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Beneficiary Features of American Trade Unions by James B. Kennedy

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Produced by Juliet Sutherland, Asad Razzaki and PG Distributed




Professor of Political Economy in Wells College

* * * * *





Under the Direction of the

Departments of History, Political Economy, and
Political Science

* * * * *

November-December, 1908

* * * * *


CHAPTER I. Insurance Against Death and Disability
CHAPTER II. Death Benefits
CHAPTER III. Sick Benefits
CHAPTER IV. Out-of-Work Benefits
CHAPTER V. Superannuation Benefits
CHAPTER VI. Administration


This monograph had its origin in the investigations of American
trade-union activities which have engaged the attention of the Economic
Seminary of the Johns Hopkins University since October, 1902. It was
begun and completed while the author was a graduate student at the

The study is based on a survey of the beneficiary activities of national
and international trade unions. While no attempt has been made to study
in detail the various forms of mutual insurance maintained by local
trade unions, frequent references are made thereto, inasmuch as the
local activities have usually an important genetic connection with the
national. The sources from which information has been secured are the
trade-union publications in the Johns Hopkins University collection and
important documents at the headquarters of different unions. These have
been supplemented by personal interviews with prominent officials and
labor leaders.

The author wishes to acknowledge the assistance received, at every stage
of the work, from Professor Jacob H. Hollander and Associate Professor
George E. Barnett of the Department of Political Economy of the Johns
Hopkins University.




The American trade unions have developed beneficiary functions far more
slowly than the trade unions of England and Germany. Only since about
1880 has there been any considerable increase in such activities. Prior
to that time the national unions with few exceptions paid no
benefits.[1] The local unions, here and there, developed beneficiary
systems, but these were not continuous nor, in many cases, important.

[Footnote 1: The term "benefit" is used in this monograph to include all
forms of mutual insurance other than those directly connected with the
enforcement of trade-union rules by collective bargaining. "Strike
benefits" and "victimized benefits" are thus without the scope of the

The history of trade-union beneficiary activities in the United States
may be roughly divided into three periods. In the first, extending from
the beginning of the century to about 1830, the local associations laid
great stress on their beneficiary functions. The societies of printers
organized from 1794 to 1815 in the most important American cities were
typical of the period. In all of them, as far as the extant records
show, the beneficiary functions were regarded as equally important with
the trade-regulating activities. American trade unionism owed its origin
as much to the desire to associate for mutual insurance as to the desire
to establish trade rules.

The second period, from 1830 to 1880, was marked by the subordination of
beneficiary to trade purposes. The maintenance of a minimum rate and
other trade policies came to occupy the foremost place in the program of
the local unions. In this period national unions were formed in many

The new national unions were not strong enough to establish beneficiary
systems. Moreover, at many points the establishment of local benefits
conflicted with the success of the national organizations. A local union
was usually forced to impose certain restrictions upon claimants of
benefits, either an initiation fee or a requisite term of membership, in
order to protect its funds. Such limitations on the full participation
of all members in the benefits of membership militated severely against
the carrying out of the prime function of the national unions--the
nationalization of membership. The leaders in the trade-union movement
of this period were interested chiefly in strengthening the relations of
the local unions. They saw, therefore, in the local benefits a hindrance
to the accomplishment of their aims. By 1860 it had become a fairly well
accepted doctrine that a trade union should not attempt to develop
beneficiary functions. It was argued that since the expense of
maintaining benefits made the dues of members higher, persons who might
otherwise join the unions were prevented from doing so. The leaders of
the Iron Molders for years opposed the introduction of beneficiary
features on the ground that the development of such activities was
likely to interfere with the trade functions of the organization. In
1866 President Sylvis for this reason vigorously opposed the
introduction of a national sick benefit.[2] As late as 1895 the veteran
president of the Iron Molders--Mr. Martin Fox--counselled the Union
against developing an extensive beneficiary system.[3] The same views
were entertained by the leaders of the other more important unions of
the period.

[Footnote 2: Iron Molders' Journal, Vol. I, p. 309.]

[Footnote 3: Proceedings of the Twentieth Session, 1895, Report of the

Shortly after the close of the Civil War the rapid growth of mutual
insurance companies attracted the attention of many trade unionists. The
formation of insurance associations under the auspices of the national
unions with a membership limited to the members of the unions was
discussed in the most important organizations of the day. In many of
them voluntary associations of one kind and another were inaugurated.
The Granite Cutters, the Iron Molders and the Printers all experimented
after this fashion. Only in the railway brotherhoods did these insurance
systems develop into a permanent feature.

The development of beneficiary functions by the leading national unions
began about 1880. The benefits administered by these organizations do
not interfere with the nationalization of membership. A new theory as to
the relation between the beneficiary and the trade functions began about
1880 to gain wide acceptance. It was argued and with much force that the
benefits were a direct aid in the accomplishment of trade purposes.
While some leaders of the older school have seen in the rapid
development of beneficiary functions a danger to the unions, the greater
number who have come into positions of authority since 1880 have
steadily advocated the establishment of benefits.

The table on p. 12 gives the year in which the principal national unions
were organized, together with the date and order of introduction of
their national benefit systems.

This change in the attitude of American trade unions toward beneficiary
activities is illustrated by the fact that while in the older American
trade unions, such as the Typographical Union, the Cigar Makers' Union
and the Iron Molders' Union, many years elapsed between the founding of
national organizations and the institution of national benefit systems,
of the national unions organized since about 1880, some, as for example,
the Granite Cutters' Union, the Brotherhood of Painters, the Metal
Polishers' Union, and the Wood Workers' Union, incorporated provisions
for the payment of benefits in their first constitutions, and many
others adopted benefit systems within a few years after organization.

| |Date of | Date of |Order of
| |National|Introduction|Introduction
| Name of Organization. | Organi-|of Benefit |of Benefit
| | zation.| System[4] | System
| Typographical Union................ | 1850 | 1891 | 11
| Hatters' Association................ | 1853 | 1887 | 6
| Stone Cutters' Association.......... | 1853 | 1892 | 13
| Glass Bottle Blowers................ | 1857 | 1891 | 12
| Iron Molders' Union................. | 1859 | 1870 | 2
| Cigar Makers' Union................. | 1864 | 1867 | 1
| Typographia, Deutsch-Amerikanischen. | 1873 | 1884 | 5
| Iron, Steel and Tin Workers......... | 1876 | 1903 | 22
| Granite Cutters..................... | 1877 | 1877 | 3
| Carpenters and Joiners, Brotherhood. | 1881 | 1882 | 4
| Tailors' Union...................... | 1884 | 1890 | 8
| Painters' Brotherhood............... | 1887 | 1887 | 7
| Pattern Makers' League.............. | 1887 | 1898 | 16
| Barbers' Union...................... | 1887 | 1895 | 15
| Plumbers' Association............... | 1889 | 1903 | 23
| Machinists' Association............. | 1889 | 1893 | 14
| Metal Polishers' Union.............. | 1890 | 1890 | 9
| Wood Workers........................ | 1890 | 1890 | 10
| Garment Workers' Union.............. | 1891 | 1902 | 21
| Boot and Shoe Workers' Union........ | 1895 | 1898 | 18
| Tobacco Workers' Union.............. | 1895 | 1896 | 17
| Leather Workers on Horse Goods...... | 1896 | 1898 | 19
| Piano and Organ Workers............. | 1898 | 1898 | 20
| United Metal Workers................ | 1900 | 1900 | 24

[Footnote 4: The dates given indicate the years in which the unions
first succeeded in adopting national benefits of some kind, and not the
dates on which successful systems were inaugurated. For example, the
Cigar Makers' system of travelling loans adopted in 1867 and its
"endowment plan" adopted in 1873 were unsuccessful and the present
system was not adopted until 1880. (Cigar Makers' Journal and Program,
twentieth session, pp. 57-63.)]

It is maintained that the establishment of beneficiary features is a
direct aid to a union in carrying through its trade policies. In the
first place, successful systems of benefits, whether they attract
members or not, undoubtedly retain them. Sharp and sudden declinations
in membership during industrial disturbances are thus prevented. The
effect of the panic of 1893-1897 was peculiarly instructive in this
respect. Many labor unions suffered a considerable decline in members.
The Typographical Union lost about ten per cent. of its membership, the
Brotherhood of Carpenters about fifty per cent., while the Cigar Makers
with a highly developed system of benefits lost only one and one half
per cent. The trade unionists naturally regard it as peculiarly
desirable that the members should not abandon the organization when the
difficulty of maintaining wages and conditions is greatest. To hold in
hard times what has been gained in good times is a vital point in
trade-union policy. The trade unionists realize that the chief work of
the unions is not so much in advancing wages in good times as in
preventing recessions when employment is scarce. President Strasser of
the Cigar Makers has pointed out that the Cigar Makers came through the
depression of 1893-1897 with very slight reductions in wages. This
result he attributed to the beneficiary system which held the membership
in good standing.[5]

[Footnote 5: Cigar Makers' Journal, Vol. 26, September, 1901.]

It is, of course, impossible to estimate with any degree of precision
the effect of trade-union benefits in retaining members. Certain unions,
such as the Cigar Makers and the Typographia, having compact
organizations with highly developed systems of benefits lose almost none
of their membership in periods of depression. The experience of the
Cigar Makers is peculiarly instructive since we are here able to note
the effect due to the introduction of a system of benefits. In 1869 the
membership of the union was 5800. No benefits were paid except the
strike benefit. In 1873 the membership had fallen to 3771, in 1874 to
2167, in 1875 to 1604, and in 1877 to 1016. A noticeable increase set in
about 1879 and by 1883 the number of members was 13,214.[6] In the
depression extending from 1893 to 1897 the membership of the Cigar
Makers remained almost stationary. The following table shows the number
of members for each year from 1890 to 1900:

1890..24,624 1984..27,828 1898..26,460
1891..24,221 1895..27,760 1899..28,994
1892..26,678 1896..27,318 1900..33,955
1893..26,788 1897..26,347

[Footnote 6: Cigar Makers' Journal, Vol. 10, Aug., 1885; Vol. 19, May,
1894, p. 8. The records of initiations and suspensions for various
periods in the history of the union also show the increase in the power
to retain members. During 1877-1879, with only strike benefits in
operation, 3000 members were initiated and 2750 were suspended; from
September, 1879, to September, 1880, with strike and travelling benefits
in force, 5453 were initiated and 1853, or 33.9 per cent., were
suspended, while from September, 1880, to September, 1881, when a sick
benefit was also being paid, 7402 were initiated, and 1867, or 25.2 per
cent., were suspended. (Cigar Makers' Journal, Vol. 6, June, 1881, p. i;
Vol. 7, October, 1881, p. 3.)]

The Typographia, the only other American trade union which has developed
its system of benefits as fully as the Cigar Makers, held its membership
equally well during the depression of 1893-1897. The following table
shows the membership of the Typographia from 1890 to 1900 by years:

1890 ...1233 1894 ...1204 1898 ...1100
1891 ...1322 1895 ...1092 1899 ...1071
1892 ...1382 1896 ...1115 1900 ...1044
1893 ...1380 1897 ...1083

The falling off in membership in 1894 and 1895 was due only to a very
small extent to defections. The introduction of the linotype decreased
the opportunity for employment in the trade, and the gradual shrinkage
in the amount of German printing done in the United States due to the
falling off in German immigration was accentuated by the depression.

