Beneficiary Features of American Trade Unions Part 1

Beneficiary Features of American Trade Unions.

by James B. Kennedy.

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 doc.u.ments 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 a.s.sistance received, at every stage of the work, from Professor Jacob H. Hollander and a.s.sociate 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 a.s.sociations 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 a.s.sociate 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 partic.i.p.ation 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 a.s.sociations 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 a.s.sociations 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 princ.i.p.al national unions were organized, together with the date and order of introduction of their national benefit systems.

This change in the att.i.tude of American trade unions toward beneficiary activities is ill.u.s.trated 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 inst.i.tution 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 const.i.tutions, 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' a.s.sociation................ | 1853 | 1887 | 6 | Stone Cutters' a.s.sociation.......... | 1853 | 1892 | 13 | Gla.s.s 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' a.s.sociation............... | 1889 | 1903 | 23 | Machinists' a.s.sociation............. | 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 Stra.s.ser 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 a.s.sume 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 a.s.sessments 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 ma.s.s 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 partic.i.p.ate 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 cla.s.ses according to their relations with the local unions. In the first cla.s.s 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' a.s.sociation, 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 princ.i.p.al 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.