the " deferred annuity is an integral part of some more wide- " spread benefit, as in the case of the trade-union super- " annuation funds . . . that it is used to any wide extent." It is not proposed in any scheme of deferred annuities that the State should offer any further and more imme- diate benefit, such as provision against sickness or acci- dent, in connection with the annuity. II. Other Methods of Saving Preferable. 1 1 . These considerations alone render the efficacy of any measure depending for good result upon their exten- Objections to any Scheme of Deferred Annuities 21 sion, and based upon their encouragement by State aid, extremely doubtful. But another, and not less serious, objection may be taken to a pension scheme on the annuity principle. " \Ye are convinced," say the Com- missioners, " that indirect methods of provision for old " age are of at least equal value to the direct provision by " annuities ; and that any legislation which would tend " to the discouragement of the former is to be depre- " cated." They remark upon several reliable witnesses having questioned the advantage of deferred annuities, as compared with other forms of saving or indirect invest- ment, upon the necessity of the annuity expiring with the death of the recipient, and upon the appearance of selfish- ness which attaches to an investment of this nature. They quote Miss Hill's expression of opinion, that other modes of investment bring in " a better and happier " return " to the wage-earning and poorer — as, indeed, to all — classes, educating their children well, and assisting them to secure better positions ; buying a small business, house, or small holding, or land for a market garden ; purchasing a stock of furniture ; laying by a small fund against emergencies, getting " something which they " have, and have to leave, and to give and to use." This view is corroborated by a witness, Mr. Ladd, a wood-dealer in a small way in Kent, who thought the majority of young men would rather use their money in becoming possessors of a pony, an allotment, or a pig, than by purchasing an annuity ; and it is borne out by the experience of Mr. Thomas Pitkin, a Buckingham- 22 Suggestions for a Scheme of Old Age Pensions shire labourer, as described in his evidence. For 40 years or so his wages were some 8s. a week, but he managed to put by £10, which he placed in the savings- bank. Then, when an opportunity came to him to rent an acre of land, he laid out that /io on the land, and gets a good return for it. " With my land and a little " work ... I get on as well as I can, and I am very comfortable, as far as that goes." III. Of Doubtful Wisdom, and demanding Unusual Foresight. 12. It must be remembered also that, whether for rich or poor, the financial wisdom of a deferred annuity as an investment is open to grave doubt, and therefore the wisdom of encouraging such a form of investment. A deferred annuity stands upon an entirely different footing to a life insurance policy, the benefit being essentially uncertain, and, in the case of a non-returnable pension, the family of the pensioner are deprived of savings which might otherwise have been available to them if he does not live to the pension age, or has only enjoyed the annuity for a couple of years before his death. And there is the further practical consideration, that no scheme can be widely serviceable which does not recognise the inclinations of human nature as it is. It is unreasonable, and contrary to ordinary experience, to expect young men, even of thoroughly deserving character, to pay much attention to the pleasantly remote, and, at the most, only probable, contingencies Objections to any Scheme of Deferred Annuities 23 of old age, even if they are confident of being able to keep up their contributions through the 40 years which are between them and the age at which the pension can be claimed. The scheme demands an unusual degree of foresight in the individual. IV. Beyond the Reach of the very Poor. 13. In a passage I have already quoted from the Majority Report of the Commission on the Aged Poor, the Commissioners state their conviction, " that indirect " methods of provision for old age are of at least equal " value to the direct provision by annuities ; and that " any legislation which would tend to the discouragement "of the former is to be deprecated." To discourage methods of thrift, which have been evolved through their fitness to satisfy national requirements, in order to substitute a form of saving which has not hitherto become ingrained in the habits of the people, would be contrary to common sense and prudence, and would defeat the ends desiderated by any reform. It is an essential condition of any acceptable measure of State pensions that it shall encourage, and not blight or destroy, the present inclinations and means of thrift of the people. The evidence given before the Commission goes far to prove, if, indeed, it does not conclusively establish, the existence of a very large number of the wage-earning classes, especially among the grade of labourers, who cannot afford to contribute regularly towards procuring 24 Suggestions for a Scheme of Old Age Pensions a pension under any scheme based upon contributions, but whose resources are strained to the uttermost to avail themselves of the insurance against sickness, accident, and funeral expenses, which friendly, trades union, and kindred societies offer. " We cannot over- look," report the Royal Commissioners, "the contention "of many witnesses, that there are members of the " working-classes who could not contribute regularly to " a pension scheme, and that it would be unjust that " State assistance should be withheld from them, while " given to those who have been able to make the con- " tributions." " In any event," writes Mr. Loch, in his Memorandum attached to the Report, " members of "friendly societies could hardly afford to pay for its " benefits (the benefits of a pension scheme based upon " contributions), and also meet their contributions to their " own societies." Mr. Reuben Watson, actuary to the Manchester Unity of Oddfellows, is emphatic on this point. He is convinced that it is as much as ever rural labourers can do to pay the lowest sum they are now charged for friendly society benefits. The working- classes, he affirms, especially in agricultural districts, do not get sufficient money to justify the assumption that they ought to make the payments required from them under the proposals of the Parliamentary Committee to purchase a pension. " There is all credit due to them " when they manage to save the little money from their " earnings which enables them to retain their member- " ship of a friendly society." Objections to any Scheme of Deferred Annuities 25 This is also the view held by the bulk of witnesses of the working-class, especially in reference to agricultural labour ; it is supported by a great quantity of evidence before the Labour Commission ; and is borne out by the results of the inquiries of Mr. Booth, embodied in his book, " The Aged Poor : Condition." The Select Com- mittee on National Provident Insurance in 18S7, in commenting upon Canon Blackley's scheme, reported : " Your Committee believe that many of the poorest class " would be unable to provide £10 between the ages of " 18 and 21 without great difficulty ; that many of those " among them who might be able would be unwilling ; 11 and that the collection of the money from those whose " work was fitful and uncertain would be almost im- " possible. Among the poorest class so many exceptions " would have to be made in case of both women and " men, that the scheme would, to a great extent, fail to " benefit many of those who at present add very largely "to the pauperism of the country." The Committee were considering proposals for enforced contributions ; and it is clear that if many people, on account of their poverty, cannot even be compelled to contribute, they would not be likely to do so when they are left free to contribute or not, as they choose. V. Tending to injuriously affect Friendly Society Insurance. 14. Several witnesses gave expression before the Com- mission to the anxiety with which the chief officers of 26 Suggestions for a Scheme of Old Age Pensions the great friendly societies generally regard the suggestion that the State should institute any insurance scheme of its own against old age. This objection to any pension scheme based upon contributions is strongly endorsed by Mr. Broadhurst in his report : " The friendly societies 1 and the trade unions, to which the working-class owe ' so much, naturally regard with some apprehension the ' creation of a gigantic rival insurance society, backed by ' the whole power of the Government. The collection ' of contributions from millions of ill-paid households is ' already found to be a task of great difficulty, intensified ' by every depression of trade or other calamity. For ' the State to enter into competition for the available ' subscriptions of the wage - earners must necessarily ' increase the difficulty of all friendly societies, trade ' unions, and industrial insurance companies, whose ' members and customers within the United Kingdom 'probably number, in the aggregate, from n to 12 ' millions of persons." This apprehension, if well founded, may be justly deemed a fatal objection to a measure of national insurance or contributory pensions, on the ground that such legislation would tend to discourage assurance against sickness, and those indirect methods of provision for old age on the value of which the Commissioners lay stress. It involves one of two issues, both destructive of the hope that good may result from a law creating old age pensions upon the basis of deferred annuities, or involving contributions from its beneficiaries. Either Objections to any Scheme of Deferred Annuities 27 such a measure will be nugatory, and afford to the in- dustrious poor in old age no protection against pauperism and no relief against penury, or it will have the pernicious effect of inducing young men to abandon the custom of insuring themselves in friendly societies against the drain upon their resources during a period of illness, and other habits of thrift which are more immediately serviceable. Either that section of the community only which has been styled " the aristocracy of labour," skilled artisans and well-paid labourers, will avail themselves of the facilities the scheme offers for old age insurance, and in all probability but a small proportion of these ; or we shall be faced by an actual increase in adult pauperism, due to diverting the savings of the poorest class, who can afford no double contribution, from their present channels to the provision of an annuity in old age. We are to empty our workhouses of people above 65 years of age, to fill them with able-bodied men who may be incapacitated for a time by a bout of illness, or suffering from an accident or temporary want of employment, and will no longer make provision against these misfortunes through their friendly and trades union societies ; or the rich and the very poor, as well as the fairly well-to-do, will be called upon to subscribe, through national taxation, to a benefit which is suited only to the requirements of a limited body, whose members, after all, do not often come upon the poor rates in their old age now, or, at the most, do not form the bulk of aged paupers. The evidence adduced before the Royal Commission, 28 Suggestions for a Scheme of Old Age Pensions in reference to the condition of the aged poor among the rural population of England, substantiates the belief that a considerable proportion of the inhabitants of agri- cultural districts, at any rate, are unable to find means to contribute towards an old age pension, and, at the same time, to bring up their families in moderate comfort and maintain their subscription to their friendly or benefit society. This is the testimony, among other witnesses, of Mr. Walker, agent for the National Agricultural Labourers' Union, Mr. Pitkin, Mr. Ladd, Mr. Edwards, general secretary of a Norfolk Labour Union, who em- phatically asserted that the labourers " could not pay a fraction out of their wages " towards a pension fund, and of Mr. Watson, whose evidence I have already referred to. There is a large consensus of expert opinion on the almost certain failure of any pension scheme, requiring contributions from its beneficiaries, to reach or attract the really poor ; and of the probability that, if it did succeed in attracting them, it must be at the cost of other forms of saving, and of insurance against the less remote and more certain contingencies of sickness, want of em- ployment, incapacity through accident, and the necessity to meet funeral expenses. In support of this dual proposition we have the authority of Mr. Knollys, Chief General Inspector to the Local Government Board ; Mr. Hedley, Inspector for the Metropolis ; Mr. Davy, an assistant-inspector ; of Mr. Hamblin, Chairman of the Brighton Board of Guardians ; of Mr. Bartley, Mr. Thomas Mackay, and Miss Octavia Hill. Mr. Hardy, Objections to any Scheme of Deferred Annuities 29 an actuary by profession, who has enjoyed an extensive experience in questions relating to provident societies and superannuation funds, insisted with great clearness and force upon most of the objections already indicated. " A scheme," he argued, " depending upon contributions " could be adopted by only a portion of the community, " and would act, preferentially, in the interests of the " least helpless, and must leave the vast remnant still " seething in hopeless pauperism." He pointed out the danger of the provision attempted by many under such a scheme breaking down through their neglect or failure of means to support the assessed contributions; "this," he added, " would only accentuate much of the present " misery, by throwing the unfortunate individual back " into the ranks of pauperism, from which he had made " so earnest an effort to escape." He, also, was of opinion that many even of the younger members of the working-classes cannot afford further deductions from their earnings than are already applied to securing to themselves and their families provision against sickness, and funeral benefits ; and, therefore, that the tendency of a contributory scheme, if operative at all, would be to increase adult pauperism. VI. Benefits too Remote. 