While the two unions having the most highly developed beneficiary
systems thus show an ability to retain members during periods of
depression, it would be absurd to assume that this result is solely the
effect of the establishment of the benefits. The Cigar Makers' Union in
1892 would undoubtedly have held its membership better than it did in
1872 even if it had developed no benefits. It is interesting in this
connection to note that while in the depression of 1873-1878 the
membership of the Typographical Union fell from 9799 to 4260, a loss of
forty per cent., and the number of local unions decreased from 105 to
60, in the great depression of 1893-1897 the membership fell from 31,379
in 1894 to 28,096 in 1897, a loss of only ten per cent. Part even of
this small loss was due to the withdrawal of the pressmen and
bookbinders from the organization. It thus appears that the
Typographical Union with a death benefit of sixty-five dollars and a
home for the aged held its membership almost as well as the Cigar Makers
with their much more highly developed beneficiary system. The change in
the power of the Typographical Union to retain its membership was
obviously due not so much to the establishment of beneficiary features
as to the greater support which it gave its members in collective

A comparison of the effect of the depression of 1893-1897 on the
Typographical Union and on the Brotherhood of Carpenters makes the point
still clearer. In 1893 when the depression set in the per capita
expenditure of the Typographical Union for beneficiary features was
$1.50, while that of the Carpenters was $1.40. The death benefit in the
Carpenters' union was graded in such a way as to offer an additional
incentive to retain membership. The two unions were, as far as the
development of benefits is concerned, on about the same plane. As has
been noted above, the Printers lost almost none of their members. The
Carpenters lost from 1893 to 1895 over half of their membership. The
following table shows the membership of the Carpenters by years from
1890 to 1900:

1890....53,769 1894....33,917 1898....31,508
1891....56,937 1895....25,152 1899\
1892....51,313 1896....29,691 ...68,463
1893....54,121 1897....28,209 1900/

It is obvious that beneficiary features are only one of several factors
in retaining membership.

How far benefits attract members into the unions it is difficult to
estimate. In the Cigar Makers' Union, the membership in 1880 was 4440,
while in 1881 it was 14,604, an increase of 228 per cent. The increase
in 1880 over 1879 had, however, been very large. How far the rapid
increase in 1881 was due to the development of the beneficiary system
and how far to the natural growth consequent upon a period of industrial
activity can only be conjectured. In much the same way the rapid
increase in the membership of the Iron Molders, from 20,920 on January
1, 1896, to 41,189 on January 1, 1900, was certainly not due primarily
to the introduction of the sick benefit into that union.[7] The Boot and
Shoe Workers introduced a system of sick benefits on January 1, 1900. At
that time the union had a membership of 2910; at the close of the year
the members numbered 10,618, and on January i, 1904, the number had
increased to 69,290.[8] This phenomenal increase was not due chiefly to
the desire of the boot and shoe workers to insure themselves against
illness, but to the policy of the union in unionizing shoe plants by a
liberal granting of the use of the label.

[Footnote 7: Iron Molders' Journal, Vol. 33, p. 73; Vol. 36, p. 78.]

[Footnote 8: Proceedings of the Fifth Convention, Detroit, 1902; Shoe
Workers' Journal, Vol. 5, February, 1904, pp. 19, 25.]

The causes of an increase in membership are usually so intertwined that
nothing can be proved statistically as to the effect of the introduction
of beneficiary systems. The executive officers of the unions with
beneficiary features are, however, a unit in declaring that the desire
to secure the advantage of the benefits does attract members.[9]

[Footnote 9: Barbers' Journal, Vol. 10, p. 10; Shoe Workers' Journal,
Vol. 2, April, 1901, p. 6.]

A second effect of the introduction of benefits is the strengthening of
the national treasury. The ordinary trade unionist is not disposed to be
liberal in voting supplies to his national officials for trade purposes.
A union without beneficiary functions usually has small reserve funds or
none at all. The effect of the introduction of beneficiary features is,
in the first place, to increase the funds which may in an emergency be
used for strike benefits, and more important, perhaps, the members,
accustomed to paying a considerable sum weekly or monthly for benefits,
are less reluctant to vote assessments adequate for carrying on
vigorously the trade policies of the union.

Finally, certain trade-union benefits aid even more directly in
accomplishing the trade purposes of the unions by tiding the members
over illness or unemployment. An unemployed journeyman, or one
impoverished by illness, unless supported by his union is tempted to
work below the union rate. A starving man cannot higgle over the
conditions of employment. The unions recognize that in time of strike
they must support the strikers. The establishment of out-of-work
benefits is urged on much the same ground.

While these considerations have been effectual in leading the great mass
of American trade unionists to believe in the advisability of developing
beneficiary systems in connection with their unions, the real reason
for the rapid growth of benefits lies, of course, in the desire of the
members to participate in such beneficiary systems. The development of
beneficiary systems has, therefore, not been guided chiefly or largely
by the consideration as to what benefits would most aid the trade unions
in enforcing their trade policies. The unions have chosen rather to
develop those benefits for which there was the greatest need. Taking the
Report of the American Federation of Labor as a convenient summary of
the beneficiary activities of American trade unions, it appears that in
1907 of sixty-seven national unions paying benefits of all kinds,
sixty-three paid death benefits, six paid benefits on the death of
members' wives, twenty-four paid sick benefits, eight paid travelling
benefits and six paid out-of-work benefits. The benefit which is most
effective as an aid to the enforcement of collective bargaining is
out-of-work relief. This it will be noted has been adopted by very few
unions. On the contrary, the death or funeral benefit of small amount is
far and away the predominant form of national trade-union benefit.
Probably no other benefit offers as little support to the militant side
of trade unionism. The reasons for the greater development of this
benefit are, first, the great need among many trade unionists for
benefits of this kind. Only within recent years has the funeral benefit
been widely obtainable from ordinary insurance companies. Secondly, the
administration of a small funeral benefit presents few difficulties as
compared with the sick or out-of-work benefit.

While the principle that trade-union benefits are an aid in collective
bargaining has not led to the development in American trade unions of
those varieties which might be supposed to have an advantage in this
respect, the form of some of the benefits has been shaped in accordance
with this theory. Thus, there is a tendency to grade the amount of the
benefit according to the length of membership, the intention being to
make it more serviceable in retaining members.

In practically all the unions trade-union benefits originated with the
local unions. With the introduction of national systems the unions have
pursued different policies with regard to the degree of freedom allowed
the local union in paying benefits. The national unions that pay
benefits may thus be divided into three classes according to their
relations with the local unions. In the first class are those unions
that pay insurance against death and disability.[10] These unions
reserve to the national union the exclusive right and authority to issue
insurance but permit the local organizations to pay other benefits. In
the second group are those unions that pay death, sick or out-of-work
benefits from their national treasuries, but prohibit the local unions
from paying similar benefits. The unions that have patterned after the
Cigar Makers' Union belong to this group. The chief of these are the
Deutsch-Amerikanischen Typographia, the Iron Molders' Union, the
Journeymen Plumbers' Association, and the Piano and Organ Workers'
Union. Finally, the largest group of unions paying benefits permit the
local unions also to pay similar benefits. The principal unions of this
character are the Typographical Union, the Brotherhood of Carpenters and
Joiners, the Brotherhood of Painters, and the Amalgamated Wood Workers'
Union. In general, the more highly developed the beneficiary functions
of the national unions become, the less freedom the local unions are
given in carrying on such functions. The tendency is therefore to
replace local with national benefits. The local unions still play,
however, a large role in the payment of benefits. It is probable that
the aggregate sum disbursed by local unions in the United States for
such purposes does not fall far short of the amount expended by the
national unions.

[Footnote 10: Order of Railway Conductors, Brotherhood of Locomotive
Engineers, Brotherhood of Locomotive Firemen, Brotherhood of Railroad
Trainmen, Order of Railroad Telegraphers, Switchmen's Union, Brotherhood
of Maintenance-of-Way Employees, and National Association of Letter



The distinction between systems of insurance on the one hand and systems
of death benefits on the other is not so much one of quality as of
quantity. Legally the distinction lies in the fact that in the case of
insurance a signed contract known as a policy is given to the insured,
while in the case of a benefit no policy is issued. This difference is
not of economic importance. Ordinarily, however, where a trade union
issues insurance policies to its members the amount paid is larger than
in the case of a death benefit. The establishment of insurance systems
has thus been confined to a few organizations. The membership of these
unions receive relatively high wages and are regularly employed. The
highly important role which insurance systems have played in the
formation and working of these unions and the general similarity of
their experiences make it desirable to treat insurance against death and
disability separately from the more common death benefits.

The unions which have been successful in establishing insurance systems
are the seven principal unions of railway employees, viz., the Grand
Brotherhood of Locomotive Engineers, the Order of Railway Conductors,
the Brotherhood of Locomotive Firemen, the Brotherhood of Railroad
Trainmen, the Order of Railroad Telegraphers, the Switchmen's Union of
North America, and the International Brotherhood of Maintenance-of-Way
Employees and the National Association of Letter Carriers.

The oldest of these organizations, the Engineers, was formed at Detroit,
August 17, 1863, as the "Brotherhood of the Footboard," and was
reorganized at Indianapolis, Indiana, August 17, 1864, under the present
name. Under the original constitution, foremen and machinists as well as
engineers were admitted; but since February 23, 1864, membership has
been restricted to locomotive engineers.[11] The Brotherhood was
prosperous from the outset, and at the twenty-first convention in 1884
Grand Chief Arthur reported 258 subordinate divisions with 16,000
members; at the sixth biennial session in May, 1904, Grand Chief Stone
reported 652 divisions with 46,400 members.

[Footnote 11: Locomotive Engineers' Journal, February, 1867.]

The Brotherhood of Locomotive Engineers is not only the oldest of the
railway unions, but was the first to institute national beneficiary
features. Three years after its organization, in September, 1866, the
grand division levied an assessment to raise a fund for "widows and
orphans and totally disabled members." The law was unsatisfactory, and
few subordinate divisions paid the assessments prior to the Cincinnati
convention of October, 1867. This convention ordered all assessments
paid at once, and on December 2, 1867, $1212.40 was paid over to the
chairman of the board of trustees. This was the nucleus of a fund which
reached $10,787.63 on March 1, 1871. On account of charges of
mismanagement and the slow growth of the fund repeated efforts were made
to repeal the "fund" law, but without success. At the Nashville
convention of 1870 a committee appointed to consider the disposition of
the fund at the expiration of the five years recommended that the entire
sum be paid back to the subordinate divisions. The grand chief opposed
this use of the fund, since he regarded it as the Brotherhood's
"strongest pillar."[12]

[Footnote 12: _Ibid.,_ Vol. 5, p. 294.]

