Published by EH.NET (August 1, 2000)
David T. Beito, From Mutual Aid to the Welfare State: Fraternal Societies
and Social Services, 1890-1967. Chapel Hill: University of North Carolina
Press, 2000. xv + 320 pp. $55.00 (cloth), ISBN: 0-8078-2531-x; $24.95 (paper),
ISBN: 0-8078-4841-7.
Reviewed for EH.NET by J. C. Herbert Emery, Department of Economics, University
of Calgary.
David Beito’s From Mutual Aid to the Welfare State is an impressive
examination of North American fraternalism and the extent of mutual aid
provided by fraternal orders over much of the twentieth century. Readers will
be struck by the range and scale of social services and types of insurance
provided by these organizations. In contrast to earlier studies of fraternalism
that have emphasized the exclusionary bases of these societies and that have
concluded that fraternal methods of insurance were failed methods, Beito
(History, University of Alabama) presents fraternal social insurance
initiatives as successful in covering much of the needy (poor) population in an
efficient manner. In the end, Beito argues that these successful fraternal
methods of dealing with economic need wilted beneath a growing web of
government regulation and were crowded out of the insurance markets by the rise
of government social insurance.
The strength of Beito’s work is the detailed case studies of the histories and
social service activities of several organizations. For example, the
examinations of children’s homes built and operated by the Loyal Order of the
Moose (Chapter 3) and the Security Benefit Association (Chapter 4) present the
diversity of fraternal approaches to aiding the “orphans” of their unfortunate
members. Despite the differences across fraternal children’s homes, both
contrasted sharply with character of publicly-run orphanages, and in this sense
provide examples of progressive approaches to social services. Beito then
provides some fascinating data on the economic outcomes of “alumni” of the
homes suggesting that fraternal orders were successful in providing for their
members’ orphans.
Similarly, Beito’s examinations of fraternal hospitals and sanitariums in
Chapters 9 and 10 provide a fresh perspective on how voluntary action could
provide needed hospital services. Given the perception of fraternalism as
largely a relatively well off, white man’s movement, Chapter 10’s examination
of hospitals built and operated by black fraternal orders provides a challenge
to some of the prevailing views of fraternal organizations. Clearly fraternal
mutualism was effective for meeting some of the economic needs for many
non-whites and poorer members of American society.
If there is a weakness with Beito’s book it is that he presents a peculiar view
of American fraternalism that is a product of his primary sources for evidence,
which are largely drawn from the post-World War I period for life insurance
fraternal orders. A primary example of the peculiar picture of American
fraternalism that Beito paints is his repeated claim that American and British
fraternal organizations differed substantially in that the British friendly
societies “focused almost exclusively on sick and funeral benefits and medical
services.” While the sick and funeral benefits were found in American
societies, Beito maintains that the “provision of insurance (life) was the most
visible manifestation of fraternal and mutual aid” (p. 2). Further, Beito’s
evidence reveals that the American organizations (to varying degrees) expended
a great deal of resources on hospitals and homes for orphans and the aged.
Beito’s description of the difference between British and American mutualism is
definitely accurate when comparing the American life insurance orders with the
British Friendly Societies that by definition provided only sick and funeral
benefits. It is probably true when comparing American fraternal organizations
generally with British friendly societies for the post-WWI period, but it is
still a very misleading general characterization of American fraternalism.
Beito provides little or no information on the American “friendly societies”
like the Independent Order of Odd Fellows or the Knights of Pythias that were
the two largest fraternal organizations providing sick and funeral benefits
before WWI and which had limited provisions of life insurance. Clearly these
two organizations were very much like the British societies in their focus on
sick and funeral benefits. Ignoring the IOOF and KP is not necessarily a minor
oversight. The IOOF had a membership 2.5 times the size of the Loyal Order of
the Moose and 4 times the size of the Fraternal Order of Eagles, two of the
larger organizations that Beito emphasizes in his study. The conclusion that
American fraternalism was not so exclusively focused on sick and funeral
benefits after WWI is largely more true because the IOOF and KP were
dismantling their sickness insurance arrangements and operating homes.
Reflecting these changes, the IOOF had considered the sick benefit as its
defining feature in the nineteenth century. By the 1920s, many Odd Fellows saw
the home program as the IOOF’s “crowning achievement” and the “brightest jewel
in its diadem.” Thus, if there is a distinction between British and American
fraternalism it is likely after WWI once the British friendly societies were
official sickness/health insurance providers under the Approved Societies
system and once the American fraternal orders were busy getting out of the
benefits business and into homes for orphans and the aged.
Beito’s focus on homes, hospitals, health insurance and life insurance also
leads to a misleading explanation for the decline of fraternalism. Beito
highlights the negative impact of insurance regulation on the fraternal
insurers and the “crowding out” of fraternal insurance by government insurance
activities and tax treatment of commercial insurance premiums. As such, in his
view most of the decline in fraternal insurance dates from the late 1920s,
through the 1930s and into the 1940s and 1950s. Once again, this may be an
accurate description for the life insurance orders, and for the case of homes
and other fraternal services, but it fails as an explanation for fraternal
benefit activities more generally. Fraternal sick benefit arrangements, which
were the hallmark of the largest orders in North America, were in decline as
early as the 1890s when the Knights of Pythias eliminated the requirement that
all subordinate lodges had to provide a stipulated sick benefit. The IOOF,
which in 1863 declared its stipulated sick benefit to be the order’s
“distinguishing characteristic,” had by 1925 declared that its stipulated sick
benefit was a “vitiation” of Odd Fellows’ principles and called for the
abolition of the benefit. In 1925 the IOOF’s supreme body eliminated the
compulsory requirement that IOOF subordinate lodges pay sick benefits following
at least three decades over which the generosity of the benefit had been
allowed to erode, and in many cases was reduced by limiting lengths of time the
full stipulated benefit could be claimed. In both the IOOF and KP examples, the
decline of the sick benefit arrangement looks identical to that described for
the Loyal Order of the Moose in 1953 in Beito’s final chapter “Vanishing
Fraternalism.” The difficulty for Beito’s explanation for the decline of
fraternal benefits is the fact that common developments across orders differed
in timing by several decades. The IOOF and KP withdrawals from the sickness
insurance market pre-date the rise of government regulation of fraternal life
insurance and the rise of government and other non-profit sources of health
insurance and hospital insurance.
Overall, Beito’s book is a worthwhile read for anyone interested in pre-Welfare
State social insurance, life insurance and fraternalism. For those readers
interested in the history of life insurance Beito clearly lays the foundation
for an important study into the interaction of fraternal and commercial
providers of life insurance. At the same time, readers should heed the cautions
that Beito gives in his book; first just as he suggests that “any quest to find
a ‘typical’ fraternal orphanage is probably fruitless” (p. 87) so too is any
quest to find a ‘typical’ fraternal order. Second, as he cautions on page 225
(in relation to the interpretation of a table which pertains to his study
generally), a reader may get an “inadequate picture of the general state of
fraternalism because it does not include information on the leading orders
supplying sick and funeral benefit.”
Herb Emery is Associate Professor of Economics at the University of Calgary.
He is the co-author (with George Emery) of the recently published A Young
Man’s Benefit: The Independent Order of Odd Fellows and Sickness Insurance in
the United States and Canada, 1860-1929 (Montreal & Kingston:
McGill-Queen’s University Press, 1999).