[Footnote 77: Report of W.S. Carter, Grand Secretary-Treasurer, June 30,1904.]
[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 ident.i.ty 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 The compulsory rule of the Maintenance-of-Way Employees during the early nineties was frequently repealed and readopted.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 a.s.sessments 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 cla.s.s of members, called non-beneficiary, who are not eligible to the insurance departments because of partial disability or because of having pa.s.sed the age limit.
The Brotherhood of Locomotive Firemen provides that the non-beneficiary member shall be ent.i.tled to all the privileges of the subordinate lodge, but shall not take part in the national convention or in any way partic.i.p.ate 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, respectively.
[Footnote 82: Const.i.tution, 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 const.i.tutions and represent the amount of the regular monthly a.s.sessment.]
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, cla.s.sify as extra-hazardous, furnish insurance against death and disability at $12 per $1000. The princ.i.p.al 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 a.s.sessment 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 cla.s.ses of railway employees and letter carriers at thirty-five years of age:
Cla.s.s 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 cla.s.ses of employees are those of the Aetna Life Insurance Company.]
a.s.suming 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 cla.s.s 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 cla.s.s 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 membership.
CHAPTER II.
DEATH BENEFITS.
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 a.s.sessments, 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 a.s.sessment 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 a.s.sessment of ten cents on each member. Similarly, the Gla.s.s Bottle Blowers, introducing the benefit as late as 1891, made provision for paying the amount secured by an a.s.sessment of twenty-five cents per capita.[89]
[Footnote 88: Iron Molders" Journal, Vol. 25, June, 1889; Const.i.tution, 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 a.s.sessment 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 ill.u.s.trates the reluctance of the Union in a.s.suming 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 a.s.sessment 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 a.s.sociation. Even where partic.i.p.ation 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 a.s.sociation, which had maintained the system of special a.s.sessments, 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: Const.i.tution, 1878 (Cincinnati, 1878); Iron Molders"
Journal, Vol. 26, May, 1890, p. 2.]
[Footnote 91: Const.i.tution, 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" a.s.sociation and the Saw Smiths" Union, which in their const.i.tutions 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: Const.i.tution of the Watch Case Engravers" International a.s.sociation of America, 1901 (New York, n.d.), p. 21; Const.i.tution of the Saw Smiths" Union of North America, 1902 (Indianapolis, n.d.), p.
8.]
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 a.s.sessment of ten cents, the payment of four hundred and forty-four dollars upon the death of each member. The a.s.sessment of twenty-five cents levied by the Gla.s.s 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. Partic.i.p.ation in the more important and successful death systems was voluntary. Membership in the Iron Molders" Beneficial a.s.sociation, created to pay death benefits, was, for example, entirely optional.[94]
The first const.i.tution 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: Const.i.tution, 1877 (Rockland, 1877), Arts. 1-2.]