FACING
OLD AGE
_SOME RECENT BORZOI BOOKS_
IN DAYS TO COME
_By Walter Rathenau_
EARLY CIVILIZATION:
AN INTRODUCTION TO ANTHROPOLOGY
_By Alexander A. Goldenweiser_
HUMAN NATURE IN POLITICS
_By Graham Wallas_
HOW ENGLAND IS GOVERNED
_By Rt. Hon. C. F. G. Masterman_
PRINCIPLES OF SOCIAL PSYCHOLOGY
_By James Mickel Williams_
THE HISTORY OF SOCIAL DEVELOPMENT
_By Dr. F. Müller-Lyer_
THE FOUNDATIONS OF SOCIAL SCIENCE
_By James Mickel Williams_
_For sale at all bookshops
For further particulars address_
ALFRED A. KNOPF, _Publisher_ NEW YORK
FACING OLD AGE
A STUDY OF OLD AGE DEPENDENCY IN THE UNITED STATES AND OLD AGE PENSIONS
BY
ABRAHAM EPSTEIN
Formerly Director Pennsylvania Commission to Investigate Old Age
Pensions
[Illustration: Black oval emblem containing a white silhouette of a
running greyhound with legs extended in mid-stride.]
NEW YORK ALFRED·A·KNOPF MCMXXII
COPYRIGHT, 1922, BY
ALFRED A. KNOPF, INC.
_Published, March, 1922_
_Set up and printed by the Vail-Ballou Co., Binghamton, N. Y._
_Paper furnished by W. F. Etherington & Co., New York, N. Y._
_Bound by the H. Wolff Estate, New York, N. Y._
MANUFACTURED IN THE UNITED STATES OF AMERICA
“The days of our years are three score years and ten; and if by reason
of strength they be four score years, yet is their strength labour and
sorrow; for it is soon cut off and we fly away.”—90th Psalm.
CONTENTS
INTRODUCTION BY JOHN B. ANDREWS xiii
PART I
ACTUAL CONDITION OF THE AGED
CHAPTER 1.—AFTER SIXTY—WHAT? 1
CHAPTER 2.—THE INDUSTRIAL SCRAP-HEAP, 8
CHAPTER 3.—PASSING BEYOND THE HALF CENTURY MARK, 22
CHAPTER 4.—THE COST OF FOLLOWING THE OSTRICH POLICY, 46
a—THE COST TO THE TAX-PAYER, 46
b—THE COST TO THE INSTITUTIONAL INMATES OR
RECIPIENTS OF CHARITY, 51
c—THE COST TO INDUSTRY, 58
d—THE COST TO THE YOUNGER GENERATION AND SOCIETY IN
GENERAL, 59
PART II
CAUSES OF OLD AGE DEPENDENCY
CHAPTER 5.—INDIVIDUAL CAUSES, 67
a—SUPERANNUATION, 68
b—WANING EARNING POWER, 69
c—LACK OF FAMILY CONNECTIONS, 71
d—INDUSTRIAL ACCIDENTS AND SICKNESS, 71
CHAPTER 6.—THE CHASM BETWEEN THE COST OF LIVING AND WAGES, 85
CHAPTER 7.—SOCIO-ECONOMIC AND MORAL CAUSES, 124
a—UNEMPLOYMENT, 124
b—STRIKES, 130
c—GENERAL MISFORTUNE, 133
d—THE PART PLAYED BY MORAL CHARACTER, 135
PART III
EXISTING METHODS OF RELIEF
CHAPTER 8.—INDIVIDUAL SAVINGS AND INDUSTRIAL PENSIONS, 141
a—INDIVIDUAL SAVINGS, 141
b—INDIVIDUAL PENSIONS, 147
c—RAILROAD PENSIONS, 158
CHAPTER 9.—FEDERAL, STATE & MUNICIPAL EMPLOYÉS’ PENSIONS, 162
a—INTRODUCTION
b—FEDERAL EMPLOYÉS’ PENSIONS, 167
c—MILITARY PENSIONS, 172
d—PENSIONS FOR STATE EMPLOYÉS, 176
e—MUNICIPAL EMPLOYÉS’ PENSIONS, 178
f—TEACHERS’ RETIREMENT FUNDS, 183
CHAPTER 10.—OLD AGE BENEFITS OF FRATERNAL AND TRADE UNION
ORGANIZATIONS, 190
a—FRATERNAL SOCIETY BENEFITS, 190
b—TRADE UNION SUPERANNUATION BENEFITS, 193
PART IV
OLD AGE PENSIONS; WHAT THEY ARE AND THEIR OUTLOOK FOR THE U. S.
CHAPTER 11.—THE PURPOSE AND NATURE OF PENSIONS, 213
a—INTRODUCTION
b—VOLUNTARY INSURANCE, 216
c—COMPULSORY-CONTRIBUTORY INSURANCE, 218
d—STRAIGHT OR NON-CONTRIBUTORY PENSIONS, 223
e—ARGUMENTS AGAINST NON-CONTRIBUTORY PENSIONS, 228
CHAPTER 12.—THE PENSION MOVEMENT IN THE UNITED STATES, 244
PART V
PENSION SYSTEMS OF FOREIGN COUNTRIES AND VARIOUS STATES
CHAPTER 13.—VOLUNTARY & SUBSIDIZED SYSTEMS OF OLD AGE INSURANCE, 265
a—INTRODUCTION
b—BELGIUM, 266
c—CANADA, 269
d—JAPAN, 271
e—SWITZERLAND, 272
f—MASSACHUSETTS, 275
g—WISCONSIN, 278
CHAPTER 14.—COMPULSORY-CONTRIBUTORY OLD AGE INSURANCE, 280
a—AUSTRIA, 280
b—CZECHO-SLOVAKIA, 282
c—CHILE, 283
d—FRANCE, 284
e—GERMANY, 288
f—GREECE, 295
g—ICELAND, 295
h—ITALY, 296
i—LUXEMBURG, 300
j—NETHERLANDS, 302
k—NORWAY, 304
l—PORTUGAL, 306
m—ROUMANIA, 308
n—RUSSIA, 308
o—SPAIN, 309
p—SWEDEN, 312
q—SWITZERLAND, 315
CHAPTER 15.—NON-CONTRIBUTORY OR STRAIGHT OLD AGE PENSIONS SYSTEMS, 318
a—ALASKA, 318
b—ARIZONA, 319
c—AUSTRALIA, 320
d—DENMARK, 322
e—GREAT BRITAIN, 324
f—NEW ZEALAND, 332
g—URUGUAY, 335
PART VI
APPENDIX
A—BILL INTRODUCED BY SENATOR MCNARY, 339
B—BILL PRESENTED BY THE COMMISSION TO THE 1921 PENNSYLVANIA
STATE LEGISLATURE, 342
a—ADMINISTRATION, 343
b—ALLOWANCE, 344
c—QUALIFICATIONS OF CLAIMANTS, 345
d—PROPERTY QUALIFICATIONS, 345
e—CALCULATIONS OF INCOME, 346
f—HOW ADMINISTERED, 346
g—FINES, PUNISHMENT AND CRIMINAL PROCEDURE, 349
h—FUNDS AND EXPENSES, 351
i—ANNUAL REPORT HEARINGS ETC., 351
FOREWORD
This book is, frankly, an appeal for social action. It attempts to set
forth the need for a constructive policy with regard to the aged. While
the tide in social legislation seems to have turned during the past few
years, so that in many states attempts are being made to repeal long
sought for protective measures, there is on the other hand evidence of
an awakening of many to the realization that the problem faced by the
aged cannot be ignored or postponed much longer. There is a growing
consciousness that social action is as inevitable for the United States
as it was in most countries abroad. Suffice it to mention the many state
commissions investigating the problem recently, the great number of
industrial concerns grappling with it, and the numerous resolutions
adopted by many church bodies, fraternal orders and trade union
organizations endorsing government legislation with regard to the aged.
The fact that twenty-six foreign countries have already adopted some
form of social action for the relief of the aged is indicative further
that the problem is a matter for social rather than for individual
solution.
The writer did not approach the question of insurance with any
preconceived notions. Three years of first hand study of the problems of
the aged in one of our leading industrial states—Pennsylvania—convinces
him, however, that no other way out is feasible. Our present methods, in
dealing with the aged are antiquated, inefficient, ineffective, costly
and demoralizing. Some constructive social policy must be inaugurated.
In discussing the plans suggested for adoption, an earnest effort has
been made to present the merits and demerits of each proposed scheme of
legislation impartially. The writer may be accused, however, of a
certain bias in connection with this presentation, to which he pleads
guilty. Absolute impartiality in matters of social policy is only
possible when convictions and interests are slight. After everything has
been said and done it remains for the individual to determine what he
understands by “right” and “truth,” and he can only be guided by his own
conscience and convictions.
In describing the pension systems of foreign governments, an attempt has
been made to bring the facts up to date. This was only partly
successful. Since the beginning of the war, European documents which
were readily obtainable under normal conditions, have been very meagre
and limited, and some reports have not been brought up to date.
The subject matter in the book beginning with Chapter Eight has been
drawn liberally from the report of the Pennsylvania Commission on Old
Age Pensions which was written by the author in 1919. Everywhere,
however, an attempt has been made to collect and present the latest
available data.
The writer wishes to record his debt of gratitude to the Pennsylvania
Commission on Old Age Pensions, which has so generously extended to him
the time and the office facilities which were necessary in the
preparation of this volume. The keen interest of members in the problem
has been a constant encouragement and source of inspiration. He also
wishes to acknowledge his indebtedness for helpful suggestions in
preparing the manuscript to Professor Henry R. Seager of Columbia
University, Mr. George M. P. Baird, formerly of the University of
Pittsburgh, Miss Mary Bogue of the Mothers’ Assistance Fund of
Pennsylvania, Miss Theresa Wolfson of the Consumers’ League of New York
State, and Mrs. Helen Glenn Tyson, of the University of Pittsburgh.
A. E.
NEW YORK CITY
_July 5, 1921_
INTRODUCTION
During the past dozen years, America has made her greatest progress in
manifesting public concern for her large numbers of bread-winners who
are annually rendered incapable of self-support by accident, sickness,
unemployment and old age. These four great contingencies in the life of
the wage-earner—long recognized as social problems of pressing
importance in countries of earlier industrial development—now claim our
increasing attention.
The free access to tillable land, which long offered “another chance” to
the dissatisfied industrial employee, has become to millions of American
city dwellers nothing more than a dream. Meanwhile, as our country has
become increasingly industrialized we have invited to our shores
millions upon millions of immigrants whose course of thinking has not
been influenced by American social and economic opportunities of the
past. We have a diverse population that yearly becomes more and more
like the populations of those older countries, and still less akin to
our earlier sturdy sons of immigrants who half a century ago could and
did sing “Uncle Sam is rich enough to give us all a farm!”
With the ever-increasing demand for essential workers in our industries
has come a condition where matter-of-fact statisticians report 3,000,000
disabling accidents yearly causing 50,000,000 days lost time; and
250,000,000 days lost annually on account of sickness; while “four times
in a single generation the numbers of the unemployed in the United
States have been counted by millions and the idle capital of the country
has been counted by the billions of dollars.” All of this has its effect
upon savings for old age.
The United States, a younger nation, and with traditions of
individualism based on earlier opportunities, has been slower to face
these industrial problems, but recently there have been signs of an
awakening sense of responsibility. Voluntary efforts of trade unions and
humanitarian experiments of the more thoughtful employers have blazed
the way towards social action. Half-a-hundred official investigating
commissions have collected, classified and disseminated
information—resulting in most instances in recommendations for American
legislation.
The industrial accident problem has been attacked in America by an
intelligent method of social insurance, and although fully adequate
benefits are not yet offered, within twelve years no less than
forty-seven workmen’s compensation laws have been adopted. Naturally
enough, the equally important problem of wage-earners’ sickness is now
under constant investigation and the public is learning to look upon it
as a subject which will in future claim far more sweeping legislative
attention. Unemployment, the most complex of all industrial questions,
periodically forces its way to the front pages of our newspapers, and in
1921 the Senate Judiciary Committee in one state legislature, by
unanimous vote, recommended the adoption of compulsory unemployment
compensation. The rapid spread of American social legislation, when once
initiated, is strikingly illustrated by the adoption of Mothers’ Pension
Laws in forty-one states and territories during the nine years 1911 to
1919.
Old age dependency has been less talked about, partly no doubt because
this evil presents itself less dramatically—its saddest victims usually
being hidden from the public eye—partly also, because fewer people
realize its connection with our modern industrial methods. Men have
always grown old, it is true, but now when they must seek work in a
system whose demands for intense application or speed are often
merciless, they are rejected as unemployable and find themselves without
means of support at an earlier age. In exceptionally fatiguing or
dangerous trades the “human scrap-heap” age is distressingly low. A
system which in the past has paid wages far too low to permit the
average workmen to prepare for old age by saving, is annually refusing
jobs to thousands who are “too old” to do its work.
The haphazard attempts to meet this problem through public or private
charity, employers’ pension systems and trade union or fraternal society
benefits, have proved to be not only inadequate and inhumane, but also
both costly and wasteful. Recently great progress has been made toward
scientific handling of the problem as it affects public employees,
especially teachers.
The United States Government and many states and cities have organized
successful pension systems for their public servants. A valuable record
of a large scale American experiment is furnished in the report of the
first year’s experience of the federal government with its pension plan
covering nearly one-third of a million civilian employees in the
classified service. But the problem of old age dependency for private
employments, has not been adequately met in any part of the United
States. Fortunately, signs of intelligent interest are becoming more and
more evident. Half a dozen states have appointed commissions to study
the subject, valuable material has been gathered, and bills drafted.
Unofficial but equally interesting investigations have been carried on
by labor organizations and fraternal orders. Americans are recognizing
the urgency of this problem and are seeking authoritative information.
Not since the publication in 1912 of Mr. Squier’s “Old Age Dependency in
the United States,” have we had a new and comprehensive book treating
this problem. Appearing now when there is both need and demand for such
information, Mr. Epstein’s volume is especially timely and valuable. His
experience as Director of the Pennsylvania Commission on Old Age
Pensions has given him an exceptional opportunity for intensive study of
the field, and the book contains a wealth of modern, well organized
material presented from the modern American point of view. It is
decidedly the most convenient compilation of up-to-date information on
this very important subject.
JOHN B. ANDREWS.
24 Gramercy Park, New York City.
January, 1922.
PART I
ACTUAL CONDITIONS OF THE AGED
CHAPTER I
AFTER SIXTY—WHAT?
The progress of a nation may be marked by the care which it provides for
its aged. The nineteenth-century doctrine of laissez-faire, as applied
to aged and superannuated wage-earners, has been practically discarded
by most civilized nations, including every English-speaking country in
the world except the United States. Instead, a definite policy of social
legislation has superseded the chaotic and degrading practices of
alms-giving and poor relief. The enemies of social legislation in this
country, however, still contend that the millions of workers in our
industries “are working for themselves; that they have unrestricted
control over the expenditures of their incomes, and that they have their
future fate in their own hands.”[1] As a nation, we are still frightened
at the thought of becoming “our brother’s keeper.” In spite of superior
wealth and accumulation of goods, our national conscience is not in the
least disturbed when the former creators of our wealth are forced to
drag out their final days, physically exhausted, friendless and
destitute, in the wretched confines of a poorhouse, or to receive some
other degrading and humiliating form of pauper relief.
To protect the wage-earners in their old age is merely to recognize the
changes wrought in our industrial system. Old age was not universally
dreaded before the industrial revolution or the advent of the modern
factory system. On the contrary, it was even looked forward to with a
certain feeling of satisfaction and accomplishment. In the patriarchal
state, old age was revered and the aged person in tribal economy was
considered the embodiment of wisdom and authority.[2] In an earlier
system where the tribe or clan was a unit, the old remained supreme and
their superiority continued beyond their productive years. Under the
feudal system the lord was obliged to take care of his workers in case
of sickness, accident, and old age. The artisan or labourer in mediaeval
times ordinarily continued to work as long as he could produce
something. In the early state of the factory system also the economic
relations between men were more inter-dependent and of a more permanent
character. The labour contract was usually lifelong, and the employer
took a personal interest in the welfare of his workers. Again, in an
agricultural society men and women are still useful in their old age,
and their activities rarely cease before actual senility has set in.
Under these conditions, men and women did not look with dread upon
approaching economic old age, and there was little necessity for
individual provision against it.
Our modern wage system presents an entirely different spectacle. Today,
most men and women are dependent upon their daily toil for their daily
bread. The pace of the present industrial system tends to wear workmen
out rapidly. Fatigue produced by over speeding as well as the hazards
characteristic of modern industry have shortened the period of effective
production of industrial workers. Increased industrial efficiency,
“scientific management,” the “bonus system” and specialized and
standardized production are forces which are increasingly using up human
energy at greater speed and in a briefer period of life. Often, at the
age when the worker in agricultural pursuits is considered to be in his
prime, the industrial worker is found to have become worn out and old.
