Beneficiary Features of American Trade Unions Part 2

[Footnote 34: The Postal Record, Vol. 4, pp. 8, 118, 119.]

[Footnote 35: _Ibid._, Vol. 5, p. 528.]

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 a.s.sociation 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 a.s.sociations for the payment of death and disability insurance. The growth of the national benefit department was thus r.e.t.a.r.ded, 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 const.i.tution in December, 1868, that the order should never become a weekly benefit a.s.sociation.[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 const.i.tutions provide that the weekly benefits shall be levied, collected, and distributed according to national rules.

[Footnote 36: Proceedings of the Order of Railway Conductors of America, 1868-1885 (Cedar Rapids, 1888), p. 207.]

[Footnote 37: _Ibid_., p. 21.]

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.

===================================================================== | | Claims Paid. | Per Cent. of| Disability Name of | Term. |------------------| Disability| Claims per Organization| | Death.|Disability| Claims. | 1000 of | | | | | Total | | | | | Members.h.i.+p.

------------|----------|-------|----------|-------------|------------ 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 ---------------------------------------------------------------------

[Footnote 38: Proceedings of the Seventh Biennial Convention, 1905 (Cleveland, n.d.); Report of Secretary-Treasurer, p. 124.]

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 members.h.i.+p 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 |Number |Number from|Percentage of|Percentage of|Percentage Claims |from | Accidental| Claims from | Claims from | of Claims |Natural| Causes | Natural | Accidental | from all |Causes | | Causes | Causes. | 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]

[Footnote 39: Proceedings of the Seventh Biennial Convention, 1905 (Cleveland, n.d.), pp. 65-66.]

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 a.s.sociation founded by the Brotherhood on December 3, 1867, provided for a.s.sessments of 50 cents per member for the benefit of each totally disabled member--one half the amount a.s.sessed 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' a.s.sociation, 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 a.s.sociation, known as the "Total Disability Insurance a.s.sociation," for furnis.h.i.+ng insurance against disability to members. An entrance fee of $2 was required and the a.s.sessment was fixed at $1.[42] In 1876 the convention dissolved the Total Disability Insurance a.s.sociation, and the Engineers did not succeed in establis.h.i.+ng a satisfactory system of disability insurance until 1884, when the prosperous condition of the a.s.sociation 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 a.s.sociation inst.i.tuted by the first convention paid a disability benefit equal to the death benefit. The law under which the a.s.sociation 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.

[Footnote 40: Locomotive Engineers' Journal, Vol. 1, p. 9.]

[Footnote 41: Const.i.tution, 1869, in Locomotive Engineers' Journal, Vol.

4, p. 31.]

[Footnote 42: Locomotive Engineers' Journal, Vol. 5, p. 11; Vol. 7, pp.

28, 60.]

[Footnote 43: _Ibid_., Vol. 7, pp. 28-60; Vol. 11, p. 78; Const.i.tution, 1884 (Cleveland, 1884).]

[Footnote 44: Proceedings of the Order of Railway Conductors of America, 1868-1885 (Cedar Rapids, 1888), p. 19.]

The difficulties experienced by the Engineers and the Conductors in establis.h.i.+ng 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 const.i.tutions, 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 a.s.sessments paid and shall deduct the amount of these a.s.sessments 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.

[Footnote 45: Const.i.tution, 1903 (St. Louis, ii. d.), p. 106.]

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 a.s.sociation organized a Retirement a.s.sociation for the payment of superannuation benefits to the aged and disabled members.[46] The a.s.sociation 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 a.s.sociation 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 ent.i.tled to receive annually the amount of his certificate. The retirement might also take place after thirty years' service, or after thirty years'

members.h.i.+p in the a.s.sociation, 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 circ.u.mstances would not allow them to pay the sum of thirty years'

premiums. The concession was allowed only for a period of ten years.[49]

[Footnote 46: The Postal Record, Vol. 15, pp. 235, 254-257.]

[Footnote 47: The Postal Record, Vol. 15, p. 301.]

[Footnote 48: _Ibid_., Vol. 17, p. 6.]

[Footnote 49: _Ibid_., Vol. 15, p. 302.]

The scheme also included provision for disability. After January 1, 1906, any member of the Retirement a.s.sociation 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'

members.h.i.+p 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 a.s.sociation; and in such event he became ent.i.tled to receive seventy-five per cent. of the annual premiums paid to the a.s.sociation. 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 a.s.sociation 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 a.s.sociation.[50]

[Footnote 50: The Postal Record, Vol. 17, p. 6.]

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 a.s.sociation 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]

[Footnote 51: _Ibid_., Vol. 19, p. 7.]

[Footnote 52: _Ibid_., Vol. 16, p. 237.]

[Footnote 53: _Ibid_., Vol. 18, p. 215.]

[Footnote 54: _Ibid_., Vol. 18, pp. 214-215.]

Under the new law, which became operative January 1, 1906, the Retirement a.s.sociation was authorized to offer insurance against disability and old age. The members are, therefore, divided into two cla.s.ses, annuity members and disability members, but those duly qualified may hold both annuity and disability certificates. Any member of the National a.s.sociation 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 ent.i.tled 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]

[Footnote 55: Const.i.tution of Retirement a.s.sociation, 1905, Art. 7; Postal Record, Vol. 19, pp. 2-6.]

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]

[Footnote 56: The Postal Record, Vol. 19, p. 2.]

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 | Age at which Annuity Begins.

at |--------------------------------------------------------------- Entry| 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 ----------------------------------------------------------------------

[Footnote 57: _Ibid_., Vol. 17, p. 11.]