the situation grew worse. Eventually the "New" Poor Law of 1834 tightened up the system, and for a time the administration and methods of public assistance were more efficient.

Until then, and for many years afterwards, the authorities were concerned merely with the question of dealing with poverty once it became manifest. It was not until the last decades of the nineteenth century that writers seriously began to inquire into the essential nature of the problem with a view to the prevention as well as the relief of poverty. The submissive acceptance of the evil gave place to an enlightened dissatisfaction with the social organisation. Study was now given to such questions as the causes of unemployment, the nature of casual employment, the consequences of the wages system, the environment of the worker, and the many other factors that contribute directly or otherwise to the evil of destitution. The Minority Report of 1909 and the Maclean Report of 1918 illustrate the change in outlook. Reformers of the nineteenth century were content with piece-meal adjustments of Poor Law methods, never contemplating that the very basis of the administration might be unsound. The devastating criticism that has been levelled during recent years at the whole system of Poor Law relief, and the sounder and more constructive alternatives of prevention and insurance that have been submitted, and to a limited extent already accepted, lead one to assume that the entire abandonment of the Poor Law system cannot be long delayed.

CHAPTER XIII.

Nature and
Extent of
Social
Insurance.

SOCIAL INSURANCE.

Insurance involves the setting aside of sums of money in order to provide compensation against loss resulting from particular emergencies. The contingency is expected to affect only a certain proportion of the number insured, and the participants in the scheme are able, therefore, by paying a comparatively small sum into the fund, to guarantee themselves against heavy financial loss. For example, it is found from experience that a fairly constant percentage of shop windows is broken per annum, and insurance companies are able with a great degree of accuracy to adjust the premiums against this form of loss, spreading the risk over a large number of persons. The same applies to the risk of fire and burglary, an individual being safeguarded against these contingencies by a relatively small annual payment.

Life insurance (which is but a euphemism for death insurance) is conducted on similar principles. It is known from analysis of vital statistics for many years that of a given number of people a certain percentage will die in a given period. If the chances are (say) 99 to 1 against a particular emergency, which involves the loss of (say) £1000, the risk can be insured against by 100 people each contributing £10, plus whatever sum is required for administration. Actuarial science has made such progress that there is scarcely any contingency against which it is not possible to

effect some insurance. against such common contingencies as death, fire, burglary, etc., but against rain during an open-air fête or during one's summer holidays, and even against the return of a parliamentary candidate at a by-election.

Policies are now issued, not only

Social Insurance is usually taken to mean that form of insurance which guarantees an individual against exigencies which reduce his earning capacity or increase his expenditure beyond the normal. Such contingencies arise out of (1) temporary inability to make a living, (2) permanent incapacity, and (3) death. Under (1) come unemployment, sickness, accidents, etc.; under (2) come disablement, chronic illness, old age, etc.; and under (3) come widowhood and orphanhood. All these have been proved to be insurable risks, but some branches have been more fully developed than others. In some cases the State has shouldered the responsibility for the scheme; in others the service has been left entirely to private enterprise.

The following table* shows the amounts estimated to have been spent on Social Insurance in this country in 1922.

* Taken from Cohen, Social Insurance Unified (1924), p. 26.

†From January, 1926, there must be added to the above figures the payments in respect of Widows', Orphans', and Old Age Contributory Pensions.

It is true that 1922 was an exceptional year, and that the expenditure on Unemployment Insurance was abnormally high. On the other hand the above table does not include £38,000,000 spent under the Poor Law, nor £57,000,000 disbursed by the trade unions and friendly societies. And if one included the sums spent by the State and other bodies on pensions of different kinds, and reckoned the sums deposited by the workers with the savings banks, cooperative societies and building societies, purely as a provision against times of need, the grand total would not, it is estimated, fall far short of £500,000,000.*

In this chapter the different forms of Social Insurance in this country are briefly surveyed. Most space is devoted to Unemployment Insurance, not so much because it entails the largest expenditure at the present time, but because the general principles discussed in connection with it apply, in greater or less degree, to all the other branches of the main subject. One sometimes comes across the contention that wageearners should put aside a certain proportion of their income in order that when the "rainy day" arrives they will be independent of help from the State or other authority. It is claimed that such a policy would prevent degradation and demoralisation.

Savings as an
Alternative to
Insurance.

The proposal that savings should take the place of insurance, however, is a mere counsel of perfection. It assumes, what is unfortunately too rarely the case, that the workers have sufficient wages during employment to permit of the necessary balance being put aside. As a rule, it is the best-paid workers who are most regularly employed, while it is those who receive little above a subsistence income who are most liable to unemployment. And, though * Ibid., p. 27.

it is known that a certain number of workmen will sooner or later be out of employment, or be in distress through any of the other contingencies mentioned above, the average individual is sufficiently optimistic to think that he will not be affected, and tends, therefore, to take too little precaution.

A second defect of the policy of savings is the difficulty, even the impossibility, of estimating how much ought to be saved. Unemployment in the aggregate may be predicted with a certain degree of accuracy, but estimates as far as the individual is concerned must be allowed a wide margin of error. If the worker's income during employment were adequate to secure a decent standard of life and a little over, it would not matter seriously if the estimate of the sum to be set aside turned out to be incorrect. But if the wage were barely above subsistence level, there is the danger that any saving would be at the cost of health and efficiency. Saving is only economical so long as the sources of the income are not impaired; when it is effected at the expense of productive capacity, there is a net loss. Further, if every worker saved sufficient to maintain himself and dependants in the event of unemployment, there would be far too much saved in the aggregate for this particular purpose, for, as was shown in the chapter on unemployment, fifteen-sixteenths of the wage-earners are still in employment when trade depression is at its worst.*

Finally, it is often objected, the dependence on savings alone to provide against distress in time of unemployment throws the burden on the wrong shoulders; little as the employers contribute in the present insurance scheme, they

* This does not apply, of course, to the abnormal conditions following a war; even the most sanguine of the advocates of saving cannot expect the workers to forecast and sufficiently provide against such a contingency as this.