And, in industry, once the approach of old age becomes apparent, the
worker is thrown upon his own resources.
Unlike the gradual physical decline in old age characteristic of
agricultural and less developed industrial countries, economic
superannuation, which takes place abruptly and earlier in life, stands
like a spectre before industrial workers. Few industrial wage-earners
may expect to continue at their accustomed work until the end of their
days. Because of the developed efficiency standards, so essential to
successful business, the wage-earner finds the problem of old age
principally one either of increasing inability to find employment or at
best of employment at low compensation. After a certain age has been
attained, although the worker may still be able to do fair work, if he
is no longer able to maintain his former speed, he is likely to be
eliminated from industry. The old man finds it difficult to secure work
even at low wages. Rowntree and Lasker, in a study of unemployment in
Great Britain, found old age the primary causal factor in 23.3 per cent.
of the cases studied. These investigators assert that: “It is
unfortunately indisputable that when a skilled worker gets past 40, he
finds it very difficult to meet with an employer who is willing to give
him regular work.”[3] What is true in England in this respect is equally
true in the United States.
Contrary to the conditions existing in the professions, in business, or
in politics, where men often do their best work at about the age of 60,
and where experience and long standing count a great deal, the
industrial worker finds himself not infrequently eliminated from
productive industry after passing his fiftieth birthday. With the
continuous introduction of new machinery and newer processes of work,
age and experience are of little value. The labor contract in the
factory system is made only for a temporary period, and the employer
ordinarily does not feel under obligation to support his workers during
their declining years of inactivity. Thus it is not uncommon today to
find aged and decrepit workers relegated to the industrial scrap-heap as
useless and of no economic value. Says Prof. E. T. Devine:
“It is notorious that the insatiable factory wears out its workers
with great rapidity. As it scraps machinery so it scraps human beings.
The young, the vigorous, the adaptable, the supple of limb, the alert
of mind, are in demand. In business and in the professions maturity of
judgment and ripened experience offset, to some extent, the
disadvantage of old age; but in the factory and on the railway, with
spade and pick, at the spindle, at the steel converters there are no
offsets. Middle age is old age, and the worn-out worker, if he has no
children and if he has no savings, becomes an item in the aggregate of
the unemployed. The veteran of industry who is crowded out by changes
in processes and the use of new machinery is obviously an instance of
maladjustment.”[4]
It will become evident in the discussions that follow, that the problem
facing the aged today is largely the creation of the modern machine
industry with its components of specialization, speed, and strain. It is
a result of the elimination of large numbers of workers as soon as they
are unable to keep up fully with the demands of modern methods of
production. The introduction of new inventions and more specialized
machinery, inevitable in the evolutionary process, while resulting in an
ultimate good, always involves the replacing of men, which in the case
of the aged, has an absolutely harmful effect, as it leaves them
destitute. For, in addition to preventing their continuity in their
regular work, it precludes also their adaptability to newer processes of
work. The lot of the aged and superannuated worker is thus adversely
affected by practically every step of industrial progress; and little or
no benefit is derived by old wage-earners from industrial improvements.
Not infrequently when the difficulties facing the aged wage-earners are
set forth, the smug and complacent citizen replies: “As one makes his
bed, so he lies.” Poverty in old age, it is asserted, is chiefly the
result of improvidence, intemperance, extravagance, thriftlessness, or
similar vices. As a result of this convenient philosophy, we have made
practically no attempt at the amelioration of the adverse conditions
facing old age. More and more, however, it is coming to be recognized by
all students of social and economic conditions that with the cost of
living soaring continuously the great masses of wage-earners cannot lay
aside from current wages sufficient to provide for possible emergencies.
This has become especially patent as careful data on wages and incomes
have been gathered by such students and responsible organizations as,
Chapin, Ryan, Streightoff, Nearing, the United States Census, the Bureau
of Labor Statistics in the United States Department of Labor, the
National Industrial Conference Board, and many of the state bureaus.
This entire problem will be discussed at length in Chapter VI. It is
sufficient to state here, that under present economic conditions and
those of the past decade, the average wage-earning family must indeed be
possessed of great resourcefulness even to make both ends meet, to say
nothing of being able to save. In this connection it must also be
pointed out that saving for old age is especially difficult because the
need is remote and current demands press. The dangers of poverty in old
age hardly impress the minds of the young. Most people have a working
belief that things will be different thirty or forty years hence, a time
which, indeed, seems unreal and distant. As Professor Seager aptly
points out:
“The conditions of modern industry have failed to supply motives for
saving sufficiently strong to take the place of those that are gone.
It is true that saving is still necessary to provide for the rainy
day, for loss of earning power due to illness or accident or old age,
but against these needs is the insistent demand of the present for
better food, for better living conditions, for educational
opportunities for children. This demand is not fixed and stationary.
It is always expanding.... One consequence of our living together in
cities and daily observing the habits of those better off than we are
is that we are under constant pressure to advance our standards. This
pressure affects the wage-earner quite as much as it does the college
professor. Both, when confronted with the problem of supporting a
family in a modern city, find the cost of living as Mark Twain has
said “a little more than you’ve got.””[5]
The problem to be faced in old age by wage-earners may thus be
summarized as being two-fold in character. First, the wage-earner is
confronted with the fact of being compelled to discontinue work much
earlier in life than should be necessary, not because he is completely
worn out, but because he is unable to maintain the pace necessary in
modern production; and secondly, he faces the inability to provide
individual savings to support himself in old age.
In addition, the above conditions of impotence in old age are augmented
still further by the break-up of the family unit in modern society. With
increasing rapidity home ties and family solidarity are being weakened
and broken by the mobility so essential to modern industrial
development. This is especially true in the United States and among
wage-earners. The migratory and immigrant labourers move from
lumber-camps to harvesting fields, railway construction, and public
works as the change of employment offers. Thousands of aged workers find
themselves in a strange country without friends or relatives. Many of
these have never had children, or if they are parents, their children
are unable to assist them. Ordinarily, the children are either
unattached migrants or are married and have children of their own who
must be supported and educated. No one contends that it is good social
policy to have children undernourished and set to work early in life in
order that they may help support the passing generation. And as a result
one finds that the only source which secured sustenance and bare comfort
to old age, in an earlier society, has disappeared for a great many. We,
therefore, send these unfortunates, in our laissez-faire fashion, to the
unfriendly poorhouses to secure the care and comforts available. Do they
secure it? Says Professor Devine:
“Suicide, friendless old age, unemployment under ordinary industrial
conditions, some forms of insanity and other disabling disease,
immorality and crime, owe a part of their prevalence and their
virulence to the absence of the capacity or opportunity for personal
friendship, to the absence of those social props and safeguards which
our friends naturally supply. The almshouse is the final apotheosis of
friendlessness.”[6]
Indeed, once the difficulties faced in old age by the great majority of
workers are realized, one cannot but wonder whether the fact that the
aged population in the United States has increased from 3.5 per cent.
for those 65 years of age and upward in 1880 to 4.3 per cent. in 1910,
and that the expectation of life has improved, has been a desirable
thing and is to be considered much of a blessing by the aged poor. Faced
with conditions such as described above, and with the almshouse as the
final destination of a life of destitution and drudgery, do they not
look upon modern industrial development, as well as the advances made in
medical progress and health as the creations of an evil spirit, which
have, on the one hand, curtailed their period of production, and, on the
other hand, prolonged their years of misery by the increased duration of
life?
CHAPTER II
THE INDUSTRIAL SCRAP-HEAP
The prospects of living to old age are becoming increasingly better as
methods of sanitation and public health are improved. According to the
United States Life Tables, the American vital statistics in 1910 showed
that out of every 100 persons at the age of 20, 64 will reach the age of
60; 54, the age of 65; and 42, the age of 70. Of 100 persons alive at
the age of 30, 53 will reach the age of 65, and 48 will not die before
70. In other words, of all men alive at the age of 30, more than
one-half will reach 65. A person who has reached the age of 65 may still
expect to live 11 more years, and the person who has reached the age of
70 may still hope to have nine more years of life. In 1880, according to
the U. S. Census, the number of persons 65 years of age and over in the
entire population constituted 3.5 per cent. This aged population
increased to 3.9 per cent. in 1890, to 4.2 per cent. in 1900, and to 4.3
per cent. in 1910. Of males 15 years of age and over, the number of
those 65 and over increased from 54 per thousand in 1880 to 60 in 1890
and 63 in 1910. It is thus clear that the proportion of older persons in
the United States has been constantly increasing.
In 1900 there were in the United States 3,083,995 persons 65 years of
age and over, constituting 4.2 per cent. of the total population. In
1910 this number increased to 3,949,524 and constituted 4.3 per cent. of
the population. Of the nearly four million persons 65 and over in 1910,
1,679,503, or 42.5 per cent., were between the ages of 65 and 69. The
magnitude of the old age problem is more easily appreciated when one
reflects that this aged group outnumbers the entire population of the
United States during the time of the Revolution—the first Census of 1790
giving the total population of the United States as 3,929,214. No State
in the Union, save the States of New York, Pennsylvania, Illinois, and
Ohio, has a greater population; and the aged population in 1910 was
greater than the combined populations of the states of Arizona,
Delaware, Idaho, Montana, Nevada, New Hampshire, New Mexico, North
Dakota, Utah, Vermont, Wyoming, the District of Columbia, and Alaska.
According to the United States Census of 1910 there were in the United
States at that time 38,167,336 persons 10 years of age and over engaged
in gainful occupations. These constituted 53.5 per cent. of the entire
population of that age, an increase of 3.1 per cent. over those reported
gainfully employed for the same ages in 1900, and an increase of 6 per
cent. in the population of the same age as compared with the proportion
gainfully employed in 1880. In the case of the male population 10 years
of age and over, 81.3 per cent. were recorded as gainfully employed in
the United States in 1910 as compared with 80.0 per cent. reported in
1900, and 78.7 in 1880. Of the female population 23.4 per cent. of those
10 years of age and over were reported gainfully employed in 1910 as
compared with 18.8 per cent. employed in 1900, and 14.7 per cent. in
1880.
That few wage-earners are able to continue at work until the end of
their lives is known to all. While the percentage of the entire
population which must secure its livelihood through gainful work has
steadily increased in the United States, it is significant to note that
the same Census figures show that after middle age the percentages of
those engaged in industry and trades have been continuously diminishing.
Out of every 100 males in gainful occupations in the United States in
1890, thirteen and one-half were between the ages of 45 and 54; eight
between the ages of 55 and 64, and five and three-tenths were 65 years
of age and over. In the same year, ninety-six and six-tenths out of
every 100 males between the ages of 45 and 54 were found gainfully
employed. Of those between the ages of 55 to 64, 92.9 per cent. were
still found occupied, while of those 65 years of age and over, 73.8 were
still recorded as engaged in gainful occupations. Ten years later, in
1900, the percentage of males employed between the ages of 45 and 54 was
95.5; of those between 55 and 64, 90 per cent., and the percentage of
those over 65 who were still occupied dropped to 68.4, a decrease of 5.4
per cent. in 10 years. The 1900 Census figures also show that of all the
males 55 years of age and over, 85 per cent. were found gainfully
employed in 1890, but only 80.7 of the same were employed in 1900, a
decline of 4.3 per cent. in 10 years.
The 1910 Census gives no age classification over 45. The information
available shows, however, that while in 1900, 87.9 per cent. of all
males over 45 were gainfully employed, the percentage declined to 85.9
in 1910. Assuming that the same rate of decrease of the gainfully
employed males 55 years of age and over held true in the period between
1900 and 1910 as that which took place between the decade of 1890 and
1900, there would be only 76.8 per cent. of males 55 and over, in the
United States employed in 1910, as compared with 80.7 in 1900, and 85 in
1890. Similarly, in regard to those 65 and over, 63 per cent. of the
males in the United States would have been employed in 1910 as compared
with 68.4 in 1900 and 73.8 in 1890. Thus it may be assumed that of the
4,660,379 males 55 years of age and over in 1910, 1,081,208 were already
eliminated from the gainfully employed class.
DECLINE OF GAINFULLY OCCUPIED
MIDDLE-AGED MALES
Percentage of Gainfully Occupied
Ages 1890 1900 1910
45–54 96.6 95.5
55–64 92.9 90.0
65 and over 73.8 68.4 63 (estimate)
55 and over 85.0 80.7 76.8 (estimate)
45 and over 87.9 85.9
The steady reduction in the percentages of those gainfully employed in
the later years of life, as shown by the United States Census reports,
is largely due to the decrease in the population of those ages engaged
in industrial and manufacturing pursuits rather than agricultural and
professions. This is obvious from the following: Of the total 38,167,336
gainfully employed persons in the United States in 1910, 12,567,925, or
32.8 per cent., were engaged in agricultural pursuits; 10,807,521, or
28.4 per cent., were engaged in manufacturing and mechanical
occupations; 7,605,730, or 20 per cent., in trade and transportation;
5,361,033, or 14 per cent., were found employed in domestic and personal
services, and 1,825,127, or 4.8 per cent., were engaged in various
professional vocations. The tremendous expansion in the manufacturing
and mechanical pursuits is apparent from the fact that the population
engaged in these occupations in 1900 was only 7,085,309. There was an
increase of more than three and one-half millions in 10 years. On the
other hand, of the 1,065,000 men 65 years of age and over reported
gainfully employed in 1900, approximately 50 per cent. were engaged in
agriculture, a considerable number were engaged in the professions and
business, and only about one-third of the number were employed as
wage-earners. In 1900 the persons 55 years of age and over constituted
12.3 per cent. in all occupations. When this group is classified in
accordance with the nature of its work, it is found that 15.1 per cent.
of this group were engaged in agricultural pursuits; 15 per cent. in
professional vocations; 10.5 per cent. in domestic and personal
services; 10.5 per cent. in manufacturing and mechanical pursuits, and
9.5 per cent. in trade and transportation. Thus while the aged group of
55 and over constituted 12.3 per cent. in all occupations it is much
higher than this average in the case of agricultural and professional
pursuits, but is much below the average in the case of manufacturing and
transportation occupations. This is practically the reverse of the
proportions found among those gainfully employed in the various
industries in the earlier age groups.
Further light upon this phase may be gleaned from the Twelfth Census.
According to the 1900 Census enumeration, the percentage of the total
number of workers in all occupations between the ages of 45 and 54
formed 25.8 per cent. of workers of all ages employed in all
occupations. The percentage of those employed between 55 and 64 was
12.3, and that of those 64 and over, 4.4 per cent. These figures were
obtained after the elimination of certain occupations which have a large
proportion of boys as well as those in which the majority of workers
were women. A comparison of the percentages for all occupations with the
percentages of those engaged in the industries given in the table below
reveals the fact that, while in the outdoor industries the percentage of
those employed between 45 and 54 holds approximately true, it is
considerably below in the case of the heavier industries, and much below
the general proportion after the 55th birthday has been reached.
NUMBER AND PER CENT OF EMPLOYEES 45 AND OVER IN SELECTED INDUSTRIES IN THE
UNITED STATES, 1900[7]
45 to 54 55 to 64 65 and over
Occupation No. Percent No. Percent No. Percent
All Occupations 6,187,927 25.8 2,925,122 12.2 1,065,275 4.4
Marble & Stone Cutters 14,339 26.3 5,264 9.6 1,498 2.7
Painters, Glaziers,
Varnishers 69,681 25.2 28,406 9.9 7,759 2.8
Brewers and Maltsters 5,204 25.1 1,686 8.1 419 2.0
Steam Boilermakers 5,938 17.0 2,103 6.3 527 1.5
Iron and Steel Workers 47,042 16.3 15,789 5.4 3,783 1.3
Brass Workers 3,822 14.7 7,394 5.3 360 1.3
Potters 1,950 14.7 691 5.2 208 1.5
Glass Makers 5,575 11.7 1,737 3.6 392 0.8
The Thirteenth Census does not give the age classifications which would
make a similar comparison possible. However, the Massachusetts
Commission on Old Age Pensions, Annuities, and Insurance, found in 1910,
in a study of 870 aged persons, that the average age at which the
wage-earning power was completely lost was 68 years. The average age at
which the earning power was partially impaired, in a study of 872
partially incapacitated persons, was 64. In 1918, the Ohio Commission on
Health Insurance and Old Age Pensions found in six foundries employing
500 moulders only three men over 50 years of age engaged in heavy floor
moulding. Ten men over 60 were engaged in light bench moulding.
The table below shows succinctly that the strain of modern machine
industry permits only a few wage-earners to remain at work after they
have passed three score and five. It is further proof of the above
figures pointing to the constant reduction of those 65 years of age and
over engaged in mechanical and manufacturing pursuits. An examination of
the table compiled in 1920, regarding the ages when actually pensioned
as compared with the ages required by these large concerns for obtaining
a pension, reveals the fact that in spite of the strict regulations
provided, a number of these have actually been pensioned before the
specified age. Thus more than one-half of those on the pension list of
the United States Steel and Carnegie Pension Fund have retired before
the age of 65, although the age for voluntary retirement is set at 65.
