[Footnote 215: Const.i.tution, 1903 (Cedar Rapids, n.d.), Article 27, p.
86.]
Only a few of the unions paying benefits as distinguished from insurance make any such provisions. The Boot and Shoe Workers provide that the "sick and death benefit fund shall not be drawn upon for any purpose except for payment of sick and death benefits;" the Painters, that "no money received for a specific purpose shall be otherwise used;" and the Tobacco Workers, that "none of the funds shall be transferable one to another."[216] The Cigar Makers and the unions which follow its methods go quite to the other extreme.[217] All the moneys of the union are kept in a single fund and are drawn upon for the payment of benefits, organizing expenses, or strike pay, as need requires. In the great majority of unions, however, a nominal allocation of funds is practised.
Thus, the Typographical Union in 1906 apportioned its monthly dues as follows: five cents to the general fund; five cents to the special defense fund; seven and one half cents to the defense fund; seven and one half cents to the burial fund; and ten cents to the endowment fund of the Union Printers" Home. Similarly, the Iron Molders, the Boot and Shoe Workers, Painters, Pattern Makers, Barbers and many others apportion their dues in fixed ratios to specific objects. But such apportionments are mere book-keeping devices. None of these unions hesitate in an emergency to transfer money from one fund to another. The Iron Molders and the Printers, for example, give their executive board or council power to transfer money from one fund to another whenever occasion demands.[218] In the other unions there is an implied power. In 1899 the Executive Board of the Iron Molders transferred $10,000 from the surplus in the out-of-work fund to other funds, as follows: $3000 to the strike fund; $5000 to the expense fund, and $2000 to the monthly fund.[219] Similarly, the Typographical Union, from 1897 to 1902, transferred $24,174.64 from the burial fund to the general fund.[220]
Although the Brotherhood of Carpenters do not make provision for the transfer of money from one fund to another, it has been found necessary to borrow from one fund in order to meet claims on another. In 1896 the Executive Board borrowed seven thousand dollars from the "protective fund" and twelve thousand from the "organization fund" with which to pay benefit claims.[221]
[Footnote 216: Const.i.tution of the Boot and Shoe Workers" Union, 1904 (Lynn, 1904), p. 25; Const.i.tution of the Brotherhood of Painters, Decorators and Paperhangers of America, 1906 (La Fayette, n.d.), p. 39; Const.i.tution of the Tobacco Workers" Union, 1900, third edition, 1905 (Louisville, n.d.), p. 18.]
[Footnote 217: The following are the more important unions making no allocation of their funds: Cigar Makers, Typographia, Piano and Organ Workers, and Plumbers.]
[Footnote 218: Const.i.tution of the Iron Molders" Union of North America, 1902 (Cincinnati, n. d.), p. 20; Const.i.tution of the International Typographical Union of North America, 1904 (Indianapolis, 1904) p. 10.]
[Footnote 219: Proceedings of the Twenty-second Session, Toronto, 1902, p. 646 (Supplement to Iron Molders" Journal, September, 1902).]
[Footnote 220: Proceedings of the Forty-sixth Session, Milwaukee, 1900, pp. 51, 99 (Supplement to Typographical Journal, September, 1900).]
[Footnote 221: The Carpenter, Vol. 16, October, 1896.]
Efficient financial administration requires in the case of certain benefits an apportionment of revenue between the national union and its subordinate unions. The funds for the payment of death and disability benefits or of old age pensions can be held at national headquarters, since the administration of such benefits can be centralized and immediate payment is not essential. In the railway unions and in the great number of unions, such as the Brotherhood of Carpenters and the Typographical Union, which have developed only death benefits, the dues for beneficiary purposes are collected by the local unions and paid over to the national treasury. In those national unions which have introduced sick, out-of-work, or travelling benefits, national funds are ordinarily held by the local unions, for the reason that it is desirable that payment of claims should be made immediately. The unions which pay such benefits are divisible into two cla.s.ses according to the extent to which they have entrusted the funds of the national union to the local unions.
