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 r?le 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.
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]
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.
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.
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.
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]
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.
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]
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.
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]
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]
The Order of Railroad Telegraphers was instituted at Cedar Rapids, Iowa, June 9, 1886. To it is admitted "any white person of good moral character, eighteen years of age and employed on a railroad as a telegrapher, line repairer, leverman, or interlocker, including all employees connected with operation of signal towers and interlocking plants."[26] By April 30, 1893, the membership numbered 17,780. A rapid decrease reduced its strength to 10,114 on April 30, 1894, to 6684 on December 30, 1894, and finally to 4976 on December 31, 1895. On August 1, 1904, the membership had increased to 37,700.[27]
Although the Order paid benefits almost from its organization, it was without an effective system of insurance until January 1, 1898, when the present system was established. The first constitution, 1886, provided that local divisions should exercise every honorable means to assist a member in need, and at the session in 1887 a voluntary insurance association was established under the name of "Mutual Life Insurance Association of North America." The insurance failed entirely to attract any considerable part of the membership, and up to July, 1890, the total amount paid was only $2430.05.[28] In 1896 the Grand Division appointed a committee to devise a plan for a system of insurance. The plan reported was submitted to referendum vote in December, 1897, and became operative on January 1, 1898.[29] From March 1, 1898, to June 15, 1899, applicants were received without an entrance fee, and during this period the success of the department was practically assured. The insurance is compulsory on all members. At present there are about 38,000 members carrying insurance, the mortuary fund has a balance of $120,000, and the total amount of insurance paid aggregates $142,000.
A local organization of switchmen was effected at Chicago on August 18, 1877, but a national union was not formed until February 22, 1886, when the Switchmen's Mutual Aid Association was inaugurated. At the first annual session in September, 1886, the grand master declared that the purposes of the organization were "to wage war against discrimination made by arbitrary employers; to organize for benevolent purposes; to amicably adjust labor disputes by arbitration; and for mutual aid to its members."[30] The Association was forced by the defalcations of its treasurer to disband, and a new organization, the Switchmen's Union, was formed. Since this reorganization in 1897 rapid growth has been made under the management of conservative officers. On January 1, 1903, the Switchmen's Union had a membership of 14,000.
The first constitution provided for death and disability insurance. At the second session in September, 1887, the grand master reported $15,000 paid for death and disability claims during the year.[31] Until the disbanding of the Association in 1894 the insurance department was successful. In 1901 the Union without a dissenting vote adopted a compulsory system of insurance. During 1902 $6,151,200 of insurance was issued, during 1903, $2,906,600; while at the close of 1902 $4,779,600 of insurance was in force, and at the close of 1903 $6,679,200. The total amount paid in death and disability claims since reorganization has aggregated $207,335.75.
The present International Brotherhood of Maintenance-of-Way Employees has suffered many vicissitudes in its development. It was organized in the summer of 1887 as the Order of Railway Trackmen, and admitted into membership foremen in the maintenance-of-way department, road masters and bridge and building masters.[32] In October, 1891, this organization, with a membership of 600, united with the Brotherhood of Railway Section Foremen, an organization with 400 members. The new union took the name of Brotherhood of Railway Trackmen of North America. Prior to 1898 the Brotherhood was almost exclusively a fraternal insurance society, but in that year collective bargaining was added to its functions. In 1903 the organization became the Brotherhood of Maintenance-of-Way Employees. It admits to membership "persons employed in the track, bridge and building, water and fuel department, and signal and interlocking service." During the last five years the membership of the Order has shown considerable increase. In 1903 over 15,000 members were added, making a total of over 40,000 on January 1, 1904.
Originally the insurance was compulsory. At the convention of October, 1893, it became optional and remained so until October, 1894, when it again became compulsory. Owing to opposition from members carrying old-line insurance and from the uncertainty in the number of assessments levied each year, the St. Louis convention of 1896 reverted to a system of optional insurance. Previous to the adoption of this plan the Order had paid death, total disability and partial disability claims to the amount of about $75,000. From January 1, 1897, to September 30, 1904, $74,909.66 was paid to beneficiaries, making a total paid since organization of about $150,000.