Before the expiration of the five-year period, however, on December 3,
1867, the Brotherhood founded an insurance association.[13] On March 13,
1869, the secretary-treasurer reported: number of members admitted
during 1868, 2426; amount of claims paid, $31,920; average amount of
each claim, $1520.09; cost per member, $19. At Baltimore, on October
21,1869, by-laws were adopted providing for assessments of $1 per member
for each death, and 50 cents for each case of total disability,[14] and
at the annual convention of 1871 President Sherman reported that for the
three and one half years of the life of the association there had been
86 deaths and 88 assessments, aggregating $196,358.50, an average of

[Footnote 13: _Ibid.,_ Vol. 3, p. 232.]

[Footnote 14: Locomotive Engineers' Journal, Vol. 4, p. 31.]

The industrial depression of the seventies decreased the membership, but
with the revival of trade an increase set in. Since January 1, 1890,
insurance has been compulsory upon all members of the Brotherhood under
fifty years of age. In January, 1890, the association numbered about
8000, and on January 1, 1897, it had increased to 18,000. During the
twenty-five years of voluntary insurance $3,122,-669.61 was paid in
death and disability benefits, and at the close of 1896 this total had
been increased to $5,771,214.61.[15] Ten years later, December 31, 1906,
the membership had grown to 49,328, with $97,799,500 insurance in force,
and the total aggregate paid in death and disability claims had reached

[Footnote 15: _Ibid.,_ Vol. 25, p. 951; Vol. 31, p. 504.]

The next organization of railway employees to be formed was the
"Conductors' Brotherhood," at Mendota, Illinois, July 6, 1868. Being
desirous of a more comprehensive organization, a few conductors issued,
in November, 1868, a circular to the railway conductors of the United
States and the British Provinces. As a result of this effort, the Grand
Division of the Order of Railway Conductors was organized at Columbus,
Ohio, on December 15, 1868.[16] For a period of twenty-two years the
organization grew slowly against much opposition. From 1877 to 1890 the
Order was exclusively beneficiary, and many of its members withdrew to
organize the "Grand International Brotherhood of Railway Conductors of
America." In 1890 the National Convention decided to make collective
bargaining one of its functions, and the members of the International
Brotherhood joined the Order of Railway Conductors in such numbers that
a year later the Brotherhood disbanded. On January 1, 1890, there were
249 subordinate divisions and 13,720 members; on January 1, 1904, there
were 446 divisions with 31,288 members.

[Footnote 16: Proceedings, 1868-1885 (Cedar Rapids, 1888), p. 13.]

The convention which founded the Grand Division of the Order of Railway
Conductors also instituted a mutual insurance association. The
association thus formed was a voluntary society. Members paid $1 upon
each death or each case of disability and the amount thus collected
constituted the "benefit" paid.[17] At the first annual session held in
Chicago in June, 1869, efforts were made to create a permanent insurance
fund, but without result; and at the second session held in Buffalo, New
York, in October, 1869, after lengthy discussion, the benefit law,
adopted in 1868, was unanimously repealed.[18] For a year the Order had
no insurance feature; but at the third session in October, 1870, a
definite plan was adopted.[19]

[Footnote 17: Proceedings, 1868-1885 (Cedar Rapids, 1888), p. 19.]

[Footnote 18: _Ibid.,_ p. 42.]

[Footnote 19: _Ibid.,_ pp. 48-49.]

From the adoption of this plan to the session at Buffalo, in 1881, the
insurance department remained of small importance, and only nineteen
claims were paid, aggregating $1672. At almost every annual session
during this period the reports of the grand chief conductor and the
grand secretary-treasurer showed that the department was losing ground.
At the session of 1881, the secretary-treasurer reported the "very
unsatisfactory condition of the department," and said: "A complete
revision of its laws can no longer be postponed, if we keep it from
going to pieces altogether."[20] In 1882 the insurance laws were
amended, and an immediate improvement began in the condition of the
department. In 1891 the insurance became compulsory. On April 1, 1891,
there were 3950 members and the outstanding risks amounted to
$9,875,000, while on April 1, 1893, there were 11,436 members, carrying
insurance to the amount of $24,963,000. On January 1, 1891, only 27.21
per cent. of the Order carried insurance, as against 64.07 per cent. in
May, 1895. During the financial and industrial depression of 1893-1896
the Order maintained its prosperity; and on December 31, 1906, the
reports showed 34,142 members in the insurance department, with
outstanding insurance aggregating $64,997,000 and a grand total of
$9,563,567 benefits paid since organization.

[Footnote 20: _Ibid.,_ pp. 395, 435.]

The Brotherhood of Locomotive Firemen was organized at Port Jervis, New
York, on December 1, 1873, as a benevolent association. In 1885 it
became a labor organization with a "protective policy."[21] During the
first fifteen years of its history its growth was retarded by the great
strike of 1877, by the opposition of the International Firemen's Union,
by the difficulties with the Knights of Labor in 1885, and by the
Chicago, Burlington and Quincy strike of 1888. These checks were only
temporary, however, and by the close of 1893 the Firemen had 510 lodges
with 28,681 members. During the next two years there was a heavy falling
off to 484 lodges with 21,408 members. Since 1895 the growth has been
rapid, and the present membership is about 55,000.[22]

[Footnote 21: Locomotive Firemen's Magazine, Vol. 14, p. 998.]

[Footnote 22: _Ibid.,_ Vol. 14, p. 998.]

At its first annual convention in 1874 the Brotherhood established an
insurance feature, which after the first four years was made compulsory.
The Firemen suffered a temporary check by the strike on the Chicago,
Burlington and Quincy, but were assisted by a loan of $25,839.60 from
the Engineers, and regained sufficient strength to withstand the
financial and industrial depression of 1893-1896. In 1897 Grand Master
Sargent said, "The condition of the beneficiary department excels by far
any previous period in the history of the Brotherhood--so far as prompt
payment of claims and the dispatch of business of the department."[23]
The present membership of the insurance department is practically the
same as that of the Brotherhood, 58,849. The total outstanding insurance
amounts to $75,559,000, and since its organization the department has
paid $9,971,615 in death and disability claims.

[Footnote 23: _Ibid.,_ Vol. 13, p. 247; Vol. 24, p. 195.]

The Brotherhood of Railroad Trainmen was founded at Oneonta, New York,
September 23, 1883, under the name "Brotherhood of Railroad Brakemen,"
which it retained until January 1, 1890, when, "because many of its
members had been promoted in the service, the more appropriate name of
Brotherhood of Railroad Trainmen was adopted." The membership consists
of conductors, brakemen, train baggagemen, train flagmen, yard masters,
yard foremen and switchmen. On August 31, 1893, the membership was
28,540, but on December 31, 1894, it had fallen to 22,359, and at the
close of 1896 it had reached the low water-mark at 22,326. Since 1896
the increase has been rapid and on December 31, 1904, there were 721
lodges with 74,539 members.[24]

[Footnote 24: Proceedings of the Seventh Biennial Convention, 1905
(Cleveland, n.d.), p. 121.]

The Brotherhood of Railroad Brakemen provided in its first constitution
for death and disability insurance. Up to the end of the fiscal year,
August 31, 1893, the membership of the insurance department increased
rapidly, but with the financial and industrial depression the membership
decreased, so that in May, 1895, it showed a reduction from 28,000 to
about 18,000. The membership of the beneficiary department at the close
of the year 1904 was 71,146, or 95.43 per cent of the membership of the
Brotherhood, and the total amount of insurance paid from date of
organization to January 1, 1906, amounted to $11,725,059.83.[25]

[Footnote 25: Trainmen's Journal, Vol. 23, p. 100.]

The Order of Railroad Telegraphers was instituted at Cedar Rapids, Iowa,
June 9, 1886. To it is admitted "any white person of good moral
character, eighteen years of age and employed on a railroad as a
telegrapher, line repairer, leverman, or interlocker, including all
employees connected with operation of signal towers and interlocking
plants."[26] By April 30, 1893, the membership numbered 17,780. A rapid
decrease reduced its strength to 10,114 on April 30, 1894, to 6684 on
December 30, 1894, and finally to 4976 on December 31, 1895. On August
1, 1904, the membership had increased to 37,700.[27]

[Footnote 26: Constitution, 1903 (St. Louis, n.d.), pp. 5, 7.]

[Footnote 27: The Railroad Telegrapher, Vol. 21, p. 292.]

Although the Order paid benefits almost from its organization, it was
without an effective system of insurance until January 1, 1898, when the
present system was established. The first constitution, 1886, provided
that local divisions should exercise every honorable means to assist a
member in need, and at the session in 1887 a voluntary insurance
association was established under the name of "Mutual Life Insurance
Association of North America." The insurance failed entirely to attract
any considerable part of the membership, and up to July, 1890, the total
amount paid was only $2430.05.[28] In 1896 the Grand Division appointed
a committee to devise a plan for a system of insurance. The plan
reported was submitted to referendum vote in December, 1897, and became
operative on January 1, 1898.[29] From March 1, 1898, to June 15, 1899,
applicants were received without an entrance fee, and during this period
the success of the department was practically assured. The insurance is
compulsory on all members. At present there are about 38,000 members
carrying insurance, the mortuary fund has a balance of $120,000, and the
total amount of insurance paid aggregates $142,000.

[Footnote 28: Vol. 6, p. 310.]

[Footnote 29: Vol. 14, p. 880.]

A local organization of switchmen was effected at Chicago on August 18,
1877, but a national union was not formed until February 22, 1886, when
the Switchmen's Mutual Aid Association was inaugurated. At the first
annual session in September, 1886, the grand master declared that the
purposes of the organization were "to wage war against discrimination
made by arbitrary employers; to organize for benevolent purposes; to
amicably adjust labor disputes by arbitration; and for mutual aid to its
members."[30] The Association was forced by the defalcations of its
treasurer to disband, and a new organization, the Switchmen's Union, was
formed. Since this reorganization in 1897 rapid growth has been made
under the management of conservative officers. On January 1, 1903, the
Switchmen's Union had a membership of 14,000.

[Footnote 30: Switchmen's Journal, Vol. 2, p. 247.]

The first constitution provided for death and disability insurance. At
the second session in September, 1887, the grand master reported $15,000
paid for death and disability claims during the year.[31] Until the
disbanding of the Association in 1894 the insurance department was
successful. In 1901 the Union without a dissenting vote adopted a
compulsory system of insurance. During 1902 $6,151,200 of insurance was
issued, during 1903, $2,906,600; while at the close of 1902 $4,779,600
of insurance was in force, and at the close of 1903 $6,679,200. The
total amount paid in death and disability claims since reorganization
has aggregated $207,335.75.

[Footnote 31: Switchmen's Journal, Vol. 1, p. 244.]