The Cigar Makers, the Typographia, the Piano and Organ Workers and the Plumbers intrust to the local unions all the funds of the national organization. A more numerous cla.s.s of unions apportion the dues between the local unions and the national organization. The Iron Molders, for example, collect twenty-five cents per week from every member. This amount is applied as follows: ten cents per week per member is transferred to the International treasurer, of which sixteen per cent.
is placed to the credit of the death and disability fund, twenty-six per cent. to the monthly fund, and fifty-eight per cent. to the strike fund; eight cents per week per member is held by the local unions as a credit to the benefit fund out of which are paid sick and out-of-work benefits; and the remainder, seven cents per member, is held by the local unions as a fund for local expenditures.
The adjudication of claims is naturally the most important administrative task connected with a system of benefits. In all cases the national officials rely upon the local unions and their officers for a certain amount of cooperation and aid in preventing fraud, but the amount of this dependence varies with the character of the benefit. In death and disability benefits the national union can prevent fraud almost without any cooperation on the part of the local unions. A certificate of death or disability, properly signed, is in the great majority of cases an indisputable evidence of the fact it purports to attest. A union may in like manner administer an old age pension directly from its head office. But in the case of sick, travelling and out-of-work benefits, the local unions become an essential part of the administrative machinery of the national union. No national union attempts to determine whether a member of a local union is ent.i.tled to the out-of-work benefit except through the local union. The administrative systems fall thus into two great cla.s.ses according as the benefit administered can be guarded against fraud by means of certificates and sworn statements, or according as it must be administered partly by persons in contact with the claimant. In both cases the national officers administer the benefits; but in the one they act directly and the mediation of the local union is formal and dispensable, while in the other the aim of national administration is to supervise and control the local administration.
The administration of the death benefit or of a system of insurance against death presents relatively few difficult problems. The local union reports the death to the national officials and certifies to the good standing of the deceased member in his local union. If the reports of national and local unions correspond and the deceased member is clear on the records of both local and national unions, the claim is approved by the national officers and payment is made to the designated beneficiary, or the legal heirs of the deceased. The report of the subordinate union to the national union, covering the case in point, contains a certificate validating the claim, sworn to before a notary public or commissioner by the president and the financial secretary, together with all doc.u.ments upon which the local authorities based their decision or prayer for the payment of the claim. Upon receipt of an application for a claim the general secretary-treasurer, the general president, or both, examine it and, if satisfied as to its validity, order immediate payment; if the claim is questionable it is referred to the general executive board for final adjustment.[222]
[Footnote 222: Iron Molders" Const.i.tution, 1902 (Cincinnati, 1902), p.
41; Cigar Makers" Const.i.tution, 1896, fourteenth edition (Chicago, n.d.), sec. 151; Painters" Const.i.tution, 1906 (La Fayette, n.d.), sec.
151.]
The adjudication of disability claims is more difficult than that of death claims. Of the unions that pay disability insurance or benefits the Locomotive Engineers, the Railway Conductors, the Locomotive Firemen, the Railroad Trainmen, the Switchmen, the Maintenance-of-Way Employees, the Iron Molders, the Brotherhood of Carpenters, the Painters, and the Gla.s.s Workers specify the disabilities that const.i.tute "total or permanent disability," while the Wood-Workers and Metal Workers define disability simply by the resultant disqualification for "following the trade,"[223] In the latter group of unions the administrative officers have large discretionary power. The lack of more specific rules in such cases causes unsatisfactory administration and this in turn gives rise to general complaint.[224]
[Footnote 223: Iron Molders" Const.i.tution, 1902 (Cincinnati, 1902), p.
40; Carpenters" Const.i.tution, 1905 (Milwaukee, n.d.), p. 19; Painters"
Const.i.tution, 1904 (La Fayette, n.d.), p. 29; Gla.s.s Workers"
Const.i.tution, 1903 (n.p., n.d.)5 p. 11; Wood Workers" Const.i.tution, 1905 (Chicago, n.d.), sec. 137; Metal Workers" Const.i.tution, 1903 (Joliet, n.d.), sec. 115.]
