Restoring Charity: Fraternal Societies As an Alternative to the Welfare State

In the last decade, Marvin Olasky, Carolyn Weaver, and other scholars have added much to our knowledge of the impressive role played by voluntary institutions in the history of American social welfare. They have catalogued a record of diversity and innovation that stands in clear contrast to the shortcomings of modern welfare bureaucracies.

Despite their impressive research, older and more conventional attitudes of social welfare history still retain a powerful hold. A case in point is the view expressed in an article earlier this year in U.S. News and World Report titled "Myths of Charity." The authors conclude that it "is highly doubtful that charities could pick up all or even most of the slack from the $76 billion to $450 billion in spending cuts now being proposed by Democrats and Republicans in Washington." Citing examples from history, they imply that Americans have never relied (and thus can never rely) on organized charities to do the job of the welfare state.

Although many of the findings of the article are open to challenge, the authors raise at least one valid issue. It is indeed true that when measured by dollar amounts, the combined efforts of traditional charities at the turn of the century, such as the Salvation Army, were small when compared to those of the modern welfare state.

The chief problem with such an approach is that it entirely misses the point. It fails to come to grips, for example, with the fact that before the rise of the welfare state, Americans of all classes shared a deep aversion to dependence on either private organized charity or governmental relief. Indeed, there was a great stigma in the folk culture attached to any form of what today would be called hierarchical relief. Hierarchical relief can be defined as aid dispensed through large, bureaucratic, and formalized institutions. An essential characteristic is that those who control the purse strings are usually from significantly different geographical, ethnic, and income backgrounds than the recipients.

While most Americans at the time conceded that such agencies performed necessary and positive functions, even the poorest of the poor generally avoided them. Organized public and private charity, as Marvin Olasky has pointed out, was widely regarded as a last resort and then only a temporary one. As a result, the size of the dependent population remained infinitesimal by today's standards. According to a study by the U.S. Census Bureau in 1905, only one out of over one hundred fifty Americans (excluding prisoners) resided in a public or private institution of any kind. The category of institution included all almshouses, asylums, orphanages, and hospitals.

The numbers of Americans dependent on outdoor relief were also small. As late as 1931, about 93,000 families received mother's pensions, the state-funded antecedents to AFDC. By comparison, the current AFDC case load includes 4.6 million parents.

Paradoxically, this rise in the welfare rolls has occurred despite a massive decline in poverty rates since the early twentieth century. This raises an obvious question: How were Americans once able to avoid such dependence? Part of the answer is that they could rely on a wide diversity of self-help and mutual-aid arrangements, most of which no longer exist.

I have classified these arrangements under the category of reciprocal relief. In contrast to hierarchical relief, reciprocal relief tended to be decentralized, spontaneous, and informal. Another attribute was that the donors and recipients often came from the same, or nearly the same, walks of life. Today's recipient could be tomorrow's donor and vice versa. Two leading examples of reciprocal relief during the period were informal giving, often by neighbors and friends, and assistance provided through church congregations.

Other major sources of reciprocal relief during the period were fraternal societies. They thrived among people from a wide range of ethnic backgrounds including native whites, blacks, and immigrants. Some names of leading societies were the Knights of Pythias, the Sons of Italy, Polish National Alliance, and Independent Order of Odd Fellows.

The activities of fraternal societies dwarfed those of organized charity and governmental poor relief bureaucracies. In 1920, for example, there were over 10,000 fraternal orders in the United States with roughly 100,000 separate lodges. That year, about 18 million Americans (most of them wage earners) were members; roughly 30 percent of all adults over age twenty. By way of contrast, fewer than 10 percent of workers at the time belonged to labor unions.

While fraternal soceties differed widely in their methods and goals, most shared a common set of characteristics. In general, they featured a decentralized lodge system, some sort of ritual, and the payment of benefits in times of sickness and death. Essentially, fraternal orders can be defined as mutual insurance agencies for the provision of social welfare to members and their families.

By 1910, they increasingly included treatment by a doctor in their menu of services. The favored method was for an individual lodge to contract with a general practitioner to treat members and their families on a per-person flat-charge basis. It was not dissimilar to a modern HMO.

Two of the most prominent organizations to rely on this system, known at the time as lodge practice, were the Foresters and the Fraternal Order of Eagles. The cost of this service was very low. The Foresters charged two dollars a year for a doctor's care, and the Eagles charged one dollar. In the case of the Eagles, coverage extended to the immediate family of the member and included home visits.

Lodge practice established a particularly strong foothold in urban areas. In the lower east side of New York City, for example, 500 doctors had contracts with Jewish lodges alone. During the 1920s, there were an estimated 600 fraternal societies among blacks in New Orleans that offered the services of a physician.