15. A further serious objection to a scheme in the nature of deferred annuities is the length of time which must elapse before anyone can obtain any benefit under it. Whilst for the problematic advantage of each fairly well-to-do individual who may take out a pension policy, 30 Suggestions for a Scheme of Old Age Pensions every section of the community will suffer a present increase, or forego the benefit of a present reduction of taxation, not a single man or woman will reap any corresponding good or relief for 40 years from now. The encouragement to the young to adopt this form of saving, which might result from acquaintance with old people actually in enjoyment of a^ pension, will be lacking, while the burden of the contributions and taxation will be apparent to them. It is suggested that the case of those too old at the time of its introduction to enter into the normal con- ditions of the scheme could best be met by modifications of the existing Poor- Law ; but such a course fails to re- move any of the deserving poor in their old age from the operations of the Poor-Law for the next 40 years, it entails an extension of the lax administration of the law, and of extended outdoor relief over this long period of time, and, in the opinion of the Commissioners, it is " inevitable that when the time for pensions arrived, " there would be an irresistible opposition to the discon- " tinuance of the large and general allowances of public " relief, to which the nation would have become accus- " tomed, with only the comparatively small State aid " given with the pensions to supply their place." VII. Objections to, summarized. 16. I have attempted to mention some of the reasons for discarding any scheme for old age pensions which is based upon the principle of State-aided deferred annuities: — (1) That deferred annuities are, and are Objections to any Scheme of Deferred Annuities 31 likely to continue to be, an unpopular form of investment, and that therefore any such scheme would fail to be of wide application ; (2) and that they are not the most valuable form of thrift, so the wisdom of extending special encouragement to this, in preference to other forms, is questionable ; (3) that a system based upon contributions can result in no wide economic good, in that it will fail to reach the bulk of those who are now reduced to pauperism or penury in old age, and who cannot afford to do more than pay their contribution to a friendly or trades union society ; (4) but may be pro- ductive of economic harm by injuriously affecting exist- ing sources and forms of saving ; (5) that such a scheme demands a degree of foresight in youth which cannot be reasonably looked for ; (6) that its benefits are too re- mote, that no one will be in enjoyment of them for 40 years from now, and that any necessary increase in taxa- tion to provide for the pensions will in the first instance fall on to a generation to none of whom will accrue any advantage from the scheme. VIII. Involving Interference with Friendly Society Management. 17. There is also the vexed question of the nature of the control which the State should exercise over the friendly societies if the third alternative plan, sug- gested in the scheme of the Committee of Members of Parliament explained by Mr. Chamberlain, necessitating the co-operation of these societies, was adopted ; but this question can be more conveniently mentioned later. V. UNIVERSAL ENDOWMENT AND COMPULSORY INSURANCE. 1 8. I shall not attempt to discuss proposals for universal State endowment or compulsory State-assisted insurance. Mr. Charles Booth computes the cost of his scheme for the State to endow every man and woman with 5s. a week on reaching the age of 65, subject to certain restrictions in the event of their having received Poor- Law relief for 10 years previously to their attaining the pension age, at some twenty-four and a half million pounds a year for the United Kingdom. There would be an annual cash saving, to deduct from this ex- penditure, of the three million pounds now spent under the Poor-Law on the maintenance of the old. This pro- posal is open to the grave objection of offering no direct encouragement to thrift. Economically, it may be a wise policy to face this immense addition to general taxation in order to secure the possibility of a stricter administration of the Poor-Law and the financial advantages arising therefrom, and of a large relief to private charity, and a Universal Endowment and Compulsory Insurance 33 general improvement in the standard of life. It is true also that the increase in taxation might be rather apparent than real ; what the taxpayer paid out from one pocket, in due course might be returned to the other. But the magnitude of its financial proposals admittedly renders its rejection certain under present conditions. I assume, apart from any criticisms directed to merits, a similar objection — that the rejection of any such plan is a foregone conclusion — applies to compulsory schemes of universal insurance requiring contributions to be obliga- tory. VI. GENERAL OBJECTS AND PRINCIPLES OF THE SUBMITTED SCHEME. I. General Objects. ig. There are two objects which should be realized by a system of pensions. In the first place, the provision of some measure of independence and comfort for the de- serving poor in old age ; and, secondly, the diminution of pauperism and the cost of pauper relief. It is possible, and has been proved in many unions to be possible, to diminish by stricter administration the sum of pauperism without relieving the pressure of excessive poverty. Where the law is strictly administered charity has to take the place of outdoor relief. " Under " the ordinary conditions of Poor- Law administration, " any attempt practically to abolish outdoor relief in the " case of the aged poor might lead to great hardship," is the conclusion the Commissioners arrive at. If, on the other hand, it is an object to reduce the cost of the Poor- Law system so far as is compatible with better provision for the industrious poor in their later years, there is much Objects and Principles of the Submitted Scheme 35 force in the contention of Canon Blackley, that to pro- vide for the contingencies of age without providing for the emergencies of illness is to leave untouched the most productive source of able-bodied, as of aged, pauperism. It is not possible to entertain Canon Blackley's primary suggestion, that the State should constitute itself an insurance office against sickness and accident as well as against old age ; that an endowed Governmental depart- ment, manned by an army of State-paid officials, should compete, on a basis of exceptional advantage, with self- supporting thrift societies in the sphere of activity to which they are admirably adapted. Such legislation, even apart from unacceptable compulsory proposals, would seriously hamper the invaluable work friendly and benefit societies have for years been fruitfully engaged upon, and have brought to a high level of usefulness. But, if it is possible to attain a similar result indirectly, and without injury to the development of the friendly orders, a material reduction may, at last, be anticipated in the nine and a half million pounds now annually expended by local authorities on a system of Poor-Law relief, which is distasteful alike to the ratepayers who supply the money, and to the poor who receive it. II. General Conditions it aims at Satisfying. 20. Before proceeding to submit the outlines of pro- posals upon which, in my opinion, it would be possible to frame an advantageous system of old age pensions, it might be well to indicate the conditions which I believe 3—2 36 Suggestions for a Scheme of Old Age Pensions any measure, to be a sound one, should satisfy if it is to realize the two objects I have mentioned. It should be simple in conception and application. It must operate as an incentive and reward to thrift and industry ; directly, as an encouragement to individual exertion, and, indirectly, strengthening the hands of existing thrift organizations. Its benefits should not be problematic nor confined to the small section of the community who are alone likely to avail themselves of an insurance scheme, however generous its facilities, other than compulsory or gratui- tous ; its services should be within the reach of the very poor. It should be productive of some relief without delay ; it should promote the immediate well-being of a con- siderable number of individuals. It should insist upon insurance being made against sickness by the future recipient of the pension during the years preceding the pension becoming payable. III. Their Application to Other Schemes. 21. I have already pointed out that the project pro- moted by the informal Parliamentary Committee, or any project of deferred annuities, appears to me to fail to satisfy three at least of these conditions. That it will encourage thrift is uncertain ; that it will be detrimental to some valuable forms of saving is possible. Its benefits are likely to be inaccessible to the poorest portion of the people, who form the bulk of the aged pauper popula- Objects and Principles of the Submitted Scheme 37 tion. For the ensuing 40 years no one is to receive any advantage under it. Proposals for compulsory insurance are open to similar criticism ; they would operate in the direction of weaken- ing existing thrift societies ; they would not be productive of immediate relief to individuals ; and it would be prob- ably found impossible to compel contributions from the very poor. Mr. Charles Booth's scheme of universal endowment, apart from the question of expense, does not require that the pensioner shall have insured himself against the risk of sickness during manhood, and does not act as a reward to thrift. 4GG16.1 VII. TEST OF THRIFT UNDER SCHEME. I. Not by Direct Inquiry. 22. If the condition that a pension scheme should operate as an encouragement and reward to thrift is approved, it is necessary to consider what is to be the criterion of the degree of thrift required to prove the title to the pension. Any minute inquisition into the merits and past history of the pensioner would not only extravagantly swell the expense of administering the fund, give a loophole to abuse and partiality, involve uncertain and unequal treat- ment, and entail an army of trained officers to make the necessary inquiries, but it would defeat the whole purpose of the reform, that the allowance should be free from the taint of pauperism. The tenure of the pensioner must be a matter of legal right, not of grace. To admit of any system of personal selection or discrimination is merely to continue outdoor relief, on an enlarged scale, under the title of pensions. Test of Thrift under Scheme 39 II. Membership of a Benefit Society. 23. I have remarked upon the evidence which goes to show that there are a large number of the wage-earning class whose earnings cannot support a double contribu- tion, whose best exertions are required to insure them- selves against illness in a benefit or trades union society. His membership of a friendly society affords a sound presumption of the thrift and credit of an individual. The test may be a rough one. It may, and will, no doubt, at first exclude many deserving people from the benefit of old age endowment ; it may include persons of little worth. But it accepts as its standard the habit of saving and frugal investment most customary and generally recognised among the poor, and which is all that can fairly be expected from a man in receipt of low wages, and who may have a family to support on them. By securing himself against the eventualities of illness and death, medical attendance and funeral expenses, and by maintaining his independence of parish relief during the more active years of life, a working - man has adequately proved his claim upon the consideration of the community. VIII. OUTLINE OF SCHEME. 24. Accepting, then, membership of a friendly society as the sufficient test of thrift, I submit that a measure of old age pensions could be framed on the following lines : That every man or woman on reaching 60 (or 65) years of age, who is not in regular employment at regular wages or remuneration, who has never received relief under the Poor-Law, and who is a member of a registered society which provides for sick-pay on a basis of members' contributions, shall be endowed with a gratuitous pension of 5s. a week, to be provided out of Imperial taxation (or a moiety out of Imperial and a moiety out of local taxa- tion). The allowance would be payable to members on their arriving at the pension age of any registered society which provides for sickness expenses, whether friendly or trades associations, or, under certain conditions necessary to insure the permanence of the benefits, clubs or associations in connection with industrial firms and undertakings, so long as their members contribute sub- Outline of Scheme 41 stantially to their funds. To guard against individuals joining a society merely with the object of qualifying for State aid, a period of 10 years' membership could be exacted to entitle anyone now above 30 years to a pension, while persons now under the age of 21 would be required to enrol themselves in a registered society before their 25th birthday. Membership before 25 would be the qualification in the future. As a temporary provision, 30 might be fixed as the qualifying age for membership of individuals between the ages of 21 and 25 at the date when the law came into force, 35 for those between 25 and 30 years of age. IX. ROUGH ESTIMATE OF COST. I. Inclusive Estimate. 25. Before going further, I will attempt to give a rough estimate of the cost of the scheme. I give these figures, with the reasons which caused me to adopt them ; they have not been submitted to any accountant or expert, but represent the result of such calculations as I made myself, to obtain some idea of the expendi- ture which might be involved by proposals which seemed to me expedient on other grounds than those of finance. The pensions are to be restricted to members of societies which are registered under the Friendly Societies Act, and provide sick and usually also funeral benefits. The registered affiliated orders have a strength of some 1,727,809 people, the orders not affiliated of 2,133,170, in all of 3,861,519. The trade union associations include about 1,166,922 members, but several, more especially among the newer unions, Rough Estimate of Cost 43 offer no insurance against illness.* It is also probable that some 20 per cent, should be deducted for duplicate membership, as it is not suggested that an individual could claim a pension in respect of each society he belonged to ; and I take, in round figures, the total membership of the registered societies giving sick and funeral benefits at 4,000,000. The next step is to arrive at the relation which the members over 60 and 65 years of age bear to the whole body. The Manchester Unity of Oddfellows lately endeavoured to ascertain how the proportion stood in their own society. Of 615,170 members whose ages were returned, there were 45,352 over 60, 25,948 over 65 years of age, or a proportion of about 1 to 13 over 60, 1 to 24 over 65. In 1893, m the Ancient Order of Foresters, of 516,305 members making a return, 29,108 had passed 60, 13,654 had passed 65 years, roughly 1 to 17 and 1 to 39. In some of the large benefit societies it is very considerably less. In the Rational Sick and Burial Association, with, in 1894, over 72,000 adult members, including over 1,000 females, it is only 1 to 45, and 1 to 90 ; and in the Hearts of Oak Society, with 183,000 adult members, the comparison is still more favourable. I will accept, however, the average proportion of the members above 60 and 65 to the total strength of the * A note will be found in the Report of the Committee on Old Age Pensions giving the membership of these societies as ascertained by the last returns. As, however, the figures do not differ very materially from those suggested above, I have left my estimate as it was submitted to the Committee. 