The present International Brotherhood of Maintenance-of-Way Employees
has suffered many vicissitudes in its development. It was organized in
the summer of 1887 as the Order of Railway Trackmen, and admitted into
membership foremen in the maintenance-of-way department, road masters
and bridge and building masters.[32] In October, 1891, this
organization, with a membership of 600, united with the Brotherhood of
Railway Section Foremen, an organization with 400 members. The new union
took the name of Brotherhood of Railway Trackmen of North America. Prior
to 1898 the Brotherhood was almost exclusively a fraternal insurance
society, but in that year collective bargaining was added to its
functions. In 1903 the organization became the Brotherhood of
Maintenance-of-Way Employees. It admits to membership "persons employed
in the track, bridge and building, water and fuel department, and signal
and interlocking service." During the last five years the membership of
the Order has shown considerable increase. In 1903 over 15,000 members
were added, making a total of over 40,000 on January 1, 1904.

[Footnote 32: Advance Advocate, Vol. 7, p. 106.]

Originally the insurance was compulsory. At the convention of October,
1893, it became optional and remained so until October, 1894, when it
again became compulsory. Owing to opposition from members carrying
old-line insurance and from the uncertainty in the number of assessments
levied each year, the St. Louis convention of 1896 reverted to a system
of optional insurance. Previous to the adoption of this plan the Order
had paid death, total disability and partial disability claims to the
amount of about $75,000. From January 1, 1897, to September 30, 1904,
$74,909.66 was paid to beneficiaries, making a total paid since
organization of about $150,000.

The National Association of Letter Carriers of the United States of
America was organized at Milwaukee, Wisconsin, in 1889. In 1891 the
Association was incorporated under the laws of the State of New Jersey,
and on February 26, 1892, was reincorporated under the laws of the State
of Tennessee. The aim of this organization is "to unite fraternally all
the letter carriers in the United States so as (_a_) to secure their
rights as Government employees and to promote the welfare of every
member, and (_b_) to found the United States Letter Carriers' Mutual
Benefit Association."[33] The first annual session appointed a committee
to draw up a plan for an insurance system. The report was published in
January, 1891, and was considered by the National Association at its
second annual session in August, 1891,[34] and the Mutual Benefit
Association was instituted.[35] The insurance has always been voluntary
and consequently the membership of the Benefit Association has been only
a small part of that of the National Association. On July 1, 1905, there
were 5318 members carrying insurance to the amount of $13,866,000, while
there were 19,000 members of the National Association.

[Footnote 33: Constitution, 1904 (Washington, 1904), p. 3.]

[Footnote 34: The Postal Record, Vol. 4, pp. 8, 118, 119.]

[Footnote 35: _Ibid._, Vol. 5, p. 528.]

All the railway organizations described above make a distinction between
death and disability insurance, and sick and accident insurance. The
local unions have been prohibited either specifically or by implication
from maintaining any association or society for paying death and
disability benefits. This rule was first established by the Conductors.
During the early years of the Conductors' national organization,
1868-1880, many subordinate divisions maintained mutual benefit
associations for the payment of death and disability insurance. The
growth of the national benefit department was thus retarded, and at the
tenth annual session in October, 1877, subordinate divisions were
prohibited from maintaining "mutual benefit societies."[36] The national
organizations, on the other hand, do not furnish accident insurance, but
leave this function to the local bodies. In the formation of this
policy, also, the Conductors took the initiative by providing in their
first national constitution in December, 1868, that the order should
never become a weekly benefit association.[37] The Engineers had a
similar provision as early as September, 1869; but national regulations
governing the payment of weekly benefits were nevertheless formulated.
The other unions have followed this policy, and their constitutions
provide that the weekly benefits shall be levied, collected, and
distributed according to national rules.

[Footnote 36: Proceedings of the Order of Railway Conductors of America,
1868-1885 (Cedar Rapids, 1888), p. 207.]

[Footnote 37: _Ibid_., p. 21.]

The most striking characteristic of the insurance features of these
organizations has been the combination of disability and death
insurance. The fact that railway employees are specially exposed to the
risks of disabling accidents has been the chief influence in this
direction. The large number of claims paid for disability in the
Conductors', the Firemen's, and the Trainmen's beneficiary departments
during recent years shows the high importance of disability insurance to
the men engaged in the more hazardous occupations. The disability claims
paid among the Firemen for the eleven years from 1894 to 1904 were 24.5
per cent. of the total number of claims paid, or about one third of the
number of death claims paid. Among the Conductors the disability
claims, paid during the same period, amounted to one seventh of the
death claims paid. The disability claims paid by the Trainmen during
twenty years, 1884-1904, were 32.5 per cent. of all claims paid.

The proportion of disability to death claims has decreased in each of
these organizations in recent years. The disability claims paid by the
Conductors in 1894 were 15.6 per cent. of the total number, and at the
close of 1904, 11.8 per cent.; while among the Firemen the percentages
for the biennial terms 1894-1896 and 1902-1904 were 32.9 per cent. and
21.4 per cent., respectively. The claim statistics of the Trainmen show
the same tendency although there are great variations from year to year.
In 1890, 1895 and 1897 the percentage of disability claims rose to 40,
41 and 40, respectively, while in 1888, 1900 and 1903 the percentage
fell to 28, 29 and 27, respectively.

| | Claims Paid. | Per Cent. of| Disability
Name of | Term. |------------------| Disability| Claims per
Organization| | Death.|Disability| Claims. | 1000 of
| | | | | Total
| | | | | Membership.
Conductors |1893-1894 | 265 | 49 | 15.6 | 3.8
|1895-1896 | 274 | 46 | 14.3 | 3.1
|1897-1898 | 363 | 63 | 14.8 | 3.6
|1899-1900 | 440 | 55 | 11.1 | 2.6
|1901-1902 | 523 | 81 | 13.4 | 3.2
|1903-1904 | 688 | 92 | 11.8 | 3
| | | | |
| | | | |
Firemen |1894-1896 | 295 | 145 | 32.9 | 6
|1896-1898 | 349 | 118 | 25.3 | 4.3
|1898-1900 | 488 | 174 | 26.3 | 4.7
|1900-1002 | 655 | 186 | 22.1 | 3.9
|1902-1904 | 857 | 234 | 21.4 | 4.3
| | | | |
| | | | |
Trainmen[38]| 1886 | 75 | 37 | 33 | 4.6
| 1887 | 77 | 42 | 35 | 4.8
| 1888 | 145 | 59 | 28 | 5.2
| 1889 | 152 | 69 | 31 | 5.1
| 1890 | 175 | 116 | 40 | 8.6
| 1891 | 264 | 123 | 32 | 6.6
| 1892 | 270 | 145 | 34 | 6.1
| 1893 | 372 | 201 | 35 | 7.1
| 1894 | 304 | 138 | 31 | 6.1
| 1895 | 212 | 147 | 41 | 7.8
| 1896 | 254 | 159 | 38 | 7.2
| 1897 | 240 | 160 | 40 | 6.3
| 1898 | 358 | 165 | 31 | 5.8
| 1899 | 403 | 211 | 34 | 5.7
| 1900 | 498 | 205 | 29 | 4.9
| 1901 | 507 | 231 | 31 | 5.1
| 1902 | 570 | 249 | 30 | 4.7
| 1903 | 788 | 305 | 27 | 4.6
| 1904 | 849 | 374 | 31 | 5.2

[Footnote 38: Proceedings of the Seventh Biennial Convention, 1905
(Cleveland, n.d.); Report of Secretary-Treasurer, p. 124.]

The decrease in the ratio of disability to death claims paid is due
primarily to a stricter definition of disability and to better
administration. The number of disability claims paid per 1000 of
membership shows also, however, a slight decrease.

The records of the Trainmen which separate claims resulting from
accidents still farther emphasize the need for disability insurance.

OF TRAINMEN (1886-1904).
Kind of |Number |Number from|Percentage of|Percentage of|Percentage
Claims |from | Accidental| Claims from | Claims from | of Claims
|Natural| Causes | Natural | Accidental | from all
|Causes | | Causes | Causes. | Causes.
Disability.| 526 | 2,610 | 16.77 | 83.23 | 32-1/3
Death | 2,033 | 4,522 | 31. | 69. | 67-2/3
Total | 2,559 | 7,322 | 26-1/3 | 73-2/3 | 100

The data show the place disability insurance has occupied among the
Railway Trainmen during twenty years. For this period disability claims
for all causes were 32-1/3 per cent. of all claims paid. The percentage
of claims from accidental causes--including both disability and
death--was 73-2/3 of the whole number of claims paid, while the
percentage from natural causes was only 26-1/2. In other words, these
statistics show that the Trainmen's accidental disability and death
claims, as compared with those due to natural causes, have averaged
almost three claims paid as the result of accidental causes to one as
the result of natural causes.[39]

[Footnote 39: Proceedings of the Seventh Biennial Convention, 1905
(Cleveland, n.d.), pp. 65-66.]

The old-line companies do not offer the form of disability insurance
required by railway employees. These companies issue accident policies
against death and total or partial disability from accident while on
duty; but there are two defects in the form of this insurance. In the
first place, the definition of total disability adopted by the companies
is much stricter than that of the insurance departments of the railway
brotherhoods. A typical insurance company's definition of total
disability is incapacity for "prosecuting any and every kind of business
pertaining to a regular occupation from the loss of both eyes, both
hands, both feet, or one hand and one foot;" while partial disability is
"the loss of one hand or one foot or any injury preventing the
performance of one or more important daily duties pertaining to a
regular occupation." In other words, to secure the indemnity for total
disability, the insured must be disabled from performing any regular
labor whatever. In the railway organizations total disability is so
defined as to cover inability of the insured to continue in his
position. Secondly, the disability insurance offered by the regular
insurance companies is joined with accident insurance affording a weekly
indemnity during the period of illness due to accident. The railway
employee, if he insures against totally disabling accidents, must also
insure against temporarily disabling accidents, since the companies do
not separate the two forms of insurance. The inclusion of all accidents
in one policy necessitates a heavy premium. For example, to secure
accident insurance including, besides a weekly indemnity of $20,
provision for the payment of $1000 in case of death or total disability
resulting from accidents, an engineer must pay an annual premium of
$50.40 or $56 according to the section of the country over which he
runs, or the system by which he is employed. The combination of life
with disability insurance meets the need of the ordinary railway
employee better than any other combination.

The formative period of the two older organizations furnished
opportunities for a study of the disability benefit and showed its
usefulness in strengthening the national unions. These organizations,
however, experienced grave difficulties in their attempts to administer
disability insurance. The Engineers included "totally disabled members"
among the beneficiaries of the fund provided for in 1866.[40] The
by-laws of the insurance association founded by the Brotherhood on
December 3, 1867, provided for assessments of 50 cents per member for
the benefit of each totally disabled member--one half the amount
assessed in case of death.[41] The history of this benefit was tersely
summed up by General Secretary-Treasurer Abbott in his address to the
Engineers' Association, December 3, 1871: "The Baltimore convention,
1869, adopted a disability clause, the Nashville, Tenn., convention
amended it, and the Toronto, Canada, convention, 1871, repealed it." At
St. Louis, 1872, the Brotherhood formed a separate association, known as
the "Total Disability Insurance Association," for furnishing insurance
against disability to members. An entrance fee of $2 was required and
the assessment was fixed at $1.[42] In 1876 the convention dissolved the
Total Disability Insurance Association, and the Engineers did not
succeed in establishing a satisfactory system of disability insurance
until 1884, when the prosperous condition of the association enabled the
convention to carry out its long-cherished plan and to make provision
for the payment of the same benefit in case of total disability as at
death.[43] In the call of the Conductors for a convention to effect a
permanent organization issued in November, 1868, the purpose of the
proposed Order was stated to be the protection of "the members and their
families in case of sickness, accident or death."[44] The mutual
insurance association instituted by the first convention paid a
disability benefit equal to the death benefit. The law under which the
association operated was repealed at the second convention in October,
1869; but when the third convention in October, 1870, adopted a new
insurance plan, provision was made that disability insurance should be
paid in an amount equal to that paid in case of death. Not until 1881,
however, did the Conductors satisfactorily solve the problem.

