Part 1

POST-OFFICE LIFE-ASSURANCE AND ANNUITIES.

The numerous aids which the government have from time to time afforded through the agency of the Post-office for the encouragement of thrift and providence amongst the poorer classes have generally been attended with so much success, that it is surprising to hear of even one exception in regard to such efforts. There is no doubt, however, as was pointed out two years ago in this _Journal_, that the existing scheme of Post-office Life-assurance and Annuities, which has been in operation since 1865, has sadly hung fire, and but little advantage has been taken of the system, as may be inferred from the fact, that although it has been established almost twenty years, the total number of policies for life-assurance issued during that period is not more than six thousand five hundred and twenty-four; while the number of annuity contracts granted during the same period is only twelve thousand four hundred and thirty-five. Taking the latest returns, too, we find that the life policies now existing have dwindled down to so low a number as four thousand six hundred and fifteen; while the number of annuity contracts now only reaches nine thousand three hundred and seventy-three. These figures at once show how trifling and unimportant have been the results from this branch of Post-office business; but perhaps the causes for this want of success are not far to seek, if we consider how circumscribed and restricted the present system is in its action.

It was but natural, therefore, that so energetic a reformer as Mr Fawcett should speedily turn his attention to this important subject, on taking the helm in the affairs of the great department over which he has so ably presided during the past four years. A select Committee of the House of Commons was appointed in 1882, of which the Postmaster-general was chairman; and after thoroughly inquiring into the whole subject, that Committee unanimously recommended in their Report the adoption of a scheme for the amelioration of the present system of Post-office Life-assurance and Annuities which had been put forward and explained to them by Mr James J. Cardin, the present Assistant-receiver and Accountant-general to the Post-office. An Act of Parliament was passed during the same session legalising the proposed changes; and as it is understood that the new system will be brought into operation on the first of May this year, it seems desirable, and indeed important, that the undoubted benefits and privileges that will accrue therefrom should be made known as widely as possible.

The essential feature of the new Post-office scheme for assuring lives and granting annuities is, that every person wishing to assure his or her life or to purchase an annuity through the Post-office shall become a depositor in the Post-office savings-bank—a plan that will offer to the public numerous facilities, and a large amount of convenience in respect of this kind of business, which have hitherto not existed. In the first place, the intending insurants or annuitants will in future be able for that purpose to go to any post-office savings-bank in the country—of which there are now over seven thousand. At present, life-assurance and annuity business can be transacted at only two thousand post-offices; but the intended system will at once place five thousand additional post-offices at the disposal of the public in this respect. In the next place, the cosmopolitanism of the savings-bank system will apply equally to the assurance and annuities business under its new conditions; and this it may be pointed out will prove an advantage of no mean order to the classes for whom Post-office Assurance and Annuities would appear to be chiefly designed, if it be remembered how frequently working-men move about from place to place. Under the present system, the insurant or annuitant is tied to the particular post-office at which the insurance or the contract for the annuity was originally effected, excepting by going through the formalities involved in giving notice to the chief office in London of a desire to change the place of payment of the premiums, which by most persons of the classes concerned is regarded as a somewhat irksome job.

The great idea of the whole scheme seems to be to afford the public in respect of Post-office Assurance and Annuities a maximum amount of convenience with a minimum amount of trouble; and nothing could probably further this object more successfully than Mr Cardin’s scheme of working the assurance and annuities business in with that of the savings-bank; for all the advantages and benefits which the public now enjoy in regard to the latter-named branch of the Post-office will be equally shared by those who intend to assure their lives or purchase annuities through the same department. Mr Fawcett, who is a true champion of the principles of thrift, has in all his schemes to this end recognised the supreme importance of simplicity in the necessary machinery, so far as the public at all events are concerned; and it was probably the fact of such simplicity being a predominating feature of the new insurance scheme that commended it so favourably to Mr Fawcett’s mind.

Any person desiring to assure his life or to purchase an annuity through the Post-office, will first of all procure the form or forms applicable to his case, and such information as he may require from a post-office at which savings-bank business is transacted, the number of such offices in the United Kingdom being, as already stated, over seven thousand. On completion of the necessary preliminaries, which will be reduced to the smallest limits compatible with the safe conduct of the business, he will be furnished, if not already a Post-office savings-bank depositor, with a deposit book; and a deposit account will be opened in his name, and he will then be asked to authorise the transfer of the amount of all future premiums as they become due, from his savings-bank to his assurance or annuity account. He will pay into the savings-bank account thus opened such sums as he conveniently can from time to time; and these sums, together with any accumulations by way of interest, or from dividends on stock purchased under the savings-bank regulations, will form the fund from which the Post-office will take the premiums as they annually become due. So long, therefore, as the annuitant or insurant, as the case may be, takes care to have a sufficient balance in his savings-bank account when the premiums become due, he will have no further trouble in the matter. In the event of the balance being insufficient, the fact will be specially notified to him, and reasonable time allowed for making good the deficiency.