44 Suggestions for a Scheme of Old Age Pensions societies coming within the scope of this pension scheme to be i in every 15, and 1 in every 30. If, then, the pension age is to be 60, about 270,000 people will be entitled, subject to any further conditions, to take imme- diate advantage of the measure, or, if 65, there will at once be some 140,000 pensioners ; the annual cost to the State being about ^3,510,000, or ^"1,820,000 to provide a pension, at 60 or 65, as may be decided, of 5s. a week. In accepting the proportion of those over 60 and 65 years of age to the total membership of the societies as 1 to 15 and 1 to 30, it must at the same time be noted that this proportion will increase, though slowly, year by year, even on the present membership of the societies. The percentage in England of those over 60 and 65 to the total population above 25 years of age, is, for males, 15-9 and 10 per cent., for females, i8*8 and 12*3 per cent., and although several years will elapse before this proportion of aged members of friendly societies to their total number of members is ap- proached, and an allowance must be made for members being enrolled under the age of 25, the proportion within the societies will tend gradually to approximate towards the normal proportion obtaining for the whole population. II. Reduction in Cost, if not extended to Persons in Regular Work. 26. But it is clear that this annual expenditure will be largely reduced if the Act provides that no individual Rough Estimate of Cost 45 can claim the pension so long as he is in receipt of regular wages for regular work. The Hearts of Oak Society offers a superannuation allowance of 4s. a week to members incapacitated for work, and the members receiving this allowance were also permitted themselves to earn not more than 12s. a week. Of the members of this society above 60 years of age, about one-fifth were then upon the list of superannuated members. Many of the trade union societies make superannuation allow- ances to incapacitated members over a certain age, the average age qualification being 55 years, and the per- centage of members dependent upon the superannuation funds is not a heavy one, ranging from 0*9 per cent., to 4*3 and 5 per cent. It is impossible to arrive at any accurate estimate of the reduction in expenditure which this provision in the Act would induce ; but it is safe to predict that, at any rate, one person in every three above 60 years of age, and one in every five above 65, will prefer and be able to continue in regular work at some regular wage rather than claim the pension. The annual cost of the scheme will then roughly amount to ^2,340,000 if the pension age is 60 years, and ^1,455,300 if 65 years. III. Affected by Condition as to Non-Receipt of Poor-Law Relief. 27. The condition as to the non-receipt of Poor-Law relief would further lessen these amounts, although to what extent it would do so it is scarcely possible to 46 Suggestions for a Scheme of Old Age Pensions decide, and I have not attempted to make any deduction in respect of it. From a return issued in 1891 it appears that for every 10,000 persons now in registered friendly societies, there are in workhouses 26 persons who have left their societies, and 12 whose societies have broken down, and Mr. Brabrook considers even these figures too high. Mr. Ballan Stead stated that in the Foresters' Society out of 526,000 English members, 490 only have applied for poor relief during the past five years, while in Wales, out of 23,000 members, only 8 sought relief in the same period. The number of society members receiving indoor relief is, however, no accurate criterion of those who have applied for and received outdoor relief. Sir Hugh Owen stated that it is most exceptional for Guardians to require a man who had secured' a pension for himself in any form to go into the workhouse, and that there would be a much greater disposition to give outdoor relief to a man who had always been of a respectable character than if it had been otherwise. It is probable, therefore, that the majority of members of friendly societies applying for relief would be assisted outside the workhouse. In considering the satisfactory figures in connection with the Foresters' Society, it must be remembered that the inclination of members making returns would not be towards admitting that they had received official relief, and that probably both the Foresters and Oddfellows show a specially low propor- tion of pauperized members. I imagine that everyone Rough Estimate of Cost 47 living in a country district has personal knowledge of one or two cases of aged members of some society or other who have applied for and received outdoor relief, and it is not likely that the Outdoor Relief (Friendly Societies) Act of 1894, making it lawful for a board to grant outdoor relief to a member of a friendly society without insisting upon the destitution test, would have been promoted and passed into law had there been no substantial demand for such legislation. IV. Proposed Exceptions to such Condition. 28. Though I believe that the strict observance of the condition as to the non-receipt of parish relief would result in a substantial, though not very considerable, reduction in the cost of the pension scheme during the first years of its operation, and will be found to be a most useful and economical provision when the scheme had been established for some years, I do not think it would be advisable at the outset to deny, in every case, a pension to an old person who has occasionally received medical or other parish assistance prior to, or immediately upon, the scheme becoming law. To meet the case also of periods of special distress through general want of employment, a distinction should be made between ordinary Poor-Law relief, and the work provided to meet such emergencies by local authorities in the distressed districts. The Select Committee on Distress from Want of Employment has, in its report this year, and in an interim report, recommended that 48 Suggestions for a Scheme of Old Age Pensions relief given in the form of labour during such periods in a distressed district should not disentitle persons receiv- ing it from exercising the Parliamentary franchise. If this distinction was recognised, and it was provided that relief given in similar form and circumstances should not be deemed to deprive a man of his claim to a pension, the wage received for such labour would also enable the workman to keep up his necessary contri- butions to his society during a time when otherwise he would be likely to fall into serious arrears. Such a provision would do something to lessen the probability of contributions being allowed to lapse through the necessity of the individual. V. Gradual Augmentation of Cost. 29. The possibility, however, must be faced of an appreciable addition to the cost of the scheme, and of the body of pensioners being enlarged at an early date, through institutions not hitherto registered under the Friendly Societies Act being qualified and applying for registration. A proportion of these, however, do not provide the required benefits ; and it would be well to render the test of registration somewhat more stringent and effectual, simultaneously with the passage of legisla- tion creating a system of pensions. It is improbable, then, that more than a quarter of the associations now not registered would attempt to become so, and would satisfy the conditions of the Friendly Societies and of the new Pension Act ; and such an addition to the body of Rough Estimate of Cost 49 immediate pensioners might increase the total annual cost of the scheme to some ^2,795,000 or ^"1,685,000, agreeably to the pension age being fixed at 60 or 65. Otherwise, for 10 years, subject always to the considera- tions I have mentioned, the expense to the nation would remain fairly stationary ; afterwards gradually to in- crease concurrently with the natural growth and expan- sion of benefit societies, a growth which would be accelerated by the prospect afforded to their members of an annuity secured to them by the State in their old age ; the measure operating as a direct incentive to the habit of thrift expressed by insurance in such institu- tions. For 10 years, subject to the above considerations, the cost of the scheme will, as I have mentioned, be stationary. The expenditure is not likely to be con- siderably augmented for 30 or 35 years after the enact- ment of the system, when those who are now under 30 years of age would first be able to claim a pension. What the rate of increase in the cost will finally be will depend on the probable rate of increase which can be anticipated under present conditions in the membership of friendly societies, the acceleration of that rate due to the further inducement of an annuity to the natural growth of population, and to the tendency of the propor- tion of the aged to friendly society membership to approximate to the proportion of the aged to the total population over 25 years of age. 4 50 Suggestions for a Scheme of Old Age Pensions VI. Accompanied by a Reduction of Poor-Law Expenditure. 30. But the growing expenditure under the pension law must be accompanied by a diminishing expenditure under the Poor- Law. Not only the cost of pauper relief to the aged, but to the able-bodied also, will be materially lightened. It is contended, from the figures I have already quoted in paragraph 27, that members of friendly societies do not form any considerable portion of the mass of old- age pauperism, and, therefore, that the hope of a great reduction in the cost of Poor-Law administration, con- sequent upon a scheme of endowment to members of these societies, is not likely to be justified. Even if this criticism was wholly substantial, it is not destructive to the arguments in support of such endow- ment : that these pensions have as their object not only the relief of old-age pauperism, but of excessive poverty in old age of the poor who only avoid pauperism by enduring great privation. But the figures are, for reasons I have endeavoured to indicate, far from con- clusive ; and it is certain that many members of benefit societies are only kept off the rates in their old age by their societies granting to them superannuation allow- ances in the form of continuous sick-pay — a system admittedly unsound economically, and injurious to the well-being of the societies. Any very considerable reduction, however, in the cost Rough Estimate of Cost 51 of Poor-Law administration so far as regards old-age pauperism cannot be at first looked for ; but by en- couraging people to avail themselves of the benefits which friendly societies offer, and so increasing their number of members, it seems to me that we may con- fidently anticipate a gradual and satisfactory diminution in the cost of able-bodied pauperism. Each young person, by qualifying for a pension, will practically be giving a guarantee that in no event will his maintenance become chargeable upon the rates— will be insuring himself during youth and middle-age against sickness, in old age against destitution, upon death against funeral expenses. The yearly cost of an indoor pauper is now some ^"26, of every pauper receiving out-relief some £13. A pensioner will claim the price only of outdoor relief, and that but during the last years of his life ; or half the annual expense he might have put the community to for his maintenance over a period of several years. The benefit societies are said to disburse some ^"12,000 or ^14,000 every day in sick and funeral pay. In default of the societies a large part of this ^"4,000,000 to ^"5,000,000 a year would be thrown upon the poor rates. Mr. Tidd Pratt, in 1859, when these societies were comparatively in their infancy, reported, as registrar, that they saved the country ,£"2,000,000 a year in poor rates. If it is the case now that a member of a friendly society very seldom applies for official relief, much more so will it be the case when upon such applica- tion he forfeits his right to an old-age pension. 4—2 52 Suggestions for a Scheme of Old Age Pensions Sir Hugh Owen's evidence before the Commission on the Aged Poor supports this view : that by offering a further inducement to people to avail themselves of the benefits of friendly societies, in so far as that inducement succeeds in swelling the membership of these societies, a substantial reduction will result in the poor rates. On the other hand, if the membership of the societies remains stationary, so will the cost of the pension scheme. Sir Hugh Owen said : " I referred to the extension " of friendly societies as having a material effect in the " reduction of the number of persons coming upon the " rates. First, you have those who obtain assistance " from their friendly societies in case of sickness. Those " persons are relieved from the necessity of applying to " the guardians for medical attendance, and it too fre- " quently happens that a person, after he has been " getting medical attendance at the cost of the rates, " afterwards applies for relief of a more substantial char- " acter. . . . Then you come to a large number of " cases in which payments are made in the event of " death, death of husband, or of wife, or of child. The "assistance obtained in that way relieves many people " from becoming a charge upon the rates — for funeral "expenses; and the sum which a widow may receive " may be sufficient to start her in some small business, " or, in other ways, help her to avoid coming on the " rates altogether." Rough Estimate of Cost 53 VII. Restriction of Outdoor Relief. 