The National Association of Letter Carriers of the United States of America was organized at Milwaukee, Wisconsin, in 1889. In 1891 the Association was incorporated under the laws of the State of New Jersey, and on February 26, 1892, was reincorporated under the laws of the State of Tennessee. The aim of this organization is "to unite fraternally all the letter carriers in the United States so as (a) to secure their rights as Government employees and to promote the welfare of every member, and (b) to found the United States Letter Carriers' Mutual Benefit Association."[33] The first annual session appointed a committee to draw up a plan for an insurance system. The report was published in January, 1891, and was considered by the National Association at its second annual session in August, 1891,[34] and the Mutual Benefit Association was instituted.[35] The insurance has always been voluntary and consequently the membership of the Benefit Association has been only a small part of that of the National Association. On July 1, 1905, there were 5318 members carrying insurance to the amount of $13,866,000, while there were 19,000 members of the National Association.
All the railway organizations described above make a distinction between death and disability insurance, and sick and accident insurance. The local unions have been prohibited either specifically or by implication from maintaining any association or society for paying death and disability benefits. This rule was first established by the Conductors. During the early years of the Conductors' national organization, 1868-1880, many subordinate divisions maintained mutual benefit associations for the payment of death and disability insurance. The growth of the national benefit department was thus retarded, and at the tenth annual session in October, 1877, subordinate divisions were prohibited from maintaining "mutual benefit societies."[36] The national organizations, on the other hand, do not furnish accident insurance, but leave this function to the local bodies. In the formation of this policy, also, the Conductors took the initiative by providing in their first national constitution in December, 1868, that the order should never become a weekly benefit association.[37] The Engineers had a similar provision as early as September, 1869; but national regulations governing the payment of weekly benefits were nevertheless formulated. The other unions have followed this policy, and their constitutions provide that the weekly benefits shall be levied, collected, and distributed according to national rules.
The most striking characteristic of the insurance features of these organizations has been the combination of disability and death insurance. The fact that railway employees are specially exposed to the risks of disabling accidents has been the chief influence in this direction. The large number of claims paid for disability in the Conductors', the Firemen's, and the Trainmen's beneficiary departments during recent years shows the high importance of disability insurance to the men engaged in the more hazardous occupations. The disability claims paid among the Firemen for the eleven years from 1894 to 1904 were 24.5 per cent. of the total number of claims paid, or about one third of the number of death claims paid. Among the Conductors the disability claims, paid during the same period, amounted to one seventh of the death claims paid. The disability claims paid by the Trainmen during twenty years, 1884-1904, were 32.5 per cent. of all claims paid.
The proportion of disability to death claims has decreased in each of these organizations in recent years. The disability claims paid by the Conductors in 1894 were 15.6 per cent. of the total number, and at the close of 1904, 11.8 per cent.; while among the Firemen the percentages for the biennial terms 1894-1896 and 1902-1904 were 32.9 per cent. and 21.4 per cent., respectively. The claim statistics of the Trainmen show the same tendency although there are great variations from year to year. In 1890, 1895 and 1897 the percentage of disability claims rose to 40, 41 and 40, respectively, while in 1888, 1900 and 1903 the percentage fell to 28, 29 and 27, respectively.
DEATH AND DISABILITY CLAIMS.
Name of Organization. Term. Claims Paid. Per Cent. of Disability Claims. Disability Claims per 1000 of Total Membership.
Death. Disability.
