Beneficiary Features of American Trade Unions by James B. Kennedy
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James B. Kennedy >> Beneficiary Features of American Trade Unions
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11 BENEFICIARY FEATURES OF AMERICAN TRADE UNIONS
BY
JAMES B. KENNEDY, PH.D.
Professor of Political Economy in Wells College
* * * * *
SERIES XXVI NOS. 11-12
JOHNS HOPKINS UNIVERSITY STUDIES
IN
HISTORICAL AND POLITICAL SCIENCE
Under the Direction of the
Departments of History, Political Economy, and
Political Science
* * * * *
November-December, 1908
* * * * *
TABLE OF CONTENTS.
INTRODUCTION
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
PREFACE.
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
University.
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.
J.B.K.
BENEFICIARY FEATURES OF AMERICAN TRADE UNIONS.
INTRODUCTION.
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
study.]
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
trades.
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
President.]
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
bargaining.
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
Carriers.]
CHAPTER I.
INSURANCE AGAINST DEATH AND DISABILITY.
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.
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