In the case of the pensioners of the Pennsylvania Railroad Company,
while the compulsory age of retirement is set at 70, 44 per cent. had
been placed on the pension list before they had reached the compulsory
retirement age. Similar proportions are found in the case of most of the
other industrial pensioners.
PENSIONABLE AGES PROVIDED AND AGES WHEN ACTUALLY PENSIONED BY LEADING
INDUSTRIAL CONCERNS
Name of Pensionable Age
Company Provided Actual Ages When Pensioned
„ „ Under 50 50 to 60 60 to 65
„ „ No. Percent No. Percent No. Percent
U. S. Steel Any age if
& Carnegie permanently
Pension incapacitated;
Fund. 65 at request. 128 3.5 420 11.6 1,487 40.5
Penna. R. R. 70 compulsory,
65 to 69 at
approval of
Board. 1,209 13.0
Philadelphia 70 compulsory;
and 65 to 69 if
Reading R. incapacitated.
R. 20 2.0 15 1.5 24 2.5
N. Y. 70 compulsory;
Central any age if
Railroad unfit for
duty. 1,606 36.3
Philadelphia No compulsory
Electric age; voluntary
retirement,
male 65,
female 60. 13 6.5 35 16.5 54 25.5
Pittsburgh No compulsory
Coal Co. age; any age
if
incapacitated
after 10 years
of service. 8 4.0 42 21.0 55 28.0
Westinghouse 70 compulsory;
Air Brake by order of
Board. 3 3.0 8 7.5 8 7.5
National Compulsory, male
Transit 65, female 55;
Co. voluntary,
male 55,
female 50. 4 6.1 23 35.5
Pittsburgh 70 compulsory;
and Lake any age if
Erie R. R. unfit for
duty. 2 3.7 1 2.0 4 7.3
Name of Pensionable Age
Company Provided Actual Ages When Pensioned
„ „ 65 to 70 70 and over
„ „ No. Percent No. Percent
U. S. Steel Any age if
& Carnegie permanently
Pension incapacitated;
Fund. 65 at request. 927 25.4 695 19.0
Penna. R. R. 70 compulsory,
65 to 69 at
approval of
Board. 2,796 31.0 5,124 56.0
Philadelphia 70 compulsory;
and 65 to 69 if
Reading R. incapacitated.
R. 201 20.5 716 73.5
N. Y. 70 compulsory;
Central any age if
Railroad unfit for
duty. 2,828 63.7
Philadelphia No compulsory
Electric age; voluntary
retirement,
male 65,
female 60. 87 41.5 21 10.0
Pittsburgh No compulsory
Coal Co. age; any age
if
incapacitated
after 10 years
of service. 50 25.0 44 22.0
Westinghouse 70 compulsory;
Air Brake by order of
Board. 16 15.5 69 66.5
National Compulsory, male
Transit 65, female 55;
Co. voluntary,
male 55,
female 50. 21 32.2 17 26.2
Pittsburgh 70 compulsory;
and Lake any age if
Erie R. R. unfit for
duty. 6 11.0 41 76.0
The extent of disability of wage-earners as they are affected by both
age and occupations has been brought out in a comprehensive manner by
Dr. Boris Emmet from studies recently made of the Workmen’s Sick and
Death Benefit Fund of the United States, for the United States Bureau of
Labour Statistics.[8] These investigations show conclusively that age
and occupation are the two most important factors in determining the
duration and extent of disability. The average number of days of
disability per member was found to be 6.6 per annum. An examination of
the age groups shows that up to the age of 45 the disabilities’ duration
is below the average, but from that age on, it increases steadily until
it averages 15.2 in the case of those who are 70 years of age and over.
By the different age groups the percentages above (+) or below (−) the
average are as follows:
Age Group Average No. of Disability Per Cent of Deviation from
Days Average
Under 20 years 5.2 −21.2
22 to 24 years 4.8. −27.3
25 to 29 years 5.0 −24.2
30 to 34 years 4.9 −25.8
35 to 39 years 5.6. −15.1
40 to 44 years 6.4 −3.0
45 to 49 years Same as average
50 to 54 years 7.4 +12.1
55 to 59 years 9.0 +36.4
60 to 64 years 12.0 +81.8
65 to 69 years 13.8 +109.1
70 years and over 15.2 +130.3
————
All age groups 6.6 None
The occupational hazards of certain of our large industries are
presented so clearly in the table below that no comment at length is
necessary. While in the professions the average number of days of
disability per year is 2.6, it progresses continuously until in the case
of miners it reaches 9.7, almost four times as great.
ANNUAL DISABILITY DAYS FOR EACH OCCUPATION
OCCUPATION AVERAGE ANNUAL DISABILITY DAYS PER
YEAR
Professional 2.6
Jewelers 3.6
Clothing Mfr. Employees 4.4
Textile Mfr. Employees 4.5
Trade and Clerical 4.7
Electrical Workers 4.8
Other Manufacturing Employees 5.1
Farmers, Gardeners, and Florists 5.3
Sheet Metal Workers 5.6
Plumbers 5.6
Plasterers 5.6
Unspecified Occupations 5.7
Molders 5.8
Leather Workers 5.8
Tanners 5.8
Auto, Carriage and Wagon Mfg. emp. 5.9
Barbers 5.9
Engineers and Firemen 6.0
Bartenders 6.0
Woodworkers 6.1
Printers and Engravers 6.1
Machinists 6.1
Food Employees 6.2
Cooks and Waiters 6.2
Dyers 6.4
Painters 6.4
Clay Products Mfg. emp. 6.6
Other Building Construction emp. 6.0
Carpenters 6.7
Tobacco and Cigars 6.8
Slaughtering and Meat Packing emp. 6.9
Blacksmiths 6.9
Labourers, not specified 6.9
Glass Workers 7.1
Bricklayers 7.1
Stone and Granite 7.5
Liquor Manufacturing emp. 7.9
Railway Employees 8.4
Drivers 8.6
Freight Handlers 9.6
Miners 9.7
Average of all Occupations 6.4
A valuable investigation in regard to this phase of the problem was made
by the Pennsylvania Commission on Old Age Pensions, during 1918–19. This
Commission interviewed over 4,500 people, 50 years of age and over in a
house-to-house canvass in the cities of Philadelphia, Pittsburgh, and
Reading. It also made a study of the ages of partial and total
impairment of workers in several industries. A case of partial
impairment was assumed when the individual sustained a reduction in
wages, either because of displacement or change in job as a result of
sickness or old age. The Commission states that its studies revealed the
following:[9]
(a) The earning power of many workers in Pennsylvania is impaired
before they reach the age of 40. The percentages of partial impairment
at the age of 40 were found to vary from 2.6 per cent. among indoor
and sedentary trades, to 16.4 in the steel industry, and 57 per cent.
in the case of railroad workers. Only in the steel industry, however,
were there many who were totally incapacitated before the age of 50.
In the building trades, 12.6 per cent. were partially impaired before
the age of 50; while 6.3 per cent. were totally incapacitated before
reaching the same age. On reaching the above age it was found that
55.3 per cent. were partially and 14.1 per cent. were totally impaired
in the case of steel workers. Of those engaged in casual occupations
26.7 per cent. have had their earning power partly, and 8.4 per cent.
wholly reduced before attaining 50 years of age. Of indoor and
sedentary trades the percentage of partially impaired workers before
the 50th birthday was 15.2, while 8.3 were wholly disqualified for
service at that age. Nearly 27 per cent. among glass blowers had had
their earning power reduced before reaching 50 years of age, and 20
per cent. were permanently incapacitated at the same age. Of skilled
workmen in the various trades, 29 per cent. were impaired partially
and less than three per cent. entirely, before attaining their 50th
birthday. Among railroad workers, those whose incomes were affected
before the age of 50, the percentages were 64.3 to a partial extent,
and 6.2 entirely.
(b) At the age of 60, the proportion of workers, whose earning power
had not yet been affected, according to the various trades, were as
follows: In the building trades, 55.1 per cent. suffered no loss of
income before reaching the age of 60. In the steel industry only 13.2
per cent. were earning the same amounts as in their earlier days at
the above age. Thirty-six per cent. of workers, at 60 years of age,
were still found to be engaged in casual occupations. Among workers in
indoor and sedentary trades, 46.4 per cent. were found without
reduction in their earning power at the age of 60. Only 26.9 per cent.
of glass blowers were in their full capacity at the age of 70. The
percentage of skilled mechanics found in good health at 60 was 25.5,
while 28.2 per cent. of railroad workers were found to be in
unimpaired health at the age of 60.
The Commission concludes: “An examination of the total number of aged
persons in all the three cities from whom the previous and present
occupations were ascertained, shows that men past a certain age must
quit even the skilled trades in which they have been engaged the
greater part of their lives. Modern industry, apparently, has little
use for the superannuated worker. A few men can continue working at
the same occupation after they have reached a certain age. While 36
per cent. stated that they were skilled or semi-skilled mechanics in
their earlier days, only 23.8 per cent. of men past 50 years of age
were still engaged in the same occupation. The percentage of those
doing unskilled or common labour or clerical labour, on the other
hand, remained stable. It is also to be noticed that in their earlier
days less than two per cent. were not working because of incapacity,
but 26.6 per cent. were found not to be working among those 50 years
of age and over. The fluctuations of the minor occupations are
inconsiderable.”[10]
Similar studies of several hundred bituminous miners scattered through a
dozen mining districts in Pennsylvania and of about two hundred steel
workers were recently completed by the writer for the above Commission.
The investigations disclose that of 368 miners, 50 years of age and
over, 177 were still in fair or good health, while 191 or somewhat more
than 50 per cent. of those investigated, were found to be either
partially or totally incapacitated. Of the 112 reported as partially
incapacitated, 79, or 70.5 per cent., became so before the age of 60; of
the 79 reported as totally incapacitated 38, or 50 per cent., were thus
disabled before the same age. While most of those reported as partially
incapacitated were still engaged in some form of work or other, this was
irregular and uncertain, as most of these persons were suffering either
from chronic sickness or the consequences of serious accident.
In the case of 146 steel workers, 50 years of age and over, investigated
in Homestead and Steelton, 90, or 62 per cent., were found to be either
in part or completely impaired in respect to their health and earning
power, the great majority of these becoming incapacitated before the age
of 60. The causes of impairment assigned in more than three-fourths of
the cases of both classes of labour were either sickness or accident.
Old age, as such, was given only in a few instances as a direct cause of
incapacity.
AGES OF INCAPACITY OF MINERS AND STEEL WORKERS
MINERS STEEL WORKERS
Ages of Incapacity Partial Total Partial Total
Under 50 29 15 8 4
50 to 60 50 23 25 5
60 to 65 18 15 11 6
65 to 70 14 20 4 5
70 and over 1 6 12 10
─────────────────────────────────────────────────────
Total Incapacitated 112 79 60 30
The reports of the different State Industrial Accident Commissions and
Compensation Bureaus corroborate further the evidence at hand that there
are fewer persons past middle age engaged in industry than the
proportion of the same group in the entire population. The Industrial
Commission of Wisconsin reported in 1915 that of all persons injured at
work in that state, 53 per cent. were under 30 years of age; 67 per
cent. were under 40; 5 per cent. between 50 to 55, and only 5 per cent.
more above that age. For the population 15 years of age and over as a
whole, 7 per cent. were 50 to 55, and 16 per cent. were 55 and over.[11]
The California Industrial Accident Commission reports that in 1918, of
2,100 permanent injury cases, 1,729, or 82.3 per cent., were under the
age of 50; 257 were between 50 and 60, and 114 above that age.[12] Of
2,569 fatal accident cases which occurred in Pennsylvania in 1919, 1,932
or 75.2 per cent., were under 50 years of age; 262, or 10.2 per cent.,
were between the ages of 50 and 60, and only 136, or 5.2 per cent., were
above that age. The ages of the rest were not ascertained.
Even more significant in this respect are the disclosures of an
investigation of several trade union locals recently made by the writer.
Printers are known to work much longer in life than do workers in many
other crafts. In spite of this fact, it was found that of a membership
of approximately 1,500, the Philadelphia Typographical Union No. 2 had
on its lists only 145 persons, approximately 10 per cent., who were 60
years of age and over; and 47 of these were already on the pension roll
of the International Typographical Union. Local No. 98, Philadelphia, of
the International Brotherhood of Electrical Workers had no one 60 years
of age or over on its membership roll of approximately 1,250. Workers in
the building trades, it is frequently asserted, work until very late in
life. An examination of the ages of 450 members of Carpenters’ Local No.
287 in Harrisburg showed only 25 persons 60 years of age and over.
Bricklayers’ Local No. 71, in the same city, had only 14 members between
the ages of 50 to 60 and a similar number 60 and over among 152 members.
Carpenters’ Local No. 1073, Philadelphia, has been in existence since
1902 and has a membership of over 1,400. There were in this local only
60 men who were 50 years of age and over, and only seven of these were
above 60. A canvass of over 600 miners’ locals with a membership of over
120,000 persons, made a few years ago by a Committee of the United Mine
Workers of America, showed that there were in these locals a total of
6,283 persons 60 years of age and over, of whom only 2,084 were 65 years
and upwards.
From the foregoing evidence it seems obvious that modern industry finds
little use for the worn-out workers. It replaces and discards these aged
wage-earners as it is in the habit of replacing and discarding the
worn-out and inefficient machinery. Once economic old age has set in,
the road to dependence is short. Says Mr. L. W. Squier: “After the age
of sixty has been reached, the transition from non-dependence to
dependence is an easy stage—property gone, friends passed away or
removed, relatives become few, ambition collapsed, only a few short
years left to live, with death a final and welcome end to it all—such
conclusions inevitably sweep the wage-earners from the class of hopeful
independent citizens into that of the helpless poor.”[13]
CHAPTER III
PASSING BEYOND THE HALF CENTURY MARK
The aged, for the purposes of our discussion, may be classified into
three distinct groups. First, the small group of wealthy and independent
persons whose economic and social security is assured. This group
presents no problem such as those which are discussed in the pages that
follow, and may be dismissed. Secondly, the great mass of the aged
wage-earners who are presumably non-dependent because, in order to avoid
the stigma of pauperism, they do not, as a rule, seek aid from
charitable and philanthropic sources. These will prefer to make all
sorts of sacrifices rather than seek asylum for their last days in
either county poorhouse or benevolent home. Many of this group,
therefore, while nominally non-dependent, may nevertheless be below the
poverty line, and very often, although they find themselves in want
through no fault of their own, will prefer to endure hardship rather
than accept charity. From any point of view this group, which represents
the great majority of wage-earners, has the greatest claim to protection
and relief in old age. Their problems must not merely attract attention
but must be studied thoroughly and met squarely with a constructive
social policy. The third group, which is considerably smaller, is
composed of the institutional and pauper classes and includes the
inmates of the State, county and private charitable institutions, as
well as the recipients of public or private relief from local poor
boards, philanthropic organizations, churches and similar institutions.
Knowledge of the actual conditions which compelled this unfortunate
group to seek relief; an examination of the effects and consequences of
our present methods of relief distribution; and a revaluation of these
methods in terms of social justice, are essential in a study of this
aged pauper group.
The proportion of the presumably “non-dependent” aged persons in the
United States who are actually living in want and are in need of
systematic relief is difficult to estimate accurately. The Census
reports supply very meagre data for the determination of the extent of
old-age dependency in the United States; especially is this true with
regard to the non-institutional aged. However, a number of studies have
been made recently which may be considered fairly indicative of the
magnitude of the problem. The first study of dependency of the aged was
made in 1908–9 by the Massachusetts Commission on Old Age Pensions,
Annuities and Insurance. This Commission estimated the number of persons
65 years of age and over in Massachusetts to be 177,000 in 1910. Of this
number 41,212, or 24 per cent., were found either to be residing in
correctional institutions and public or private pauper and benevolent
homes, or were the recipients of public or private outdoor relief, or
United States pensions. One hundred and thirty-five thousand, seven
hundred and eighty-eight, or 76 per cent., of these aged in
Massachusetts were “non-dependent,” as far as could be ascertained.
Basing his calculations upon the Massachusetts figures, L. W. Squier
estimated that approximately 1,250,000 of those 65 years of age and over
in the United States are dependent upon public and private charity.
This estimate was admittedly conservative, as Mr. Squier’s calculations
were based upon cases of relief granted by the organized charitable
agencies; and even the recipients of this form of relief could not have
been, in the nature of such studies, completely gathered by the
Massachusetts Commission. No account was taken of the unofficial and
less known relief agencies, and it goes without saying that neither the
Massachusetts Commission nor Mr. Squier could determine the amount of
private charity extended. That Mr. Squier has under-estimated rather
than over-estimated the total number of aged dependents, is shown by the
1915 decennial census of Massachusetts. In this state-wide enumeration
there were found 189,047 persons 65 years of age and over, of whom
34,496, or 18.2 per cent. of the total population of that age, were
receiving aid from one source or another. However, this number did not
include those aged who were receiving pensions from the United States
government. The number of this group was estimated at 29,150, or 14.8
per cent. The aggregate number of dependents thus constituted 33 per
cent. While many of the latter did not need such assistance, their
number doubtless increased the total dependents, and if used as a basis
for the entire United States would have increased Mr. Squier’s estimate
considerably.