31. But the national economy, resulting from the in- stitution of old-age pensions, is not to be measured by the sum of the savings accruing from instances of individuals who keep clear of parish relief, instead of becoming a burden upon the rates. It will, at last, be possible to attain that stringent administration which it is admitted is essential to the economic and moral success of our Poor-Law system, and to the neglect of which its comparative failure is attributable. At present the ethical force at the back of our workhouse system to render its severe application possible does not exist. No law can now be effective in Great Britain which is not agreeable to the general sense of justice among her people, and the sense of justice among the great majority of Englishmen is manifestly against clothing, in old age, the industrious in the pauper garb. The danger result- ing from this feeling leads those who do not favour old- age pensions to tolerate outdoor relief, and even to recommend its extension, in spite of the abuses of the system and its inconsistency with Poor-Law principles. The Commissioners also say: "We are convinced by " the evidence that there is a strong and prevalent feel- " ing in favour of greater discrimination, especially in " the case of the aged, between the respectable poor and " those whose poverty is distinctly the result of their " own misconduct. Unless this distinction is more " clearly recognised than it has hitherto been, we fear 54 Suggestions for a Scheme of Old Age Pensions " that the agitation against the whole policy of the Poor- " Law may gain in strength and lead to changes which " we should deprecate in the general interests of economy " and morality." During the period immediately follow- ing the adoption of State endowment for old age, Boards of Guardians must be left to exercise some discretion in the matter of granting out-relief. But a measure upon the lines indicated would give to all men under 50 years of age a fair chance to secure themselves, by joining a substantial benefit society, at once against immediate pressure and ultimate pauperism. A man can make no claim to special treatment if he neglects this opportunity. Laxity of administration would no longer be counte- nanced by the same popular sentiment as at present ; it might be successfully discouraged, and speedily reduced within narrow limits. The Rev. T. W. Fowle, who, in his volume on the " Poor-Law " in the " English Citizen Series," strongly condemned outdoor relief and lax ad- ministration, is now convinced that an improvement in administration can only be secured after providing some pension system for the aged. In a pamphlet published in 1892, he writes: "Outdoor relief would be got rid of " in the only way possible, i.e., by fair and reasonable " bargain, in which it would be quite apparent that the " motive was not the mere saving of money, but the " spending it in a more judicious, and to the working " people more honourable, way. The dangers of a re- " action towards out-relief are obvious and urgent " if no system of pensions can be devised. Rough Estimate of Cost 55 VIII. Relief to Charitable Allowanxes. 32. While the poor rates will be lightened, a consider- able sum, now devoted to charitable gifts to the aged poor, will be set free to flow into other philanthropic channels, or to meet any increase of taxation necessitated by a national system of pensions. In the stricter Poor- Law unions especially a large number of poor people are now supported in old age by private benefactions, which take the place of, or supplement, parish relief. Without the co-operation of charity, it is admitted that it would be impossible to insist on strict administration in respect to the aged. The bulk of the funds the Charity Organiza- tion Society is able to dispose of in charity is applied to providing aged persons with weekly allowances. In January, 1890, for instance, the Stepney Committee of the Society had 70 old pensioners on its books with an average weekly stipend of 4s. ; the St. Pancras Com- mittee in 1889 gave pensions to 49 people. The munifi- cent gifts which support our voluntary hospitals and other institutions of wide beneficence and utility are doubtless among the noblest features in the history of our time. But precarious donations by individuals to deserving individual cases, though necessary under exist- ing conditions, are unsatisfactory to the giver and deroga- tory to the recipient. The fact that deserving old people are in need of such assistance is a fruitful source of dishonest pretences, while advantage is too often taken of the loose and overlapping manner in which charitable 56 Suggestions for a Scheme of Old Age Pensions institutions and persons apply their funds. Moreover, while some individuals contribute largely to the main- tenance of the aged poor, others who can equally afford to do so give little or nothing. By a national system of pensions the burden of providing for the necessities of industrious old persons will be more equally and equitably distributed. By the provision of pensions all the resources from which the old now draw their support will be to a certain extent relieved, private charity and relations will be largely relieved, the burden of continuous sick -pay on the funds of friendly societies will be removed, and employers and traders, who in many instances now either bestow some allowance upon an employe who is unfitted by old age for work, or continue from charitable motives men in their employ who no longer can perform their tasks with efficiency, will be relieved in a great measure of such obligations, and trade and industry will reap some advantage by the lightening of these charges upon them. X. CONDITION AS TO INCOME OF PENSIONER. 33. I have remarked upon the vital importance of eliminating the taint of dependence from any measure of State pensions. To avoid the possibility of its presence is one of the motives which prevailed upon Mr. Booth to recommend a system which would be universal in its application. These pensions, however, are manifestly not intended to add to the comfort of the well-to-do, but to be a barrier against want. To make them contingent upon membership of a benefit society seems to avoid at the same time the wastefulness of endowing the rich with superfluous funds, and the pauper stigma which pursues any preliminary investigation into character or means of subsistence. It may be expedient to fix some limit of income above which the pension could not be claimed : liability to income-tax would form a con- venient line of demarcation. But at the same time every individual is free to avail himself of the benefits offered by a friendly society, if he is qualified by its rules for membership; and, indeed, it is possible that a man, 58 Suggestions for a Scheme of Old Age Pensions at one time in easy circumstances, may eventually be as much in need of an annuity as any other member of a friendly order. There is no personal State selection, and none of the inquiries as to character and opportunities which render out-relief, or even a charitable allowance, alike pauperizing in their nature. XL POSITION OF BENEFIT SOCIETIES IN RELATION TO A PENSION SCHEME. I. Friendly Society Superannuation Scheme Unsuccessful. 34. The whole question of the position of friendly, trades union, and cognate societies in relation to the provision of pensions for aged persons, and to any old age pension scheme, is of primary importance. It has been suggested that provision for the poor in old age will be gradually brought about by the independent action of these societies. This view, however, seems to rest on an assumption that a radical change will take place in the inclinations of the working-classes. Hitherto the efforts of friendly societies in this direction have not been successful. In the Manchester Unity of Oddfellows, with some 700,000 members, only 500 have up to now insured themselves for the old-age provision under tables prepared so long ago as i882. :;: Yet this society has in its * By a Return in an Appendix to the Report of the Committee on Old Age Pensions it appears that now eighteen members subscribe to a central superannuation fund, and about 1,100 to branch funds out of a total membership of nearly 800,000. 6o Suggestions for a Scheme of Old Age Pensions ranks the pick of the wage-earning classes, who would be most inclined to avail themselves of such a scheme. Mr. Reuben Watson has stated: "Since the establishment "of the Manchester Unity none of its functions have "been expounded with greater earnestness than the " necessity for superannuation allowances after the age of " 65 years. Notwithstanding the advocacy and plan pro- " pounded, the members have not yet proved amenable to " the persuasiveness of the supporters of superannuation." Mr. Stead's evidence upon the amount of success which has been achieved by a similar scheme in regard to the Order of Foresters, with some 717,000 male adult members, is still more significant. In 1882 a super- annuation fund was started on a 4 per cent, basis. The scheme was in operation for nine years ; during that time three members only took advantage of it. In August, 1892, fresh tables were drawn up on a 3 per cent, basis, for returnable and non-returnable pensions, but not a single member of the Order is insured under them." It may be safely affirmed that not one member in 4,000 in the affiliated friendly societies is paying for a pension, although it is stated that these societies contain 65,000 members of upwards of 65 years of age ; and Mr. Hardy gave emphatic testimony before the Com- mission to the effect that, in his opinion, it was im- possible for friendly societies ever to deal with the demand for old age pensions. * In the Return now made it is stated that three members are now insured, and that some branches in Sheffield require a super- annuation contribution from new members. Position of Benefit Societies 61 II. Merely Deferred Annuities. 35. And this view coincides with the probabilities of the case. If the subscription for the pension benefit is voluntary, the pensions are merely deferred annuities without concurrent advantages, and all the objections to deferred annuities hold good. Thus, as might be antici- pated, we find that Mr. Watson, in the case of the Manchester Unity, attributes the failure of the system " to the indisposition of the young to provide specifically " for old age;" and Mr. Stead, in the case of the Foresters, to " the usual indifference of youth to the necessities of " old age." III. Beyond Reach of the Very Poor. 36. But if the contribution for the pension benefit is to be a compulsory condition of membership of a society, the difficulty is not in reality avoided. The payment necessary to insure for the pension cannot be reduced if the society's financial position is to continue a sound one ; it is merely added to the amount of the contributions demanded for the ordinary benefits. The members have, of course, to pay for their pension just the same, and it is this increased payment which is beyond the means of some considerable portion of the working-classes, a point which has been dealt with. In the case of the Odd- fellows the inclusive contribution for the sick and pension benefits is, at the age of 18, 2s. iid. on the unreturnable, and 2s. 6d. on the returnable scale, instead of is. 2d., or slightly less to slightly more than double the ordinary 62 Suggestions for a Scheme of Old Age Pensions contribution now demanded, and this without any pro- vision for returning payments in the event of lapses. The double benefit has been found possible in a few patronized societies such as the Dunmow Society. But even in the case of the Dunmow Society, it appears that more than half its members seceded because of the high rate of contribution entailed, and the consequent com- petition of other societies offering larger immediate sick- pay though no distant old age benefit. The dual system has also been tried in two or three of the lodges of the Manchester Unity, but it is clear that unless the double benefit is made compulsory by law, the more poor, at any rate, will avail themselves of such existing societies which continue to provide only for the ordinary risks at the lower rate of contribution, or of new societies which would spring up to satisfy the demand. Such a result cannot be contemplated with satisfaction. To insist by law on the dual benefit would, however, be productive of a still greater evil. The tendency of almost every corporate body as it becomes firmly established, and attains a stronger financial position, is to grow more select. It may be good policy on the part of some of the older societies to insist on the double benefit, and to cater chiefly for the wants of the more skilled artisans and better paid labourers ; but that is no reason why other societies should be restricted from carrying on their business on cheaper lines, so long as the contributions they require are not inadequate to support the benefits they promise. The alteration in the law would not secure old age provision for persons already enrolled in Position of Benefit Societies 63 friendly societies ; men now middle-aged could not be called upon to pay the high contributions necessary in their case to insure for a pension at 65. It would no doubt result in a material increase in the number of young men who would pay for the pension benefit ; a good proportion at any rate among the less badly off of the working- classes would prefer to meet the increased contribution than to go without the insurance against the more certain and immediate risks of death and sickness which they rightly value. But this addition to the number of persons insured against old age would come for the greater part from the ranks of the better paid section of wage-earners, and from the small shop-keeping and trading classes ; while, on the other hand, the higher contribution would be a deterrent, or at the least a discouragement, to the poorer classes of workmen from insuring themselves against the more imperative risk of sickness, and would check the development of friendly societies in the work which experience has proved them to be especially capable of undertaking. Such a result would react disastrously upon the saving habits and independence of the poorer classes. IV. Juvenile Insurance no Solution. 37. It is suggested that the insurance for a pension should be commenced in a friendly society at a vei y early age indeed, so that the annual payment may be small. For this purpose the Friendly Societies Act of 1875 would have to be altered, to permit of the fusion of juvenile and adult societies, and enable members to be 64 Suggestions for a Scheme of Old Age Pensions enrolled at any age ; and it should not be overlooked that the Select Committee which inquired into the work- ing of the Act in 1889 expressed strong objection to the unrestricted insurance of children, though this objection was mainly directed to a payment of any kind on death. But a practical reason against this suggestion having any claim to sufficiency or finality is that there is no clear probability of parents being inclined to avail themselves of such an amendment of the law on behalf of their children. If young persons neglect facilities for them- selves to make provision for old age, it is not likely that parents will make use of them for their children. It is not pretended the demand for such facilities is an urgent one : it is hoped that it can be manufactured. A poor man with a large family, who already does not find it easy to pay his own contribution to a benefit society, cannot be expected to find the payments required to secure old age pensions for all his children on the re- turnable scale. Taking into account the risk of the insurance lapsing through failure of contributions, and the risk of death, the wisdom of the investment would be doubtful in any case, and on the non-returnable scale it would be almost improvident. And even should a fair number of parents avail themselves of the facilities so offered, it is not just that the claims of a deserving man should be prejudiced because his father may have been too poor, too thoughtless, or disinclined to insure him in his childhood against the contingencies of age. It is impossible to regard a slight amendment of the law, which cannot operate in tangible benefit to any individual Position of Benefit Societies 65 for some 50 or 55 years to come, and will then be of benefit only to a fraction of the deserving aged members of the working-classes, as an attempt to meet in any degree the demand for some system of pensions as a substitute for relief under the Poor-Law, and a main- tenance provision for the worthy poor in old age. V. Superannuation by Continuous Sick-Pay Injurious. 