Conductors 1893-1894 265 49 15.6 3.8
1895-1896 274 46 14.3 3.1
1897-1898 363 63 14.8 3.6
1899-1900 440 55 11.1 2.6
1901-1902 523 81 13.4 3.2
1903-1904 688 92 11.8 3
Firemen 1894-1896 295 145 32.9 6
1896-1898 349 118 25.3 4.3
1898-1900 488 174 26.3 4.7
1900-1002 655 186 22.1 3.9
1902-1904 857 234 21.4 4.3
Trainmen[38] 1886 75 37 33 4.6
1887 77 42 35 4.8
1888 145 59 28 5.2
1889 152 69 31 5.1
1890 175 116 40 8.6
1891 264 123 32 6.6
1892 270 145 34 6.1
1893 372 201 35 7.1
1894 304 138 31 6.1
1895 212 147 41 7.8
1896 254 159 38 7.2
1897 240 160 40 6.3
1898 358 165 31 5.8
1899 403 211 34 5.7
1900 498 205 29 4.9
1901 507 231 31 5.1
1902 570 249 30 4.7
1903 788 305 27 4.6
1904 849 374 31 5.2
The decrease in the ratio of disability to death claims paid is due primarily to a stricter definition of disability and to better administration. The number of disability claims paid per 1000 of membership shows also, however, a slight decrease.
The records of the Trainmen which separate claims resulting from accidents still farther emphasize the need for disability insurance.
DEATH AND DISABILITY CLAIMS IN BROTHERHOOD OF TRAINMEN (1886-1904).
Kind of Claims Number from Natural causes Number from Accidental Causes Percentage of Claims from Natural Causes. Percentage of Claims from Accidental Causes. Percentage of Claims from all Causes.
Disability. 526 2,610 16.77 83.23 32-1/3
Death. 2,033 4,522 31. 69. 67-2/3
Total 2,559 7,322 26-1/3 73-2/3 100
The data show the place disability insurance has occupied among the Railway Trainmen during twenty years. For this period disability claims for all causes were 32-1/3 per cent. of all claims paid. The percentage of claims from accidental causes-including both disability and death-was 73-2/3 of the whole number of claims paid, while the percentage from natural causes was only 26-1/2. In other words, these statistics show that the Trainmen's accidental disability and death claims, as compared with those due to natural causes, have averaged almost three claims paid as the result of accidental causes to one as the result of natural causes.[39]
The old-line companies do not offer the form of disability insurance required by railway employees. These companies issue accident policies against death and total or partial disability from accident while on duty; but there are two defects in the form of this insurance. In the first place, the definition of total disability adopted by the companies is much stricter than that of the insurance departments of the railway brotherhoods. A typical insurance company's definition of total disability is incapacity for "prosecuting any and every kind of business pertaining to a regular occupation from the loss of both eyes, both hands, both feet, or one hand and one foot;" while partial disability is "the loss of one hand or one foot or any injury preventing the performance of one or more important daily duties pertaining to a regular occupation." In other words, to secure the indemnity for total disability, the insured must be disabled from performing any regular labor whatever. In the railway organizations total disability is so defined as to cover inability of the insured to continue in his position. Secondly, the disability insurance offered by the regular insurance companies is joined with accident insurance affording a weekly indemnity during the period of illness due to accident. The railway employee, if he insures against totally disabling accidents, must also insure against temporarily disabling accidents, since the companies do not separate the two forms of insurance. The inclusion of all accidents in one policy necessitates a heavy premium. For example, to secure accident insurance including, besides a weekly indemnity of $20, provision for the payment of $1000 in case of death or total disability resulting from accidents, an engineer must pay an annual premium of $50.40 or $56 according to the section of the country over which he runs, or the system by which he is employed. The combination of life with disability insurance meets the need of the ordinary railway employee better than any other combination.