Statistics dealing with those aged persons in the United States who are
definitely dependent upon public or private relief are scanty and
incomplete. The various groups of dependents are classified according to
age in only a few instances by the United States Census. The 1910 Census
reports that of a total of 84,198 paupers in almshouses in the United
States, 35,943 or 42.7 per cent. were 65 years of age and over. In the
same year there were 187,791 known insane and feeble-minded persons in
the United States, 21,881 or 11.8 per cent. of whom were 65 and over. Of
a total of 19,153 deaf and dumb persons in 1910, only 797, or 4.1 per
cent., were 65 and over. The number of prisoners 65 and over is not
given by the Census, but of the number committed to penal institutions
during the year 1910, only 1.6 per cent. were 65 years of age and over.
There were in 1910 also 98,846 adult inmates over 21 years of age in
benevolent institutions, the large majority of whom were obviously of
advanced age. Of the total 57,272 blind persons in the United States,
23,746 or 41.4 per cent. were past threescore and five years. There were
in addition in that year 72,948 dependent adult inmates in hospitals and
sanitoriums. No data are available to show the number of aged persons in
receipt of either public or private relief. The recipients of this form
of charity, however, generally constitute the large majority of
dependents, and as shown by the different State Commissions, exceed the
aggregate number of dependents of all other classes. Neither do the
classes enumerated above include the great number who are in receipt of
State and Federal pensions, as well as those receiving pensions from
industrial establishments. It is, of course, impossible even to estimate
the number of those receiving partial or entire support from
individuals.
The Census figures seem to indicate also either a steady increase in
aged dependency in the case of most pauper classes, or an increase in
the longevity of most aged dependents. Thus, the blind 60 years of age
and over increased from 36 per cent. of the total blind population in
1860, to 41.4 in 1910. The deaf and dumb of the same age group
constituted 4.9 in 1860 and increased to 6.7 per cent. in 1910. In the
case of almshouse paupers the percentage of the aged increased from 25.6
in 1880 to 42.7 in 1910.
Recently a number of special State Commissions on Old Age Pensions have
added further light upon the extent of dependency in old age. The
Wisconsin Industrial Commission in its report on old-age relief in 1915,
states:
“The number of persons 60 years of age and upwards in Wisconsin may be
estimated at 185,000. Of this number, probably two per cent. are
recipients of public or private relief. Even including United States
pensioners, the proportion scarcely exceeds 12 per cent. But that very
much unrelieved distress exists no one can doubt who is familiar with
the statistics of other countries. The inauguration of systematic old
age relief invariably brings to light a vast mass of unsuspected
poverty among the aged. Thousands of old people contrive to escape the
clutches of the poor laws who nevertheless endure a pitiful struggle
for existence. They work beyond their strength, they deny themselves
proper food and clothing, they are aided by friends and neighbours, or
they are supported by their children, too often at the expense of
growing families.”[14]
The Ohio Commission on Health Insurance and Old Age Pensions states:
“The number of aged persons aided by private families or by relatives
and friends is unknown and cannot be estimated. The Hamilton and
Cincinnati surveys indicate that 15 to 25 per cent. of people over 50
were dependent upon relatives or friends. Nor can the number who are
living an independent but precarious existence be accurately
estimated.”[15]
The Pennsylvania Commission concludes that:
“Aside from the aged dependents found in almshouses, benevolent or
fraternal homes, and those receiving public or private relief, there
is a considerable proportion (43 per cent.) of the aged population, 50
years of age and over in the State, who, when reaching old age have no
other means of support, except their own earnings.”[16]
As the studies made by the Pennsylvania Commission in regard to this
phase of the problem of the aged, go into greater detail than those of
the other State Commissions, its conclusions may perhaps be considered
as fairly indicative of the extent of destitution in old age among the
industrial population of this country. Based on the percentage found in
Pennsylvania, it may be said that in 1910 there were approximately
1,700,000 persons in the United States who had passed beyond the half
century mark and who had had no other means of support in their old age
except what they could earn themselves. While it may be conceded that
this proportion may be smaller in the less industrial States, the above
estimate may nevertheless be fairly accurate for the entire United
States, as the districts studied by the Pennsylvania Commission were
largely inhabited by better paid American-born workers as contrasted
with the more thickly populated foreign sections. Of course, it must not
be presumed that all of these will apply for relief, either public or
private, but it is obvious that the great majority of these will have to
face a pitiful struggle for subsistence. Ultimately the majority of this
number will become dependent, if not upon public charity, then upon
children or relatives at the expense of self-respect, and in many cases
also to the great detriment of the growing generation.
In the discussions that follow, the individual and social forces, as
well as the moral factor that go to make for dependency and pauperism
will be dwelt upon at length. At this juncture it is important first to
examine and endeavour to understand sympathetically the immediate
conditions confronting multitudes of superannuated workers which compel
many to become paupers in their old age. Indeed, a comparison of the
circumstances of the dependent aged, as disclosed by the different State
Commissions’ reports, with those of the so-called non-dependent,
discussed in the preceding pages, sheds much light upon the frequently
repeated question: “Why is it that some workers succeed in remaining
away from the pauper homes, while others, apparently of the same class,
become dependent upon public charity?”
AGE
The age relativity among the different classes is significant. In the
total population of 1910 the group between 65 and over constituted 4.3
per cent. of the population, and contained 4.2 per cent. of the males
and 4.4 of the females of all ages. This percentage held true for the
native whites of native parentage. Among the native whites of foreign or
mixed parentage the aged constituted only 1.4 per cent., while of the
foreign born whites, the same age group contained 8.9 per cent., and
among Negroes 3.0 per cent. The proportion of the aged varies also
considerably in the different sections. According to the 1910 Census,
the percentage of those 65 and over to the total population was highest
in the New England States, with 5.9 per cent., and lowest in the West
South Central States with 2.8 per cent. The Middle Atlantic States gave
4.4 per cent.; East North Central, 5.1 per cent.; West Central, 4.6;
South Atlantic, 3.6; East South Central, 3.5; Mountain, 3.0, and
Pacific, 4.5 per cent.
The dependent classes, as is to be expected, are largely made up of
those of advanced ages. The relation of dependence to old age is so
clearly indicated in the following reports that no additional comment is
necessary. The Massachusetts Commission in 1910 found that:
“Less than one per cent. of those for whom the age at entrance was
stated in the returns became inmates before the age of 40; only eight
per cent. entered before the age of 60; thus 92 per cent. had passed
the sixtieth year before they took up residence in the almshouse.”[17]
Commenting on this, the Commission adds:
“The strikingly high proportion of persons entering pauper
institutions late in life points to the close connections between old
age and institutional pauperism. It is clear that such pauperism is in
most cases the result of the infirmity of advancing years, rather than
of the misfortunes of earlier years.”[18]
The Wisconsin Commission reports regarding the almshouse population of
that State, as follows:
“A very large proportion are of advanced age—only 17 per cent. are
under 65, 40 per cent. are 75 and over and nearly 25 per cent. are 80
or above. In the population of the state at large, one-third of all
persons over 59 fall in the age group 60 to 65 and only one-fourth are
above 74. This fact, taken in connection with the great proportion of
the entire almshouse population who are 60 and over, indicates a close
co-relation between destitution and old age.”[19]
The Ohio Commission states:
“In regard to age distribution, the records of the Ohio Board of State
Charities show that 4,772, or 60 per cent. of the regular infirmary
inmates were over 60 years of age, 2,926 or 37.1 per cent. between 16
and 60 and 219, or 2.78 per cent. under 16 years of age.”[20]
The Pennsylvania Commission concludes that:
“It appears that only about 13 per cent. were admitted under 50 years
of age; 24.87 per cent. were admitted between the ages of 50 and 60;
31.9 per cent. between 60 and 70, while over 24.78 per cent. were
admitted after they had reached their seventieth year. A comparison
between our figures and those obtained by the Massachusetts Commission
on Old Age Pensions in 1908 is of interest. In the New England State
only eight per cent. of those investigated entered the almshouses
before the age of 60, and 92 per cent. had passed their sixtieth year
before they took up residence in the almshouse. The higher rate of
those entering almshouses below the sixtieth year in Pennsylvania may
be explained by the highly developed industries peculiar to this
Commonwealth, which, requiring greater physical strain, wear out and
incapacitate men at an earlier age. For those admitted during the year
1910 to the almshouses of the entire country, the percentages were
17.7 between 50 to 59; 18 from 60 to 69 and 15.3 per cent. over 70
years.
“It is obvious, that the great majority of the aged inmates enter the
institution late in life. This would indicate a close relationship
between institutional pauperism and old age. The combination of
advanced years and infirmity, when coupled with the fact, that in most
cases these people have no one to depend or fall back upon is—as will
be seen later—the chief cause compelling an aged person to go to the
poorhouse. Most men will stay out of an almshouse as long as they can.
When they are compelled to take up residence there, it is usually not
due to personal or other misfortunes in earlier years, but in most
cases, is the result of feebleness and lack of assistance from other
sources.”[21]
[Illustration: PERCENTAGE OF PERSONS IN STATE PAUPER INSTITUTIONS WHO
ARE 65 YEARS OF AGE AND OVER.
_Massachusetts_ _92%_
_Wisconsin_ _87%_
_Pennsylvania_ _62%_
_Ohio_ _60%_
]
SEX
Of the 3,949,524 persons 65 years of age and over in 1910, 1,985,976, or
50.5 per cent., were males, and 1,963,548, or 49.5 per cent., were
females. This group was, in addition, divided as follows in 1910:
1,693,010, or 42.8 per cent., urban, and 2,256,415, or 57.2 per cent.
rural, while 1,183,349, or 29.9 per cent. were of foreign birth.
The 1910 Massachusetts Commission found the proportion of males and
females in the almshouses of that State to be 61.4 per cent. and 38.6
per cent. respectively. In this respect, the Commission declares:
“The figures for the aged poor present a contrast to those for the
general population of the State, which is divided between the sexes
very evenly, with 48.7 per cent. males and 51.3 per cent. females. The
lack of any uniformity in the division between the sexes in the case
of the various classes is also striking. In the classes of almshouse
inmates, recipients of State and military aid and non-dependent poor,
the males preponderate; in the classes of inmates of benevolent homes
and recipients of public and private outdoor relief, the males are
greatly outnumbered. It appears that relief in charitable institutions
and in the homes through public or private agencies is given more
largely to women than to men.”[22]
In Wisconsin, the proportion of women in almshouses, the Commission
finds,
“Is very small—only 20 per cent. as against 47 per cent. of the
State’s population of 60 and over. This showing is the more remarkable
because the Commission’s sample census indicates (what is true in
other countries) that the number of aged widows and single women
exceeds the number of aged widowers and single men. The explanation is
that an elderly woman is better able than an old man to maintain a
home of her own or to fill a useful niche in the household of a
relative.”[23]
The Pennsylvania Commission found the almshouse population to be
composed of 62.7 per cent. males and 37.3 females. It comments as
follows:
“It is interesting to remark that the above percentages found by the
Commission are in exact agreement with the percentages found by the
Massachusetts Commission on Old Age Pensions in its study in 1908. The
comparative difference between the sexes in the almshouses and that
prevailing in the entire State population is significant. According to
the Thirteenth United States Census, the percentage of males in the
entire State population was 51.4 per cent. and that of females 48.6
per cent. The reasons for the disproportionate number of male paupers
in institutions over female paupers may be explained in several ways.
Children or relatives will make greater sacrifices in order to keep an
old mother at home and prevent her going to a poorhouse, than they
would for an aged father or other male relative. Aside from the
sentimental reasons involved, the presence of an old woman around the
home—unless she is absolutely invalided—entails little burden, as she
can be made useful in numerous ways. This, however, is not the case
with an aged man. Aged women are also more generously provided for by
private charity than are aged men. The percentages of aged men and
women who are inmates of benevolent and private Homes for the Aged,
are 23.54 and 76.46 per cent. respectively. The relationship here is
thus radically reversed from that of the almshouse population.”[24]
FAMILY CONNECTIONS
[Illustration: PERCENTAGE OF MALES IN ENTIRE U. S. POPULATION, AND IN
PAUPER INSTITUTIONS.
_% of males in U.S. population_ _= 50.5%_
_Wisconsin_ _80%_
_Pennsylvania_ _62.7%_
_Massachusetts_ _61.4%_
]
The number of old persons applying for charity in no way indicates the
degree of destitution in old age. Much of this suffering is kept
concealed from the public eye by timid and sensitive children or
relatives. This is borne out by the available data on the family
connections of aged persons. Indeed, the investigations seem to disclose
that pauperism among the aged is in inverse ratio to the number of
family relations and is largely a result of the lack of family
connections. The data below indicate that, in most instances, children
or relatives will endeavour to support their aged dependents, regardless
of the sacrifices thereby required of themselves or of their children.
The Thirteenth United States Census gives the marital relationship of
the aged as follows:—males, 6.2 per cent. single, 65.6 per cent.
married, 27.1 per cent. widowed, and 0.7 per cent. divorced; females,
6.3 per cent. single, 35 per cent. married, 58.1 per cent. widowed, and
0.4 per cent. divorced. The Massachusetts Commission found that 6.2 per
cent. of the aged persons investigated were single; 53.8 married; and
39.7 widowed. In Wisconsin, in 1915, in a sample census of 1,395
persons, 60 years of age and over, there were 35, or 2.5 per cent.
single; 885, or 63.4 per cent. married; and 456, or 32.5 per cent.
widowed. Of these, 76, or 5 per cent., lived alone; 885, or 63.4 per
cent. lived with a spouse; 168, or 11 per cent. had unmarried children;
and 206, or 14 per cent., had married children. The Wisconsin Commission
concludes:
“It will be seen that substantially one-half of the women enumerated
are widowed, divorced, separated or single, whereas nearly 80 per
cent. of the men are married. The explanation is partly that women on
the average live longer than men and partly that husbands very
generally are older than their wives. The result is that a vast number
of aged women are left without homes of their own.”[25]
[Illustration: MARITAL RELATIONS OF PERSONS 65 YEARS OF AGE AND OVER IN
THE ENTIRE POPULATION IN THE CENSUS OF PAUPERS AND IN PAUPER
INSTITUTIONS.
Single Married Widowed
_U.S. 65 or over 6.2%_ _U.S. 65 or over 65.6%_ _U.S. 65 or over 27.5%_
_U.S. paupers 50.2%_ _U.S. paupers 15.7%_ _U.S. paupers 32.5%_
_Ohio paupers 47.5%_ _Ohio paupers 37.8%_ _Mass. paupers 54.5%_
_Pa. paupers 40.0%_ _Mass. 24.7%_ _Pa. paupers 39.1%_
_Mass. 19%_ _Pa. 16.9%_ _Ohio 10.9%_
]
The preponderately greater number of elderly widows is also shown in a
study of 100 aged persons in Greenwich Village, made by Miss Nassau in
1915.[26] Of 65 women investigated, Miss Nassau found 54 widowed, nine
single, and two separated, while of the 35 men interviewed, 21 were
still married, three were single, and two separated or divorced.
The Ohio Commission, in discussing this subject, states:
“In old age, marital condition, especially as regards women, is very
important. The woman who becomes a widow after 50 is ill prepared to
make her own living. She must, therefore, depend on her children or on
the property left her by her husband. If her husband was a
wage-earner, the most she can expect to inherit is a little home. One
hundred and sixty-six or 50.8 per cent. of the 329 widows in the
Hamilton survey owned their own homes. While the children remain
unmarried, they contribute to the maintenance of their mother, but
after marriage she can no longer depend upon them with any feeling of
security. The single woman who has had to make her own living is also
insecure in her old age. After 50 she finds it difficult to obtain
steady employment and her wages, as a rule, have not been such as to
permit much saving for old age. Only 37 of the 114 single women over
50 had any savings.”[27]
“When aged persons who have been unable to save lose their economic
usefulness, they must depend on their children or relatives or on
public charity. Three hundred and fifty-four, old, or invalided
persons in Hamilton were dependent on children or relatives. One
hundred and fifty of these were dependent on married children, all
with families of their own; 144, on unmarried children, and the
remaining 60, on relatives. Forty-eight of the 416 aged persons
studied in Cincinnati were dependent on their children and 13 on other
persons.”[28]
The Pennsylvania Commission found the marital conditions of 3,477
non-dependent persons 50 years of age and over, as follows: 5.4 per
cent. single; 55.5 married; and 38.3 widowed. It also found 37.8 per
cent. who have no one depending upon them; 31.5 having their wives to
support, while the rest had one or more children in addition to support.