[Footnote 224: Proceedings of the Nineteenth Session of the Iron Molders" Union of North America, 1890, Report of President (Cincinnati, n.d.); Proceedings of the Seventh General Convention of the United Brotherhood of Carpenters and Joiners of America, 1892, Report of the President (Philadelphia, 1892).]
All claims for disability benefits are filed with the local officers of the disabled members" union for their examination and approval or rejection. In case of approval the claims are forwarded to the central office of the national union with all necessary papers concerning its validity. If the claim is approved, payment is made through the local union to the legal claimants.[225] The majority of the unions paying disability benefits, as a precautionary measure specify the time within which claims for disability must be filed. The Conductors and the Carpenters require claims to be filed within one year from date of disability,[226] the Firemen and the Switchmen, within six months,[227]
and the Trainmen "promptly" after injury;[228] while the Engineers and the Maintenance-of-Way Employees fix no specific time for filing claims.
The Carpenters and the Painters require that notice of a claim for disability must be given to the general secretary-treasurer within sixty days after disability occurs.
[Footnote 225: Const.i.tution of the Iron Molders" Union of North America 1902 (Cincinnati, 1902), p. 41; Const.i.tution of the United Brotherhood of Carpenters and Joiners of America, 1905 (Milwaukee, n.d.), secs.
109-110; Const.i.tution of the Brotherhood of Painters, Decorators and Paperhangers of America, 1906 (La Fayette, n.d.), secs. 84-87.]
[Footnote 226: Const.i.tution of the Railway Conductors of America, 1903 (Cedar Rapids, n.d.), p. 82; Const.i.tution of the United Brotherhood of Carpenters and Joiners, 1905 (Milwaukee, n.d.), p. 19.]
[Footnote 227: Const.i.tution of the Brotherhood of Locomotive Firemen, 1905 (Indianapolis, n.d.), p. 30; Const.i.tution of the Switchmen"s Union of North America, 1903 (Buffalo, n.d.), p. 20.]
[Footnote 228: Const.i.tution of the Brotherhood of Railroad Trainmen, 1903 (Cleveland, 1903), p. 35.]
The disability claim must be accompanied, under the rules of practically all the unions, by the sworn certificates of the attending physicians.[229] The Firemen provide that the national officials may, when they consider it necessary, appoint a physician to pa.s.s upon the validity of a claim; the Maintenance-of-Way Employees require subordinate lodges to appoint a special committee to report on the nature and cause of the disability. The Engineers exercise special care in pa.s.sing upon a claim for loss of sight. In such cases they require a certificate signed by two experienced oculists; and in case the eyes have not been removed the claim remains on file for one year, when additional certificates from two experienced oculists, certifying to total or permanent blindness, must be furnished.[230]
[Footnote 229: Const.i.tution of the Brotherhood of Railroad Trainmen, 1903 (Cleveland, 1903), p. 35; Const.i.tution of the Switchmen"s Union of North America, 1903 (Buffalo, n.d.), p. 16; Const.i.tution of the United Brotherhood of Carpenters and Joiners, 1905 (Milwaukee, n.d.), p. 19; Const.i.tution of the Brotherhood of Painters, Decorators and Paperhangers of America, 1906 (La Fayette, n.d.), p. 20.]
[Footnote 230: Const.i.tution of the Brotherhood of Locomotive Firemen, 1905 (Indianapolis, n.d.), p. 34; Const.i.tution of the Maintenance-of-Way Employees, 1903 (St. Louis, n.d.), p. 13; Const.i.tution of the Grand International Brotherhood of Locomotive Engineers, 1904 (Cleveland, 1904), p. 85.]
