itself, been rendered more intense and jntractable.
And here it is imperative that the reader should fully appreciate the disastrous effect of this competition and rivalry between separate Trade Unions. The evil will be equally apparent whether we regard the Trade Union merely as a friendly society for insuring the weekly wage-earner against loss of livelihood through sickness, old age, and depression of trade, or as a militant orgainisation for enabling the manual worker to obtain better conditions from the capitalist employer.
Let us consider first Jthe side of Trade Unionism which has, from the outset, been universally praised and admired, the " ancient and most laudable custom for divers artists within the United Kingdom to meet and form themselves into societies for the sole purpose of assisting each other in cases of sickness, old age, and other infirmities, and for the burial of their dead." ^ Now, whatever weight may be given, in matters of commerce, to the maxim caveat emptor—how- ever thoroughly we may rely, as regards articles of personal consumption, on the buyer's watchfulness over his own
1 Preamble to Rules of the Friendly Society of Ironmoulders (Manchestei, 1809), and to those of many other unions of this epoch.
Interunion Relations 113
interests—it is indisputable that, in the whole realm of insurance, competition does practically nothing to promote efficiency. The assumption which underlies the faith in unrestricted competition is that the consumer is competent to judge of the quality of what he pays for, or that he will at any rate become so in the act of consumption. In matters of financial insurance no such assumption can reasonably be maintained. Apart from the dangers of irregularities and defalcations, the whole question of efficiency or inefficiency in friendly society administration is bound up with the selection of proper actuarial data, the collection and verifica-| tion of the society's own actuarial experience, and the conJ sequent fixing of the due rates of contribution and benefits. When rival societies bid against each other for members, competition inevitably takes the form, either of offering the common benefits at a lower rate, or of promising extravagant benefits at the common rate of subscription. The ordinary man, innocent of actuarial science, is totally unable to appreciate the merits of the rival scales put before him. To the raw recruit the smallness of the weekly levy offers an almost irresistible attraction. Nor does such illegitimate competition between societies work, as might be supposed, its own cure. The club charging rates insufficient to meet its liabilities will, it is true, in the end bring about its own destruction. But the actuarial nemesis is slow to arrive, as many years must elapse before the full measure of the liability for death claims and superannuation allowances can be tested. And when the inevitable collapse comes, the prudent society gains little by the dissolution of its unsound rival. A club which has failed to meet its engage- ments, and has been broken' up, leaves those who have been its members suspicious of all forms of organisation and indisposed to renew their contributions. The payment for some time of high benefits in return for low subscriptions will have falsified the standard of expectation. Those who have lost their money ascribe the failure to the dishonesty or incapacity of the officers, to the workmen's lack of loyalty,
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to any cause, indeed, rather than to their own unreasonable- ness in expecting a shilling's worth of benefits for a sixpenny contribution.
In the case of Friendly Societies proper, and in that of Insurance Companies, the untrustworthiness of competition as a guarantee of financial eflficiency has been fully recog-' nised by the community, and dealt with by the legislature.' Trade Unions, however, have, for good and sufficient reasons, been left outside the scope of these provisions.^ But, as a matter of fact, competition between Trade Unions on their benefit club side is even more injurious to their soundness than it is to Friendly Societies proper, Dealing as they do, not with a specially selected class -of thrifty citizens, but with the whole body of men in their trade ; unable, owing to their other functions, to concentrate their members' attention upon the actuarial side of their affairs ; and destitute of any authoritative data or scientific calculation for such benefits as Out of Work pay. Trade ^nions must always find it , specially difficult to resist a demand for increase of benefits, or lowering of contribution. If two unions are competing for the I same class of members, the pressure becomes irresistible.
The history of Trade Unionism is one long illustration of this argument. In one trade after another we watch the cropping up of " mushroom unions," their heated rivalry
' It is unnecessary for us to do more than refer to the long series" of statutes, beginning in 1786, which provide for the registration, publication of accounts, public audit, and even compulsory valuation of Friendly Societies and Industrial Insurance Companies. By every means, short of direct prohibition, the State now seeks to put obstacles in the way of " under-cutting," and, to use the words of Mr. .Reuben Watson before the Select Committee on National Provident Insurance in 1885 (Question 893), discourages "the formation of new societies on the unsound principles of former times." Within the two great "affiliated orders" of Oddfellows and Foresters, which together comprise at least half the friendly society world, the legal requirements are backed by an absolute prohibi- tion to open any new lodge or court without adopting, as a minimum, the definitely approved scale of contributions and benefits. Even with regard to middle-class life assurance companies. Parliament has not only insisted on a specific account- keeping and publication of financial position, but has, since 1872, practically stopped the uprising of additional competitors, by requiring a deposit of ;^20,ooo from any new company before business can be begun.
' See the chapter on "The Method of Mutual Insurance."
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with the older organisations, and consequent mad race for members ; and finally, after a few years of unstable existence, their ignoble bankruptcy and ' dissolution. Meanwhile the responsible officials of the older societies will have been struggling with their own " Delegate Meetings " and " Revising Committees," to maintain a relatively sound scale of con- tributions and benefits. ' Any attempt at financial improve- ment will have been checked by the representations of the branch officers that the only result would be to divert all the recruits to their rasher and more open-handed competitors. The records of every important union contain bitter complaints of this injurious competition. The Friendly Society of Ironfounders, for instance, which dates from 1 809, is one of the oldest and most firmly established Trade Unions. Its 16,000 members include an overwhelming majority of the competent ironmoulders in England, Ireland, and Wales. For over sixty years it has collected and preserved admirable statistical data of the cost of its various benefits, to provide for which it maintains a relatively high rate of contribution and levies. In August 1891, a leading member called attention to the touting for membership that was going on among his trade in certain districts. " I have now noticed," he concludes, " three distinct societies that enter moulders (ironfounders) who are eligible to join us. They offer, more or less, a high rate of benefit at a low rate of contribution. Whether they are likely to fulfil their promises I leave to the judgment of any thoughtful man who will sit down and compare their rates of contribution and benefits with the statistical figures of our society, as shown continually in the annual reports. Those figures have been arrived at by experience, which is the truest basis of calculation for the future, and I would commend them to the notice of all who set themselves the task of computing the maximum rate of benefit to be obtained at the minimum rate of subscription." ^ Nor was
« I^ttei from H. G. Percival in the Monthly Report of the Friendly Society of Ironfounders (August 1891), pp. 18–21.
ii6 Trade Union Structure
this warning unneeded. When, in the very next month, the Ironfounders met in delegate meeting to revise their rules, branch after branch suggested, in order to outstrip the attractions of their extravagant rivals, an increase of benefits, without any addition to the contribution. Thus Gateshead, Keighley, and Greenwich urged that the Out of Work benefit