The formative period of the two older organizations furnished opportunities for a study of the disability benefit and showed its usefulness in strengthening the national unions. These organizations, however, experienced grave difficulties in their attempts to administer disability insurance. The Engineers included "totally disabled members" among the beneficiaries of the fund provided for in 1866.[40] The by-laws of the insurance association founded by the Brotherhood on December 3, 1867, provided for assessments of 50 cents per member for the benefit of each totally disabled member-one half the amount assessed in case of death.[41] The history of this benefit was tersely summed up by General Secretary-Treasurer Abbott in his address to the Engineers' Association, December 3, 1871: "The Baltimore convention, 1869, adopted a disability clause, the Nashville, Tenn., convention amended it, and the Toronto, Canada, convention, 1871, repealed it." At St. Louis, 1872, the Brotherhood formed a separate association, known as the "Total Disability Insurance Association," for furnishing insurance against disability to members. An entrance fee of $2 was required and the assessment was fixed at $1.[42] In 1876 the convention dissolved the Total Disability Insurance Association, and the Engineers did not succeed in establishing a satisfactory system of disability insurance until 1884, when the prosperous condition of the association enabled the convention to carry out its long-cherished plan and to make provision for the payment of the same benefit in case of total disability as at death.[43] In the call of the Conductors for a convention to effect a permanent organization issued in November, 1868, the purpose of the proposed Order was stated to be the protection of "the members and their families in case of sickness, accident or death."[44] The mutual insurance association instituted by the first convention paid a disability benefit equal to the death benefit. The law under which the association operated was repealed at the second convention in October, 1869; but when the third convention in October, 1870, adopted a new insurance plan, provision was made that disability insurance should be paid in an amount equal to that paid in case of death. Not until 1881, however, did the Conductors satisfactorily solve the problem.
The difficulties experienced by the Engineers and the Conductors in establishing disability insurance, without doubt, served to deter the Firemen from adopting a similar system until their fifth convention in 1878. During the period 1868-1880 the disability benefit was in process of evolution. By 1880 the three older organizations had demonstrated the possibility of maintaining the benefit, and since that time it has been regarded as an essential element in railway insurance systems. Hence the Trainmen in 1883, the Telegraphers in 1887, and the Switchmen in 1886, in their first constitutions, and the Trackmen in 1893, made the disability insurance equal to that paid in case of death. All of the railway organizations, except the Telegraphers, follow this policy at the present time. The Telegraphers have not paid a disability benefit since 1897. They provide, however, that should a member become totally or permanently disabled the insurance committee may order his assessments paid and shall deduct the amount of these assessments when the benefit is finally paid.[45] The failure of the Telegraphers to pay a disability benefit is largely due to the fact that their occupation is less dangerous than other forms of railway service.
The Letter Carriers also have not the same urgent need for the payment of a disability benefit and until the Denver convention, 1902, paid insurance against death without direct provision for disability. At this convention, however, the National Association organized a Retirement Association for the payment of superannuation benefits to the aged and disabled members.[46] The Association had in view in founding this department the growing necessity of making some provision for the large number of carriers whom old age prevented from doing the regular amount of work.[47] Under the original plan, which went into effect January 1, 1903, the Association issued retirement certificates to members in the sums of $500, $400, $300 and $200 at monthly premiums of $6.70, $5.35, $4.00 and $2.70, respectively. On retirement, after having paid thirty annual premiums, or their equivalent, the beneficiary was entitled to receive annually the amount of his certificate. The retirement might also take place after thirty years' service, or after thirty years' membership in the Association, or after the age of sixty-five had been reached, provided ten annual premiums had been made.[48] This "ten annual premium" concession was for the special benefit of old men whose circumstances would not allow them to pay the sum of thirty years' premiums. The concession was allowed only for a period of ten years. [49]