A member whose claim for a death or disability benefit has been rejected may appeal from the decision of the official authorized to pa.s.s upon claims. The provisions of the Trainmen are typical. Every claim rejected by the secretary-treasurer is referred to the Beneficiary Board, consisting of the grand master, the a.s.sistant grand master and the secretary-treasurer. If rejected also by the Board the claimant may appeal to the Grand Lodge "at its next succeeding session, but not afterward." The appellant must give a written notice to the grand secretary-treasurer of his intention to appeal.[231]
[Footnote 231: Const.i.tution of the Railroad Trainmen, 1903 (Cleveland, 1903), p. 39.]
The unions paying the sick benefit fall into two cla.s.ses according as they administer the benefit directly from the offices of the national union with the aid of the local union or as they intrust the administration of the benefit to the local union and leave to the national officers only a general supervision. The Boot and Shoe Workers, the Barbers and the Tobacco Workers are in the former cla.s.s, while in the latter are the Cigar Makers, Iron Molders, Typographia, Plumbers, Leather Workers on Horse Goods and the Garment Workers.
The chief means relied upon to guard against fraud are the certificate of the attending physician and the report of a visiting committee of the local union. Some of the unions require both the certificate and the report; the larger part, however, rely on the report of the visiting committee, although local unions are permitted to require that a physician"s certificate shall be furnished. The duties of the visiting committee are set forth with great elaboration in all the const.i.tutions.
Thus, the Boot and Shoe Workers require that the claim shall be investigated by "three Union members of good repute not related to the sick member, each acting independently of the others and reporting individually to the local executive board." The Plumbers and Cigar Makers require that every sick member shall be visited at least once in each week and that no two members of the committee shall visit him at the same time.
Notwithstanding these precautions it has not been possible entirely to prevent the payment of fraudulent claims for sick benefits. The visiting committees of the local unions are frequently neglectful or careless in exercising their supervisory functions, and occasionally knowingly sanction the payment of unwarranted claims. Where the unions do not have an out-of-work benefit, there is always the chance that unemployed members will claim the sick benefit and that the local unions, aware that the money for the payment of the claim comes from the national union, will not scrutinize with any care the severity of the illness.
Reserving to the national officials the right to pa.s.s finally upon sick-benefit claims is not effective as a precaution against such frauds. The national officials cannot inform themselves as to the honesty of the physician who signs the certificate nor as to the good faith with which the visiting committee has performed its duties. On the whole, the better policy seems to be to place the responsibility of pa.s.sing upon individual claims directly upon the local union, and to reserve to the national officials an oversight of the administration of the local unions.
In several of the unions no effective measures appear to have been taken to keep the local unions up to their duties, but in others a close scrutiny is maintained. The system in use by the Iron Molders is probably the most effective of those used by the unions which do not pay a money out-of-work benefit and in which consequently the need for supervision is greatest. Every member of the union is catalogued on a card. When he is reported as having received a benefit payment from any local union, this fact is entered on his card. Members removing from one local union to another and drawing more sick benefits than they are allowed by the rules are thus detected and forced to make rest.i.tution.
The "financier" of the union also notes the sick rate in each local union. When the amount of sickness in any locality appears to be excessive, he employs for a limited time a reputable physician, who must sign all claims for sick relief. The result usually is the discovery of laxity in the local administration and the necessary corrective measures are applied.[232] The Cigar Makers have a staff of travelling auditors who from time to time inspect the accounts of local unions and scrutinize the administration of the benefits.
[Footnote 232: Proceedings of the Twenty-second Convention, 1902, in Supplement to Iron Molders" Journal, September, 1902; Proceedings of the Twenty-third Convention, in Supplement to Iron Molders" Journal, September, 1907.]
The administration of out-of-work relief is similar to that of sick benefits in that the national union must of necessity rely upon the local union. The requirement of registration from day to day is the chief administrative check upon the payment of the benefit to members not ent.i.tled thereto.
The more complete the system of benefits the less is the difficulty in preventing the payment of fraudulent claims. A union such as the Cigar Makers or the Typographia has a comparatively small problem in administration as compared with that of a union like the Iron Molders.