It concludes that:
“It is evident that the possession of children in old age is a great
protection against dependency. Thirty-one per cent. had one or two
children living; forty-five per cent. had from three to six children
living; while 12.7 per cent. had more than six children living. Of
those children, only 3.3 per cent. were still under 16 years of age;
16 per cent. of the adult children were married, while 80.7 per cent.
were still single.”[29]
The marital condition of paupers is given by the 1910 Census as follows:
50.2 per cent. single; 32.5 per cent. widowed, and 13.7 per cent.
married. The 1915 Massachusetts Decennial Census found the percentages
of the marital dependents to be: single 19.0; married 24.7; widowed
54.4. In Ohio, 47.5 were single; 37.8 married, and 10.9 widowed. In
Pennsylvania 40 per cent. were single; 16.9 married; and 39.14 widowed.
The report of the last named Commission goes on to point out that the
single and widowed in the almshouses of the State constitute nearly
eighty per cent. of the total number of inmates. However, the marital
conditions of people over forty-five years of age in the entire State,
as given in the United States Census for 1910, was: for males, single,
9.1 per cent.; married, 77.7 per cent., and widowed, 12.6 per cent.; and
for women the percentage for those over 45 years of age was, single, 10
per cent.; married, 60.3 per cent., and widowed, 29.2 per cent.
The Commission adds:
“Some light may be shed on the problem of aged pauperism by comparing
the preceding figures with those obtained from the house-to-house
studies conducted by the Commission. In the latter group the
respective percentages are: Single 5.4 per cent.; married 55.5 per
cent., and widowed, 38.3 per cent. These figures would seem to
indicate that the prime reason why the aged poor cannot remain in
their own homes, or in those of their parents or close relatives is
because, as a rule, most of these institutional paupers have no one to
fall back upon in their declining days. Having no children of their
own, their parents dead, and in many cases, with few relatives, to be
relied upon, these paupers seek the institution as the last resort for
shelter and nourishment. The wide difference between the populations
of single people in the almshouses and those living at home,
doubtless, explains why the former are inmates of pauper institutions
and the latter are classed as non-dependent.”[30]
In Massachusetts in 1910, the proportion of inmates of almshouses and of
benevolent homes who had adult children living at the time of entrance,
was found to be nearly the same, being 43.7 per cent. for the former and
39.4 per cent. for the latter. On the other hand, the percentage of
non-institutional poor, both public and private, who had adult children
living at that time, was higher, standing at approximately 60.
The Commission further states in its report:
“The number of almshouse and benevolent home inmates having adult
children or near relatives who are able to aid them at present is, as
one would infer, very small, namely, 7.7 per cent. for the almshouse
class and 13.2 per cent. for the benevolent homes. Here the
percentages are much higher for the non-institutional poor, being 46.4
for the recipients of public relief, and 57.5 for recipients of
private relief.”[31]
In 1918 in Ohio, Dr. John O’Grady states in the report of the Ohio
Commission:
“A study of the domestic relations of 2,260 infirmary patients showed
that 1,023 or 45.6 per cent. were never married. Those, as a rule had
no one on whom they could depend. Their parents were dead, and
brothers and sisters, even when in good circumstances, cannot be
relied upon to maintain a disabled brother or sister. Of the 822
inmates who had been married, 605, or more than half, had one or more
children living; of these 232 had children able to support them. The
children of the remaining 373 were generally ordinary unskilled
workingmen with large families of their own. These could scarcely
maintain their parents without depriving themselves or their children
of some of the necessaries of life.
“About seven per cent. of the inmates studied were in the infirmaries
because their children, although in fairly good circumstances, were
unwilling to maintain them. In comparison with the total infirmary
population, this number may seem very small, but of 232 inmates with
children able to support them only 88, or 37.9 per cent. had children
able and willing to support them.”[32]
Also, in Pennsylvania, the Commission found further substantiation of
the isolation of the majority of the inmates who must avail themselves
of the comforts of the almshouse.
“Sixty-three and fifty-one hundredths per cent. of those investigated
have no children living; 13.5 per cent. have but one child living,
while only 23 per cent. have two or more children living. A comparison
at this point with the same aged group studied in the house-to-house
canvasses is significant. In the latter group, only 10.63 per cent.
had no children living; 15.8 per cent. had only one child, while
nearly 70 per cent. had two or more children alive.
“The data obtained with regard to the ages of the children living
shows that more than 13 per cent. of them are adult, indicating that
this aged group has few dependents. On the other hand, 89.93 per cent.
of these children are reported as unable to support their parents. The
majority of these children are burdened with large families of their
own. Most of them also belong to the ranks of the unskilled workers
and earn wages which are hardly sufficient to maintain their own
families in comfort. Only a very small percentage, namely 4.15, have
children believed to be fully able to support their parents, while an
additional 6.86 per cent. are able to help support the parents if
ready to make the required sacrifices.
“Nearly 95 per cent. of the aged inmates investigated, have no other
relatives able to help support them.”[33]
PHYSICAL CONDITION
The degree of physical welfare and the capacity of maintaining one’s
grip upon life in old age, under our present industrial conditions, may
be gleaned from the following: Of the non-dependent persons, just above
the poverty line, 65 years of age and over, investigated by the
Massachusetts Commission in 1910, 40.3 per cent. were found physically
defective. In Wisconsin in 1915, out of a total of 1,395 persons 60
years of age and over, 489, or 35 per cent., were “able to follow
gainful occupation”; 493 others could do light work; 245 were “able to
take care of their own person;” and 42 required attendance. In
Pennsylvania, in 1918, 36 per cent. of the aged 50 and over in the
cities investigated were found to be physically defective. Sixty-four
per cent. of these were found to be still in fair or sound health.
Quite a different tale is told by the investigations of the dependent
groups. Of the 57,049 paupers without age classification, enumerated on
January 1, 1900, in the United States, 15.4 per cent. were able-bodied,
40.5 were able to do light work, and 44.1 per cent. were incapacitated.
The Massachusetts Commission found among almshouse inmates 93.8 per
cent. defective; the next highest percentage of defectives was 86.0 for
recipients of State and military aid, and 82.7 for those who received
public outdoor relief. On the other hand, the defectives among the
non-dependent poor, as found by the same Commission, was only 40.3 per
cent.
The proportion suffering from chronic ailments among the aged inmates
studied in Wisconsin was also found to be very high. Only one-third were
found to be reasonably sound in mind and body, and only 14 per cent.
were able to work regularly, while 12 per cent. required attendance.
A study made by the Ohio Commission from the reports to the State Board
of Charities, reveals, the Commission states:
“Nearly half, or 47.6 per cent. of the regular inmates of county and
city infirmaries are old and infirm and 24.5 per cent. are sick and
diseased or persons who have become disabled through loss of members.
More than 75 per cent. of the inmates of county infirmaries in Ohio
are, therefore, old and infirm, or persons disabled by sickness,
disease or accident. The remaining 27.7 per cent. is made up of
miscellaneous groups of persons with various defects.”[34]
A study of 2,260 persons representing the total population of 22 typical
infirmaries in Ohio made by Dr. John O’Grady showed results somewhat
different from the foregoing. Of the 2,260 cases, 830 or 36.46 per cent.
were old and infirm; 305 or 13.4 per cent were defective mentally; and
1,106 or 49.77 per cent. suffered from disease or physical defects.
The Pennsylvania Commission reports in regard to the almshouse inmates:
“Of the 3,405 cases investigated, only 12.80 per cent. are reported as
being in good or fair health. Of those reported in bad or poor
physical condition 28.92 per cent. were in a general state of poor
health; 13.21 were crippled, maimed or deformed; 9.04 per cent. were
feeble-minded; 9.3 per cent. were defective in sight or hearing; 7.25
per cent. were rheumatic; quite a number were epileptics and a number
were suffering from various diseases. Of the total number investigated
only five per cent. were reported as able-bodied; 40 per cent. were
partially disabled, while 55 per cent. were totally incapacitated. For
the same group in the house-to-house studies, 64.3 per cent. are
reported in good or fair health, and only 35 per cent. are in poor
health. In the total pauper population of the United States in 1910,
the percentage of able-bodied was 20.64 per cent.”[35]
The Commission concludes:
“Regarding the aged paupers and the non-dependent aged classes, the
outstanding differences lie, it would appear, in the respective family
connections and physical conditions.”[36]
CLASSES FROM WHICH RECRUITED
Of the 57,888 male paupers admitted to the different county almshouses
in the United States in 1910, 37.5 per cent. gave their occupations as
common and agricultural labourers. The other occupations gave very small
percentages each. The Massachusetts investigation in the same year
disclosed that 33.7 per cent. of the almshouse paupers were previously
engaged in manufacturing and mechanical pursuits, followed by 22.6 per
cent. engaged in housekeeping and domestic service, and 14.5 per cent.
who were recorded as common labourers. In Pennsylvania, of 1,939 paupers
stating their last occupation, 47.6 per cent. were classified as common
and unskilled workers; 29 per cent. as engaged previously in
housekeeping and domestic service, and less than 18 per cent. were
engaged in occupations of skilled or semi-skilled character.
[Illustration: PERCENTAGE OF INCAPACITATED AGED PERSONS IN GENERAL AND
PAUPER POPULATIONS.]
HOME OWNERSHIP, PROPERTY, AND INCOMES
Complete and exact information regarding the economic conditions of the
aged in the United States and the extent of incomes outside of their
earnings is not available. However, even an examination of the meagre
data available, discloses a distinct insufficiency of incomes, outside
immediate earnings, in old age for the majority of wage-earners.
According to the Twelfth U. S. Census, only 847,069, or 27.4 per cent.,
of the 3,083,995 persons 65 years and over in the United States owned
their homes free, while 196,407, or 6.4 per cent., owned them mortgaged.
The 1910 Census does not give the home ownership by ages. The latter
enumeration does classify the owners of farm homes, however, by age
groups. Thus, in 1900 the percentage of those 65 and over in the United
States who owned their own farm homes, to the total population of that
age, was about 16.3. But only about 15.1 per cent. of the same age group
owned their farm homes in 1910, and these included both free and
encumbered. At the same time, the percentage of the rural population of
the same advanced age constituted 57.2 per cent. in 1910.
[Illustration:
HOME OWNERSHIP OF PERSONS 65 YEARS AND OVER—1900
]
The precarious economic status of the aged wage-earners and the extent
of their ability to support themselves in old age becomes further
manifested from the following disclosures:
The Massachusetts Commission’s investigations revealed the economic
conditions of the non-dependent aged poor in 1910 as follows:
WEEKLY INCOMES AND EXPENSES OF NON-DEPENDENT AGED POOR
Av. Av.
Income Expenditure
from All for All PERCENTAGE OF THOSE RECEIVING
Sources Purposes INCOME FROM SPECIAL SOURCES
„ From From From
„ „ Savings Relatives Pensions
Individual males $7.32 $6.26 36.1 36.1 15.5
Individual females 4.50 4.28 44.0 57.0 9.4
Couples 11.70 9.32 55.3 29.0 19.5
Families 12.24 12.00 58.7 12.4 32.3
Commenting on these figures, Mr. Squier points out:
“From the above table, it will be seen that the many thousands of
comparatively well-to-do aged people may, by the slightest slip of
luck or fortune, become absolutely dependent on charity. With the
average weekly income of $7.32 for males and $4.50 for females, an
average expenditure respectively of $6.26 and $4.28 and with such a
large proportion of the incomes from sources other than that of weekly
wages, one can readily appreciate that it is but a step from poverty
to pauperism after the sixty-fifth birthday is passed.”[37]
In Wisconsin the economic possessions of the aged, as found by the
Industrial Commission of that State, were found to be as follows:
“Of the married couples 65 per cent. and of others 56 per cent. owned
homes mortgage free; of all home owners 65 per cent. have property
(including homestead) of more than $2,000; of non-home owners 12 per
cent. have property to the value of more than $500; of married couples
60 per cent. have incomes from labour or property over $300, and of
others 40 per cent. have incomes over $200 per annum.”[38]
Even more complete data is given by the Ohio Commission:
“Of the 1,432 persons studied in Hamilton, 525 or 36.6 per cent. owned
their homes free from encumbrance and 138 or 9.6 per cent. owned them
mortgaged. Of the 416 persons studied in Cincinnati, 98, or 23.6 per
cent., owned their homes.[39]
“Of the 663 homes owned by the persons studied in Hamilton, 435 were
owned by wage-earners or widows of former wage-earners and 228 by
business or professional men or their widows. One hundred and
ninety-six of the wage-earners owning their homes were relatively
skilled or semi-skilled wage-earners and 31.6 per cent. of the total
unskilled wage-earners owned their homes.”[40]
The commission further reveals that:
“Home owning was noticeably more common among immigrants than among
the native-born. Approximately two-thirds of the Germans owned their
own homes and among other foreign born the proportion was almost as
high. Among the natives of Ohio every other person visited was a home
owner, but among the natives of other states home owning was rare. The
small number of persons from other states owning their home is due to
the predominance of certain groups, already referred to, from the
backward districts of the south, whose members have not yet acquired
the art of saving.”[41]
The Ohio Commission’s investigations disclosed that one home in every
four of those studied at random was heavily encumbered; 65.2 per cent.
of the latter were mortgaged for one-third of their value, and 20 per
cent. for at least two-thirds of their value. Of the 663 home owners in
Hamilton, 198 had in addition property or some other means of income;
out of the 769 non-home owners in the same city, 119 had property or
other means. Nearly 42 per cent. of the former and 67.2 per cent. of the
latter class had property or other source of income valued at less than
$500.
The Pennsylvania Commission in its studies of the aged in the cities of
Philadelphia, Pittsburgh, and Reading, found 38 per cent. having
property possessions of one kind or another. It also found 43.6 per
cent. of the population 50 years of age and over, who claimed to have
had no other source of income outside that of their own earnings. Of
those that did have outside means, 35 per cent. had incomes amounting to
less than $10 per week. The incomes in 24.2 per cent. of these cases had
come from their own children, over seventy per cent. of whom were
wage-earners themselves. Of the people investigated the Commission
states: “The earnings of these aged workers in the high wage period of
1918 were as follows: 14 per cent. earned less than $12 per week; 29 per
cent. more, from $12 to $20; and 37 per cent. did not earn anything.”
The property possessions and earnings of the definitely dependent
classes are even less. The Massachusetts Commission found the percentage
of those having property above debt at any time to be 37.8 for all
classes of dependents.[42] The Wisconsin Report gives the home ownership
of aged persons who received outdoor relief during the fiscal year
1913–1914 as follows: Of 107 married couples only five had a home clear;
one had it mortgaged and 101 had neither; of 460 individuals of both
sexes 47 had their homes clear; 26 had them mortgaged, while 387 had
none at all. Only two of the married couples and 10 of the 460 other
individuals had property exclusive of homestead valued at $500 to
$4,000.
The Ohio Commission in discussing the same subject concludes:
“Among the inmates of county infirmaries are to be found some who were
once prosperous; of the 1,608 persons studied 113 had had property
valued at more than $2,000, while 39 had had property valued at more
than $10,000.”[43]
The Pennsylvania Commission found similar conditions:
“Of more than 2,000 inmates questioned, as to their property holdings,
191 or 9.5 per cent. claimed to have had property above debts. More
than 90 per cent. never possessed any property of their own. At the
time of investigation less than one per cent. were receiving incomes
from property holdings or savings.”[44]
The significance of these disclosures in terms of old-age destitution,
stand out so clearly that they need hardly be commented upon further.
The preceding data leave no doubt as to the consequences of our present
policy of aloofness. In the face of actual destitution in old age, which
now confronts almost half of our industrial population, it seems hardly
consistent to continue to advocate and pride ourselves upon the
blessings of laissez-faire and individual thrift. The foregoing would
seem to indicate emphatically that the problems facing the old are as
real and difficult of solution by individual effort in the United States
as they have been found to be in other countries. It is obvious that
old-age dependency, whether of one form or another, is with us, and that
the introduction of a constructive social policy cannot be delayed much
longer. The investigations of the aged seem to show clearly that for the
wage-earner who has passed beyond the half century mark the
all-important decision whether he is to escape the poorhouse in old age
and a pauper’s grave at the end, does not altogether depend upon his own
desires and ambitions. This decision will be made largely by the social
forces which lie outside his own control, namely, the extent and
economic standing of his family and his own physical vigour.
CHAPTER IV
THE COST OF FOLLOWING THE OSTRICH POLICY
No social order can for long remain indifferent toward the problems and
difficulties confronting some of its members, without directly or
indirectly paying the price for its unconcern. The cost of this apathy
is difficult of estimation, as it is frequently indirect and indistinct.
A brief examination of the facts, however, shows that the price paid by
society for its indifference is prodigious. For what is to many more
distressing and nerve-racking than actual suffering is the fear and
dread of such misery and privation. As Thomas Carlyle expressed it: “It
is not to die or even to die of hunger, that makes a man wretched; many
men have died; all men must die. But it is to live miserably, we know
not why; to work sore, yet gain nothing; to be heart-worn, weary, yet
isolated, unrelated, girt in with a cold, universal laissez-faire.” It
is a patent fact that public pauperism in old age is the dread and agony
of thousands of workingmen and women. Many lives are embittered by the
fear of dependency in old age. Who can measure the extent of depression
of spirits, and the amount of physical drain accompanying such
depression and its loss to society in terms of efficiency and progress?