[Footnote 40: Locomotive Engineers' Journal, Vol. 1, p. 9.]

[Footnote 41: Constitution, 1869, in Locomotive Engineers' Journal, Vol.
4, p. 31.]

[Footnote 42: Locomotive Engineers' Journal, Vol. 5, p. 11; Vol. 7, pp.
28, 60.]

[Footnote 43: _Ibid_., Vol. 7, pp. 28-60; Vol. 11, p. 78; Constitution,
1884 (Cleveland, 1884).]

[Footnote 44: Proceedings of the Order of Railway Conductors of America,
1868-1885 (Cedar Rapids, 1888), p. 19.]

The difficulties experienced by the Engineers and the Conductors in
establishing disability insurance, without doubt, served to deter the
Firemen from adopting a similar system until their fifth convention in
1878. During the period 1868-1880 the disability benefit was in process
of evolution. By 1880 the three older organizations had demonstrated the
possibility of maintaining the benefit, and since that time it has been
regarded as an essential element in railway insurance systems. Hence the
Trainmen in 1883, the Telegraphers in 1887, and the Switchmen in 1886,
in their first constitutions, and the Trackmen in 1893, made the
disability insurance equal to that paid in case of death. All of the
railway organizations, except the Telegraphers, follow this policy at
the present time. The Telegraphers have not paid a disability benefit
since 1897. They provide, however, that should a member become totally
or permanently disabled the insurance committee may order his
assessments paid and shall deduct the amount of these assessments when
the benefit is finally paid.[45] The failure of the Telegraphers to pay
a disability benefit is largely due to the fact that their occupation is
less dangerous than other forms of railway service.

[Footnote 45: Constitution, 1903 (St. Louis, ii. d.), p. 106.]

The Letter Carriers also have not the same urgent need for the payment
of a disability benefit and until the Denver convention, 1902, paid
insurance against death without direct provision for disability. At this
convention, however, the National Association organized a Retirement
Association for the payment of superannuation benefits to the aged and
disabled members.[46] The Association had in view in founding this
department the growing necessity of making some provision for the large
number of carriers whom old age prevented from doing the regular amount
of work.[47] Under the original plan, which went into effect January 1,
1903, the Association issued retirement certificates to members in the
sums of $500, $400, $300 and $200 at monthly premiums of $6.70, $5.35,
$4.00 and $2.70, respectively. On retirement, after having paid thirty
annual premiums, or their equivalent, the beneficiary was entitled to
receive annually the amount of his certificate. The retirement might
also take place after thirty years' service, or after thirty years'
membership in the Association, or after the age of sixty-five had been
reached, provided ten annual premiums had been made.[48] This "ten
annual premium" concession was for the special benefit of old men whose
circumstances would not allow them to pay the sum of thirty years'
premiums. The concession was allowed only for a period of ten years.[49]

[Footnote 46: The Postal Record, Vol. 15, pp. 235, 254-257.]

[Footnote 47: The Postal Record, Vol. 15, p. 301.]

[Footnote 48: _Ibid_., Vol. 17, p. 6.]

[Footnote 49: _Ibid_., Vol. 15, p. 302.]

The scheme also included provision for disability. After January 1,
1906, any member of the Retirement Association who became permanently
incapacitated, mentally or physically, for any kind of remunerative
labor before thirty years' service or before attaining the age of
sixty-five years, was to receive annually from the retirement fund a
certain per cent. of the face value of his retirement certificate. The
amount was proportionate to the years of service. For five years'
membership such a member received fifteen per cent.; for ten years',
thirty per cent.; for fifteen years', forty-five per cent.; for twenty
years', sixty per cent.; for twenty-five years', seventy-five per cent.
Any member of not less than five years' standing might, after ninety
days' notice to the chief clerk, withdraw from the Association; and in
such event he became entitled to receive seventy-five per cent. of the
annual premiums paid to the Association. Also in case of death within
two years of his retirement and prior to the payment of not more than
twenty-four monthly installments of pension, the Association agreed to
pay to the widow, the children, or legal heirs the annuity provided in
the deceased member's certificate until the amount paid should aggregate
seventy-five per cent. of all premiums received by the Association.[50]

[Footnote 50: The Postal Record, Vol. 17, p. 6.]

This plan was a failure. In it business principles had been sacrificed
for fraternity. Relief had been provided for the old man particularly,
but very few took advantage of the opportunity. The young men refused to
enter because the favorable rates to old men placed a heavy burden upon
the younger members.[51] The report of the chief clerk to the Syracuse
convention, in 1903, showed that up to September 1, 1903, only eighteen
retirement certificates had been issued, of which thirteen were for
$500, two for $300, and three for $200. The average age at entrance was
fifty-three and the average length of service, twenty-two years. The
total receipts of the retirement fund were only $390.90.[52] On
September 1, 1905, the total number of certificates issued had reached
twenty-five, with only nineteen outstanding, while the retirement fund
had increased to $2839.88.[53] The originators of the Retirement
Association were forced to abandon their experimental fraternity scheme
and to formulate a plan based more upon business principles.
Consequently, at the Portland convention in September, 1905, Chairman
Goodwin and Chief Clerk Wilson of the retirement committee proposed a
new plan.[54]

[Footnote 51: _Ibid_., Vol. 19, p. 7.]

[Footnote 52: _Ibid_., Vol. 16, p. 237.]

[Footnote 53: _Ibid_., Vol. 18, p. 215.]

[Footnote 54: _Ibid_., Vol. 18, pp. 214-215.]

Under the new law, which became operative January 1, 1906, the
Retirement Association was authorized to offer insurance against
disability and old age. The members are, therefore, divided into two
classes, annuity members and disability members, but those duly
qualified may hold both annuity and disability certificates. Any member
of the National Association of Letter Carriers may become an "annuity
member;" but only those under sixty-five years of age and in good
physical condition may become "disability members." A member retiring
from the carriers' service ceases to be entitled to disability relief;
on the other hand, however, retirement from the carrier service does not
affect the right of a member to an annuity.[55]

[Footnote 55: Constitution of Retirement Association, 1905, Art. 7;
Postal Record, Vol. 19, pp. 2-6.]

The plan provides for annuities of one, two, three, four or five hundred
dollars. The annuities can begin in five, or any multiple of five years
after the policy is issued and the rate varies according to the
deferment of the annuity. A member may withdraw at any time prior to
reaching the annuity, and in that event all payments are to be returned,
with interest. Members may receive loans to the amount of ninety-five
per cent. of the sum accredited to them in the retirement fund, provided
this aggregates two hundred dollars or over, and they surrender their
certificates as collateral, so that members credited with one hundred
dollars or more may receive a loan of fifty dollars as an emergency loan
for three months during any one year.[56]

[Footnote 56: The Postal Record, Vol. 19, p. 2.]

The following table shows the cost of the annuity per $100 for various
ages according to the age at which the annuity begins:

Age | Age at which Annuity Begins.
at |---------------------------------------------------------------
Entry| 30 | 35 | 40 | 45 | 50 | 55 | 60 | 65 | 70
20 |$13.47|$ 7.66|$ 4.83|$ 3.19|$ 2.16|$ 1.47| $ .99| $ .66| $ .45
30 | | 28.31| 11.97| 6.63| 4.05| 2.59| 1.68| 1.08| .72
40 | | | | 24.50| 10.06| 5.37| 3.16| 1.91| 1.21
50 | | | | | |19.83 | 7.79| 3.98| 2.27
60 | | | | | | | | 14.62| 5.62
65 | | | | | | | | | 12.46

[Footnote 57: _Ibid_., Vol. 17, p. 11.]

The new system differs in two important respects from the old. In the
first place, the rates are graded according to age, and secondly, the
new system provides that a member may retire five years after entrance,
or thereafter at any successive period of five years up to seventy, and
that his premiums shall be fixed according to the time of retirement and
the period of his expectancy.

The disability certificates provide for an indemnity of eight dollars
per week for loss of time resulting from disability caused by accident
or sickness, a maximum of twenty weeks' disability during any one
year.[58] However, should a member, after entrance into the association,
become disabled permanently by "tuberculosis, paralysis, locomotor
ataxia, dropsy, cancer, diabetes, sciatica, chronic rheumatism, chronic
kidney or mental disease, or any other chronic disease," not especially
named in the constitution, that may, in the judgment of the board of
directors, cause permanent drain upon the funds of the Association, the
said member shall receive the disability allowance for twenty weeks,
after which all payments shall cease and his certificate shall be
cancelled.[59] The disability insurance is thus really sick insurance.

[Footnote 58: The Postal Record, Vol. 17, p. 6.]

[Footnote 59: Constitution 1905, Art. 12, in The Postal Record, Vol. 19,
pp. 2-6.]

To aid members who are too old to take advantage of the plan offered for
securing annuities by their own financial efforts, the Association, in
convention at Portland, September, 1905, endorsed an "extended leave of
absence retirement plan."[60] The Post Office Department of the United
States was requested to grant an extended leave of absence to
"superannuated or permanently impaired" carriers on condition that they
accept 40 per cent. of their regular salary, while retired, and that
they pay the remaining 60 per cent. to the senior substitute in their
office. Under the conditions of this plan, the applicant for retirement
must submit himself to the board of examiners, who shall, after a
physical examination by the physician of the board, determine his
eligibility. The results of this plan would be two-fold: first, to
relieve the detrimental effect of superannuation upon the efficiency of
the service, and, secondly, to remove the fear of those who look for
more drastic measures of relief. Aside from a regular pension grant by
the Government this plan is considered the most efficient method of
securing adequate protection for the superannuated who are too old to
avail themselves of the opportunities offered under the system of

[Footnote 60: The Postal Record, Vol. 18, pp. 220-222.]

[Footnote 61: The Postal Record, Vol. 19, p. 6.]