The scheme also included provision for disability. After January 1, 1906, any member of the Retirement Association who became permanently incapacitated, mentally or physically, for any kind of remunerative labor before thirty years' service or before attaining the age of sixty-five years, was to receive annually from the retirement fund a certain per cent. of the face value of his retirement certificate. The amount was proportionate to the years of service. For five years' membership such a member received fifteen per cent.; for ten years', thirty per cent.; for fifteen years', forty-five per cent.; for twenty years', sixty per cent.; for twenty-five years', seventy-five per cent. Any member of not less than five years' standing might, after ninety days' notice to the chief clerk, withdraw from the Association; and in such event he became entitled to receive seventy-five per cent. of the annual premiums paid to the Association. Also in case of death within two years of his retirement and prior to the payment of not more than twenty-four monthly installments of pension, the Association agreed to pay to the widow, the children, or legal heirs the annuity provided in the deceased member's certificate until the amount paid should aggregate seventy-five per cent. of all premiums received by the Association.[50]
This plan was a failure. In it business principles had been sacrificed for fraternity. Relief had been provided for the old man particularly, but very few took advantage of the opportunity. The young men refused to enter because the favorable rates to old men placed a heavy burden upon the younger members.[51] The report of the chief clerk to the Syracuse convention, in 1903, showed that up to September 1, 1903, only eighteen retirement certificates had been issued, of which thirteen were for $500, two for $300, and three for $200. The average age at entrance was fifty-three and the average length of service, twenty-two years. The total receipts of the retirement fund were only $390.90.[52] On September 1, 1905, the total number of certificates issued had reached twenty-five, with only nineteen outstanding, while the retirement fund had increased to $2839.88.[53] The originators of the Retirement Association were forced to abandon their experimental fraternity scheme and to formulate a plan based more upon business principles. Consequently, at the Portland convention in September, 1905, Chairman Goodwin and Chief Clerk Wilson of the retirement committee proposed a new plan.[54]
Under the new law, which became operative January 1, 1906, the Retirement Association was authorized to offer insurance against disability and old age. The members are, therefore, divided into two classes, annuity members and disability members, but those duly qualified may hold both annuity and disability certificates. Any member of the National Association of Letter Carriers may become an "annuity member;" but only those under sixty-five years of age and in good physical condition may become "disability members." A member retiring from the carriers' service ceases to be entitled to disability relief; on the other hand, however, retirement from the carrier service does not affect the right of a member to an annuity.[55]
The plan provides for annuities of one, two, three, four or five hundred dollars. The annuities can begin in five, or any multiple of five years after the policy is issued and the rate varies according to the deferment of the annuity. A member may withdraw at any time prior to reaching the annuity, and in that event all payments are to be returned, with interest. Members may receive loans to the amount of ninety-five per cent. of the sum accredited to them in the retirement fund, provided this aggregates two hundred dollars or over, and they surrender their certificates as collateral, so that members credited with one hundred dollars or more may receive a loan of fifty dollars as an emergency loan for three months during any one year.[56]
The following table shows the cost of the annuity per $100 for various ages according to the age at which the annuity begins:
MONTHLY COST OF $100 ANNUITY IN THE LETTER CARRIERS.[57]
Age at Entry Age at which Annuity Begins.
30 35 40 45 50 55 60 65 70
20 $13.47 $ 7.66 $ 4.83 $ 3.19 $ 2.16 $ 1.47 $ .99 $ .66 $ .45
30 28.31 11.97 6.63 4.05 2.59 1.68 1.08 .72
40 24.50 10.06 5.37 3.16 1.91 1.21
50 19.83 7.79 3.98 2.27
60 14.62 5.62
65 12.46
The new system differs in two important respects from the old. In the first place, the rates are graded according to age, and secondly, the new system provides that a member may retire five years after entrance, or thereafter at any successive period of five years up to seventy, and that his premiums shall be fixed according to the time of retirement and the period of his expectancy.
The disability certificates provide for an indemnity of eight dollars per week for loss of time resulting from disability caused by accident or sickness, a maximum of twenty weeks' disability during any one year.[58] However, should a member, after entrance into the association, become disabled permanently by "tuberculosis, paralysis, locomotor ataxia, dropsy, cancer, diabetes, sciatica, chronic rheumatism, chronic kidney or mental disease, or any other chronic disease," not especially named in the constitution, that may, in the judgment of the board of directors, cause permanent drain upon the funds of the Association, the said member shall receive the disability allowance for twenty weeks, after which all payments shall cease and his certificate shall be cancelled.[59] The disability insurance is thus really sick insurance.