Since the Iron Molders do not maintain an out-of-work benefit unemployed members are tempted to try to secure sick benefits. Even in the Cigar Makers the sick benefit and the out-of-work benefit are used as a form of superannuation relief. The addition of a superannuation benefit would lower the expense of maintaining the sick and out-of-work benefits.
The administration of trade-union benefits is subject to certain rules imposed by the statutes of the various states. All the commonwealths of the United States regulate by law the conduct of insurance business. In this regulation, distinction has necessarily been made between regular insurance companies and that cla.s.s of organizations known as fraternal or beneficiary societies. The trade organizations described in this monograph as maintaining insurance or benefit departments fall under the latter cla.s.s.
The unions paying insurance, as distinguished from benefits, have conformed to certain requirements of these laws, either by incorporating their insurance departments or by modifying the rules of the organizations in harmony with special state regulations for fraternal insurance companies.
Prior to 1894--from December, 1867, to 1894--the Brotherhood of Locomotive Engineers had its headquarters in the state of New York. In the latter year the State Superintendent of Insurance notified the Brotherhood that incorporation of the insurance department was necessary for the continuance of the business. In consequence thereof the central office of the Brotherhood was transferred to Cleveland, Ohio, and on the twenty-second of February, 1894, the insurance department was incorporated under the laws of the state of Ohio as a separate organization.[233] Similarly, the Conductors were forced to incorporate by the pressure of the state laws. In December, 1885, the Order moved its central office from Cedar Rapids to Chicago. In order to strengthen its power and to broaden its influence, the Order, in 1886, applied for a certificate of incorporation under the laws of the state of Illinois.
The Secretary of State refused the certificate on the ground that the insurance regulations of the Order were not in accordance with the state laws, and requested that these be changed and that the insurance department be incorporated as a separate organization. The Secretary of State was willing to incorporate the Order under the Act of 1872, provided the Order eliminated from the object of organization the clauses referring to the payment of benefits or indemnity; or he was willing to issue a charter based on the Act of 1883 which provided that only such powers could be taken as are specifically granted therein, namely, "the furnishing of life indemnity or pecuniary benefits to widows, orphans, heirs, relatives, and devisees of deceased members, or accident or permanent disability indemnity to members."[234] In other words, the Order could have been incorporated under the Act of 1872 to do all business except insurance, while under the Act of 1883 it could have been incorporated to maintain a system of insurance, but nothing else. The only alternative was separate organization for the protective and the benevolent departments. The Order was unwilling to separate the two departments and consequently transferred its central office to Cedar Rapids, Iowa. The Board of Directors, on July 12, 1887, ordered the grand secretary to proceed with incorporation under the laws of the state of Iowa.[235] The certificate of incorporation, however, was not issued until the laws of the union were made to conform to the insurance laws of the state. These changes were only unimportant ones, such as the change of the name of the Insurance Department to "Mutual Benefit Department," and in no way affected the intent of any laws of the Order.
[Footnote 233: Locomotive Engineers" Journal, Vol. 28, p. 360.]
[Footnote 234: Proceedings of the Nineteenth Convention of the Order of Railway Conductors, New Orleans, 1887 (Cedar Rapids, n.d.), pp. 51-52, 63.]
[Footnote 235: Proceedings of the Nineteenth Convention of the Order of Railway Conductors, New Orleans, 1887 (Cedar Rapids, n.d.), pp.
155-156.]
The other railway brotherhoods have conformed to the insurance laws of the states in which they do business. The insurance department of the Switchmen"s Union is incorporated under the laws of the state of New York. The Brotherhood of Locomotive Firemen does business in the state of Illinois under a law enacted in 1893 whereby all beneficial fraternal a.s.sociations are declared to be corporations, the insurance features of which are subject to state laws.[236] The Brotherhood of Railroad Trainmen operates its insurance department under a license issued by the insurance department of the state of Ohio under the Fraternal Beneficiary Society Act.
[Footnote 236: Hurd, Revised Statutes of Illinois, 1901 (Chicago, 1901), secs. 258-260, p. 1071.]