Beneficiary Features of American Trade Unions

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 rôle 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 $3278.

[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 $10,323,181.60.

[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]