The principal obstacle to the successful operation of disability insurance
has been the difficulty experienced in its administration--largely on
account of the impracticability of closely defining permanent or total
disability. With almost every revision of the constitutions changes were
made in the definition of the term "disability." Strict construction of
the law by the executive officials led to dissatisfaction and often to
appeals from their decisions to the insurance committees, or to the boards
of trustees.[62] During the early years disability claims were often
presented through subordinate officials, who were either unable to
interpret the laws aright, or were unwilling to assume the responsibility
of pronouncing the claims illegal. The Engineers, after a period of
thirty-two years, in 1898 adopted a satisfactory definition of total
disability: "Any member of this Association losing by amputation a hand at
or above the wrist joint; a foot at or above the ankle joint; or
sustaining the total and permanent loss of sight in one eye or both eyes,
shall receive the full amount of his insurance."[63] Similar definitions
of disability have been worked out by the other railway organizations. The
Conductors add to this "total loss of the sense of hearing." The Switchmen
include "the loss of four fingers of one hand, at or above the second
joint." Disability, as defined by the Letter Carriers, means inability,
because of sickness or accident, to perform the regular duties of a letter

[Footnote 62: Proceedings of the Nineteenth Annual Session of the Order
of Railway Conductors of America, 1887 (n.p., n.d.), p. 69.]

[Footnote 63: Constitution, 1899 (Cleveland, 1898), Art. 28.]

[Footnote 64: Constitution of the Letter Carriers of the United States,
1905, Art. 13, in The Postal Record, Vol. 19, No. 1, p. 3.]

The most important development in the insurance systems of the railway
unions has been the change in the amount paid from an uncertain to a
fixed amount. This evolution is best illustrated in the history of the
older organizations. In the period from 1868 to 1884 the amount paid was
the sum collected by levying upon each member a certain assessment for
each death or disability. The amount of the benefit therefore varied
with the number of members. In the first stage, the Engineers paid one
dollar per member upon each death and fifty cents in each case of
disability, the Conductors paid one dollar per member upon each death or
case of disability, while the Firemen paid fifty cents upon each death
or case of disability.[65] The membership was small and the assessments
were largely regarded as benevolent contributions. This phase is well
illustrated by the early history of the benefit among the Conductors.
The first benefit, paid in December, 1871, amounted to $48. During the
first thirteen years of the department's activity 19 claims were paid.
The last was $70, and the average amount paid was $88.[66] This system
continued until 1881-1884, when a general revision of constitutions in
these three brotherhoods limited the amount of insurance paid, and laid
the foundation for issuing insurance certificates in fixed sums. In the
second period, from 1883 to 1890, the number of assessments remained
undetermined; but the amount of the benefit was limited to a fixed sum
and all surpluses were placed in reserve. The Conductors and the Firemen
took the initiative in this change and in the constitution of 1881 fixed
the maximum amount for death or disability at $2000 and $1000,
respectively; the Engineers, in the constitution of 1884, placed this
maximum at $3000.

[Footnote 65: Constitution of the Locomotive Engineers, 1869, in
Journal, Vol. 4, p. 31; Proceedings of the Railway Conductors, 1868-1885
(Cedar Rapids, 1888), p. 119; Locomotive Firemen's Magazine, Vol. 21, p.

[Footnote 66: Proceedings of the Eighteenth Convention, 1885 (Cedar
Rapids, 1888), p. 754; The Railway Conductor, Vol. 4, p. 188.]

The Brotherhood of Railroad Trainmen, the Order of Railroad
Telegraphers, the Switchmen's Union, and the Maintenance-of-Way
Employees did not pass through the first period of development, but were
organized during the second stage when the amount of insurance was
limited. The Trainmen, the Telegraphers, and the Switchmen, in their
first constitutions of 1883, 1887 and 1886, respectively, and the
Trackmen (Maintenance-of-Way Employees) in 1892 fixed the amount paid at
the definite sums of $300, $1000, $500 and $1000, respectively.[67] The
Letter Carriers, although organized after the railway unions had fixed
at a definite sum the amount of insurance to be paid, for several years
paid only a sum equivalent to one assessment, at the regular rates, upon
all the certificates in force at the time of the death of the
insured.[68] The amounts paid on the second death, March 22, 1892, and
on the third death, July 28, 1893, were $599.16 and $596.12,
respectively.[69] Finally, in the third period, from 1890 to the
present, the number of assessments was also fixed.

[Footnote 67: Constitutions for the several years. Reference is made to
the Trackmen's Constitution, 1893 (n.p. n.d.); Proceedings of the Second
Annual Convention, 1893, in Advance Advocate, Vol. 2.]

[Footnote 68: The Postal Record, Vol. 5, p. 185.]

[Footnote 69: _Ibid_., Vol. 5, p. 138.]

Another important change in the method of conducting these insurance
systems was made in the decade from 1890 to 1900. The organizations with
two exceptions have not adopted the policy of the insurance companies in
varying the charge with the age of the insured. The device they have
commonly used is the differentiation in the amount of insurance which
may be taken in such a way that the older members may insure themselves
only for a smaller amount. As early as 1886 the Firemen provided that
only members under forty-five years of age might take insurance,[70] and
in 1887 the Telegraphers adopted an age limit of fifty years.[71] The
Conductors, under the constitution of 1890, provided that any member
between the ages of fifteen and fifty might take $2500 of insurance
against death or disability, and any member between the ages of fifty
and sixty might take $1000 against death and $500 against
disability.[72] In 1892 the Engineers introduced an age limit of fifty,
and in 1894 further differentiated applicants so that those under forty
years of age might secure $4500, those under forty-five years of age
might obtain $3000, and all over forty-five and under fifty years of
age, $1500.[73] Even now the Switchmen and the Trainmen offer equal
amounts to members of all ages at the same rate.

[Footnote 70: Constitution, 1886 (Terre Haute, n.d.), sec. 71.]

[Footnote 71: Constitution, 1887, Arts. 12-13, in the Railroad
Telegrapher, Vol. 2.]

[Footnote 72: Constitution, 1888, second edition (Rochester, 1890), p.

[Footnote 73: Constitution, 1894 (Peoria, 1895).]

The Maintenance-of-Way Employees and the Letter Carriers not only limit
the age of the insured but also grade the charge per $1000 according to
age. In the case of the former, members from eighteen to thirty-five
years of age pay $1 monthly per $1000 of insurance; those from
thirty-five to forty, $1.25; from forty to fifty, $1.50. Insurance rates
in the Letter Carriers' Mutual Benefit Department have, with the
exception of the first year of operation, been graded according to age.
The minimum and maximum age limits are twenty-one and fifty-five years.
The monthly rates vary according to age from 77 cents per $1000 of
insurance at twenty-one years to $2.06 at fifty years.

The following table shows the regulations as to the amount and rate of
insurance issued according to ages:

Amount of Insurance
Organization. Age Classes. Issued.

Engineers ............. Under 40 years. $4500
40 and under 45. 3000
45 and under 50. 1500

Conductors ............ Under 35 years. 3000
35 and under 45. 2000
45 to 50. 1000

Firemen ............... Under 45 years. 3000
45 and over. 1500

Trainmen .............. No age restriction. 1350

Telegraphers .......... 18 and under 45. 1000
45 and under 50. 500
50 and under 60. 300

Switchmen ............. No age restriction. 1200

Employees ........... 18 and under 45 at
graded rates. 1000

Letter Carriers ....... 21 to 55 at graded rates. 1000 to 3000

The necessity for a reduction in the amount of insurance issued to the
older men was more urgent among the Engineers and the Conductors than
among the other railway organizations, since the latter form the school
of apprenticeship from which the engineers and the conductors are drawn.
In the Trainmen's and the Switchmen's organizations the young men
contribute materially to the cost of insuring the old men. This charge
is not so heavy as might appear at first sight, since in both
organizations many members withdraw when they are promoted to higher
positions in the service. In grading the amount of insurance offered
according to age, the brotherhoods have made a compromise between an
assessment on each individual according to the liability incurred, and a
system in which the welfare of the individual is regarded as entirely at
one with the welfare of the membership. The principle of solidarity is
still recognized, but under limitations.

Originally these unions collected assessments to meet death or
disability claims after the occurrence of the death or disability.
Considerable delay was thus entailed in the final settlement. All of
them, with the exception of the Engineers, now hold reserve funds for
the payment of claims. The Conductors took the initiative by providing
in the constitution of 1881 that the grand secretary-treasurer, on
paying a claim, should levy the regular assessment upon each member to
be held in reserve to pay the next claim.[74] This was followed in 1885
by a regulation of the Trainmen which required all members to pay in
advance one death assessment. This was repealed by the convention of
1886; but the convention of 1888 re-enacted the law. The Firemen
provided in 1888[75] that the subordinate lodges should collect all dues
quarterly in advance.

[Footnote 74: Constitution, 1903 (Pittsburg, 1903), pp. 80, 86.]

[Footnote 75: Constitution, 1888 (Terre Haute, 1888), secs. 50, 52, 53.]

In determining the amount of insurance offered, the organizations have
had necessarily to consider what their members can afford to pay. Only a
certain per cent. of earnings can be set aside for insurance purposes,
and that amount has been determined only by the long experience of the
organizations. Again, the insurance must be in an amount which accords
with the idea of the workmen of what constitutes a satisfactory
provision against death or disability. The amount offered must for this
reason be comparable with that offered by insurance companies.

The following table shows the minimum and the maximum amounts paid by
the several brotherhoods:

Minimum Maximum
Brotherhoods. Amount. Amount.

Brotherhood of Locomotive Engineers ... $1500 $4500
Order of Railway Conductors ........... 1000 3000
Brotherhood of Locomotive Firemen ..... 1500 3000
Brotherhood of Railroad Trainmen ...... 500 1350
Order of Railroad Telegraphers ........ 300 1000
Switchmen's Union ..................... 600 1200
Maintenance-of-Way Employees .......... 500 1000
Letter Carriers' Association[76] ...... 1000 3000

[Footnote 76: Under a unique system, known as the "Post Mortem
Deduction" scheme, the actual value of a certificate of the Letter
Carriers' Association at date of issue is fifteen per cent. less than
its face value plus the amount of one assessment, and the value of the
certificate does not become equal to its face value until the member has
paid assessments equal to fifteen per cent. of the face amount
(Constitution, 1904, pp. 67-68).]

Originally, except in the case of the Letter Carriers, the maximum
amounts paid were much lower than at present. As the membership
increased, a greater benefit was paid. In 1887 the Conductors' maximum
insurance was $2500, and in 1888 the Firemen's, the Trainmen's, and the
Switchmen's was raised to $1500, $1000 and $800, respectively. Each of
the railway organizations has since raised the maximum; the Engineers to
$4500 in 1892; the Conductors to $5000 in 1893, reduced since 1899 to
$3000; the Firemen to $3000 in 1903; the Trainmen to $1350 in 1903; and
the Switchmen to $1200 in 1901. While the Engineers, the Conductors, and
the Firemen offer insurance in relatively large amounts, only a small
per cent. of the membership take out certificates for the larger sums.
On June 30, 1904, of the 54,434 Firemen, 43,228 carried $1500
certificates, while only 717 carried $2000 certificates, and 824, $3000
certificates.[77] On November 1, 1904, of the 41,124 Engineers, 24,187
carried $1500, and 10,337 and 1602 carried $3000 and $4500,
respectively.[78] In each of these organizations the $1500 certificates
are thus in greatest demand. The rule restricting the amount that
members over forty-five years of age may take lessens the number of
policies for larger sums, but it is evident that the great majority of
members in these unions do not care to insure for more than $1500. The
Letter Carriers are an exception to this rule. The report of the Chief
Collector for December 1, 1905, shows that out of 5284 insurance
certificates in force there were 473 $1000 certificates, 386 $1500
certificates, 541 $2000 certificates, and 3884 $3000 certificates.[79]

[Footnote 77: Report of W.S. Carter, Grand Secretary-Treasurer, June

[Footnote 78: Locomotive Engineers' Journal, Vol. 38, p. 966.]

