"Ah! who can tell how many a soul sublime
Has felt the influence of malignant star,
And waged with fortune an eternal war!
Checked by the scoff of pride and envy's frown,
Or poverty's unconquerable bar,
In life's low vale remote, has pined alone
And dropt into the grave unpitied and unknown."—Beattie.
Proposals for a Government Insurance Office, like those for National Savings Banks, are not, as many have been led to think, the product of the thought of the last few years. In 1807, for example, Mr. Whitbread, in bringing forward his Bill for Poor Law Reform, earnestly advocated, that, together with his plan for the investing of their savings, some means should be provided for the poorer classes by which they might insure their lives under the responsibility of Government. Both as regards his plan of Savings Banks and his plan for Government Insurance, Mr. Whitbread was fully half a century before his age. The different schemes for the purchase of Government Annuities and the Acts under which they were carried out are already familiar to the reader. The Act of 1834 we may repeat, however, was the beginning of legislation on the subject. The principal emendation[195] in the Act 16 and 17 Victoria, c. 45, passed in 1853, was supposed to be in the introduction of a clause providing that a person buying a Government Annuity could also insure the payment of a sum of money at death. Notwithstanding this amendment, the Act was not nearly so productive of good as might have been expected. In the matter of Insurances effected under the arrangements of 1853, the Act has been for all practical purposes quite inoperative; and from 1834 to 1864 the whole of the annual payments in respect to Annuities did not reach 200,000l. In the latter year 6,500 annuities were in force, the amount represented by this number being 140,000l. This is, in brief, an account of how matters stood in 1864; and it is little wonder that it should now begin to be felt that some fresh steps were required; that there should be an entirely new organization for the work; and the abolition of all unnecessary restrictions, especially that which required that a person must deal perforce both in insurances and annuities. The institution of Post Office Banks, which had been rendered possible by the superior organization consequent on the introduction of postage reform, had already demonstrated how the Post Office machinery could reach every part of the country, and how well it could bear the additional weight put upon it. Nor was this all. From the experience of two or three years, those who were best able to judge of the burden this machinery could bear without difficulty were those who now proposed to add fresh wheels and contrivances to be worked by the already existing motive power.
A few words will suffice to show how the further proposals which we have to describe in this chapter were originated. Government Annuities at this time were, under the authority of an Act spoken of in a previous chapter, allowed to be granted either directly through the National Debt Office or through the medium of the ordinary Savings Banks. To a certain extent many of the Savings Banks had availed themselves of this Act, and granted both Immediate and Deferred Annuities. Among the banks which, as we have already shown, transferred their business to the Post Office Savings Banks soon after the establishment of the latter, were some which had done a little of this business; the question thereupon arose whether the Post Office Banks should not take up the duty which devolved on the old banks, and receive the payments for the Annuities as they fell due. The result of this was, that the gentlemen who in the Post Office had organized and so far directed the machinery of the Postal Banks not only proposed to carry on the business which others had in this way begun, but they advised that the operations themselves should be extended, and that this extension would be a legitimate offshoot of their original scheme. Mr. Scudamore and Mr. Chetwynd, the gentlemen in question, held that if the Post Office Banks were to become agencies for the purchase and payment of Annuities, there would be a considerable increase in the number purchased. They then proceeded to sketch the outline of a plan on which it would be possible to undertake the work, and showed how the course of the business in respect to the Annuities would be easy, simple, and comparatively inexpensive. The most important feature of the plan was, that the purchase and payment on account of Government Annuities should have no immediate connexion with the Post Office Savings Banks; and that the purchasers of the former should not necessarily be depositors in the latter.
With regard to Insurances, the following sentence occurs in a report which, referring to Mr. Whitbread's proposals, the same gentlemen presented. “We believe that the time may come when the propriety of attaching to the Post Office Savings Banks a scheme of Life Assurance will again be seriously considered by the Legislature. The frequent appearance and disappearance of bubble insurance companies, which have been productive of very disastrous consequences during the last few years, may probably induce a serious consideration of the subject at no very distant date.”
When the Commissioners of the National Debt came to speak of the former of these proposals, they reported “that in their judgment, the greater the extent to which the system of annuities can be carried, the greater will be the amount of benefit conferred on that class of the community on whose behalf and for whose security it was the pleasure of Parliament to authorize the grant of such Annuities through Savings Banks and by this department. The machinery of the Post Office will give the opportunity to Lord Stanley largely to extend these benefits, and the Commissioners will gladly unite with him in doing so.”