To aid members who are too old to take advantage of the plan offered for securing annuities by their own financial efforts, the Association, in convention at Portland, September, 1905, endorsed an "extended leave of absence retirement plan."[60] The Post Office Department of the United States was requested to grant an extended leave of absence to "superannuated or permanently impaired" carriers on condition that they accept 40 per cent. of their regular salary, while retired, and that they pay the remaining 60 per cent. to the senior substitute in their office. Under the conditions of this plan, the applicant for retirement must submit himself to the board of examiners, who shall, after a physical examination by the physician of the board, determine his eligibility. The results of this plan would be two-fold: first, to relieve the detrimental effect of superannuation upon the efficiency of the service, and, secondly, to remove the fear of those who look for more drastic measures of relief. Aside from a regular pension grant by the Government this plan is considered the most efficient method of securing adequate protection for the superannuated who are too old to avail themselves of the opportunities offered under the system of annuities.[61]
The principal obstacle to the successful operation of disability insurance has been the difficulty experienced in its administration-largely on account of the impracticability of closely defining permanent or total disability. With almost every revision of the constitutions changes were made in the definition of the term "disability." Strict construction of the law by the executive officials led to dissatisfaction and often to appeals from their decisions to the insurance committees, or to the boards of trustees.[62] During the early years disability claims were often presented through subordinate officials, who were either unable to interpret the laws aright, or were unwilling to assume the responsibility of pronouncing the claims illegal. The Engineers, after a period of thirty-two years, in 1898 adopted a satisfactory definition of total disability: "Any member of this Association losing by amputation a hand at or above the wrist joint; a foot at or above the ankle joint; or sustaining the total and permanent loss of sight in one eye or both eyes, shall receive the full amount of his insurance."[63] Similar definitions of disability have been worked out by the other railway organizations. The Conductors add to this "total loss of the sense of hearing." The Switchmen include "the loss of four fingers of one hand, at or above the second joint." Disability, as defined by the Letter Carriers, means inability, because of sickness or accident, to perform the regular duties of a letter carrier.[64]
The most important development in the insurance systems of the railway unions has been the change in the amount paid from an uncertain to a fixed amount. This evolution is best illustrated in the history of the older organizations. In the period from 1868 to 1884 the amount paid was the sum collected by levying upon each member a certain assessment for each death or disability. The amount of the benefit therefore varied with the number of members. In the first stage, the Engineers paid one dollar per member upon each death and fifty cents in each case of disability, the Conductors paid one dollar per member upon each death or case of disability, while the Firemen paid fifty cents upon each death or case of disability.[65] The membership was small and the assessments were largely regarded as benevolent contributions. This phase is well illustrated by the early history of the benefit among the Conductors. The first benefit, paid in December, 1871, amounted to $48. During the first thirteen years of the department's activity 19 claims were paid. The last was $70, and the average amount paid was $88.[66] This system continued until 1881-1884, when a general revision of constitutions in these three brotherhoods limited the amount of insurance paid, and laid the foundation for issuing insurance certificates in fixed sums. In the second period, from 1883 to 1890, the number of assessments remained undetermined; but the amount of the benefit was limited to a fixed sum and all surpluses were placed in reserve. The Conductors and the Firemen took the initiative in this change and in the constitution of 1881 fixed the maximum amount for death or disability at $2000 and $1000, respectively; the Engineers, in the constitution of 1884, placed this maximum at $3000.
The Brotherhood of Railroad Trainmen, the Order of Railroad Telegraphers, the Switchmen's Union, and the Maintenance-of-Way Employees did not pass through the first period of development, but were organized during the second stage when the amount of insurance was limited. The Trainmen, the Telegraphers, and the Switchmen, in their first constitutions of 1883, 1887 and 1886, respectively, and the Trackmen (Maintenance-of-Way Employees) in 1892 fixed the amount paid at the definite sums of $300, $1000, $500 and $1000, respectively.[67] The Letter Carriers, although organized after the railway unions had fixed at a definite sum the amount of insurance to be paid, for several years paid only a sum equivalent to one assessment, at the regular rates, upon all the certificates in force at the time of the death of the insured.[68] The amounts paid on the second death, March 22, 1892, and on the third death, July 28, 1893, were $599.16 and $596.12, respectively.[69] Finally, in the third period, from 1890 to the present, the number of assessments was also fixed.