38. But while unable to induce their members to make the necessary payments for provision in old age, the friendly societies are in a large measure Riving them that provision without receiving the covering contributions, and are impairing their financial stability by their efforts to keep their old members off the rates. Not the least admirable feature in a national pension scheme is the opportunity it affords to benefit societies to attain a higher degree of financial stability than they can now boast, by putting an end to the faulty system of accord- ing superannuation allowances in the guise of sick-pay. The Manchester Unity of Oddfellows have been advised by their actuary that it is financially unsafe to continue sick benefits to members who have passed the age of 65. These pensions in the form of permanent relief during illness to old persons whose illness is but the debility which accompanies length of days seriously endanger the standing of many societies. No provision is made in the sick benefit subscription for any old age pension in most societies, and yet the benefit is being granted in the shape of reduced sick-pay. 5 66 Suggestions for a Scheme of Old Age Pensions The Registrar-General, in his annual report for 1893, says : " The great fault of the friendly society system is " an attempt to provide old age pensions by means of " a subterfuge. The established object of friendly " societies is to provide for such sickness as happens to " a man when he is unable to work, and it is not the " business of a sick society to provide for old age." This evil is so manifest that it is recommended that the law should be altered so as to forbid the payment of sick benefits to a member after his reaching the age of 65. But unless this alteration of the law is accompanied by the provision of a pension, it will operate with great hard- ship on some of the most deserving old members, and will tend to increase old age pauperism. In conjunction with the institution of an adequate system of pensions such an amendment of the law would be of benefit to the best societies, and should be an integral part of any national pension scheme. The existence of this unsound form of superannuation allow- ance is, however, only another illustration of the strength of the sentiment against deserving old people being forced to have recourse to the Poor-Law, and cannot be remedied except by making some other and equally acceptable provision for their old age. VI. Self-management of Societies not to be INTERFERED WITH BY GOVERNMENT. 39. The objection entertained to a scheme of State pensions by many of the leading members of friendly Position of Benefit Societies 67 societies originates, as I understand it, mainly from the fear of two consequences following from such a scheme : that it might result in men neglecting the insurance pro- vided by friendly societies in favour of insurance against old age, and in some measure of State control or inter- ference with the self-management of the societies. If these results are obviated, the virtue of the objection will be removed. Mr. Watson says : " Members of friendly " societies are exceedingly jealous of outward interfer- " ence, either by the Government or any other authority, " but they are amenable to reasonable persuasion and " advice ; and it is possible that some might be found " who would be encouraged by a liberal subvention, if " such a method of help could be tendered and received " without infecting the recipient with the pauper taint." Mr. Hardy, the actuary of the Hearts of Oak Society, is in favour of a pension scheme which is not on a con- tributory basis ; and the dislike to State pensions is probably stronger among the officials than the rank and file of friendly society members. There seems to be no feeling against State pensions among the majority of trades unions, and the resolutions passed at friendly society gatherings have not always been adverse to their institution. The fear that a pension system will compete with sick insurance cannot apply to a system of pensions which is not based on contributions, and the gratuitous endow- ment of members of friendly and their kindred societies in 5—2 68 Suggestions for a Scheme of Old Age Pensions old age must operate, if at all, in the direction of increas- ing the membership of these societies. The dislike of the societies to outside interference has a serious bearing on the acceptability of the proposals of the informal Parliamentary Committee, as given in evi- dence by Mr. Chamberlain. The third alternative plan contained in their proposals, involving the co-operation of friendly societies, is the plan from which Mr. Cham- berlain seemed to anticipate the best results. The individual desiring the State-aided pension has to insure in a society for a pension of £6 ios. a year, and make a deposit in the Post Office, and when he arrives at the pension age the State would double the society pension. It seems that the person so insuring at the invitation of the Government would have a right to expect that the Government, having required him to make a deposit to a Government department, on accepting that deposit, has entered into a contract with him that when, and if he reaches 65 years of age, the pension to secure which it was made will be paid to him. It would be difficult to persuade him that he had no State guarantee for his annuity, for the full relief for which he had subscribed. " He would practically view the State as the predomi- " nant partner in the insurance, and look to the State for " its complete fulfilment." If the Government arouses such expectations, and accepts such responsibility, it is manifest that it cannot run the risk of allowing the individual to insure for his pension in some practically insolvent society. The State Position of Benefit Societies 69 contribution might then be indefinitely increased through the failure of insuring societies, and would be impossible to estimate in advance. Mr. Chamberlain himself seems to think that it might be necessary to separate the society superannuation from its ordinary funds, and to exercise some State control over the former. " We feel our- " selves," report the Commissioners, " that, if an old age " pension, to be paid wholly or partly by the State, were " in any way contingent upon a sum provided in a " friendly society, the State would be wanting in its duty " if it did not see that the contributions for such an object " paid to the society were actually sufficient and properly " invested." Immediately upon the State taking such action, the objection to any State control or interference is realized, and the complete independence and self-management of the societies destroyed. It is the possibility of this out- side interference, even though limited, which the friendly societies resent, and which they fear will tend to go beyond the limits originally put to it. It will involve also a considerable increase in the cost of administration ; and, in the event of the failure of an insuring society, will, I imagine, throw the burden of collecting the pension contributions of members in a society which has thus ceased to exist upon the Post Office. It is the deposit paid to the Government, and the fact that the Government requires the depositor to contribute to some society so as to become entitled to a pension, jo Suggestions for a Scheme of Old Age Pensions from which the liability on the part of the Government to see the depositor obtains what he pays for will be inferred. But if no deposit and no payment is required, if the pension is in the nature of a free gift and endow- ment, such liability does not exist. Under the scheme I have indicated, the State is not required to take any cognizance or give any guarantee as to the soundness, or want of soundness, of a society. The contributions which a man pays are to cover the ordinary risks which the society accepts, and no more. However grievously the failure of his society may press upon the individual, he has not paid for a pension, and if he does not receive it, through lack of qualification, he cannot complain of any breach of faith on the part of the State. His contract was with the society, and to no degree with the State. The State merely offers a free gift of a pension to those who can show that for 40 or 45 years they have not come upon the parish for relief, and have throughout that period been insured against sickness and funeral expenses. It is not proposed that the Government should in any degree guarantee the financial stability of a society ; the societies would be exempt as heretofore from any inter- ference whatever from outside in regard to the complete independence of management to which they rightly attach great value. VII. Efficient Registration of Societies. 40. But, while avoiding any steps which would entail interference with the self-management of the friendly Position of Benefit Societies yi societies or amount to a State guarantee of their stability, it seems to me unwise and impolitic that the Government should continue to register societies without ascertaining that it is probable that they will remain financially capable of fulfilling their obligations, and that the con- tributions they require from their members are reason- ably sufficient to support the benefits they promise. The Commissioners state that " there can, unhappily, be " no doubt that unsound and badly-managed friendly " societies, although less numerous than formerly, often " exist. The evil done by such societies is incalculable, " and appears not only in the hardship resulting to the "individual members, who are deprived of the benefits " to secure which many may have devoted the savings of " a lifetime, but in the general discouragement to thrift " induced by each failure." Parliament, therefore, would be well advised if it decided to render the test of regis- tration somewhat more stringent and effectual, simul- taneously with the passage of legislation creating a system of pensions. The Select Committee on National Provident Insur- ance made the following report in 1887 on this subject : " The present system of registration of friendly societies " cannot be considered satisfactory. Societies are allowed " to register without any requirement on the part of the " registrar that their scales of contribution are adequate " for the benefits promised. Your Committee would " suggest that ... a minimum contribution for a given "benefit should be fixed when the constitution of the 72 Suggestions for a Scheme of Old Age Pensions " society will admit of this, and no society in future " should be registered with less than that minimum, and " that it be provided by the rules that the contribution " be raised, or the benefit reduced after valuation, if " necessary, on pain of suspension of registry. . . . " Were this plan carried out, and greater powers given " to the office of the registrar of friendly societies than it " at present possesses in connection with the registration " of societies' rules, and with a view to the securing an " efficient audit, the proper investment of funds, and the " protection of benefit funds from any inroads upon them " for management expenses, it is believed that registra- " tion would be of far greater value to the members of " these societies than under the present arrangements. " It is desirable also that the facilities for the prosecution " by a public authority of societies or officials, especially " when fraudulent practices have taken pla'ce, should be " enlarged." The incomplete nature of present registration require- ments are further commented upon in the report of the Select Committee of 1889 upon the Friendly Societies Act, 1875. Canon Blackley holds that " the law should " make it impossible for any new society to be established " without good actuarial certification as to the reasonable- " ness of the tables which they offer" ; and Mr. Fatkin advocated the registrars being empowered to have the books and documents of societies inspected from time to time. The Manchester Unity of Oddfellows, at a general meeting, passed a resolution in favour of some legislation Position of Benefit Societies y^ " to prevent societies enrolling members by promising " larger benefits than the contributions can meet." While the larger societies appear to make every effort to satisfy the criticisms which the registrar may advance, some of the smaller bodies seem entirely to ignore his advice. Steps should be taken to carry out these reforms so far as practicable, in the direction of enabling the registrar to refuse to register societies which are not substantially sound, and to suspend the registration of societies which, after inquiry, he discovers to have become unable to fulfil their obligations, and are not prepared to remedy their position ; and, in the event of a national pension system being instituted, superannuation allowances in the form of continuous sick-pay to old members above the pension age should be made illegal. It is inexpedient to insist on the compulsory registra- tion of all benefit societies ; but the enactment of a pension scheme of the character I have advanced would operate as a strong additional inducement to working- men to become members of a registered in preference to an unregistered society, and consequently for unregis- tered societies to bring themselves up to the registration level. With the satisfactory tendency now existing for soundly-conducted to replace ill-managed societies, and with a more effectual registration test, it may be fairly anticipated that members of friendly societies would enjoy reasonable certainty as to the security of benefits for which they insure. 74 Suggestions for a Scheme of Old Age Pensions VIII. Trades Union and Employers' Societies. 