[Footnote 79: Postal Record, Vol. 19, p. 10.]

The advantage of insurance as a means of securing identity of interest
within the organization was not fully recognized in the early
development of the insurance systems, consequently entrance into the
insurance departments of these organizations was originally optional.
The Brotherhood of Locomotive Firemen first adopted compulsory insurance
at the fourth annual convention, 1878.[80] The Brotherhood of Railway
Trainmen next adopted a similar feature in 1888. Although the Engineers
and the Conductors did not enforce compulsory insurance until 1890 and
1891, respectively, during the twenty years preceding its adoption
frequent proposals were made by subordinate divisions of both these
organizations for the adoption of such an arrangement. On different
occasions the national conventions considered the wisdom of such
proposals, weighing in turn the advisability of such a measure and the
ability of the organization to enforce it. The thorough discussion of
the subject among the Engineers and the Conductors undoubtedly prepared
the younger organizations for the settlement of this question at an
earlier stage in their development. The Trainmen adopted compulsory
insurance in 1888, while the two older organizations were in the midst
of the struggle.

[Footnote 80: Locomotive Firemen's Magazine, Vol. 21, p. 181.]

The Switchmen adopted it in 1892, and, after reorganization, again on
October 1, 1901, and the Telegraphers on January 1, 1898. The Letter
Carriers alone retain the system of optional insurance.

Only in the Switchmen's Union and in the Brotherhood of
Maintenance-of-Way Employees has the operation of the compulsory system
met with interruption. The compulsory rule of the Maintenance-of-Way
Employees during the early nineties was frequently repealed and
readopted. The opposition to it was due in a large measure to
uncertainty as to the number of yearly assessments necessary and also to
the fact that many of the members carried insurance in old-line
companies.[81] The Switchmen's insurance department suffered a
suspension from 1894 to 1897, and although the Union had compulsory
insurance before its suspension, on reorganization a voluntary system
was adopted, and not until October 1, 1901, did the Union succeed in
reestablishing a compulsory system.

[Footnote 81: Advance Advocate, Vol. 5, p. 485.]

In all the organizations there is a class of members, called
non-beneficiary, who are not eligible to the insurance departments
because of partial disability or because of having passed the age limit.
The Brotherhood of Locomotive Firemen provides that the non-beneficiary
member shall be entitled to all the privileges of the subordinate lodge,
but shall not take part in the national convention or in any way
participate in the benefits and privileges of the beneficiary
department.[82] Similar rules are found in the other brotherhoods. The
Trainmen and the Switchmen issue to non-beneficiary members insurance
certificates only against death in the sums of $500 and $600,

[Footnote 82: Constitution, amended 1902 (Peoria, n.d.), sec. 163.]

The efficiency of compulsory insurance rules in securing and retaining
members in the brotherhoods is generally acknowledged among the railway
employees. After the member has carried insurance for several years, his
financial interests are bound up with the interests of the organization,
and his loyalty to the union is increased. From this loyalty flows
greater interest in every phase of the brotherhood's work. The operation
of compulsory insurance appears to have caused an increase in the
membership of the brotherhoods. On January 1, 1890, the date on which
compulsory insurance became operative, the membership of the Brotherhood
of Locomotive Engineers numbered 7408; on January 1, 1897, it had
increased to 18,739; and in May, 1904, to 46,400.[83] On January 1,
1891, the date on which compulsory insurance was inaugurated, the
membership of the Order of Railway Conductors numbered 3933; on January
1, 1898, it had increased to 15,807, and again on January 1, 1904, to
31,288. It is noteworthy that during the depression, 1893-1897, those
organizations having systems of voluntary insurance suffered far more
severely than those enforcing compulsory insurance. Thus, the
Telegraphers were almost annihilated, while the Firemen and the
Conductors practically maintained their position.

[Footnote 83: Locomotive Engineers' Journal, Vol. 37, p. 446; Vol. 18,
p. 654.]

The cost of insurance per $1000 varies greatly in the different
organizations, as may be seen by the following table:[84]

Cost of Insurance per
Organizations. Fiscal Year Ending. $1000 a Year.
Engineers ........... December 31, 1903 $17.80
Conductors .......... December 31, 1903 16.00
Firemen ............. June 30, 1904 12.00
Trainmen ............ December 31, 1903 18.00
Telegraphers ........ December 31, 1903 7.20
Switchmen ........... December 31, 1903 20.00
Maintenance-of-Way 12.00\
Employees ......... December 31, 1903 15.00 | according
18.00/ to age
Letter Carriers...... December 31, 1906 9.24\ according
21.96/ to age

[Footnote 84: These amounts have been furnished by the grand
secretary-treasurers of the several organizations, except those of the
Telegraphers and the Maintenance-of-Way Employees, which have been taken
from the 1903 constitutions and represent the amount of the regular
monthly assessment.]

The differences in the cost of insurance are the result of several
factors. The slight degree of risk in the occupation is largely
responsible for the relative cheapness of the Telegraphers' and the
Letter Carriers' insurance. More important differences are due to the
age grouping of the membership. Thus the Firemen, whom old-line
companies, for the most part, classify as extra-hazardous, furnish
insurance against death and disability at $12 per $1000. The principal
reason for this low rate is the rapid change in membership, the old men
withdrawing and being replaced by young men. Near the close of the
nineties the cry of "Something must be done to keep the old members in
the Brotherhood of Locomotive Firemen" was raised; but it was clearly
shown that "the greatest favor a member of the Brotherhood could show
the insurance department was to pay his assessment for ten years and
then withdraw, permitting a man ten years his junior to take his place."
The grand secretary-treasurer states that the membership practically
changes every seven years, due to promotions to the position of engineer
and to withdrawals of older men for various reasons. The withdrawal of
old men conduces to a more favorable age grouping, to a decrease in the
death rate, and to a consequent decrease in the cost of insurance. The
Switchmen's Union presents an interesting contrast. The Union prescribes
no age limit, and higher positions in the service are not so frequently
open to the advancement of its members. The result is that the number of
older members is relatively greater, and insurance is maintained at a
considerably higher cost.

The cheapness of the insurance offered by these organizations is better
appreciated when compared with that offered by old-line companies. The
following table shows the cost of insurance per $1000 in a typical life
insurance company for different classes of railway employees and letter
carriers at thirty-five years of age:

Class of Employees. Rate per $1000.[85]

Engineers .................................... $27.23
Conductors ................................... 22.23
Firemen ...................................... 27.23
Trainmen ..................................... 27.23
Telegraphers ................................. 22.23
Switchmen .................................... 27.23
Maintenance-of-Way Employees ................. 27.23
Letter Carriers .............................. 27.30

[Footnote 85: The letter carriers' rate is that of the New England
Mutual Life Insurance Company, the rates of the other classes of
employees are those of the Aetna Life Insurance Company.]

Assuming that the average age at admission of the members of unions is
thirty-five, the cost of insurance in the regular companies is far
higher than the cost for an equal amount in the unions. The conductors
pay their union twenty-five per cent. less than they would have to pay
to an insurance company and the locomotive firemen pay considerably less
than one half of company rates. These rates, moreover, are for insurance
against death only, while the insurance offered by the brotherhoods also
provides against total disability.

The compulsory insurance has not been in operation long enough in any of
the organizations for its full effect to be seen. It is certain that as
the unions grow older they must materially raise the rates at which they
issue insurance. The rapid growth in membership has brought into all the
unions in this class in recent years a proportionately large number of
young men. The limitation on the age of the insured has contributed to
this result. As these members grow older, the death rate will increase.
As has been noted above, however, it has not been primarily the
cheapness of the insurance but the combination of death and disability
insurance which has been the advantage possessed by the union systems.

The primary purpose of the insurance features of these organizations is
to obtain for the members and their families a higher degree of economic
security. The two great economic contingencies against which the railway
organizations provide insurance are, first, the loss to a family in
consequence of the death of the income-earning member, and second, the
economic hardship involved in shifting from one industry to another made
necessary by certain severe physical accidents. Insurance paid to the
totally disabled employee, or to the family of a deceased member, is
frequently the means of maintaining the standard of living of the
unfortunate family. The risks to which the railway employee is exposed
are due to the nature of the trade, the negligence of a fellow workman,
or the negligence of the employers. Compensation for only the last class
is given by the law. Against the other two kinds of accident the railway
employee must himself make provision, and this provision is amplest and
surest when made by insurance. The organizations, as we have seen, have
never entirely subordinated the idea of benevolence to the principles of
business. In the early years of its history, each grand convention set
aside large sums for charitable payments. Before the adoption and
satisfactory operation of the Engineers' insurance system, it is
estimated that eight tenths of the husbands and fathers of those who
applied for charity were uninsured.[86] Purely charitable relief was
found inadequate and the present systems represent a compromise between
charity and business.

[Footnote 86: Locomotive Engineers' Journal, Vol. 22, p. 33.]

The insurance features have further been the means of securing and
retaining members and thus building up these trade organizations as
factors in collective bargaining. The power of the brotherhoods to
secure satisfactory agreements with their employers is largely measured
by the strength of the organizations, and that strength is usually in
direct proportion to the development of their insurance systems. Thus
not only is insurance a prime support in the collective bargaining of
the unions, but it insures control in the exercise of that function. The
infrequency of railroad strikes may be attributed largely to the almost
perfect control of the head officials of the brotherhoods over their



The most needed trade-union benefits are those against death and these
were the first to be established. At the present time about one half of
American national trade unions maintain death benefit systems. In 1904,
out of a total of one hundred and seventeen national unions affiliated
with the American Federation of Labor, fifty-three were paying death
benefits.[87] Of those unions not affiliated with the American
Federation of Labor, ten were also paying such benefits.

[Footnote 87: Proceedings of the Twenty-fourth Annual Convention of the
American Federation of Labor, 1904, p. 46.]

The development of death benefits in American trade unions resembles
closely the growth of the insurance systems described in the preceding
chapter. The first unions to adopt death benefits, for example, paid for
a time a sum fluctuating in amount. The benefit was in each case the sum
raised by per capita assessments, and the yield varied according to the
membership. Thus, the Iron Molders paid a fluctuating benefit from 1870
to 1879.[88] Upon the death of a member, an assessment of forty cents
and later of forty-five per capita was levied. At Detroit in 1873 the
Cigar Makers inaugurated an endowment plan which provided for the
payment of a death benefit, the amount of which was to be the sum raised
by an assessment of ten cents on each member. Similarly, the Glass
Bottle Blowers, introducing the benefit as late as 1891, made provision
for paying the amount secured by an assessment of twenty-five cents per

[Footnote 88: Iron Molders' Journal, Vol. 25, June, 1889; Constitution,
1878 (Cincinnati, 1878), Art. 17.]