The advantage in this scheme which the classes for whom it is designed will probably best appreciate is the liberty, and consequent convenience, of paying the premiums not in one annual lump sum and on a specific date, but from time to time as may be agreeable to the insurant or annuitant, and in such sums as may at the time suit his pocket. He may indeed save a penny at a time for his annual premiums by using the savings-bank stamp slip, which has spaces on it for twelve stamps, and which when filled up may be passed into the post-office. It is astonishing what benefits can be procured by the saving of only a penny a week. For instance, a youth of sixteen, by putting a penny postage-stamp each week on one of the slips referred to, might either secure for himself at sixty, old-age pay of about three pounds a year, or insure his life for about thirteen pounds; and if the saving commenced at five years of age, the old-age pay would be about five pounds a year. Another appreciable benefit which the new system will afford as regards payment is, that by allowing the premiums to be paid in as savings-bank deposits, the higher charges necessarily made when premiums have to be collected in regular periodical instalments will be saved to the insurant or annuitant, as the case may be.

To make a providence or thrift scheme at all successful it is of course essential that the general working of such a scheme should be adapted to the character of the classes whom it is intended to reach; and it is precisely in this respect that the new scheme of Post-office Assurance and Annuities would seem to succeed. As Mr Fawcett is himself ready to admit, the purchase of an annuity or the keeping up of a policy of insurance is at present a constant source of trouble to the person concerned. Attendance at a particular post-office is necessary for the payment of a premium, a special book has to be kept, and other rules have to be observed. All this will be changed under the new system; and when once the annuity has been purchased or the assurance effected, no further action on the part of the person concerned will be necessary. The premiums will be transferred at the chief office in London from his savings-bank account to his assurance or annuity account without trouble to him. He will thus be saved the task of remembering the precise amount of premium due or the particular day on which it is to be paid; and this arrangement will also abolish the necessity for a special insurance or annuity book.

The operation of the new scheme will, so far as can be seen, lead to some collateral advantages, of which not a few persons will be ready to avail themselves. A depositor, for instance, in the Post-office savings-banks, or a holder of government stock obtained through that medium, will be able to give authority to the Postmaster-general to use the interest or the dividends as the case may be, which may accrue, for the purposes of purchasing a life policy or an annuity, or both, as might be directed. Thus, as Mr Cardin tells us, a man at the age of thirty, with one hundred pounds deposited in the Post-office savings-bank, will be able to give an order directing that half the interest thereon shall be applied to the assurance of his life for fifty-three pounds thirteen shillings and fourpence, and the other moiety to the purchase of a deferred annuity of eight pounds six shillings and eightpence, commencing at the age of sixty; and if his one hundred pounds were invested in government stock, the amounts of his life-assurance and his deferred annuity would be greater, as the dividends would be of greater amount than the interest received on a mere deposit.

It may be briefly pointed out that under the Act of Parliament for legalising the changes about to be wrought in the Post-office Assurance and Annuities system, some important alterations in the limits will be made. It has been long recognised that the present limits were ill adapted to the kind of business sought. The higher limits were too low, and the lower limits too high. The former will now be raised to the useful maximum of two hundred pounds; while the present lower limit of twenty pounds has been altogether abolished, so that an assurance can be effected or an annuity purchased for any sum below two hundred pounds. There will also be some beneficial changes as to the limits of age. There can be no doubt that the first steps taken by the young to make provision for the future act as a powerful incentive to greater efforts, and that thus an annuity or life policy of considerable amount is gradually built up. Mr Fawcett and the select Committee over which he presided, recognising this fact, felt that such beginnings of thrift could not be made too soon, and consequently recommended that the present limits of age which restrict life-assurance to sixteen, and the grant of annuities to ten, should be respectively reduced to eight and five years; and these proposals have been sanctioned by the Act. It should be added, that for obvious reasons, it was considered expedient to limit the amount of the assurance to be effected upon the life of a very young child; and the Act provides, therefore, that the amount shall not exceed five pounds on the life of a child between the ages of eight and fourteen years.