41. The permanent and certain character of the society's sick and funeral benefits are the features to be considered in deciding whether the members of a society are to be entitled to pensions. In the case of a trades union society which proposes to come under the pension scheme, it would be necessary to insist upon the sick funds being distinct from its general funds, so that they could not be drawn upon to meet some industrial emergency. The union, however, would be compensated for having to conform to this requirement by the greater security given to its members, by the inducement to membership afforded by the prospect of an assured pension, and by the relief to its superannua- tion payments. Superannuation allowances have become a heavy drain on the resources of many unions, and in several instances they have found it necessary to substitute the payment of sums down for such allowances. Sick insurance funds in connection with industrial undertakings, and contributed to by employers, are open to the objections that, in some instances, the private undertakings to which they are allied are not themselves of assured permanence ; that they are liable to be dissolved at the will of the employer ; that employes, if dismissed upon reduction of staff, or for inefficiency or misconduct, or upon leaving the employ- ment, cease to be entitled to avail themselves of the benefits of the fund, and as a general rule merely have the contributions they have made returned to them. Position of Benefit Societies 75 It would be necessary, before the registrar certified that a society of this nature was entitled to come under the pension scheme, that he should demand such altera- tion of rules as would secure that the society was not liable to be dissolved on the mere initiative of the employer, and that men who were members of the society, upon leaving the employment from whatever cause, except upon being convicted of a crime, should be still entitled to contribute for, and to receive, the sick benefits provided for by the society, or have the same benefits secured to them in another fully registered society. IX. Dissolution of Societies. 42. I think it possible to meet, to a great extent, the difficulty and hardship to individuals arising from the failure of a registered society providing the required benefits, and the case of a man who desires to exchange his own for another society, whether from choice or in consequence of a change of employment, by a general provision covering such cases. The qualification entitling to the State endowment is that the individual should have insured himself against sickness and funeral ex- penses from 25 years of age up to the pension age. If the society in which he has insured himself breaks up, it is unjust that he should forfeit his claim to a pension if he is willing to preserve that claim by joining another society, and paying the higher contributions which will be demanded to cover an insurance commenced at a later age. yd Suggestions for a Scheme of Old Age Pensions It would be to impose but a small amount of labour on the secretaries of the registered societies qualified to come under the pension scheme, or upon their district or lodge secretaries, if they were required to send in an annual list to the registrar's office of the names — giving also the age, employment, then residence, and date of application for membership — of the new members they had enrolled in the course of the year, and of those ceasing to be members through death or secession, noting those new members who had been transferred to their district from another lodge of the same society, or had joined from another society. Nor would the arrangement and preservation of such lists at the registrar's office entail any considerable yearly outlay. To compile, on the initiation of the pension scheme, a complete list of the existing members would, no doubt, be a laborious and expensive business, the cost of which would have to be borne by the State, and conducted under the direction of the registrar's department ; but this expense would not be repeated. Such a complete record of membership, available for reference in the registrar's office, would supply a safe- guard against imposition and be of use in the settlement of a doubtful claim. In applying a solution to the diffi- culty raised in this paragraph, it would be invaluable. Upon an individual over 25 years of age being proposed for membership of a registered society, on account of failure of his own society, or his desire to exchange it for another, or upon his leaving employment which had a benefit fund in connection with it, the secretary of the Position of Benefit Societies jj society or lodge of the society to which the proposal for membership was made would notify the application to the registrar, who would thus be able to verify the claim of the applicant that he had been continuously insured since the age of 25 years. In the case of the failure of a society, its members would be allowed a reasonable time of grace — three months or so' — in which to join, if they so desired, another society. X. Membership prevented by Ill-Health. 43. The case of persons unfitted by ill -health for membership of a friendly society may deserve excep- tional treatment. Friendly societies usually require candidates for membership to pass a medical examina- tion before admission, and some societies exclude members of unhealthy trades. Various ways of over- coming this difficulty might be suggested. It has been proposed to establish a State-aided sick-club, which persons either medically unsound or engaged in un- healthy trades can enter at the ordinary rates ; but the objections to such a scheme are great. Some provision might be made that a man on being unable on account of health to obtain admission into a friendly society, upon notifying his disability, and upon a certificate from a competent medical authority as to his unfitness, should not be refused an annuity if he lived to the age when it becomes payable, even although he had been unable to provide against sick and funeral expenses, and had occasionally received medical relief from the parish. XII. THE PENSION AGE. 44. To fix the age at which a man is to begin to enjoy his weekly allowance at 60 instead of 65 years, the pension age approved by Mr. Charles Booth and Mr. Chamberlain, and most usually suggested, will, it has been seen, almost double the annual cost of the endow- ment. It is, however, essential to the efficacy of the proposal that the interval between incapacity for work and the pension becoming due should be rendered as brief as possible. With the expectation of this State allowance, an individual would doubtless exert himself to the utmost to bridge over, without parish relief, the period intervening between his ceasing to earn a regular wage and his ability to claim the annuity. He would be aided in these efforts by his relations, by charity, by his friendly society. But while we may fairly hope that his lodge of the society would aid a member to surmount any obstacle which may threaten to deprive him of his title to State endowment, it is well to avoid exposing societies or their district lodges to the strong tempta- The Pension Age 79 tion of relieving members incapacitated through age, to the detriment of the general interests of their body, by making the pension age approximate to the period in a man's life when inability to earn a sufficient wage com- mences. The tendency of modern industry is to favour the young. Its methods demand a higher rate of speed than formerly as well as of excellence, and therefore a more rapid expenditure of energy ; the reserve of vital force in the worker is more quickly used up. It is increasingly difficult for the poor to obtain employment in old age ; a man over 50 years old who loses a job through illness will find it hard to replace it with another. Miners, as a rule, are incapacitated for work at the age of 60. In the iron and steel trades artisans earn their best wages from the ages of 25 to 45 ; at 55 their earning power is diminished by one -third to a half; after 60 it is estimated that 10 per cent, are living on their savings, 50 per cent, on their relations, and 40 per cent, on the parish. A puddler in Staffordshire of 55 years is not often able to follow his calling ; a dockside labourer of 50 is fortunate if he gets perma- nent employment except when trade is brisk ; and in the case of the hands engaged in the glass bottle trade in Lancashire, the rules of their union provide for super- annuation pay at the early age of 40. A fair indication of the time in life when the powers of working-men begin to fail to meet the requirements of the more active branches of employment is supplied by the age adopted 80 Suggestions for a Scheme of Old Age Pensions by trades union societies to commence their superannua- tion allowances. The average superannuation age among these societies is fixed at 55. Sixty years, I believe, is generally accepted by Boards of Guardians as the dividing line between able-bodied and aged pauperism. While it would fairly meet the necessities of the case to settle the pension age at 60, I am of opinion that to fix it higher would be deleterious to the effectiveness and sufficiency of the reform, and would result either in perpetuating the undue strain upon the resources of friendly societies, or in compelling many deserving people, having exhausted their savings, to appeal to the Poor- Law authorities, and thus forfeit their right to a pension. XIII. AMOUNT OF PENSION. I. Five Shillings a Week. 45. As to the sufficiency in amount of the allowance, I have accepted 5s. a week as the sum contemplated in both Mr. Chamberlain's and Mr. Charles Booth's pro- posals. It is the average cost to the parish of outdoor relief to an individual. No doubt the objection may fairly be raised that ^"13 a year does not represent even the sum necessary for bare livelihood. The reform, how- ever, is admittedly in the nature of an experiment. To fix the State endowment at 7s. a week would, to my mind, be decidedly preferable. But to swell the initial cost, already heavy, of the scheme is to minimize the chance of a favourable reception. If experience establishes the economic advantages of the change, and that the financial relief anticipated from it is substantiated, the expediency of approximating the amount of the pensions to the bare cost of living may become apparent. There is, besides, a general agreement that an annuity of £13 will give a man a measure of independence in old 6 82 Suggestions for a Scheme of Old Age Pensions age. It will render him a not expensive, and often help- ful, guest in the house of a relation or a friend. It will supplement any savings he has been able to put by. The prospect of this certain endowment will encourage an individual while at work to lay by such additional sums as, in conjunction with the State assistance, will enable him to spend his last years in decent comfort, and relieve him of the constant apprehension, too often justified at present, that any little capital he may have been able to collect, a few months of want of employ- ment will suffice to dissipate, and will only avail to defer for a year or two the inevitable drift into pauperism. The certainty of enjoying the results of thrift makes thrift attractive ; but, as yet, the improbability of being able to put by sufficient against old age is a discourage- ment to any thrift at all. It may well seem a hopeless job to many a working-man to save enough during his manhood to provide for independent livelihood from 60 years to death, yet, to qualify for out-relief, he must prove, at least technically, entire lack of means of sustenance. Under present conditions, to save a little, and to use that little carefully, is to forfeit any claim for State assistance. A curious illustration of the partial working of our present system of relief was elicited by Mr. Chamberlain from a witness who gave evidence before the Royal Com- mission on the Aged Poor. In the parish for which he was a guardian the board grants out-relief of 4s. to a person possessed of savings equal to 3s. a week ; but if Amount of Pension 83 an industrious applicant has put by a sum producing 5s. weekly, the Board of Guardians limit their allowance to 2s. 6d. The more thrifty person is put on an exact level with the less thrifty, and receives less generous treat- ment ; while the man who has saved nothing is offered by the board only the workhouse, and he immediately proceeds to cost the parish about twice as much a year as his more deserving fellows. I have already quoted from the evidence of Mr. Pitkin, a sober and industrious agricultural labourer, who has hitherto, by hard work and rigid thrift, maintained in- dependence. But, although -he has made savings, he fears they are not sufficient to carry him through to the end. " I shall keep on as long as I can : I want to be " independent as long as I can ;" but he expects that the loadstone of pauperism will draw him to the workhouse before he dies ; and that that State aid which is denied to him so long as he is manfully endeavouring to battle with poverty will be obtainable when he has utterly succumbed to it. His children, he is certain, could not afford to keep him ; they find it hard enough to maintain their own families. Five shillings a week, however, would enable him, and probably most old people, to keep a roof above them. It would enable their children, who — with rent to meet, young ones to bring up and do their duty by, and club payments to make — have no margin left to them out of which to support their aged parents, gladly to receive their father or mother as honoured guests, ready to contribute a small sum to household 6—2 84 Suggestions for a Scheme of Old Age Pensions expenses, and assist in a few light household duties. The relations between parent and child will be rendered healthier and happier than is now possible. II. Supplemented by Endowed Charity. 46. At the same time, there will probably be instances of the pensioner being unable to maintain his indepen- dence on 5s. a week ; instances of old people whose savings have been exhausted, and without relations or friends able to receive them as paying guests ; and it will be conceded that it would be advantageous to increase the amount of the pension in especially deserving or necessi- tous cases, so long as no further charge upon taxation or the rates is involved by so doing. If the views of Sir H. Longley and the Commissioners were carried out in the direction of a further reform in the administration of endowed charities, there would be a large sum annually available in several localities, which might be placed at the disposal of Boards of Guardians for building or maintaining almshouses for old pensioners to live in, or for supplementing their pensions. The amount of endowed charities applicable to alms- houses and pensions is considerably over ^550,000 a year, and to doles and general uses of the poor about ^365,000 a year. " The evidence," says the Commis- sioners, " leaves no doubt that the dole charities should, " as far as possible, be converted to other purposes, " especially to pensions." They indicate the legislation necessary to attain this object. While not suggesting Amount of Pension 85 that these charities should be alienated from the districts to which they properly belong, it would be of great advantage that such legislation should accompany the enactment of a scheme of pensions, and the Guardians, in co-operation with the trustees of the endowed charities, be directed to use the sums available for their union in the maintenance of almshouses and supplementation of pensions, somewhat on the lines of the Fulham and Hammersmith scheme, and to receive charitable gifts or bequests for the same uses. XIV. OLD AGE PENSIONS AS AFFECTING WAGES. I. Summary of Advantages of Scheme. 47. I have endeavoured to show that old age pensions conferred by the State on aged members of substantial benefit societies will satisfy the several conditions I mentioned in paragraph 20 as being essential to any satisfactory solution of the problem — that such a system will be an incentive to thrift, and encourage existing methods of thrift ; will ensure that provision is made against illness during the working years of a man's life ; will be of some immediate benefit ; and will be within the reach of the bulk of the poorer classes. The ques- tion of simplicity in administration remains to be con- sidered ; but before suggesting the lines upon which the scheme could be administered, there are two points of importance which require consideration — its influence upon the remuneration of labour, and its application to women. Old Age Pensions as Affecting Wages 87 II. Pensioners not to be in Regular Employment. 48. That legislation creating old age pensions will indirectly affect the rate of wages, and disturb the natural play of forces which settle the remuneration of labour, is a possible danger. There was abundant evidence before the Poor-Law Commission of 1834 that the indiscrimi- nate distribution then prevailing of outdoor relief had a serious tendency to force down wages, and to keep the remuneration of labour at a low level. This system of relief, said one witness — an agricultural labourer — in his evidence before the 1834 Commission, " is the very worst " thing that ever happened for the labourers of this " country ; that is the way our wages are kept down. A " farmer wants to get some work done ; he proposes " starvation wages to the labourer. If the labourer " refuses them, he says, ' Very well ; I do not want you ;' " and sends to the overseer, and gets a man to whom he " pays what he likes, and who gets the rest from the " parish." " People may say what they like," declared another working-man witness, " but it is this parish " relief that has completely ruined the labourer." The inquiries of that Commission revealed a pitiable story of the worthy ruined for the sake of the worthless ; of industrious men left out in the cold, while their thriftless fellows, with relief-money in their pockets, accepted a wage wholly insufficient to keep a labourer and his family in respectable independence. It is to avoid the possibility of a repetition, in however 88 Suggestions for a Scheme of Old Age Pensions modified and limited a form, of the evil consequences of such mischievous laxity of administration, that I have suggested that the State allowance should not be payable to persons in regular employment. I confess, however, it seems to me extremely doubtful whether any such provision is necessary as a protection against harmful economic results, although, on other grounds, it may find favour ; and it may be argued that the pensions are intended for people not merely old in number of years, but experiencing the feebleness of age. The radical sin of the unreformed Poor-Law was the dispensing of in- discriminate relief, not only to those incapacitated from work by illness or age, but also to the able-bodied. No return to such methods is suggested ; rather, the tendency of the alteration proposed would be still further to restrict out-relief, with a view to its early extinction. The change may affect such wages as old persons may now manage to claim, but it will open no new cheap-labour market to the employer. Professor Marshall does not anticipate that pensions for the old would influence in any degree the natural rise or fall in the rate of wages ; and the con- ditions upon which labour and industry are organized are very different to those prevailing 60 years ago. In most commercial undertakings it would not be worth the while of an employer to engage men of inferior capacity, strength, or activity, even at a reduced cost. Good labour is worth a good price ; inferior labour is practically valueless. In manufacturing industries, and with unskilled work Old Age Pensions as Affecting Wages 89 requiring any high degree of strength, it is the efficient labour which settles the remuneration of labour through- out the trade. Wages are held up by the younger men, and there is no place for the serious competition of the old ; while, in those branches of business in which trades unionism is influential, employers are practically debarred from offering a lower scale of pay for inferior work. At the same time, many witnesses before the Com- mission were strongly of opinion that the pensions should only begin with the cessation from regular work, and it is the custom of trades union societies to give superannua- tion allowances only to members incapable of earning the ordinary rate of wages. XV. APPLICATION OF THE SCHEME TO WOMEN. 49. The immediate action of the scheme I have in- dicated admittedly, in any case, will be incomplete ; but especially so in the inadequate relief it will, at first at any rate, afford to female pauperism, if the insurance against illness is insisted upon in order to entitle a woman to an allowance in old age. A fair proportion, no doubt, of the women of the poorer classes would in the course of a few years be brought within the scope of the scheme. Already several temperance societies and the Rational Sick and Burial Association, among similar institutions, have a fair contingent of female members. Mr. Stead declares that the promotion of women's lodges in connection with the Order of Foresters is being actively pressed forward, and the Oddfellows have also decided to admit females as members. It is reasonable to anticipate that the en- actment of a pension scheme, applicable to all members of benefit associations, would tend to expedite this move- Application of the Scheme to Women 91 ment, so that the measure might be serviceable to both sexes. But it is clear that the case of women presents ex- ceptional difficulties, and owing " to the unequal con- " ditions under which they have often to compete in the " labour market," to their being " less financially re- " sponsible," to their low earnings and intermittent work, and to their home-ties and duties, they are often unable, especially in the case of married women, and certainly less likely than men, to become members of friendly societies or to insure against the risks of sickness and funeral expenses. The proportion of aged women who are given outdoor relief is far greater than that of aged men, but to counte- nance the continuance of such relief to any large section of the community in the construction of a pension scheme would militate against the successful attainment of one of the chief objects of such a scheme, the minimizing of lax administration. On the other hand, the system of pensions suggested is based on the assumption that insurance in a friendly society is within the reach of the great majority of men of normal capacity and health. If this assumption is not true of women, and especially of married women, many of whom can engage in no wage-earning pursuit, they are clearly placed in a position of disadvantage. It has been suggested to me by a lady of great experience in Poor -Law management that a remedy might be found by continuing the pension of a man to 92 Suggestions for a Scheme of Old Age Pensions his widow so long as she remains unmarried. I am unable to estimate with any accuracy what increase of expense this proposal would involve in the cost of the scheme ; but it appears from the Post Office tables that an annuity, to begin at the age of 65, which would cost ^150 if for a man alone, would cost ^"200 if with con- tinuance to the wife should she survive him. The expense, therefore, of the scheme might . be increased by one-third, but it is probable that the majority of old widows of the working-classes now get parish-relief, so any additional cost would have this saving to set off against it. I should, therefore, propose that where a man and woman had been married for not less than 10 years, on the death of the man, if he was then in receipt of a pension, that pension should be continued to his widow if she was over 55 years of age, unless and until she married again a person also in receipt of a pension, in which case her pension would lapse. This would not prevent single women, and any married women who were able to do so, taking advantage of the pension scheme by joining a friendly society ; but no woman would, of course, be allowed to be in receipt of more than one pension in her own right. Provision might be made for women who insured for smaller benefits at a lower rate of contribution than men, receiving a pension less in amount than 5s. a week in proportion to the smaller banefits for which thsy insured In the event of a married man dying before reaching Application of the Scheme to Women 93 the pension age, but who has been up to his death in continuous membership of a benefit society, the societies might be willing to agree that the widow should be allowed to continue her husband's contributions. Her husband's length of membership would then be placed to her credit, and on reaching the pension age she would become entitled to the State annuity. XVI. ADMINISTRATION OF THE PENSION SCHEME. I. Division of Cost between Imperial and Local Taxation. 50. The method of the administration of the scheme remains to be considered. It would not be unreasonable for the Government to refuse to bear the whole cost of providing pensions for the aged poor on the ground that such pensions will tend to relieve the local poor rates, and to release allowances which may be made by the employers in a district or by charitable people to old members of the working-classes, and that the locality will be directly benefited by so much of the State en- dowment as is appropriated to its old residents ; and, therefore, to demand that half of the cost of pensions payable to persons residing in the locality shall be paid by the local authority out of local taxation. In dealing with the administration of the scheme, I accept the view that the State is to bear only a moiety of the cost. I also think it important that the Govern- ment should be relieved, so far as is possible, of the Administration of the Pension Scheme 95 labour and cost of the actual administration, following in this respect the general principles of the Poor-Law, for the administering of which local authorities, repre- sented by Boards of Guardians, are chiefly responsible, being only subjected to general Government control and regulations. I propose that the body responsible for the moiety of the cost shall be the council of each county district. II. Formalities of Administration. 51. When a member of a registered benefit society, properly qualified for the purposes of the Pension Act, is within a year or six months of the pension age, the secretary of the society, or the lodge of the society, would notify, on a form and in a manner prescribed, the claim of its member for a pension to the Board of Guardians of the union in which the claimant resided. He would have to certify the number of years the applicant had been a member of the society (or whether he had previously been in another society, and for how many years, or had been transferred from another lodge of the same society) ; his age at joining the society and present age ; the district in which he had chiefly resided during the last 5 years ; his own belief as to the identity of the applicant ; and that he was engaged in no regular employment. This form would be accompanied by a declaration signed by four of his fellow-members of their belief in the identity of the applicant, and that he was not engaged in any regular employment. g6 Suggestions for a Scheme of Old Age Pensions False statements or information, knowingly given, would expose the culprit to criminal proceedings. The applicant would be required, within a fixed time of the claim being sent in, himself to see the relieving- officer or other official selected by the Board of Guardians for this purpose, to make a declaration that he had never received Poor- Law relief, and swear an affidavit on the points mentioned. If any doubt was entertained, either by the society's secretary or by the Guardians, on any of these points, the statements could be verified by reference to the Registrar of Friendly Societies, who, under a provision I have suggested, would have in his possession a complete list of the members of registered societies, the dates of their becoming members, and their ages at joining, and showing any transference of membership which has occurred. The Guardians, if they had no reason to doubt the accuracy of the information given them, and having fairly satisfied themselves that the applicant had never received parish relief within their union, and made such inquiries as they deemed sufficient upon this condition from the Guardians of any union in which the applicant had previously resided, would forward the claim to the County Council for the county district in which their union was situate. If the applicant had not principally resided in their union during the five years previous to his claiming the pension, the Guardians would transmit his claim to the Administration of the Pension Scheme 97 union in which they were of opinion his residence had chiefly been. The County Council would then proceed to pay the pension by quarterly or half-yearly prepaid payments to the friendly society or lodge of the society to which the pensioner belonged ; and the pensioner would receive his pension at the quarterly or monthly meetings of his lodge, or in such manner and instalments as the society might decide conformably to any regulations enacted by Parliament. The Government would pay annually to each County Council half of the actual sum the Council had paid away during the year in pensions. In the event of a pensioner moving into another county, the secretary of his society or lodge would notify the change of abode to the Guardians of the union to whom the claim had been sent in the first instance, and they would communicate it to their County Council. The Guardians of the union into which the pensioner had moved, upon notification by the secretary of the society, lodge, or branch to which the pensioner had been trans- ferred, or the representative of the society in the county into which he had moved, would communicate with their County Council, which would pay the pension through the society to which the pensioner was attached in the district, and would receive annually a sum equivalent to the amount of the pension from the County Council to which the pension was primarily charged. In the event of the pensioner's death, the secretary 7 g8 Suggestions for a Scheme of Old Age Pensions of the society or its lodge, as the case might be, would communicate the fact to the Guardians, and the County Council would cease forwarding the amount of the pension. If the Guardians informed the council of the pensioner having applied for Poor- Law relief, and of his inability to maintain himself without such relief, the pension would be cancelled, but its equivalent paid to the Poor- Law union to which the pensioner was chargeable for maintenance, so long as he was supported by the union. Imprisonment, upon conviction, for an offence would also cancel the pension. III. Advantages of Method. 52. I believe that some such method of administration would prove inexpensive, relatively to the considerable magnitude of the undertaking, and eminently so as com- pared with the administrative expense of some other schemes which have been suggested, and will afford ample security against imposition or mistake. It would be comparatively inexpensive, because no minute or difficult inquiries have to be undertaken. The necessary information to test the presence of the claimant's qualifications to a pension is within the knowledge of those individuals or bodies who have to assure themselves that the qualifications are existent. The persons who can easiest acquire the information are the persons re- sponsible for its application. The Government exercises a general control, is the arbiter on disputed claims, and Administration of the Pension Scheme gg its Registrar of Friendly Societies will be consulted when the validity of a claim is not apparent, so that he may test its validity by the complete record of membership which he is to be supplied with. Perhaps the Govern- ment might deem it advisable to engage a few inspectors to pursue inquiries in any particular instance in which laxity or fraud is suspected. But, beyond these general functions, its sole responsibility is to pay each year to the various County Councils half of the sums they have expended in pensions. The functions of the County Councils under the scheme are mainly financial and clerical. They, again, may think fit to employ one or two outside officials to supervise and test the efficiency and accuracy of the work performed by the Boards of Guardians ; but the expense to the Councils in administration will be mainly confined to an increase in their clerical department. The main investigations will be conducted by the Boards of Guardians and the officials of the friendly societies ; but the inquiries of either will extend only to matters fairly within their knowledge, or upon which they can obtain information without difficulty. At the same time, the tests they can apply to satisfy themselves of the genuine nature of the claim are fairly exact, and will afford substantial security that the qualifi- cations of the claimant, if allowed, are in accordance with the requirements of the scheme. The chief points to be verified are the age of the claimant, his identity with the individual entitled to the 7—2 ioo Suggestions for a Scheme of Old Age Pensions pension, his not being engaged in regular work at a regular wage, and his not having received Poor-Law relief. His age at the date of his becoming a member of the society is on record in the books of the society, and can be verified, if required, by a search through the docu- ments at the registrar's office. His identity is familiar to his fellow-members. In these two respects there is little room for mistake. Whether the condition, if insisted upon, that the pen- sioner should not be in regular employment is satisfied, cannot be ascertained with equal certainty. But whether he is continuing in any employment or not is probably within the knowledge of some of his acquaintances in his society. This is a condition enforced successfully by many trades unions in relation to their superannuation funds, and, with a certain latitude as to the amount of earnings, by the Hearts of Oak Society. If the pensioner infringes the condition his pension is forfeited, and he renders himself liable to further proceedings. He runs the risk of being informed against by a fellow-workman, or a man who is desirous of getting his job, or by the officers of a trades union, who would be anxious to see this provision rigorously enforced. The evidence of witnesses before the Royal Commission inclines to the view that no material difficulty would be found in seeing that this rule was generally observed, and the Guardians, through their relieving-officers, would often be able to hear of any instance of its being disregarded. Administration of the Pension Scheme 101 The report made upon the claimant's qualifications in these three respects would be verified by the regular officials of the Boards of Guardians, who have a suffi- ciently intimate knowledge of the position of most of the poorer residents in their union to be likely to detect any inaccuracy or fraudulent representation. No direct contribution towards the provision of pensions is thrown upon the vestry or poor rates ; but to secure proper verification of the claimant's qualifica- tions in the first instance, and to minimize the possibility of subsequent attempts at fraud, it is possible a slight increase of their staff would be found necessary by Boards of Guardians. The further duty of the Guardians is to ascertain whether the claimant has received Poor- Law relief, and this information they are, through their relieving-officers and books, able to discover with suffi- cient accuracy to afford a fair presumption that in the great majority of cases a man whose qualifications for a pension are admitted will not have been the recipient of parish relief. XVII. ALTERNATIVE SCHEME ON SAME GENERAL LINES SUGGESTED. 53. While anxious to insist upon what I conceive to be the advantages in principle and method of the scheme I have submitted, I am equally desirous of pointing out that, without materially altering its basis, it can be varied and adapted if it be judged that the cost of its application is excessive, or that its proposals form too generous an endowment to benefit societies, and do not sufficiently insist upon self-provision against old age on the part of the pensioners. To meet these objections, it has been suggested to me that the State pension should not commence till the age of either 67 or 68 years, but that a benefit society should agree to continue its sick- pay in the form of a superannuation allowance to a member who has reached the age of 65, upon the con- dition that it is relieved of all responsibility upon his arriving at the age of 67 or 68, and of the State then endowing him with a pension. This proposal is based on the belief that the present contributions required by Alternative Scheme on same General Lines 103 the large friendly societies are actuarially sufficient to meet the liability of providing for members up to 67 or 68 years of age, if their funds are entirely freed from any subsequent obligation. If this is ascertained to be the case, and the suggestion is entertained by the societies, the cost of the scheme will be very considerably reduced (by some two-thirds as compared with the cost of a pension at 60 years of age under the proposals already made), while the advantages of the scheme to the in- dividual will be preserved. XVIII. SUMMARY OF PROVISIONS OF THE SUBMITTED SCHEME. 54. In conclusion, I will briefly summarize the pro- posals of the scheme, and the provisions which I suggest should form part of it. Amount of Pension. — Thirteen pounds a year, paid monthly or quarterly to the pensioner through his benefit society. Half the cost of the pensions to be borne by Imperial taxation, and the remaining half to be a charge on the rates levied by the County Council of the county district in which the pensioner has chiefly resided during the five years preceding the date of the pension becoming payable. Boards of Guardians are empowered to supplement the pensions, by the provision of almshouses or an additional allowance, out of any endowed charities within their union. No person to receive more than one State pension. The pension to be inalienable, and might be protected from all process of debt. Summary of Provisions of the submitted Scheme 105 Pension Age. — Sixty or sixty-five years. Qualifications entitling to Pension. — Continuous member- ship, since the 25th birthday, of a registered benefit society which provides sick and funeral pay on the basis of members' contributions. Ten years' membership to be the qualification for members already enrolled in such societies when the scheme becomes law. Special provisions to meet the case of persons now over 25 years of age, and not now enrolled in a society. The test of registration of a society to be rendered more stringent and effectual, and fuller and more exact information to be at the command of the registrar. Abolition of superannuation allowances in the form of continuous sick-pay to people over the pension age. Provisions to secure the permanent and certain char- acter of the sick and funeral benefits in connection with trades union or employers' societies. Special provisions to meet the cases of an individual changing his society through choice or the failure of his society, and of persons unfitted by ill-health for member- ship of a benefit society. Special Provisions for Women. — Upon death of husband who is a pensioner, pension to be continued to widow if not in receipt of a pension in her own right, unless and until she marries again a person also in receipt of a pension. Also power to the widow to continue her husband's contributions to a society, this entitling her to a pension on attaining the pension age. 106 Suggestions for a Scheme of Old Age Pensions Permanent Disqualifications. — Receipt at any time of Poor- Law relief. Exceptions in cases of relief given in form of labour in a " distressed district " during periods of exceptional distress through want of employment, and of an individual unfitted by ill-health for membership of a benefit society. Having undergone imprisonment upon conviction for an offence. If a pensioner is unable to maintain himself indepen- dently of the Poor-Law, the pension is cancelled, and is paid to the Guardians of the union to which the pensioner becomes chargeable. Partial Disqualifications. — While in employment at regular wage or remuneration (if a provision of this char- acter is deemed advantageous). If income assessed to income-tax, so long as it remains at income-tax level. For mode of administration, see paragraphs 51 and 52. Abolition of outdoor relief to be ultimately provided for, subject to certain exceptions. An alternative scheme is suggested in paragraph 53, under which the pension age is fixed at 67 or 68, the benefit societies agreeing to provide a superannuation allowance for members between the age of 65 and the pension age, the other provisions of the scheme, as summarized above, remaining unaltered. .,— LIST OF THE SOURCES OF INFORMATION CHIEFLY RELIED UPON. The paragraphs are taken consecutively, and the chief sources of information relied upon for the statements advanced in each paragraph are given under its number. By " Commission " is meant the Royal Commission on the Aged Poor, and the reference is to the number of the paragraph, whether of the Report or Evidence. Para- graph. 2. Commission, Report, 23, 27, 33 ; Evidence, 10,852, 10,860, 10,909, 12,170, 12,177, 10,879, i7>848. 3. Commission, Report, 24; Evidence, 5473, 11,701, 14,269, 17,720; and evidence of Mr. Booth. 4. Commission, Report, 36, 91, 93, 174, 31 ; Evidence of Sir Hugh Owen, Mr. Knollys, Mr. Hedley, and Mr. Davey. 5. Commission, Report, 50 ; " Old- Age Pensions and Pauperism," by C. S. Loch, page 22. 6. Commission, Report, 47, 48, 50, 53, 54, 56 ; Charity Organization Review for March, 1896, page 1. 8. Commission, Report, 54, 60, 61, 328 (section 4); Summary of Report, 2, 3, 4. io8 Suggestions for a Scheme of Old Age Pensions Para- graph. 10. Commission, Report, 259, 243 ; Evidence, 8108, 8111, 8740, 8885, 11,085, 10,463, 11,375. 11. Commission, Report, 263, 264; Evidence, 14,116, 14,170, 14,225, 14,327, 14,481. 12. Commission, Report, 262, 263, 265 ; Evidence, 8735, 8740 ; " The State, and Pensions in Old Age," by J. A. Spender, page xxv. 13. Commission, Report, 262, 263, 325, 341; Mr. Loch's Memorandum to 18; Evidence, 11,458, n,5 I 3> 11,686, 11,887, ".794s i4> Il6 > H> 22 5> 14,481 ; Labour Commission, Evidence, Sec- tion C, 23,564, 23,606 ; Select Committee on National Provident Insurance, 1887, Report, page v. 14. Commission, Report, 324, 325, 329 ; Mr. Loch's Memorandum to, 18; Mr. Broadhurst's separate Report, 7; Evidence, 11,458, 1153, 11,887, IJ >794> 1 7M°^ J-M 16 , i4>4 81 - 15. Commission, Report, 326 ; " Pauperism : an Argu- ment," by Mr. Booth, Part II., page 63. 17. See paragraph 39. 19. Commission, Report, 77, 78, 79, 94. 22. Commission, Report, 53, 296, 298, 300 ; Evidence, 11,706, 10,929. 23. See references to paragraph 13 ; Commission, Re- port, 235 ; and evidence of Messrs. Manley, Pitkin, Allen, Walker, Disley, Edwards, and of Mr. Booth. 28. Commission, Report, 174, 175 ; Evidence, 264, 283. 30. See paragraph 27 ; Address by C. Graham on Old Age Pensions, before Norwich Church Congess of 1895 ! Commission, Evidence, 395, 533) 534» 535- List of the Sources of Information 109 Para- graph. 31. See references to paragraph 4; Commission, Re- port, 91; Evidence, 12,190; "A Proposed Solution," by the Rev. T. W. Fowle, M.A. (1892), page 18. 32. Commission, Report, 77, 194, 205, 56 ; Summary of Report, 18 ; Evidence, 1096, 10,865, 10,900, 10,901, 2066, 2177 ; Labour Commission, Evi- dence, Section C, 27,733. 33. Commission, Report, 282, 298, 300; Evidence, 10,929, 11,706, 13,447, i3>553> I 7>7 2 5- 34. Commission, Report, 218, 219; Evidence, 11,657, 11,692, 11,791; "The Problem of the Aged Poor," by G. Drage, page 171. 35. Commission, Report, 219 ; Evidence, 12,453. 36. Commission, Report, 215, 218, 225 ; Evidence, 11,390. 37. Commission, Report, 236, 238, 239, 244 ; Select Committee on the Friendly Societies Act of 1875, Report in 1889, pages vii, x, xiii. 38. Commission, Report, 217, 220, 245 ; Summary of, 20, 21 ; Evidence, 16,677, an ^ of Mr. Brabrook ; "Address, 1895, on Old ^» e Pensions," by C. Graham, page 2. 39. Sec paragraph 9 ; Commission, Report, 336, 337 ; Evidence, 11,436, 11,692, 12,429, 12,438, 12,824, 12,861. 40. Commission, Report, 209, 210, 211, 213, 214; Evidence, 11,708, 11,712, 11,881, 17,975 ; Select Committee, National Provident Insurance, 1887, Report, pages viii, ix ; Select Committee on Friendly Societies. Act, Report, page xix. 41. Commission, Report, 228, 229 ; Evidence, 11,692, 11,675, Il6 7- no Suggestions for a Scheme of Old Age Pensions Para- graph. 43. Commission, Report, 241. 44. Commission, Report, 31 ; Evidence, 10,869, 10,873, 14,898, 3819, 17,559, 17,807, 17,878, 17,678, I 7»7 I 5« 17,848, 10,785, 4744, 13,335, 10,336 ; " The State and Pensions in Old Age," by J. A. Spender, pages 25-27, 37, 39. 45. Commission, Evidence, 10,962, 10,964, 12,218, 16,615, 2194, 2208, 2167, 14,225, 14,266, 14,270 H,327, 14,335- 46. Commission, Report, 180 to 190. 48. Report of the Commissioners on the Poor-Laws, 1834, Evidence of Thomas Bayce and Charles James; Commission, Evidence, 10,279, 10,280, 10,789, 11,687, 11,827, 17,743, 11, 3 12 - 49. Commission, Report, 39, 240; Evidence, 1259, 11,206, 10,863. 52. Commission, Report, 262, 263, 259, 284 ; Evidence, 10,924, 17,745, 11,827. • 85 HILLING AND SONS, PRINTERS, GUILDFORD. UNIVERSITY OF CALIFORNIA LIBRARV Los Angeles UNIVERSITY OF CALIFORNIA AT LOS ANGELES IX SOUTHERN REGIONAL LIBRARY FACILITY AA OOO 961 286