From mutual aid to the welfare state: fraternal societies and social services, 1890-1967

Abstract

From Mutual Aid to the Welfare State: Fraternal Societies and Social Services, 18901967, by David T. Beito, 2000, Chapel Hill: University of North Carolina Press. Civil society encompasses the variety of human interactions that fill the social, economic, and political space between the institutions of the state and the private life of self and family. In recent years, a number of public intellectuals have raised concerns about the decline of capital, the network of connections among individuals, within civil society. They selectively point to particular sorts of organizational activity in apparent decline and seek to link the implied loss of social capital to declines in everything from health to democracy. Fraternal societies, characterized by the strong reciprocal relations and trust so valued by social capital theorists, experienced substantial growth and then decline in importance and membership over the last century. The author provides an interesting, extremely well researched, and insightful history of American fraternal societies during this period. His analysis calls for reconsideration of the too easily dismissed hypothesis that the growing welfare state helped displace organizational participation, and it suggests the importance of interpreting the economic environment in assessing the character of civil society. As a primary function of the fraternal organizations was the provision of insurance to their members, readers of the Journal of Risk and Insurance with a historical bent are likely to find this account interesting. From Mutual Aid to the Welfare State shows the author's skill as a professional historian. He draws on a variety of primary documents, statistical sources, and interviews to tell a very rich story. He begins with overviews of the mutual aid societies, such as the Loyal Order of the Moose, the Independent Order of Odd Fellows, and the Ladies of the Maccabees, that were so prominent in the life of Americans, blacks and whites, men and women, during the early part of the last century-in 1920 membership was as high as one out of three adult men, and societies provided more than $9 billion in life insurance coverage (p. 2). The fraternal organizations shared a belief in the desirability of reciprocal aid over charity and dependence, and promoted personal habits of thrift and responsibility Almost all of the societies provided some form of insurance-life, burial, sickness, medical, and even tontines. Subsequent chapters provide detailed accounts of several sorts of in-kind provision of assistance: Homes for children of deceased members (Mooseheart and the Children's Home of the Security Benefit Association), medical services through capitation contracts with doctors (so-called lodge practice), the creation of hospitals and sanitariums (the hospital established in Kansas for members by the Security Benefit Association, the hospital established in Mississippi for black members by the International Order of the Twelve Knights and the Daughters of Tabor, and the tuberculosis sanitarium established in Colorado for members by the Modern Woodman of America). The final chapters consider the response of the fraternal organizations to the stress of the Great Depression and postwar trends in membership. The development of the fraternal organizations cannot be understood without considering their role in providing insurance to their members. The oldest fraternal societies provided funeral benefits so that members could avoid the disgrace of paupers' graves. With industrialization, sickness benefits, which provided dollar payments during periods when illness or injury prevented members from working, became common. Interestingly, moral hazard was reduced by not guaranteeing benefits and by tying them to responsible behavior; adverse selection was controlled through conditions of membership that stressed personal responsibility. Many societies provided life insurance. Rather than maintain reserves, societies originally relied on occasional assessments of members to cover losses. …