In conclusion, there can be no question that the changes which we have indicated here will prove of the greatest value, now that the importance of life-assurance and of making provision for old age is becoming more appreciated among the people. It is true, of course, that numerous benefit and friendly societies exist which offer various kinds of privileges; but from causes that are not far to seek, the poor have come to view such societies with a certain amount of distrust; and it is needful that the government should step in to render the poorer classes not only all the facilities at its command, but also that assurance as regards stability which alone a government department can impress on such classes.

We have attempted to show some of the principal advantages which will accrue from that system, and there is one more that should not be omitted. It is, that any person who may suddenly or unexpectedly become possessed of a certain sum of money may invest it in the Post-office, and by a single payment secure either an annuity in old age or a life-assurance. The advantage of being able to make a single payment is obvious; for it at once removes all further trouble and anxiety from the mind of the person so investing his money as to the future; a reflection which, to most persons, must be a source of infinite satisfaction.

BY MEAD AND STREAM.

CHAPTER XXV.—A WORD IN SEASON.

The suspicion which Philip now entertained regarding his uncle’s habits rendered the letters received from him the more surprising—they were so calm, kindly, and firm. He did not receive many: Mr Shield preferred that his instructions should be conveyed to him by Messrs Hawkins and Jackson. There was one waiting for him, however, on the morning on which he took possession of his chambers in Verulam Buildings, Gray’s Inn.

Wrentham had tried to persuade him to take chambers in the West End, indicating Piccadilly as the most suitable quarter for the residence of a young man of fortune who was likely to mix in society. There he would be close to the clubs, and five minutes from every place of amusement worth going to.

But Philip had notions of his own on this subject. He had no particular desire to be near the clubs: he expected his time to be fully occupied in the enterprise on which he was entering. What leisure he might have would of course be spent at Willowmere and Ringsford. The chambers in Verulam Buildings were all that a bachelor of simple tastes could desire. They were on the second floor, and the windows of the principal apartment overlooked the green square. To the left were quaint old gables and tiles, which the master-painter, Time, had transformed into a wondrous harmony of all the shades and tints of green and russet.

Sitting there, with the noisy traffic of Gray’s Inn Road shut out by double doors and double windows on the other side of the building, he could imagine himself to be miles away from the bustle and fever of the town, although he was in the midst of it. And sitting there, he read this letter from Mr Shield, which began as usual without any of the customary phrases of address:

‘I now feel that you have begun your individual life in earnest; and I am glad of it. By this step you secure full opportunity to show us what stuff you are made of. As already explained, I do not intend to interfere with you in any way. I do not wish you to seek my advice, and do not wish to give any. Once for all, understand me—my desire is to test by your own acts and judgment whether or not you are worthy of the fortune which awaits you.

‘When I say the fortune which awaits you, I mean something more than money.

‘I hope you will stand the test; but you must not ask me to help you to do so. Circumstances may tempt me at times to give you a word of warning; but my present intention is to do my best to resist the temptation. You must do everything for yourself and by yourself, if you are to satisfy me.

‘I admire the spirit which prompts your enterprise, and entirely approve of its object. But here let me speak my first and probably my last word of warning. No doubt you are anxious to convince me that the capital which has been placed at your disposal is not to be thrown away; and it is this anxiety, backed by the enthusiasm of inexperience, that leads you into your first blunder. You calculate upon reaping from six to eight per cent. on your investment. I do not pretend to have gone thoroughly into the subject; but considering the kind of investment and the manner in which you propose to work it, my opinion is that if you count upon from two to three per cent., you will be more likely to avoid disappointment than if you adhere to the figures you have set down. At anyrate, you will err on the safe side.

‘Further: you should also, and to a like extent, moderate your calculations as to the degree of sympathy and co-operation you will receive from the people you intend to benefit. I should be sorry to rob you of any part of the joy which faith in his fellow-men gives to youth. I think the man is happier who fails because he has trusted others, than he who succeeds because he has trusted no one but himself. I have failed in that way, and may fail again; yet my belief in the truth of this principle of trust is unchanged.

‘At the same time, whilst you have faith in others, your eyes should be clear. Before you give your confidence, do what you can to make sure that it is not given to a knave. Should you, with eyes open, allow yourself to be deceived, you would be a fool, not a generous man. I was a fool.

‘Pardon this allusion to myself; there was no intention of making any when this letter was begun.

