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).