A brief examination of the obvious costs is of supreme value.
(a) THE COST TO THE TAX-PAYER
The total cost of the dependent aged in the United States is, of course,
impossible to obtain. Not only are the records of charitable
institutions incomplete, but it is common knowledge also that millions
of dollars are being given in one form of relief or another by
individuals, as well as by private organizations, the extent of whose
benefactions can never be ascertained. Basing his estimate upon the
average cost per dependent person given by the Massachusetts Commission
in 1910, Mr. L. W. Squier calculated the total annual cost of the
dependent population 65 years of age and over, exclusive of those in
correctional institutions and insane asylums, to have been
$178,899,968.41 in 1910. “In round numbers,” Mr. Squier estimated, “it
is costing this country $220,000,000 a year for the support of this
great host of worn-out toilers.”
The Massachusetts 1915 Decennial Census summarized the per capita
expenditures on the dependent aged 65 and over in that State as follows:
“Exclusive of United States pensioners, the aggregate number of
dependent persons in Massachusetts 65 years of age and over who
received aid from all sources (both public and private) during the
fiscal year ending March 31, 1915, was 34,496 and the aggregate amount
of aid received by this number was $3,233,948.74. Corresponding data
for public relief were 26,403 persons aided to the amount of
$2,250,685.91 and for private relief 9,862 persons aided to the amount
of $983,262.83. The per capita expenditure on account of persons
receiving aid from all sources (both public and private) was $93.75;
for persons receiving aid from public sources, $85.24; and for persons
receiving aid from private sources $99.70. For males the per capita
expenditure (public and private) was $98.64 and for females
$90.26.”[45]
In Wisconsin in 1914 the average cost per person of almshouse
maintenance, including interest on invested capital, was $3.58 per week
or $186 per year. The amount of outdoor relief averaged $50 per person
per year. The Ohio Commission found that:
“Independent of the value of the farm products consumed in these
institutions, the cost of maintaining the city and county infirmaries
in Ohio in 1915, was $1,455,944 and the average per capita cost was
$169.88. Of the 80 infirmaries reporting, 13 had a per capita cost of
less than $100; 27 between $100 and $149; 20 between $150 and $200; 15
between $200 and $250; four between $250 and $300; and one over
$300.[46]
“The total expenditure for poor relief by cities, counties and
townships was $1,966,352 in 1916. Other state institutions cared for
37,139 different persons in the year ending June 30, 1917. Nearly half
of these persons were over 60 years of age. During the same year
expenditure on these institutions was $5,247,327.
“In addition 46 private, church and society homes were caring for
2,628 aged persons in June, 1917.
“The state has an investment of over $25,000,000 in its state
institutions. The cities and counties have an investment of
$10,000,000 in the county and city infirmaries alone. Altogether, this
public investment calls for an interest charge of nearly two millions
annually, to say nothing of depreciation.
“Roughly speaking, then, nearly $10,000,000 is expended annually by
local and state public charities and a large part of this, probably
about half, is for the care of the aged. The amount expended by
private organized charities for the care of the aged and for all
relief and social work amounts to several million dollars
annually.”[47]
Exceedingly interesting related data is presented by the Pennsylvania
Commission. It finds that in 1917:
“The average cost per week for all almshouses, was $5.87 or $25.14 per
month. In 1916, according to the report of the State Board of Public
Charities, the average per capita cost, when computed in a similar
way, was $5.09 per week or $21.81 per month. It must be noted that the
expenditures made during the year on buildings and improvements, and
the interest on permanent investments, are not included, in most
cases. It is impossible to ascertain the value of the different
institutions at the present time. It is a well-known fact, however,
that many of the larger institutions are worth millions of dollars. It
is not unusual to find many county almshouses occupying farms of
several hundred acres and building properties worth several hundred
thousand dollars. In the few institutions where big expenditures were
made on buildings and improvements during the year 1917, five per
cent. added for interest and depreciation increases considerably the
per capita cost.”[48]
It also found that:
“One county home with eleven inmates spends $6,655.60 or $605.05 per
year per inmate; while another County Home with three inmates spends a
grand total of $2,570.55 or $856.85 per inmate per year. One almshouse
is maintained solely for one inmate and while the direct cost of him
to the county was $110.26 there was spent $240.25 or $2.17 per dollar,
to deliver this money to the inmate.
“In 1916, $4,449,108.20 was spent for maintaining 16,754 inmates. This
total increased to $5,114,307.15 which was spent in 1917 on 16,716
inmates.
“The average yearly per capita cost for 1917 was $301.68.”[49]
In the Benevolent Homes for the aged the Pennsylvania Commission found
that in 1917 a total of $485,441.78 was being spent on 1,545 inmates, or
a per capita cost of $6.03 per week or $25.83 per month. It also found
“one institution in which the weekly per capita cost amounted to $19.88,
while in another it amounted to $33.81.” The above averages the
Commission states do not include the interest on permanent investment or
depreciation. When these were added the Commission found the average
cost per inmate in these Benevolent Homes to be $33.99 per month in
1917. There are practically no figures available showing the money spent
on the aged poor by private charity organizations. However, a study of
the Philadelphia Society for Organizing Charity made by the same
Commission, disclosed that during the most prosperous 12 months—between
October 1917 and October 1918—the Philadelphia Society alone spent
$33,291.57 on 162 aged people, or an average of over $200 per
beneficiary. The extent of contributions, given in a confidential
manner, by private persons as well as by churches and fraternal
societies throughout the country is, of course, impossible to ascertain.
It is obvious that the millions of dollars spent annually on the care of
the aged, whether through public or private agencies, ultimately come
out of the pockets of the taxpayers. And the Pennsylvania Commission’s
indictment of the administration of these funds is applicable to many
States. The latter Commission states that its investigations:
“Disclose an exceedingly confusing and bewildering system of
management of our county poorhouses. Not only do many of the officials
connected with these institutions have little knowledge of the
problems involved in the care of the aged, but there is obviously a
laxity in the management of these institutions and the distribution of
the county funds. The state supervision of these aged homes is
insufficient, loose and hardly competent. Careful records are kept in
only a few institutions. There are no uniform methods of accounting.
Computations of costs are made in almost as many forms and methods as
the men making them. Many of the per capita costs of almshouses given
in the reports of the Board of Public Charities do not represent the
actual cost. The latter do not include the interest upon the permanent
investment and, in many cases, do not include the value of farm
products.”[50]
In his private business the citizen is continually making further
inquiries in regard to newer and more efficient methods of management by
means of which he may reduce his cost, and increase his returns. To
suggest, however, that the same principle should be applied to national
or State business is, unfortunately, still considered by many to be the
rankest of radicalism. Yet what could be greater folly than to continue
to spend these many millions of dollars without either an accurate
account of the expenditures or of the returns secured?
(b) THE COST TO THE INSTITUTIONAL INMATES OR RECIPIENTS OF CHARITY
Of greater social importance than the mere expenditures of the enormous
sums of money cited in the preceding pages is the degree of
effectiveness and the adequacy of these methods of aged relief in
meeting the purposes desired. These methods must be judged in terms of
the quality of the services rendered to those who are forced to seek
assistance in return for the funds expended. Even the present chaotic
means of caring for the aged, if they are at all to be effective, must
not only seek to relieve the immediate needs of the aged but must aim
also to prevent dependency and thus ultimately reduce the cost of
pauperism. Measured by these standards it may safely be stated that the
existing means of aged relief are ineffective, inadequate and
undesirable. The present methods of relief are looked upon as degrading
and are of a repugnant nature, invariably resulting in the loss of
self-respect in the individual recipient and increased pauperism in the
group. The stigma of public charity is inseparable from the almshouse
and public outdoor relief as commonly administered, because of long
custom and deeply ingrained public opinion.
Francis Herbert Stead, who was connected with the English workhouses for
years, says in his book, “How Old Age Pensions Began to Be”:
“I saw men who trembled for very age hawking trifles in the streets,
and tottering on through mud and sleet and icy wind. I saw men slowly
wither up, body and soul, under the blighting sense that they were
wanted nowhere, and a burden everywhere.
When he is forsaken,
Withered and shaken,
What can an old man do but die?
“Only those who have seen it can conceive the misery of the poor old
fellow who finds that society has no longer any use for him, who feels
he is done with and done for. Many old men come to me, with tears
running down their cheek, imploring me as if I were Almighty God to
have pity on them and get them work.—‘Anything, oh, anything, no
matter what it is, to keep me from the workhouse.’”
Another Englishman—John Metcalfe—declared:
“One of the sights which make life unbearable to me is that of old men
and women, who in a worse plight than the sturdy beggar (who has the
spirit to beg) are trying to get a scanty living by doing any kind of
little odd jobs. They know that life must soon end for them, and they
have one ambition left, the ambition not to die in the workhouse.”
These conditions do not exist in England alone. In this country too it
has often been asserted by competent authorities that insanity and
suicide of middle-aged persons is due in a large measure to the dread of
old age. Even in the United States there are, apparently, workers who
would rather enter the valley of the shadow of death than the loathed
confines of a poorhouse. In a brief period of two months the writer’s
morning newspaper reported the following two stories, which need no
further comment:
“AGED MAN DIES AS HE FACES ALMSHOUSE
“Camden, N. J., Feb. 28—Heartbroken because he had to go to the
almshouse, Jacob ... 78 years old, of this place, was taken ill and
died yesterday afternoon.
“Jacob, and his brother, George, 76 years old, lived and worked
together all their lives. They have spent their last declining years
alone together, with no relatives, at their home here. As age crept
upon them they found themselves unable to obtain work, but they eked
out their slender savings until the final penny was gone. Arrangements
were made to have them sent to the almshouse at Blackwood, and the
news was too much for the elder of the brothers and he became ill. His
brother went to the almshouse alone.”
“FEARING OLD AGE HE JUMPS FROM HIGH BRIDGE
“Cleveland, May 7.—Fear of losing his position because of his age is
said by friends to have been the reason for a suicide leap today by
Joseph H...., 60 who hurled himself to death from the high level
bridge to the street pavement 125 feet below.”
The almshouse, like most charitable institutions, leaves much to be
desired as a home for the aged. Even if the majority of almshouses and
charitable homes in the United States afforded a fair degree of physical
comfort, sanitation, good food and humane treatment, it would still seem
hardly fair to herd together indiscriminately the worn-out honest
workers, the insane, the feeble-minded, the confirmed inebriates and the
petty criminals, as is done in most public poorhouses at present. The
actual conditions of the great majority of county and semi-private
institutions are far from ideal. The recent investigations of the
several State Commissions, as well as personal observations, reveal that
life in public almshouses is far from inviting, not merely on account of
the opprobrium of public opinion, but because in addition life in these
institutions is exceedingly dull, depressing and restricted.
In practically all States the superintendents of the county almshouses
are as a rule political appointees. “The great majority of these,” says
the Pennsylvania Commission, “have had no experience of this nature,
previous to their appointments. Many of the men connected with the
management of the almshouses are prejudiced and often without the
rudiments of an education. Where the superintendents are highly educated
men and trained—of these there are only a few—they are as a rule
powerless, and have no authority to make improvements without the
consent of the Poor Board or the County Commissioners.”
Similar conclusions are reached by the Ohio Commission. Regarding the
actual conditions of the County Almshouse the Ohio Commission says:
“The care of the various inmates in the county and city infirmaries in
Ohio is a rather difficult problem, but it is one which is not taken
very seriously, as is evident from the conditions prevailing in the 45
infirmaries visited in the course of this study. Thirteen were in very
bad condition, 19 others would not come up to any reasonable standard,
and the remaining 13 were in fairly good condition.
“In three infirmaries among those in bad condition, new buildings are
absolutely essential for any improvement in the situation, the old
buildings being entirely uninhabitable. Persons employed to keep the
premises clean seemed more lavish in the use of disinfectant than of
soap and water. The inside of the buildings was unclean and slovenly;
the walls had not been painted in a generation and no attempt had been
made to repair cracks or other defacements.
“Many old persons suffer from foul smelling disorders and when a
number of them congregate in small groups, the resulting bad odor is
very noticeable to a person unaccustomed to it. Lack of attention
regarding personal cleanliness, poor ventilation and over-heating tend
to accentuate the odor. In many of the buildings inspected, sections
occupied by the inmates were so foul smelling that they were almost
unbearable. The inmates frequently were unclean, the beds dirty, the
bed covers old and worn and ventilation poor. Those who were unable to
care for their physical needs and demanded constant attention, had to
depend on other inmates for the most urgent wants. Often these
improvised attendants were feeble-minded or at least ignorant and
inattentive. In the entire group there was virtually no medical
supervision.”[51]
Somewhat better conditions are described by the investigators of the
Pennsylvania Commission as having been found in the larger institutions
in the State; but even in these institutions the Commission declares:
“There was no genuine homelike spirit. Most of the inmates looked
sullen and wore depressed and downcast mien. Practically all were
eager to get out of the place. Even in the best equipped institutions
there were no recreational facilities provided for these inmates.
Except for a pack of cards, a game of checkers and a few old
magazines, there was nothing these aged could do to keep their minds
occupied and to prevent their nursing of grievances and discontent.
This feeling of depression is augmented by the fact that in most Homes
no attempt is made to segregate the old people,—who have been
compelled to go to the almshouse through no fault of their own,—from
the feeble-minded, and in some cases even the partially insane. In
many places they are compelled to eat at the same tables and sleep in
the same dormitories with the latter groups. The inmates in most
almshouses are a very heterogeneous collection. They comprise insane,
feeble-minded persons and epileptics, blind and deaf mutes; sufferers
from chronic diseases, persons with criminal records; prostitutes;
mothers of illegitimate children, orphans and deserted children.”[52]
Miss Nassau, after visiting the Homes for the Aged on Blackwell’s Island
declared:
“Perhaps the most striking thing of all is the horror of the huge
dormitories with the beds nearer together than in the usual hospital
wards. That people can sleep in such huge dormitories so close
together seems incomprehensible—for although the very poor have never
been used to the luxury of real privacy there is a difference between
sharing a room with two to four relatives—and a room with a hundred or
so strangers.... In spite of long years of tenement visiting I could
stand no longer the sight of such depressed, hopeless, sad, vacant,
wretched faces. All seemed to live such a hopelessly monotonous life
with no individuality or scope for personal effort.... Of course
people do get desperate and commit suicide or try to do so. One of the
nurses at Blackwell’s Island said, ‘I don’t think I can stand it here
much longer, it is awful. I don’t wonder some of the old people wander
down to the river and get in boats and—well, sometimes nothing more is
heard of them!’”
While commenting favourably upon the regulations for cleanliness and
general hygiene, Miss Nassau states:
“My last comment is on the lack of provision at both places for the
keeping of personal effects, which is a most serious defect.
“At Staten Island, in the dormitories the women had chairs by their
bedsides, so they practically owned a chair as well as a bed, and the
clothes on their backs. Think of the tragedy of owning nothing more,
when every human being has inherently a love of acquisition of
property, as is proved also in asylums for children, where it is found
that children pine away if acquisition of personal belongings is
denied them! I asked one of the heads at Staten Island if the inmates
could not have a locked tin box for personal belongings, but he
insisted that that would be a menace to the general hygiene. I said,
‘But the boxes could be inspected regularly.’ To which he objected
irritably, ‘There is no one here to do such work. I am short of help
as it is; besides the people here are riff-raff, anyway.’ This
statement I could not agree with at all, for many of the inmates
seemed very decent, respectable people, and in the cottages where they
were given liberty (entrance to the cottages is rather by ‘pull,’ and
perhaps to some especially deserving ones) they looked very neat and
nice.”[53]
In practically all States outdoor relief is given by the different Poor
Boards to persons either whose physical condition does not permit their
removal to the County Homes, or to women with dependent children,
temporarily in need, who are physically able to care for themselves.
Outdoor relief may be given also to those who have some one to care for
them in their own homes, or it is given to those who while physically
able are in temporary need of relief. This form of relief is usually
dispensed through the County Poor Directors themselves or through a
clerk appointed by them. Cash is given only in rare cases. Generally an
order for groceries or merchandise is given to merchants extending
credit to the Poor Directors. Of the constituency of these Boards, the
Pennsylvania Commission states:
“It is seldom that the county poor directors, county commissioners or
other poor authorities have any definite knowledge or understanding of
the problems of poor relief. These bodies are generally elected or
appointed because of their political leadership in their respective
communities. The policies of rendering relief to the poor are very
often shaped in accordance with the political fluctuations and whims
of the particular localities. Few make provisions for careful
investigation as to the extent and need of assistance or for
supervision of those who receive relief. The clerk of one County Poor
Board, who dispensed more than $10,000 worth of goods in one year,
frankly admitted that he had no experience in this work. He was a
machinist by trade and confessed he knew nothing of the problem. He
said that he rarely investigated a case but that he knew he was
supposed to ‘relieve the needs of the poor,’ and furthermore, that
there ought to be a better method of conducting this poor relief
system, but that he held his job because of his political influence
and that ‘it was much worse with the Democratic clerk who preceded him
in this office.’”[54]
What are the actual returns made to institutional inmates for the
enormous expenditures cited above? The Pennsylvania Commission has made
a careful analysis of the quality and quantity of food consumed in one
typical county almshouse of that state on the respective tables for
inmates and stewards. The general methods of caring for the aged may be
seen from the following: The almshouse studied had a farm of 514 acres
valued at $200,000, while the buildings were valued at $250,000 more.