Another important change in the method of conducting these insurance systems was made in the decade from 1890 to 1900. The organizations with two exceptions have not adopted the policy of the insurance companies in varying the charge with the age of the insured. The device they have commonly used is the differentiation in the amount of insurance which may be taken in such a way that the older members may insure themselves only for a smaller amount. As early as 1886 the Firemen provided that only members under forty-five years of age might take insurance,[70] and in 1887 the Telegraphers adopted an age limit of fifty years.[71] The Conductors, under the constitution of 1890, provided that any member between the ages of fifteen and fifty might take $2500 of insurance against death or disability, and any member between the ages of fifty and sixty might take $1000 against death and $500 against disability.[72] In 1892 the Engineers introduced an age limit of fifty, and in 1894 further differentiated applicants so that those under forty years of age might secure $4500, those under forty-five years of age might obtain $3000, and all over forty-five and under fifty years of age, $1500.[73] Even now the Switchmen and the Trainmen offer equal amounts to members of all ages at the same rate.
The Maintenance-of-Way Employees and the Letter Carriers not only limit the age of the insured but also grade the charge per $1000 according to age. In the case of the former, members from eighteen to thirty-five years of age pay $1 monthly per $1000 of insurance; those from thirty-five to forty, $1.25; from forty to fifty, $1.50. Insurance rates in the Letter Carriers' Mutual Benefit Department have, with the exception of the first year of operation, been graded according to age. The minimum and maximum age limits are twenty-one and fifty-five years. The monthly rates vary according to age from 77 cents per $1000 of insurance at twenty-one years to $2.06 at fifty years.
The following table shows the regulations as to the amount and rate of insurance issued according to ages:
Organization. Age Classes. Amount of Insurance Issued.
Engineers Under 40 years. $4500
40 and under 45. 3000
45 and under 50. 1500
Conductors Under 35 years. 3000
35 and under 45. 2000
45 to 50. 1000
Firemen Under 45 years. 3000
45 and over. 1500
Trainmen No age restriction. 1350
Telegraphers 18 and under 45. 1000
45 and under 50. 500
50 and 60. 300
Switchmen No age restriction. 1200
Maintenance-of-Way Employees 18 and under 45 at graded rates. 1000
Letter Carriers 21 to 55 at graded rates. 1000 to 3000
The necessity for a reduction in the amount of insurance issued to the older men was more urgent among the Engineers and the Conductors than among the other railway organizations, since the latter form the school of apprenticeship from which the engineers and the conductors are drawn. In the Trainmen's and the Switchmen's organizations the young men contribute materially to the cost of insuring the old men. This charge is not so heavy as might appear at first sight, since in both organizations many members withdraw when they are promoted to higher positions in the service. In grading the amount of insurance offered according to age, the brotherhoods have made a compromise between an assessment on each individual according to the liability incurred, and a system in which the welfare of the individual is regarded as entirely at one with the welfare of the membership. The principle of solidarity is still recognized, but under limitations.
Originally these unions collected assessments to meet death or disability claims after the occurrence of the death or disability. Considerable delay was thus entailed in the final settlement. All of them, with the exception of the Engineers, now hold reserve funds for the payment of claims. The Conductors took the initiative by providing in the constitution of 1881 that the grand secretary-treasurer, on paying a claim, should levy the regular assessment upon each member to be held in reserve to pay the next claim.[74] This was followed in 1885 by a regulation of the Trainmen which required all members to pay in advance one death assessment. This was repealed by the convention of 1886; but the convention of 1888 re-enacted the law. The Firemen provided in 1888[75] that the subordinate lodges should collect all dues quarterly in advance.