[Footnote 89: Proceedings of the Twenty-fifth Annual Convention,
Milwaukee, 1901; Report of Secretary Launer (Milwaukee, 1901).]

When the fluctuating benefits were inaugurated the unions were without
experience in the exercise of beneficiary functions. They could not
calculate with any exactness the amount of the assessment necessary to
provide benefits in fixed sum. They preferred, therefore, not to
guarantee the payment of any amount. The character of the first death
benefit in the Granite Cutters' Union illustrates the reluctance of the
Union in assuming the responsibility of guaranteeing fixed benefits. In
1877 they adopted a benefit of fifty dollars, but also provided for an
additional voluntary benefit to be raised by an assessment of fifty
cents. After a few years the entire system was replaced by provision for
the payment of a fixed funeral benefit.

The fluctuating benefit was very unsatisfactory, inasmuch as the insured
member could not be certain as to what amount he would receive, and this
uncertainty was aggravated by the voluntary character of the
association. Even where participation was compulsory the fluctuations in
the number of members were much greater than at present.

As soon as the unions became sufficiently strong, financially and
numerically, and had acquired experience in the management of the
benefit, they, with few exceptions, guaranteed to their members a
benefit of fixed amount. A fixed payment of one hundred dollars was
guaranteed by the Iron Molders in 1879 on the death of a member, and in
1882 the voluntary organization known as the Beneficial Association,
which had maintained the system of special assessments, was
disbanded.[90] The advantage of paying a benefit of fixed amount, as
demonstrated by the experience of Local Union No. 87 of Brooklyn, led to
the adoption of this system by the Cigar Makers' International Union, in
September, 1880.[91]

[Footnote 90: Constitution, 1878 (Cincinnati, 1878); Iron Molders'
Journal, Vol. 26, May, 1890, p. 2.]

[Footnote 91: Constitution, 1880 (New York, 1880), Art. 13.]

The majority of American trade unions have inaugurated their death
benefits since 1880,[92] and hence have escaped the experimental period
of benefits based upon the fluctuating principle. Learning from the
experience of the older unions, they have in most cases paid from the
beginning death benefits of fixed amount. The benefit is a definite sum
in all the unions except the Watch Case Engravers' Association and the
Saw Smiths' Union, which in their constitutions of 1901 and 1902
respectively provide for the payment of a benefit upon a fluctuating
basis.[93] This must be attributed to the fact that the unions are not
sufficiently strong to guarantee the payment of a definite amount.

[Footnote 92: See page 12.]

[Footnote 93: Constitution of the Watch Case Engravers' International
Association of America, 1901 (New York, n.d.), p. 21; Constitution of
the Saw Smiths' Union of North America, 1902 (Indianapolis, n.d.), p.

Under the fluctuating system the sum paid was often larger than the
amount at which the benefit was later fixed. When, in 1880, the Cigar
Makers adopted a death benefit of twenty-five dollars, their membership
had increased to 4400, making possible, by a per capita assessment of
ten cents, the payment of four hundred and forty-four dollars upon the
death of each member. The assessment of twenty-five cents levied by the
Glass Bottle Blowers for each death benefit upon a membership of 2423 in
1891 yielded a greater sum than the definite amount adopted one year
later. The amount paid under the fluctuating system in the Iron Molders
was also larger than the fixed amount later guaranteed by the
International Union.

In another respect the early death benefits and insurance systems were
alike. Participation in the more important and successful death systems
was voluntary. Membership in the Iron Molders' Beneficial Association,
created to pay death benefits, was, for example, entirely optional.[94]
The first constitution of the Granite Cutters provided for an additional
voluntary benefit.[95] In both of the above named unions the voluntary
idea was short-lived. In January, 1879, the Iron Molders provided for
the payment of a death benefit for all members of the craft.[96] By 1884
the Granite Cutters had abolished the voluntary death benefit and paid
it to all members.[97]

[Footnote 94: Iron Molders' Journal, March, 1871.]

[Footnote 95: Constitution, 1877 (Rockland, 1877), Arts. 1-2.]

[Footnote 96: Iron Molders' Journal, Vol. 26, May, 1890, p. 2.]

[Footnote 97: Constitution, 1884 (Quincy, n.d.), p. 11 ff.]

Thus, both the death benefit and the insurance systems in American trade
unions had their origin in the movement for mutual insurance which was
so widespread in the United States immediately after the Civil War. Only
in the railway brotherhoods did the plan result in any considerable
increase in membership. In the other unions the insurance systems were
replaced by the establishment of benefits, and these were usually
smaller in amount than the insurance systems had contemplated.[98]

[Footnote 98: The death benefits established by the Cigar Makers and
Iron Molders in 1870 and 1879 were for $40 and $100. The ordinary death
benefit in American trade unions is still a sum assumed to be sufficient
to inter decently the deceased.]

The tendency in those unions which have longest maintained the death
benefit has been to increase the amount of the benefit and to grade the
amount according to the length of membership. The policy of the unions
in these respects has, however, varied considerably. In some cases there
has been an increase in the minimum amount paid, together with provision
for the payment of larger sums to members who have been longer in good
standing. In other unions, such as the Iron Molders and the Pattern
Makers, the regular benefit remains as originally established, but a
larger sum is paid to older members. Only a few of the older
organizations retain the uniform benefit. The most notable of these are
the Typographical Union, the Glass Bottle Blowers, and the Hatters.

The grading of the death benefit serves two purposes. In the first
place, the funds are protected. If the benefit were uniform and large,
persons in bad health would be tempted to join the union in order to
secure protection for their families. The grading of the benefit is
accordingly a crude but fairly effective device against a danger which
presents itself as soon as the amount becomes large enough to be
attractive to "bad risks." A more important reason, perhaps, for the
grading of the benefit is the desire to make it a more effective agency
in attracting and holding members. If continuous membership carries with
it constantly increasing insurance, the lapses in membership lessen.

The maximum death benefits paid by the Cigar Makers and the Glass Bottle
Blowers are $550 and $500, respectively. The Iron Molders pay a maximum
benefit of $200; the Carpenters of $200; the Pattern Makers of $400; the
Germania Typographia of $200. In all these cases except that of the
Glass Bottle Blowers the benefit is graded according to the period of
membership. The maximum benefit is paid in the Cigar Makers and in the
Pattern Makers to members of fifteen years' standing.

Only a few unions have decreased the amount of the benefit from that
first established. Among these are the Brotherhood of Carpenters, the
Brotherhood of Leather Workers on Horse Goods, the Tailors' Union, and
the Metal Polishers' Union. In the case of the Carpenters the death
benefit which was originally established at $250 in 1882 was $100 in
1905. Changes of this kind have naturally followed the too liberal
policy of inexperienced unions.

The following table, giving the amount of the death benefit as
originally established and as paid at present in certain of the more
important unions which have adopted the graded death benefit,
illustrates the variety of forms which the systems take:

| | Date of | |
|Date of |Introducing|Amount of Death |Amount of Death
Name of | Organi-| Death | Benefit Paid |Benefit Paid in
Union | zation | Benefits | Originally | 1905.
Boot and | 1895 | 1898 | $50 for six months' |$50 for six months'
Shoe | | | membership. | membership.
Workers | | | $100 for two years' |$100 for two years'
| | | membership. | membership.
| | | |
Carpenters,| 1881 | 1882 | $250 for six months'|$100 for six
Brotherhood| | | membership. |months' membership.
of | | | |$200 for one year's
| | | |membership.
| | | |
Cigar | 1864 | 1867 | Yield of a 10 |$50 for two years'
Makers | | | cent per capita | membership.
| | | assessment. |$200 for five
| | | | years' membership.
| | | |$350 for ten years'
| | | | membership.
| | | |$550 for fifteen
| | | |years' membership.
| | | |
Granite | 1877 | 1877 | $50........... |$50.
Cutters | | | |$75 for six months'
| | | | membership.
| | | |$100 for one year's
| | | | membership.
| | | |$150 for five
| | | | years' membership.
| | | |$200 for ten years'
| | | | membership.
| | | |
Iron | 1859 | 1870 | Yield of a 40 |$100 for one year's
Molders | | | cent per capita | membership.
| | | assessment. $150 for five
| | | | years' membership.
| | | |$175 for ten years'
| | | | membership.
| | | |$200 for fifteen
| | | |years' membership.
| | | |
Leather | 1896 | 1896 | $40 for one |
Workers | | | year's |
on Horse | | | membership. |
| | | $60 for two |$40 for one
| | | years' |year's
| | | membership. |membership.
| | | $100 for four |$75 for three
| | | years' |years'
| | | membership. |membership.
| | | $200 for five |$100 for four
| | | years' | years'
| | | membership. |membership.
| | | $300 for eight |
| | | years' |
| | | membership. |
| | | |
Metal | 1890 | 1890 | $100 for six |$50 for one year's
Polishers | | | months' | membership.
| | | membership. |$100 for two years'
| | | | membership.
| | | |
Machinists | 1890 | 1890 | $50 for six |$50 for six months'
| | | months' | membership.
| | | membership. |$75 for one year's
| | | | membership.
| | | |$100 for two years'
| | | | membership.
| | | |$150 for three
| | | |years' membership.
| | | |$200 for four
| | | |years' membership.
| | | |
Painters | 1887 | 1887 | $100............... |$50 for one year's
| | | | membership
| | | |$100 for two years'
| | | | membership
| | | |$150 for three
| | | | years' membership
| | | |$200 for four years'
| | | | membership
| | | |
Pattern | 1887 | 1898 | $50 |$50 for one year's
Makers | | | | membership
| | | |$75 for two years'
| | | | membership
| | | |$100 for three
| | | | years' membership
| | | |$150 for five
| | | | years' membership
| | | |$200 for seven
| | | | years' membership
| | | |$250 for nine
| | | | years' membership
| | | |$300 for eleven
| | | | years' membership
| | | |$350 for thirteen
| | | | years' membership
| | | |$400 for fifteen
| | | | years' membership
| | | |
Piano and | 1898 | 1898 | $50 for six |$50 for one year's
Organ | | | months' | membership
Workers | | | membership |$100 for five
| | | | years' membership
| | | |$200 for ten years'
| | | | membership
| | | |
Tailors | 1884 | 1890 |$75 for three months'|$25 for six months'
| | | membership | membership
| | |$100 for one years' |$40 for one year's
| | | membership | membership
| | | |$50 for two years'
| | | | membership
| | | |$75 for three years'
| | | | membership
| | | |$100 for four years'
| | | | membership

A few of the unions require only that the deceased member shall have
been in good standing. These unions ordinarily pay a small benefit,
although the Glass Bottle Blowers pay five hundred dollars without
requiring a preliminary period of membership. The term of necessary
membership varies from thirty days in the case of the Barbers to two
years in the Cigar Makers. The usual requirement is that the member
shall have been in good standing for six months.

A few of the unions restrict the benefit to members under a certain age
at the time of admission. Where such an age limit is imposed it is
ordinarily fifty years, but in a few unions it is sixty years.

The following table shows the conditions imposed upon the payment of the
death benefit in the more important unions:

Book of the day: