The average of the surcharge on all the old members is 67 per centum, and is 27 per centum higher than the new members pay. Naturally, if the membership could be held together, these new rates would create and pile up a surplus, or excess, of $3,700,000 per year over any sum that the laws of Massachusetts permit the society to hold, which at the present time is about $30,000,000.
However, the society has never attempted to create any surplus or reserve over and above about $2,000,000, nearly equal to the proceeds of three assessments. What kind of financing is this which at one fell stroke burdens the members with paying sums which will produce $3,700,000 per year after paying over all mortuary calls? Heretofore the order has preached for twenty-eight years that the surplus remains in the pockets of its members and shall so remain. Now it is to be created and placed in the control of Mr. Butler and his one hundred and fourteen associates who are souls with a single thought. And what for? What kind of actuaries did the Supreme Council employ to make these new rates that such a result is brought about and that the policy of twenty-eight years is reversed at a single session, without any notice to the members? The members of the Royal Arcanum, the men who pay the money disbursed by Mr. Butler and his associates, have no voice in proposing any new legislation for the order, nor in approving or rejecting any enacted by the Supreme Council. They must pay whatever the one hundred and fifteen guardians ask of them or get out of the order.
The $3,700,000 surplus exacted the first year, under the new rates, is not to be used for paid-up or extended insurance or cash-surrender values, but is simply to be kept on hand as a reserve. The reserve, which has heretofore been carried in the pockets of the members, is now to be transferred to the pockets of the Supreme Council. Why are the members of the order, who have carried their insurance at great sacrifices, to have an additional burden placed on them? Why must this great reserve be created unless for the same reasons it was created in the three great companies in New York City? What is the object of creating a reserve when there is no paid-up or extended insurance and no cash-surrender to be made, and when assessments are required to be called for as needed to pay death losses? Why should any assessment company have a reserve beyond a few assessments ahead? What kind of actuaries did the Supreme Council have to make tables to produce such results? What fit guardians of 250,000 people are the one hundred and fifteen members of the Supreme Council who would adopt a table of rates producing such results? The control of the funds must have driven these one hundred and fifteen people mad to have produced tables which will so work. Would it not have been better to have called extra assessments from time to time under the authority of the laws of the order and of the State of Massachusetts, until the order was compelled to fail, than to have adopted the new rates, which are more expensive than old-line insurance and which if approved in the legal contest now pending will insure the failure of the order at once?
The only true assessment insurance is to pay the death losses as they occur, by assessments, and which must include a fund for management and control. When the assessments become too great the company dissolves and that is the end of it. All those who have not died during its existence, or who have lapsed in the same time, have lost their bets, and those who have died have won.
I am not able to give the number who have been members of the order since its origin. It could not have been more than 400,000. Of this number 35,000, or one-twelfth, have died. Over 33 per cent., or 133,333, have lapsed, and if the institution fails, as it certainly will, 367,000 have lost every dollar they have put in, in order that 35,000, or one in twelve, might draw prizes.
Such institutions are contrary to public policy and should be suppressed. Each state insurance department should require such statistics as will show all the facts any one might wish to know.
If I had the exact statistics, I am satisfied the proportion of those who pay in and lose would be much higher than I gave it.
The laws of political economy must be evolved just as we evolve those of nature, and they are as certain when we know them, but any institution which requires a party to live beyond his expectancy in order to pay in the amount of his benefit certificate is a fraud. At 21 a man’s expectancy is 45 years. Now a man at 21 who entered the order June 23, 1874, would have paid in to December 31, 1905, $404. It would take him over 166 years to pay in the $3,000 at the same rate. As he can never do that, his death loss must be paid by some one else, and consequently his insurance by others is a fraud and a gambling transaction.
As eleven persons must contribute to pay the loss of the twelve and then lose everything themselves, the whole scheme is an imposition contrary to the interest of society. Eleven men contribute and lose $250 each that one man’s beneficiary may gain $3,000, and these eleven men lose every dollar they put in. After twenty-eight years of preaching to the public that they had found the El Dorado of Insurance, that they were furnishing insurance at cost and that the members carried the reserve in their pockets, Messrs. Butler, Robson & Company now come to the front and admit that all this time their scheme has been a fake and a failure. They say the unclean spirit departed from them in May last, but I think he returned to them with seven others worse and they have turned the Arcanum into a madhouse.
I do not have the personal acquaintance of all the seven, but two of them might be called Landis and Barnard, because the condition of the Arcanum is worse than before. Now every member must pay in his $3,000 in the period of his expectancy, and if he lives beyond it he must pay till he dies. The new rates indicate that members must die before reaching 65 years, and if they decline, then they must be fined $192.96 per annum for their refusal to do so.