The following is an excerpt from my paper “American Welfare Reform in Historical Perspective: Marriage, the Family, and Mutual Aid Societies,” which you can download from my Academia.edu profile (see side bar for link). Here I summarize the history of American benefit societies (also known as “fraternal societies” and “mutual aid societies”) in welfare provision and poverty alleviation until the early 20th century. And yes, I do plan on blogging more frequently from now on. – Karl “With A K”
Besides the family and religious institutions, another source of welfare provision was the mutual aid society. Mutual aid societies are as old as the American colonies. In fact, the Freemasons (commonly known as Masons) were the first to establish mutual aid societies in the American colonies. Early Mason members consisted mainly of Americans from the higher classes; this changed with the American Revolution, as the Masons spread to establish lodges wherever chartered members had been stationed. Many mutual aid societies established in the nineteenth century were based on the model set by the Masonic mutual aid societies (Beito 1994, 55).
Unlike modern insurance companies, mutual aid societies “were controlled by their members”, organized at the local level via lodges (Beito 1990, 712). While secret societies “specialized in the social and informal components of mutual aid”, the formal aid offerings of mutual aid societies “had a more substantial social welfare impact” (Beito 1990, 712, 713). A 1910 article noted that the main purpose of mutual aid societies was “insurance against want, the poorhouse, charity and degradation” (Beito 1990, 713). Even in 1931, mutual aid societies provided aid for (at least) ten times as many individuals as mothers’ pensions did (Beito 1990, 714). Death benefits (akin to life insurance) were the keystone of mutual aid assoctiations for a long time; however, societies started offering health and accident insurance in the early twentieth century (Beito 1990, 713, 714).
Around the early twentieth century, mutual aid societies started to decline in membership. According to numbers from the National Fraternal Congress, the number of associated lodge was at 120,000 in 1925. Membership in mutual aid societies then declined through the next eight decades, the pace of which increased during and after the Great Depression (Beito 1994, 59). Twenty percent of member lodges shut down during the 1970’s. Only 52,000 lodges remained in 1986 (Beito 1990, 724). Founded in 1886, the American Fraternal Alliance reports that only sixty-three member societies exist to date (American Fraternal Alliance).
Historians have given several explanations for the decline in mutual aid societies (Beito 1990, 724–729). The most prevalent is actuarial problems as a source of stress on fraternal societies. Similar to problems in today’s Social Security program, letting members pay a basic premium regardless of risk or age came “under severe strain when the membership aged” (725). However, this could not explain how many smaller African–American mutual aid societies were still able to operate efficiently on this system.
David Beito highlights two of these explanations for contemplation. The first, proposed by Roger L. Ransom and Richard Sutch, is that legal prohibitions on certain forms of insurance incentivized “consumer dependency on employer benefit plans and government programs”. Beito notes that this thesis requires development societies (Beito 1990, 726).
A second thesis Beito considers posits a causal relationship between the early expansion of government welfare and the decline of mutual aid societies. According to Beito, the historical evidence “is fairly clear” that “weakened mutual aid coincided with the growth of government’s social–welfare role” (Beito 1990, 726). Two types of government aid that predated the New Deal were workers’ compensation and mothers’ pensions. The number of states offering the later type grew from twenty in 1913, to thirty-nine in 1919, and all but four in 1931 (Beito 1990, 726–727). While correlation is not causation, Beito notes that since mutual aid societies “had [historically] been a creature of necessity,” the government’s increased provision of welfare “must have undermined much of this necessity” that characterized mutual aid societies (Beito 1990, 727).
Beito, David T. “Mutual Aid for Social Welfare: The Case of American Fraternal Societies.” Critical Review 4, no. 4 (1990): 709-736.
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