The analysis showed that during the year 1917 the inmates’ table
consisted on the average of 313 persons, while the stewards’ table
consisted of 32 persons. The following differences in table fare were
found: The amount of butter consumed during that year averaged 7½ lbs.
per inmate and 30¾ lbs. per steward. The inmates averaged 28 eggs per
year, while the stewards averaged 200 per year. Sugar was consumed on
the average of 22½ lbs. per inmate and 32½ per steward. The average
amount of milk consumed by the inmates during that year was 23 qts.,
while the stewards averaged 101 qts. The average amount of chicken
consumed by the inmates was a little over one ounce per year, while the
stewards averaged ten pounds. The same proportion held true of other
foodstuffs. The Commission comments:
“The above is illuminating from the standpoint of the quality and
quantity of the foods consumed at the respective tables of inmates and
stewards. It is shown throughout that the coarser foods are consumed
by the inmates, while the better kinds, are used by the stewards. This
is significant when it is remembered that many of the aged folks are
continuously sick and need more of the better foodstuffs.”[55]
(c) THE COST TO INDUSTRY
Much has been heard lately of the importance of increasing production.
The necessity for higher standards of workmanship, newer devices, and
more scientific methods of management in order to increase the
efficiency of the workers is now dwelt upon by all industrial leaders.
Innumerable devices which would tend to stimulate a greater out-put by
their workers are suggested by business men. It is patent, however, that
a high degree of efficiency can be obtained only when one is possessed
of a mind that is cheery, hopeful, and more or less contented. The
reactions of mind upon body, in terms of industrial efficiency, can
hardly be over-emphasized. But as long as the worker is left to grope
with the problems of old age individually, the wage-earner—especially
the middle-aged worker—can hardly be expected to maintain a happy state
of mind.
To many millions of workers in the United States today, the future is a
dark, unfathomable abyss in which hope, independence and comfort have no
place. Advancing age is looked upon with great apprehension and dread
even by many who are engaged in the skilled trades. What with the
unemployment of old age, the high cost of living, and the numerous other
vicissitudes of modern life, their meagre savings are soon exhausted.
Slowly, as the years advance, the thought of what he is to face during
the days when he is no longer capable of working, robs the mind of the
middle-aged worker of every form of contentment and enjoyment of the
present. The thought of helplessness in the future gradually fills the
life of a worker, especially if he is already advanced in age, with a
fear and a feeling of fatalism which has a deadening influence upon
everything he does. The prospect of the poorhouse with its stigma of
pauperism, so detestable to the honest wage-earner, haunts him like a
dark shadow and saps every bit of his vitality. The dreadful thought
that after a lifetime of valuable service, he will be compelled to give
up long-cherished home ties and life associations, to lose sight of the
old home, to hear no longer the sound of his loved ones’ voices, is
constantly before him and fills his life with bitterness. He knows that
life must soon end for him, yet he has one ambition left—not to die in a
poorhouse. And these reflections inevitably result, especially to the
sensitive and thoughtful worker, who cannot help dwelling with horror on
the dreary period of old-age imprisonment which awaits him, in physical
deterioration and the reduction of physical vigour, which in turn
increasingly affect adversely his interest, efficiency, and contentment.
Under these circumstances, what opportunities are there for the
conservation of energy and the increase of production?
(d) THE COST TO THE YOUNGER GENERATIONS AND TO SOCIETY
The present system of aged relief stands indicted not merely because it
is inadequate, incompetently administered, and destructive of industrial
efficiency. It must be called to account chiefly because of the
detrimental effect it has upon the future. The present methods of caring
for the aged necessitate a reconsideration and a readjustment because of
their evil results upon the coming generation and upon society as a
whole. For of greater social significance and more far-reaching
importance than either the money spent on the decrepit, or the treatment
received by those whose lives have been spent and whose hopes of
rehabilitation or restoration to society are slight, more sinister than
even the industrial inefficiency it creates, are the effects the present
methods of aged relief have upon great numbers of the younger and
especially middle-aged wage-earners.
It is now generally recognized that society ultimately pays the price
for all its apathy and resultant maladjustments. From the first
impression it would appear that while this truth may be admitted, the
price in the case of the neglected aged would be reduced to a minimum.
For the great majority of the aged are rarely restored to active social
participation, and their effect upon society, whether for good or evil,
would seem to be nil. However, a closer observation reveals an intimate
relationship between the superannuated workers and the younger
generation with its children.
The data given in a preceding chapter show that, while aged dependency
is widespread in this country, most persons, despite their poverty,
succeed in avoiding either public or private charity. Obviously, these
do not all commit suicide upon reaching old age, nor are many found
actually starving on the streets. Most of these aged folk, as shown in
the preceding chapters, are taken care of by their children or
relatives. Indeed, this is given by the Pennsylvania Commission as the
chief difference between those who remain “non-dependent” and those who
must seek the poorhouse as their sheltering place. The studies of the
different State Commissions show conclusively that few children able to
do so are unwilling to aid their parents. On the other hand, it was
found that in many instances children were supporting their aged
parents, against great odds, either because of deep attachment to them
or because of pride, which would rather suffer in silence than accept
charity. While this may seem a very meritorious act, to those who
consider it an obligation for children to support their parents, or who
take it as indication of the much-prized family solidarity, it can
hardly be accepted as a desirable basis of society, under present
conditions, that the older generation must be supported by the younger.
The younger generation must be considered in any discussion of the aged
problem, especially if it is to be accepted that the aged are to be
supported by their children. The proverbial “mother-in-law” is
undoubtedly blamed for many more things than she is actually guilty of.
Nevertheless, there are few persons who could not reflect upon one or
more of their acquaintances whose young lives have been made pitiably
wretched, and in some instances totally ruined, by the constant
“pestering” of an old father-in-law or mother-in-law. Such conflicts are
almost inevitable.
Romain Rolland’s characteristic Frenchman, Colas Breugnon, faced with
such a situation after a fire, bewails his misfortune thus:
“I have lost everything in the world,” thought I. “My home,—the house
was full of dear memories,—and the hope of ever having another of my
own; all my savings, which it took me years to get together, bit by
bit, and which were so much the more valuable to me, and worst of all,
my independence is gone; for now, of course, I shall have to live with
one of my children, and I don’t know which of us will hate it the
most. It is the one thing I have always been resolved against, as the
worst that could happen. There is no use telling me that I love them,
and they love me,—I know all that, but young people and old interfere
with each other, and it is natural and proper for a bird to sit on its
own nest, and hatch out its own eggs in its own way. Respect for the
old is all very well, or rather it makes a difficulty, for you are not
on an equality with people when you are obliged to show them respect.
I have tried to behave so that my five children should not have too
much respect for me, and I think I have succeeded pretty well, but
there must always be a distance between us. Parents come and go in
their children’s lives, like strangers from a far country; there can
never be perfect understanding from one generation to another, and too
often there is, on the contrary, interference and irritation.”
As a rule the old persons hate to feel dependent upon their children.
They suffer greatly from not being “able to make their own dollar,”
instead of accepting it from their children. On the one hand, the old
who for years have been accustomed to be looked up to as the superiors
and masters of the household can hardly adjust themselves to a position
of “added burdens,” when they become dependent upon their children. They
find it difficult to give up their authority. On the other hand, even
loyal children begin to lose their respect for parents who have become
feeble, irritable, and burdensome. As a result there is frequently great
suffering on the part of both the old and young generations, which
sometimes ends disastrously for the children.
In addition to the evil effects upon the second generation described
above, there is also the third generation to be considered. It seems
cruel to force any father or mother in this twentieth century to decide
between supporting old parents and contenting themselves with a little
less food, less room, less clothing, and the curtailment of their
children’s education; or sending parents to the poorhouse or charitable
agencies, accepting the stigma of pauperism, and thus assuring
themselves of more food, more room, and more clothing, and a better
education for their children which would help them to become somewhat
more proficient workers. This is a difficult alternative, yet it is
certain that thousands of parents in the United States are annually
compelled to make such decisions.
Unfortunately for the children, the hateful odium of charity and
pauperism is so repugnant to self-respecting labouring men and women
that the decision, in the majority of such cases, is made in favour of
the passing generation. Thus the lack of provisions for the old is often
responsible for the stunted and thwarted growth of the children. Because
of the necessity of supporting the aged, the children are frequently
doomed to under-nourishment; and to a life in the midst of crowded and
unsanitary quarters. The children are compelled to leave school early in
life and join the ranks of the unskilled; to add further to the already
over-crowded industries and thus lower the wages of their own fathers
and other such workers. They are doomed to physical deterioration early
in life, and in turn to aged dependency, in order that they may keep up
the vicious cycle. And this slaughter of the innocent brought upon the
altar of ignorance to the ostrich continues, because the majority of the
people in the United States still are afraid to lift their heads from
the sand. They dread to face and meet the facts—as every other civilized
country has already done—with a constructive social policy, for fear
that in doing so they may be accused of “paternalism,” or “socialism,”
or perhaps “Bolshevism”!
PART TWO
CAUSES OF OLD AGE DEPENDENCY
CHAPTER V
INDIVIDUAL CAUSES OF OLD AGE DEPENDENCY
The causes that make for dependency in old age, like those which make
for poverty in general, are many and varied. The forces which underlie
the brutal sweeping aside of thousands of wage-earners as decrepit and
dependent, are ordinarily too complex and of too heterogeneous a nature
to permit of enumeration. Some are due, doubtless, to congenital or
hereditary biological influences, some to physical environment and
social heredity, while others may be the result of the existing social,
economic, political, and perhaps even moral conditions. No completely
accurate classification can be made of the factors and influences which
go to make up human life, and which result in the fortune or misfortune
of the individual. What may seem the effect of one particular cause may
be so only in part. The main cause may overlap and encroach upon one or
more related causes. It is especially difficult to classify the causes
which make for old-age dependency, as even first hand information cannot
be taken at its face value in this instance; for frequently, where the
mental grip of the aged upon life is loosening, many things are
complained of which may have little or no actual basis for complaint.
The division of individual and socio-economic causes of old-age
dependency made in the following chapters must not, therefore, be taken
to mean that they are mutually exclusive. The classification is made
largely for convenience and on the ground that certain influences are
more closely related, and are affected by the individual, while others
lie largely outside of the individual and are more intimately allied
with and dependent upon the current social and economic forces.
SUPERANNUATION AS A CAUSE OF OLD AGE DEPENDENCY
In any discussion of the causes of old-age dependency it is important to
state first the part played by feebleness and inefficiency, naturally
resulting from old age. The studies made by the several State
Commissions, as well as by many other competent authorities reveal that
old age as such is a comparatively minor cause of dependency in later
life. As was pointed out before, the present problem of old age is due
largely, not to the total incapacity or feebleness on the part of the
aged, but rather to their inability to cope with the conditions under
the highly developed modern machine industry which finds less need for
expertness and experience and greater use for speed and rapid
production. As a result, the younger generation, though less
experienced, is continuously crowding out the older and less efficient
workers.
The small part old age, as such, plays in dependency may be seen from
the following: The Thirteenth U. S. Census’ pauper enumeration gives the
percentage of aged and infirm in almshouses as 32.1. The Massachusetts
Commission in 1910 found the percentage of physical defect, due to old
age, among the aged poor 65 years and over, ranging from 17.2 in the
case of those receiving State and Military aid, to 35.7 in the case of
those receiving private outdoor relief. Of 133 cases studied in
Hamilton, Ohio, as to the cause of their retirement, only 25 attributed
it directly to old age. Among the almshouse inmates in Ohio, of 1,608
cases investigated, only 90 or 5.6 per cent, attributed it to the same
cause. In Pennsylvania also only 33.9 per cent. among almshouse paupers,
47.6 per cent. among inmates of benevolent homes, and 25 per cent. among
the non-dependent aged 50 years of age and over were defective because
of old age. In a study of 5,000 dependent families who came under the
care of the New York Charity Organization Society during the years
1907–1908, Professor Devine found only 11.98 per cent. who were
dependent because the head of the family was 60 years old or more.[56]
DEPENDENCY DUE TO WANING EARNING POWER
Closely associated with superannuation as a factor in dependency is the
decreasing earning power of those who have passed their prime in life.
It is commonly known that in many of the larger industries the age of
employment is set below the age of 40 and in some cases not above 35. As
a result many workers, who for one reason or another are compelled to
leave the occupations in which they were engaged for many years, cannot
be re-employed in the trades in which they have acquired expertness and
experience. These are compelled to seek new employment more suited to
their age, which invariably means decreased wages. As a factor in
dependency this is of utmost significance, for it must be remembered
that in spite of the reduction in wages the expenditures of these
persons for food and rent, even under normal conditions of living costs,
remain the same, while the expenditures for medicines are increasing
with age.
The extent of the changes in occupation, with the resulting decrease in
wages among workers who have passed their prime, may be judged from the
following. The Ohio Commission found in its studies of wage-earners in
Hamilton, that many men of weak physique who enter occupations like
moulding, blacksmithing and boiler-making, make the discovery that they
are not equal to the strain, after it is too late. These are forced to
seek new and lighter employments. Its intensive analysis of the Census
reports regarding ages and occupations indicates:
“That there are certain unskilled occupations which old men enter
after they have been compelled to give up work in their principal
occupations. There is a striking preponderance of old men in such
occupations as those of janitor, city labourer, watchman for cities,
and boarding and lodging house keepers. Nearly 24.8 per cent. of the
boarding and lodging house keepers (male), in the United States in
1900 were between 45 and 54; 21.8 per cent. were between 55 and 64 and
15.2 per cent. were 65 and over. Of the watchmen, policemen and
firemen 21.9 per cent. were between 45 and 54; 14.0 per cent. were
between 55 and 65 and 5.4 per cent. were 65 and over. Of the janitors
and sextons 21.8 per cent. were between 45 and 54; about 17.9 per
cent. were between 55 and 64 and 9.7 per cent. were 65 and over. In
1910, 52.0 per cent. of the janitors, 63.4 per cent. of the sextons,
41.3 per cent. of the city labourers, 65.7 per cent. of the city
watchmen, and 55.0 per cent. of the boarding and lodging house keepers
were 45 and over.”
The foregoing, concludes the Commission, shows that:
“Many workingmen are compelled between 50 and 60 to leave trades which
impose a severe physical strain.”[57]
Comparisons of wages earned in old age with those earned at lesser ages
bear out the relationship of old age to decreased earnings even more
clearly. According to the findings of the Massachusetts Commission in
1910, of all aged classes investigated, the earnings at the time of
investigation varied considerably from their earnings in the last
occupations. While 31.3 per cent. were found earning above $10 per week,
at the time of investigation, 49.9 per cent. were in this wage-earning
group during their last occupations. The percentage of those who
received below $10 a week was 50.1 during their previous earnings; while
68.7 per cent earned below this sum at time of investigation, or just
prior to their admission to the various institutions.
Valuable information regarding the wages earned by paupers in old age,
just prior to their admission to an institution, and in their earlier
days is also supplied by the Pennsylvania Commission. It comments:
“While 32.30 per cent. of the almshouse inmates earned less than $8
per week in their earlier years, a greater number, or 44.12 per cent.
were earning the same sum prior to their admission. On the other hand,
while 61.07 per cent. were earning between $8 and $20 per week in
their younger days, only 52.48 per cent. were earning the same amount
at the time of admission. This would prove that the earning power of
these inmates was gradually declining, due either to old age or
similar causes. The small wages earned by the majority of the inmates
also seem to show that many of these aged folk could not earn a
sufficient sum to maintain themselves in comfort. Of those who
reported their last earnings 21.33 per cent. earned between $12 and
$20 per week and only 6.4 per cent. were making $20 or more a
week.”[58]
LACK OF FAMILY CONNECTIONS
In the discussions of family connections (Chapter III), it was seen that
aged dependency and pauperism are almost in inverse ratio to the number
of children or relatives. Indeed, the presence of large numbers of
childless persons in our poorhouses indicates clearly the connection
between abnormally deficient family relationships and pauperism. In a
total of 44,433 female paupers enumerated by the U. S. Census of 1910,
only 30.9 per cent. had children still living. In Pennsylvania also, the
Commission found, that while 63.5 per cent among the almshouse paupers
had no children, in the case of those classified as “non-dependent
aged,” only 10.6 per cent. had no children living.
SICKNESS AND INDUSTRIAL ACCIDENTS AS CAUSES OF AGED DEPENDENCY
Very closely related to, and constantly attendant upon, aged dependency
is physical disability resulting from either accident or bad health in
general. It is common knowledge among social and charity workers that
ill health stands out as the largest factor in all causes of dependency.
