is removed, for the entire scheme is rendered unstable if money paid for benefit funds may be diverted by action of officers, or even by vote of the representative conventions.

In the future development of industrial insurance we must reckon with the trade-unions as among the most important agencies for promoting the movement, especially as legal compulsion seems to be remote. The stronger unions have long since learned that an insurance fund is the first, most sure, and most permanent foundation for the popularity of the union. Only in extraordinary, uncertain, and unforeseen circumstances is a strike fund needed, while, on the contrary, provision of benefits in cases of sickness, accident, and death is a permanent and certain need of members. If compulsory insurance were introduced, the legislatures of the states would find it desirable and necessary to bring these powerful organizations into the system by recognizing, regulating, and controlling their by-laws and administration. The state governments could well afford to follow this course, because the unions have shown that they can administer insurance funds at low cost and in an efficient and satisfactory way. Up to this time the tradeunions are the only organizations which have shown ability, even in moderate measure, to provide unemployment insurance.

CHAPTER IV

THE INSURANCE OF THE FRATERNAL SOCIETIES

These societies of the United States are similar in many respects to the friendly societies of Great Britain, but they are not confined, as in the mother country with its established social distinctions, to the so-called working classes. Indeed there is a strong inducement for professional persons, especially those who seek clients or votes, to belong to one or more strong fraternal associations for the acquaintance and influence which membership gives.

The characteristics which distinguish these brotherhoods are the following: (1) Each local lodge belongs to a system of similar lodges with common regulations. (2) Each lodge is an independent society for local purposes, and yet the rules which govern it are made by a legislative body composed of delegated representatives elected by the lodges, and there is a central administration by officials chosen by the federation. (3) Each fraternal organization has its own peculiar ceremonies, usually of a religious character, which gives expression to the sympathetic bonds of the members. The secret pass-words and signs and solemn forms of initiation provoke curiosity and attract new members. (4) Brotherly assistance is rendered to sick or helpless members. Many of the services rendered by a lodge to its members could not be formally prescribed in a contract nor reported in statistical tables. (5) All lodges pay something or render some form of aid to members who are wholly or partially unable to work. (6) Death benefits are paid to the bereaved family of a member who has died, or to his legal heirs. It is in this last point that the fraternal

societies discover their chief social function, and it is this fact which makes them competitors of the ordinary insurance companies which carry on business for profit. The strife between them is unceasing and often bitter, even if veiled under formal courtesy. If the financial basis of a fraternal society is sound it can continue to exist, even when the ceremonies and sociable features are lightly esteemed and are neglected; but if the administration is defective, the assessments unduly frequent and high, the economic burden excessive, then the society goes to the wall in spite of all its sentimental sympathies and its impressive ritual.1

It is not easy to discover how large a proportion of the members of these fraternal societies belong to the wageearning group. Statistical material for a judgment is wanting and the opinions of representative leaders vary according to their personal experience and observation. In some lodges the workingmen are more numerous than in others. Inquiries made among almoners of charity, friendly visitors, residents of settlements, collectors for the "industrial insurance companies," and officials of the fraternal societies. themselves furnish evidence that the unskilled and low-paid workingmen do not constitute any large part of the membership, but that these are more likely to purchase, at high rates, a little claim on burial benefits from the industrial companies and to secure an imperfect provision for sickness in some club or mutual aid society with small dues. In the larger cities and in certain smaller industrial centers it is probable that the Catholic fraternal orders. consist almost entirely of wage earners. The most imknown to the

portant single investigation, so far as

1

1 Proceedings of the Nineteenth Annual Meeting of the National Fraternal Congress, p. 445.

114

writer, is that of the Bureau of Labor Statistics of Connecticut.2

Activity of the fraternal societies.3-In the year 1905 there were said to be 168 societies of the kind under consideration in the United States. The first to be established dated from October 1, 1868, the youngest from September 30, 1904. How many in the meantime have dissolved it is difficult to discover. On January 1, 1905, there were 87,758 lodges with a total membership of 5,111,480 persons, of whom 232,068 were "social members" who had no claim upon the life-insurance benefits of the lodges, while the great majority (4,879,412) were in the full enjoyment of these rights. During the year 1904 the number of lodges increased about 3,860, and the membership 137,049, and yet this very year was for all forms of life insurance organizations in the United States a year of unrest, suspicion, and difficulties. The insurance in force, at least on the face of contracts, was on January 1, 1905, $6,665,141,251. The expenditures during the year 1904 were $64,322,892. The assets on January 1, 1905, were stated to be $51,465,430, and the liabilities $9,619,089. The total expenditures of all fraternal societies since their foundation, chiefly for death benefits, had been $787,427,445; and in addition to this 13 societies which offer sick

2 Report of Bureau of Labor Statistics of Connecticut, 1891; Article of E. W. Bemis in Universal Cyclopedia, Vol. IV, p. 521:

3

Statistics of Fraternal Societies, 1905, Rochester, N. Y.

insurance had paid out for this purpose $312,514,193. The total expenditures of all societies for all purposes had been since their beginning $1,099,941,638.*

Costs of administration.-It is the boast of the fraternal orders that their expenses of administration have been kept remarkably low. A comparison has been drawn between twenty-five of the most important insurance corporations with twenty-five of the largest fraternals. The policies of the twenty-five insurance companies had a value, on December 31, 1904, of $8,541,899,611, while the smaller but more numerous policies of the fraternals had a face value of $5,210,016,008. The costs of administration of the twenty-five insurance companies was 18.3 per cent. of the receipts, while the corresponding costs of the fraternals amounted to only 8.4 per cent. The representatives of the fraternals offer an explanation of the difference. In the first place the salaries of the officers of the fraternals are very low, while those of officials of the great companies are, in many cases, notoriously extravagant. In the case of the companies every policy holder has been won at considerable expense for commissions of solicitors, while in the lodges members are solicitors who work zealously without pay. Further the meetings of the lodges afford a method of collecting the premiums and dues without great expense.

National organizations.-The fraternal societies have

A national fraternal sanatorium association has been formed to proIvide for the treatment of members afflicted with tuberculosis. They have secured property in New Mexico valued at $1,000,000, and an effort is made to endow and support it. The National Fraternal Congress and the Associated Fraternities of America have voted approval of the enterprise. It is affirmed that over $9,000,000 were paid out in one year for those who had died of consumption, and it is believed that by curing and preventing the disease the cost of sick benefits and premiums for life insurance can be substantially reduced. The cost for caring for patients will be from $7 to $10 per week. The legislature of Illinois, in 1907, made it legal for fraternal societies to establish and maintain such sanatoria.