In most cases, lodge practice entailed nothing more extensive than basic primary care. Only a handful of societies experimented with more ambitious programs, such as hospitalization. Remarkably, two that did, El Centro Asturiano and El Centro Espanol, were in the same location: Tampa, Florida. They shared another characteristic in common. Both were competitors in a spirited rivalry for the loyalties of Cuban and Spanish cigar workers who lived in the area.

Probably the largest fraternal hospital among native whites was that of the Security Benefit Association based in Topeka, Kansas. During the 1910s, the Association launched a campaign to protect members from the "cradle to the grave." In addition to a hospital of 300 beds, it built an orphanage, school, home for the elderly, and hotel. All of these facilities were located in Topeka on the current site of the Menninger Institute.

The hospital enjoyed particularly extensive use. In 1933, for example, it was the scene of over 1,200 operations of which about 500 were major. Each patient paid in total charges a ten-dollar entrance fee and one dollar a day. Although the hospital itself lost money, it was generally considered a profitable venture because it attracted new customers for life insurance, which was always the main focus of the Association.

Most leaders of fraternal societies rejected the view that their benefits were, in any sense, charity. A typical expression of this attitude can be found in an article from 1905 written by an official of the Ladies of the Maccabees. This society was the largest fraternal society controlled exclusively by women and at its height had over 200,000 members. The author of the article asserted that "in fraternity, there is no charity, no humiliation in accepting aid for it is the right of the member in distress to receive that for which he or she has contributed and the recognized duty of the other members to give." At the same time, she rejected the idea that fraternal benefits were in any sense open-ended entitlements. To the contrary, she specified that members forfeited their right to help unless they obeyed the rules of the organization.

By the 1930s, fraternal societies entered a period of decline from which they never recovered. While lodge membership rebounded somewhat in the 1940s, it did not return to its pre- Depression highs. Historians have pointed to several possible explanations, including the rise of commercial insurance among the working class and the lure of competing forms of entertainment, such as the radio and movies. While all of the these probably give part of the answer, they do not tell the whole story.

Another contributor to the decline of fraternal orders was the role of the medical associations. By 1910, the profession had launched an all-out war against lodge practice, and local medical societies imposed manifold sanctions against doctors who accepted these contracts. One highly effective method of enforcement was to pressure hospitals to close their doors to members of offending lodges. By 1914, Dr. Robert Allen in the Journal of the American Medical Association could write, with but slight exaggeration, that "there is scarcely a city in the country in which medical societies have not issued edicts against members who accept contracts for lodge practice."

While the sanctions brought to bear by the medical profession were crucial, other factors were also at work in the decline of fraternal societies. Unfortunately, a paucity of hard evidence on cause-and-effect makes any discussion of this subject highly speculative. One intriguing line of research would be to explore the relationship, if any, to the rise of the welfare/regulatory state. Specifically, it might be asked: Is there any evidence that tax-funded social programs crowded out fraternal services, such as lodge practice?

One fact is clear. The first three decades of the twentieth century brought a rapid and unprecedented expansion in the government's welfare role. The two leading sources of growth were widows' pensions and workers' compensation. In 1910, no state had either program, but by 1931 both were nearly universal. During the 1920s alone, the numbers of individuals on the widows' pension rolls more than doubled. This expansion of governmental services, as mentioned above, coincided with the decline of fraternal membership.

For what it is worth, more than a few leaders of fraternal societies posited a relationship between these two trends. As the magazine of the Fraternal Order of Eagles put it in 1917, "the State is doing or planning to do for the wage-earner what our Order was a pioneer in doing eighteen years ago. All this is lessening the popular appeal of our beneficial features. With that appeal weakened or gone, we shall have lost a strong argument for joining the Order; for no fraternity can depend entirely on its recreational features to attract members."

In contrast to their modern counterparts, opinion leaders in the social-welfare field at the turn of the century often displayed a keen appreciation for the impact of mutual aid and self-help. In 1913, for example, Edward T. Devine, a prominent social worker, reminded his colleagues that millions of poor people were able to both survive and progress without recourse to organized charities and governmental aid:

As Devine's comments indicate, institutions of reciprocal relief and self-help, such as fraternal societies, were once at the center of social welfare. Today, they have been pushed to the margins. As a result, Americans have become increasingly dependent on the vagaries of hierarchical organizations controlled by government.

I would be the first to argue against placing too much trust in so-called lessons of history. At the same time, past experience gives ample cause to be skeptical of recent proposals for welfare reform. These proposals are bound to fall short of their goals unless they create an environment in which Americans will once again be motivated to engage in mutual aid and self-help for their own protection. If the historical record illustrates anything, it is that such arrangements cannot be created through political fiat.

David T. Beito is assistant professor of history at the University of Alabama. He received his doctorate at the University of Wisconsin and has taught at George Mason University in Fairfax, Virginia, and at the University of Nevada-Las Vegas. He is the author of Taxpayers in Revolt: Tax Resistance During the Great Depression (1989). His current research focuses on the historical role of fraternal lodges as providers of social welfare.