On the 11th of February, 1864, Mr. Gladstone took up this further scheme—the matter of Insurances and Annuities having been combined in the plan of operations prepared, during the interval. He then moved for leave to bring in a “Bill to amend the laws relating to the purchase of Government Annuities through the medium of Savings Banks.” The Chancellor of the Exchequer briefly explained his object in bringing about the new measure. He wished, without any unnecessary interference with private establishments, to assist in offering increased facilities for the extension of frugal habits among the industrial population. This had been the principle upon which Postal Banks had been founded, and now this new scheme might be regarded as an extension of the principle. Mr. Gladstone wished, “under the altered circumstances of the times and the improved machinery at command, to further other measures intimately connected in their ultimate object with the Savings Banks themselves.” Sums, he explained, could at present be received both for the purchase of annuities, and even for the granting of life insurance policies, but the arrangements were hampered by restrictions so as to render the law almost inoperative. Thus, Deferred Annuities could only be purchased in large amounts, and Insurances could only be effected where the persons had previously purchased these Annuities. He thought it quite possible to alter the system so that small sums at frequent intervals might be received; and not only so, but the restriction as to effecting an Insurance, which was not only inconvenient, but unreasonable in itself, might be done away with. The person who wanted an Insurance was not the most likely person to want an Annuity also; they were, indeed, generally people of different classes, or at any rate different habits of mind. The Chancellor of the Exchequer, after stating that he would give these increased facilities and remove this unnecessary restriction, obtained leave to proceed with the measure.[196]
His simple statement of the scheme was not long in securing ample criticism; some of it was friendly, much more of it adverse. Then a certain class of Insurance Offices and the principal Friendly Society organizations believing their institutions menaced, set to work to get up an agitation. The measure was represented by one class of persons as embodying the very questionable principle of Government interference with private enterprise, and taking as it were the bread out of the mouth of institutions specially got up for such purposes. Others pretended to criticize the proposals disinterestedly; they dwelt on the difficulty the Post Office would find in attempting to do the work, and that, if officers of higher attainments were obtained, they would require proportionately higher remuneration. Savings Bank deposits might be managed, though that was not thought likely three years before; but how all the details of Life Insurance proposals and the intricate calculations necessary to the Annuities business could be got through, was above comprehension! It was represented by leading articles in influential papers that there would be but a poor security against fraud; little supervision, and probably that little would not be exerted; and everybody would conspire to defraud the Government. “As it is intended,” said one respectable organ, “to assure the lives of the poorer classes chiefly, all payers of poor-rates and officers of the Poor Law Unions would have a bias, to say the least, in getting those persons assured who would otherwise be likely to leave their families a burden upon the parochial funds.” “It cannot be denied that a few isolated instances of bad faith have occurred among insurance companies, yet as a class there is none to excel them for high and honourable dealing, and there is no pretence for interfering with their operations or invading their privileges. Why should not Government open a drapery or a dry-goods store?” This latter effusion, which appeared in a letter to the Times, was prominently printed, and headed, “A New Instance of Proposed Paternal Legislation.”[197] A more organized opposition soon, however, showed its face. The actuaries of some of the Insurance Companies met and discussed the measure, and came to the conclusion that, as it might only be the thin end of the wedge, the measure ought to be opposed. The smaller Insurance Companies eagerly fell in with this conclusion. During March petitions were got up in great numbers from Insurance Companies and Benefit Societies, and when they were presented to the House of Commons several voices were raised in support of their prayer.
On the 4th of March, Mr. Gladstone moved the committal of the bill. Mr. Turner, Mr. Powell, Mr. T. Hankey, Sir Minto Farquhar, and several other members, protested against going on with the bill without an opportunity for full discussion, and most of them expressing great dissatisfaction with the Government proposals relating to Life Insurance, the Chancellor endeavoured to separate the bill into two parts, to pass that having reference to Annuities, and to defer the consideration of the clauses relating to Insurances to a subsequent period. The debate was adjourned.
Three days afterwards Mr. Gladstone made a long and elaborate speech in defence of his proposals, and addressed himself with great earnestness and power to the task of disabusing the public mind of the many erroneous impressions which within a very short time had taken possession of it. The history of his proposals was a short and simple one. In the autumn of the previous year the Registrar of Friendly Societies, in his Report for 1862, had recorded an unusual number of very gross abuses and violations of trust on the part of those Societies. The Report was in fact full of a multitude of complaints from persons in all parts of the country, who called for redress. So important had the facts been regarded that at least two important journals[198] had published several articles calling attention to the scandalous condition of these institutions. It had been suggested to him (Mr. Gladstone) that the subject of small life assurances, having already received in principle the sanction of Parliament, ought, under these circumstances, and the fact of an excellent machinery in connexion with the Post Office being ready for use, to be again considered by the Government. He agreed with this view of the case, and had now proposed to take action upon it. It is almost impossible to give an account in detail of the speech which followed; next to the Budget speech, it was the longest which Mr. Gladstone made in the session of 1864. We can, however, and ought to describe its principal points. Mr. Gladstone observed that no one considered Savings Banks, Annuities, or Insurances to be, abstractedly, matters desirable for the Government to deal with. But the Post Office Savings Banks which that House had legalized, though interfering distinctly with other interests, had produced great and lasting results; so likewise had the Factory Acts, though they likewise had greatly interfered with the liberty of private action. This bill, however, prohibited nothing whatever. “I do not deny that it is Government interference, or that it requires justification or apology; but I do deny that we are to be frightened and terrified by clamours respecting centralization, or respecting undue assumptions of power by the Executive.” “All that is requisite in such a case is to show that what the Government proposes it can do safely, and likewise that what it proposes it can do justly.” Well, this bill, which was represented as entirely novel in principle, simply offered to such members of the community as chose to avail themselves thereof, certain facilities for self-help. It had not grown out of any consideration of the case of Assurance Societies, but from a consideration of Friendly Societies, and of the wholesale deception, fraud, and swindling perpetrated upon a helpless and defenceless portion of the community.
Mr. Gladstone then referred to some deputations of the largest Friendly Societies that had waited upon him, and begged him not to interfere “with private trade and private enterprise;” and answered that these very societies were virtually and substantially subsidized by the Government. After showing that they were exempted from different duties, and received, like Savings Banks, more interest from the money invested with Government than the money realized, Mr. Gladstone held that nothing could be more plain than that Parliament was justified in looking to their circumstances. The country was overrun with them, and it was necessary to inquire if they were safe. Instead of finding them safe, he found them promising to pay amounts of interest which it was impossible to pay under fair and honest management. Such were the reasons which had induced him to interfere. He had, however, chosen a very mild form of intervention, and, he thought, a proper time for the remedy. The remedy, indeed, in this case was precisely analogous to that adopted in the case of the Post Office Banks.