In determining the amount of insurance offered, the organizations have had necessarily to consider what their members can afford to pay. Only a certain per cent. of earnings can be set aside for insurance purposes, and that amount has been determined only by the long experience of the organizations. Again, the insurance must be in an amount which accords with the idea of the workmen of what constitutes a satisfactory provision against death or disability. The amount offered must for this reason be comparable with that offered by insurance companies.
The following table shows the minimum and the maximum amounts paid by the several brotherhoods:
Brotherhoods. Minimum Amount. Maximum Amount.
Brotherhood of Locomotive Engineers $1500 $4500
Order of Railway Conductors 1000 3000
Brotherhood of Locomotive Firemen 1500 3000
Brotherhood of Railroad Trainmen 500 1350
Order of Railroad Telegraphers 300 1000
Switchmen's Union 600 1200
Maintenance-of-Way Employees 500 1000
Letter Carriers' Association[76] 1000 3000
Originally, except in the case of the Letter Carriers, the maximum amounts paid were much lower than at present. As the membership increased, a greater benefit was paid. In 1887 the Conductors' maximum insurance was $2500, and in 1888 the Firemen's, the Trainmen's, and the Switchmen's was raised to $1500, $1000 and $800, respectively. Each of the railway organizations has since raised the maximum; the Engineers to $4500 in 1892; the Conductors to $5000 in 1893, reduced since 1899 to $3000; the Firemen to $3000 in 1903; the Trainmen to $1350 in 1903; and the Switchmen to $1200 in 1901. While the Engineers, the Conductors, and the Firemen offer insurance in relatively large amounts, only a small per cent. of the membership take out certificates for the larger sums. On June 30, 1904, of the 54,434 Firemen, 43,228 carried $1500 certificates, while only 717 carried $2000 certificates, and 824, $3000 certifi cates.[77] On November 1, 1904, of the 41,124 Engineers, 24,187 carried $1500, and 10,337 and 1602 carried $3000 and $4500, respectively.[78] In each of these organizations the $1500 certificates are thus in greatest demand. The rule restricting the amount that members over forty-five years of age may take lessens the number of policies for larger sums, but it is evident that the great majority of members in these unions do not care to insure for more than $1500. The Letter Carriers are an exception to this rule. The report of the Chief Collector for December 1, 1905, shows that out of 5284 insurance certificates in force there were 473 $1000 certificates, 386 $1500 certificates, 541 $2000 certificates, and 3884 $3000 certificates.[79]
The advantage of insurance as a means of securing identity 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.
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 assessments 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 re?stablishing a compulsory system.
In all the organizations there is a class of members, called non-beneficiary, who are not eligible to the insurance departments because of partial disability or because of having passed the age limit. The Brotherhood of Locomotive Firemen provides that the non-beneficiary member shall be entitled to all the privileges of the subordinate lodge, but shall not take part in the national convention or in any way participate 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.
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.
The cost of insurance per $1000 varies greatly in the different organizations, as may be seen by the following table:[84]
Organizations. Fiscal Year Ending. Cost of Insurance per $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 Employees December 31, 1903 12.00 according to age
/0/6399/coverbig.jpg?v=6e823886f14a8813f7d26fa8c084da34)
View More Comments on App
/0/69834/coverbig.jpg?v=fcc364f58e98a2ca005385db2508a9f0)
/0/92672/coverbig.jpg?v=915fd96d31da7f7db31b5de342251ad7)
/0/97518/coverbig.jpg?v=af5c7bafdb4ddef31911cee9661cdc51)
/0/40781/coverbig.jpg?v=c2164aac07767e17c371a8bac71db113)
/0/85173/coverbig.jpg?v=95f4c350fdd6a7bee4bd59ff686ca121)
/0/93997/coverbig.jpg?v=ad7c2a32c5e7bb960467f306cc21ba72)