‘Briefly, whilst hoping that your enterprise may be completely successful, I wish to remind you of the commonplace fact that greed and selfishness are elements which have to be reckoned with in everything we attempt to do for or with others, whether the attempt be made in the wilds of Griqualand or in this centre of civilisation. It is a miserable conclusion to arrive at in looking back on the experience of a life; but it is the inevitable one. The only people you will be able to help are those who are willing to help themselves in the right way—which means those who have learned that the success of a comrade is no barrier to their own success. You will have to learn that the petty jealousies which exist amongst the workers in even the smallest undertakings are as countless as they are incomprehensible to the man who looks on all around him with generous eyes. You will be a happy man if twenty years hence you can say that your experience has been different from mine.

‘You are not to think, however, that I consider all people moved by greed and selfishness alone: I only say that these are elements to be taken into account in dealing with them. The most faithful friends are sometimes found amongst the most ignorant of mankind: the greatest scoundrels amongst those who are regarded as the most cultivated.

‘Do you find this difficult to understand? You must work out its full meaning for yourself. I say no more. You have your warning. Go on your way, and I trust you will prosper.’

This was signed abruptly, Austin Shield, as if the writer feared that he had already said too much.

‘How he must have suffered,’ was Philip’s thought, after the first few moments of reflection over this letter. It was the longest he had ever received from his uncle, and seemed to disclose more of the man’s inner nature than he had hitherto been permitted to see. ‘How he must have suffered! Would I bear the scar so long if—— What stuff and nonsense!’

He laughed at himself heartily, and a little scornfully for allowing the absurd question even to flit across his mind. As if any possible combination of circumstances could ever arise to take Madge away from him! The tombstone of one of them was the only barrier that could ever stand between them; and the prospect of its erection was such a long way off, that he could think of it lightly if not philosophically.

But as he continued to stare out at those quaint russet gables and the green square, a dreamy expression slowly filled his eyes, and visions of the impossible passed before him. He had thrown himself into this work which he had found to do with such earnestness, that he had already passed more than one day without going to see Madge. Her spirit was in the work, and inspired his devotion to it, and all his labour was for her. In that way she was always with him, although her form and clear eyes might not be constantly present to his mind. That was a consolatory thought for himself; but would it satisfy her? Was it sufficient to satisfy himself how he had allowed three days to pass without his appearance at Willowmere?

He was startled when he recollected that it was three days since he had been there. Three days—an age, and how it could have passed so quickly he was unable to understand. He had certainly intended every evening to go as usual. But every day had been so full of business—details of plans and estimates to study and master—that he had been glad to lie down and sleep. The task was the more laborious for him, as he had not had previous knowledge of its practical intricacies, and he was resolved to understand thoroughly everything that was done.

‘I suppose she will laugh, and say it is like me—always at extremes; either trying to do too much, or doing too little. At anyrate, she will be convinced that I have taken kindly to harness. We’ll see this afternoon.’

There was another influence which unconsciously detained him in town. He shrank somehow from the interview with his father which must take place on his return to Ringsford. He had hoped to be able to take with him some friendly message from Mr Shield which would lead to the reconciliation of the two men; and as yet he was as far as ever from being able to approach the subject with his uncle.

His reverie was interrupted by the arrival of Wrentham, spruce and buoyant, a flower in his button-hole, and looking as if he had made a safe bet on the next racing event.

‘Came to tell you about that land,’ he said.

‘I suppose you have made arrangements for the purchase?’ rejoined Philip, as he folded his uncle’s letter and replaced it in the envelope.

Wrentham followed the action with inquisitive eyes. He was asking himself, ‘Has that letter anything to do with this coolness about the bargain, on which he was so hot a few days ago, or is it accident?’ Then, with a little real wonder, and some affectation of amusement at the innocence of his principal:

‘My dear Philip!’—Wrentham was one of those men who will call an acquaintance of a few hours by his Christian name, and by an abbreviation of it after an intimacy of a couple of days—‘you don’t mean to say that you imagine a question of the transfer of land in this greatest city of the world is to be settled off-hand in a forenoon?’

‘O no; I did not think that, Wrentham; but as the land is very much on the outskirts of the city, and has been for a long time in the market, I did not expect that there would be much delay in coming to terms about it.’

‘Ah! but you forget that it is within easy distance of an existing railway station, and close by the site of one which will be in working order before your houses can be built.’

‘Exactly. That is why I chose the spot.’