It is conservatively estimated that in at least 50 per cent. of the
families who apply for aid, physical disability, either directly or
indirectly, constitutes the paramount cause for relief. The problem of
old age is largely a problem of sickness and invalidity. This fact is
generally recognized in European countries where old age insurance is
frequently operated in conjunction with health and invalidity insurance
systems. In these countries there are usually more persons receiving
invalidity pensions than old age pensions.
The extent of sickness as a cause of dependency among the aged may be
deduced from the following official studies. The U. S. Census
enumeration of almshouse paupers in 1910 discloses that “Of the 84,198
paupers enumerated in almshouses on January 1, 1910, 53,619, or 63.7 per
cent., were reported as having some serious physical or mental defect.”
The Massachusetts Commission in 1910 found in its almshouse population
only 12.5 per cent. able-bodied persons and the general percentage of
physically defective ones for all classes was high (72.2).
Of the conditions in Ohio, Dr. John O’Grady concludes:
“These figures, as well as the general observation of the
investigators during the course of the study, seem to indicate that
sickness, disease and accident are important factors in shortening the
period of man’s economic usefulness. Many of the workers interviewed
stated that they began to fail after 50. Machinists and pattern makers
complained of defective eyesight and the molders of rheumatism. As a
rule they paid little attention to these disorders until there was a
breakdown compelling them to give up work for two or three months.
“Illnesses were more important than any other cause in bringing about
premature superannuation and frequently required the expenditure of
all previous savings.
“There was every indication that for many wage-earners over 50 in
Hamilton, the problem of sickness was really serious. The
maladjustments, neglects and excesses of early life were then making
themselves felt. One hundred and fifty-five of the men interviewed
reported themselves as afflicted with definite disorders of various
kinds, such as rheumatism and kidney, bladder and stomach troubles.
These ailments, accentuated by age, frequently compelled them to be
absent from work for two or three months at a time.[59]
“Of the 2,260 infirmary inmates of whom a detailed study was made, it
was possible to obtain information in regard to the most important
cause of poverty in 1,608 cases. Disease, sickness, or accident was
given as the most important cause of dependency in 482, or 29.9 per
cent. of the total number of cases.”[60]
Sickness was also found to be the leading cause of disability by the
Pennsylvania Commission. This cause was given by 34.5 per cent. in the
case of the almshouse group; 36.2 among Benevolent Home inmates and 47
per cent. among the “non-dependent” aged.
The part played by physical disability in old-age dependency, however,
is not confined to the actual period of senility. Indeed, illness and
poverty are all too closely inter-related throughout our social system.
It is very often difficult to determine which comes first. The Social
Insurance Commission of California found in a study of 500 families who
received public aid, that there were many family heads who had been
earning considerably more than the average wage, but who were,
nevertheless, compelled to ask for aid because of sickness which had
consumed the savings of years.
That sickness encroaches upon the small property possessions of the poor
and succeeds in ultimately wiping them out, is clearly brought out by
the investigations of at least two State Commissions. Of all dependent
groups investigated by the Massachusetts Commission, 60.1 per cent. of
those who had property in their earlier days attributed its loss to
prolonged illness. In Pennsylvania 35.5 per cent. of the almshouse
paupers and 88.3 per cent. of the “non-dependent” aged claimed to have
disposed of their previous property possessions in order to meet
emergencies, largely those of sickness.
The relationship of bad health and dependency is indeed of such
importance that a summary of some of the data gathered by the most
recent State Commissions on Health Insurance is exceedingly valuable in
this discussion.
As early as 1900, the National Conservation Commission in its report on
national vitality declared that one rarely finds a person past
forty-five years of age who is in perfect health. Since that time this
broad statement of ill health has been corroborated by many studies of
health conditions as found among different groups of workers.
“In an intensive physical examination of garment workers in New York
City, made by the United States Public Health Service in 1914–15, it
was found that among 2,086 males examined, there were present 9,541
defects and diseases, or an average of 4.57 for each male. The
examination of 1,000 females showed 3,916 defects and diseases, or
4.33 for each female.[61]
“Our knowledge of morbidity among the general population has been
increased during the past few years by the surveys made by the
Metropolitan Life Insurance Co. Surveys among the industrial
policy-holders of this company have been made by the agents and have
covered Rochester, N. Y., Boston, Mass., Kansas City, Mo., cities of
West Virginia, cities of Pennsylvania, North Carolina, Trenton, N. J.,
and the Chelsea district of New York City. A total of 579,197 white
men, women and children were covered and 10,878 were found unable to
work, or 18.8 per thousand. A total of 376,673 people over 15 years of
age showed 8,636 cases of disabling illness or 22.9 per thousand. The
average disabling sickness for each of the persons of working age was,
therefore, 8.4 days or 6.9 working days per year. When the data for
disabling illness are classified according to sex, they show that
white males over 15 have a morbidity rate of 22.8 per thousand and
white females over 15 have a rate of 23.0 per thousand. These sickness
rates represent an average total loss of 8.3 days a year for men and
8.4 days per year for women. If these rates are applied to the
population over 15 in Ohio (3,700,000), it gives an annual total of
31,000,000 sick days and a loss of 25,000,000 working days per year.
“The United States Commission on Industrial Relations estimated upon
the basis of an examination of sickness statistics of more than a
million workmen, that each industrial worker loses an average of nine
days a year. This estimate is approved by Warren and Sydenstricker in
their report on health insurance for the United States Public Health
Service.
“The experience of nine benefit funds, in Ohio, covering 663,163
workers and 131,921 cases of disability which lasted eight days and
over and which were due to sickness and non-industrial accident was
examined. The analysis showed that for every 100 members, there were
19.7 cases of disability lasting eight days and over. The average
number of days’ disability per member per year—based on these cases,
exclusive of days of disability beyond 189 days—was 6.0 days. In the
Workmen’s Sick and Death Benefit Fund which was analyzed separately,
it is estimated upon the basis of compensated cases of disability
lasting more than one day—exclusive of days of disability beyond one
year—that each member was compensated on the average of 6.9 days of
disability a year. Since these figures are for compensated cases only
and do not include days of disability beyond the specified ranges,
they are, therefore, somewhat less than the total sickness among the
groups studied. From the mass of data all pointing to the same
conclusion, the Commission estimates that for the whole group of
employed workers in Ohio the average days of sickness will be about
nine days annually.[62]
“Among the 663,163 workers under observation, there were 131,921 cases
of disability lasting eight days or over, or 19.7 cases for every 100
members. Of the cases lasting eight days or more, 34.7 per cent.
lasted from eight to 14 days; 19.5 per cent. lasted from 15 to 21
days; 11.3 per cent. lasted from 22 to 27 days; 7.9 per cent. over one
month but less than two months; 6.4 per cent. over two months but less
than three months; 7.1 per cent. over three months but less than six
months and 3.1 per cent. over six months.”[63]
In Dr. Emmet’s study of the Workmen’s Sick and Benefit Society,[64]
already referred to in a previous chapter, the average age of the
members of this organization, composed largely of wage-earners, was 42.9
years. The total membership and the total cases of disability due to
sickness and injuries of these were found as follows:
EXTENT OF DISABILITY AMONG MEMBERS OF THE WORKMEN’S SICK AND BENEFIT
SOCIETY
No. of
Total No. of Cases Disability
No. of Disability per 1,000 Days among
Year Members Cases Members 1,000 Members
1912 40,294 10.791 267.8 4,920.6
1913 42,075 11.529 274.0 5,076.4
1914 42,821 11.231 262.2 5,636.8
1915 43,300 11.240 259.6 5,628.4
1916 44,188 11.870 268.6 5,528.4
Thus the total membership during a period of five years was subjected to
a disability extent measured by 43,885 sick persons, disabled an
aggregate of 1,223,324 days or an average of 6.6 days per member and
28.1 days per disabled person.
The Pennsylvania Health Insurance Commission in its report of 1919
concludes:
“More than 385,000 persons in the State are constantly suffering from
illness; approximately 140,000 from severe, and 245,000 from slighter
illnesses.
“The average loss of working time among employés in the State is at
least six days each year because of sickness. In 1916, 3,025,071
working days were lost because of industrial accidents in the State;
sickness causes approximately five to seven times as much loss as
industrial accidents.
“At the nominal rate of $2.00 a day the wage loss to employés of this
State every year because of illness is at least $33,000,000.[65]
“A study of twelve well organized establishment funds, was made during
the summer and fall of 1918 by the Connecticut, Ohio, Illinois, and
Pennsylvania Health Insurance Commissions with the help of Mr. Boris
Emmet of the United States Bureau of Labour Statistics. The results of
this study were tabulated by the Ohio Commission in ten groupings. The
benefit associations selected for study include employés in the
following occupations: railroad transportation, manufacture of iron
and steel products, textiles, steel mill, general foundry work and
letter carriers. The most important facts to be gathered from this
study relate to the duration of the illnesses for which benefit had
been paid. As most of the funds had a seven day ‘waiting period’ only
cases of more than eight days’ duration were used in the combined
experience tables. Because of differences in administration of
benefits and hazards of the several occupations represented, the
proportions of cases of long and short duration vary widely in the
different funds. For instance, 55.73 per cent. of the sickness in Fund
No. 1 lasted less than two weeks, while in Fund No. 10 only 16.1 per
cent. was of this duration. In the ‘over six months’ group, Fund No. 1
had 1.39 per cent. of its cases, while Fund No. 10 had 5.24 per cent.
“Taking the combined experience of these funds, however, it was found
that 34.56 per cent. of the cases lasted less than two weeks; 34.68
lasted more than a month, and 3.26 per cent. more than six
months.”[66]
The Connecticut Report of the Public Welfare Commission in an
examination of the disability experiences of 22 factory Mutual Benefit
Associations in that State also finds that:
“The average number of disability days per member per year for the 22
associations taken as a whole is 4.9 days. Making allowance for the
fact that in these associations disabilities of shorter duration than
the waiting period and disability running beyond the maximum benefit
period are not reported, it is found that on the average a workman is
disabled approximately six days per year because of non-industrial
accidents and sickness. This figure is the same as was disclosed by
the investigation of the Social Insurance Commission of the State of
California.
“The individual experience for one year of a concern which employs
approximately 1,200 females showed for this group that the average
number of disability days due to non-industrial accidents and sickness
per female employé per year was 17.2.”[67]
According to the American Labour Legislation Review for December 1920 (p
232), the United States Department of Labour estimates that 450,000,000
days’ time is lost every year by 50,000,000 workers in this country on
account of sickness.
The degree of physical disability in the United States as a whole is
told vividly by the military draft rejections for physical defects. Of
all the young men examined in the United States by the draft boards
29.11 per cent. were rejected on account of physical defects.
The responsibility of industrial accidents for a great deal of poverty
and dependency is known to all. The exact number of industrial accidents
occurring in the United States annually, however, is still impossible to
determine. Even the best State compensation laws include neither all
classes of workers nor all hazards, and no complete statistics of
accidents are therefore available. For the year 1913 the U. S. Bureau of
Labour Statistics[68] estimated the probable approximate number of fatal
industrial accidents in the United States at 25,000 for both sexes, and
the number of injuries involving a disability of more than four weeks at
approximately 700,000. This estimate of comparatively prolonged
disability was obviously no indication of the total number of minor
accidents which occurred during that year. In a study of 10,000
accidents in the iron and steel industry involving disability of one day
and over, made by the same Bureau,[69] it was found that in 41.2 per
cent. of the cases the disability terminated in the first week; 59.8 per
cent. of the total cases terminated in two weeks, while 77.7 per cent.
recovered in four weeks. If the accidents in the iron and steel industry
are taken as representative of industry in general, in the United
States, in respect to the period of termination, it would mean that the
total number of industrial accidents in the United States approximate
4,000,000 a year.
Miss Margaret Gadsby in a recent study of industrial accident statistics
in the United States[70] points out succinctly the deplorable inadequacy
of complete data on this subject:
“How many industrial accidents occur yearly in the United States? We
do not know. To what extent have workmen’s compensation laws and the
safety movement mitigated the accident evil in American industries? We
are unable to determine with any degree of certainty. What are the
causes of industrial accidents? What is the accident frequency rate in
the leading industries; the accident severity rate? We do not know.
Where can preventative measures be most effectively applied? It has
never been adequately determined; there are no adequate comparable
data. How many industrially disabled are there in the country who will
be affected by the recent legislation extending the provisions of the
rehabilitation act to the industrial cripple? No authoritative
statistics are available. What is the annual loss in productive
efficiency through industrial accidents? What is the annual cost in
time and money lost through accidents in industry? We do not know;
there are no figures available by which it can be determined.... Even
the part of this information which is the most elementary—the mere
number of accidents occurring within a given year—is unavailable for
the country as a whole. Not only is there no uniform method of
tabulating statistics of accidents for the entire country, but also
few States can be said to have accurate knowledge of the total number
of accidents occurring in the industries within their borders. As for
an analysis of such accidents as to cause and severity within each
industry, only half a dozen States can be said to have approximated a
significant analysis.”
From a study of all the available sources of information which, Miss
Gadsby states, “can in no case be said to represent the total number of
accidents occurring within the State,” she presents the following
industrial accident figures for the years 1917–1918–1919.
Year Fatal Accidents Non-Fatal Accidents
1917 11,111 1,398,151
1918 12,082 1,569,771
1919 9,963 1,170,384
The above totals, as was pointed out, are incomplete. From several
states no figures whatever were available for the period covered. In
four instances, the figures refer to accidents in mines only. In some
cases only accidents resulting in more than two weeks’ disability are
included, and in one case the data refer only to such accidents
occurring in establishments where women and children are employed. In
addition, the investigator contends: “A State that has a seven day
waiting period has no record of approximately 40 per cent. of its
tabulatable accidents. Those States having a waiting period of two weeks
have no record of from 65 to 70 per cent. of their industrial
casualties.”
After a thorough analysis of European and American industrial accident
rates, Rubinow concludes:
“That there occur in the United States annually some 30,000 fatal
industrial accidents, about 200,000 accidents leading to permanent
disability, of which nearly 60,000 are cases of actual loss of part of
body, and about 100,000 resulting in disability of under 25 per cent.
and another 50,000 in disability of 25 to 50 per cent., and the
remainder cause disability of over 50 per cent. In addition, some
170,000 accidents are serious in that disability lasts over three
months, but eventually they result in complete recovery, especially,
if economic conditions favour it.”[71]
A recent pamphlet issued by the Metropolitan Life Insurance Company
declares that the United States leads all other countries “equally
advanced industrially and socially” in industrial deaths. It is stated
that there are “not less than 85,000 deaths from accidental causes each
year in this country. If our accident rate were reduced to that of
England and Wales, we should have only 44,000 deaths from accidents.”
R. W. Little of the Safety Institute of America, referring to the
2,000,000 industrial accidents in the United States every year, points
out that each of more than 700,000 industrial workers loses more than
four weeks every year as a result of industrial accidents; that there
are at least 22,500 industrial deaths annually in this country, and that
our industries turn out each year 15,000 workmen suffering from
permanent disability—“battle casualties of peace.”[72]
The above estimates are hardly exaggerated. In the State of
Massachusetts alone, whose population was less than three and one-half
millions in 1910, there were reported to the Industrial Accident Board
of that State, the following number of injuries:
Year Number
1912–13 90,631
1913–14 98,729
1914–15 95,769
1915–16 137,695
1916–17 174,372
1917–18 170,718[73]
The New York Industrial Commission found that from July 1, 1914, to Jan.
1, 1916, there were 683 industrial accidents in that State every working
day. In other words, there were in that State alone 315,000 industrial
accidents in eighteen months. According to the September, 1920, Bulletin
of the New York Industrial Commission there were during the year ending
June, 1920, 345,672 industrial accidents reported to the above
Commission. During the three-year period of 1915 to 1917 the total cases
compensated in Wisconsin, including both fatal and non-fatal accidents,
was 40,980.[74] During the year ending June 30, 1919, 18,448 cases of
injury were reported under the Wisconsin law, while during the year
ending June 1920, 18,441 additional cases of injury were reported.[75]
In California, the Industrial Accident Commission gives the total number
of accidents for the calendar year of 1918 in that State as 104,767.[76]
In 1919 the total increased to 108,947.[77]
In Pennsylvania the Department of Labour and Industry Reports state that
in 1916 there were 255,616 accidents of all kinds. In 1917 the number
decreased to 227,880. In 1918 there were in Pennsylvania a total of
184,844 industrial accidents, 3,403 of which were fatal. In 53,783 or
29.1 per cent. of the cases, the injuries resulted in a loss of more
than 14 days, while in 127,658 or 69.1 per cent., the disability lasted
from two to 14 days. The total number of days lost that year amounted to
2,767,471 and the wages lost amounted to $10,286,872. In 1919 there were
a total number of 152,544 industrial accidents of which 2,569 were
fatal.[78] There were lost through accidents during the same year
2,053,277 work days in Pennsylvania, an average of 13.46 days lost for
each accident. The total wage loss through accident during that year
amounted to $8,756,697, or an average wage loss of $57.47 for each
accident.[79]
In 1920 the total number of accidents amounted to 174,979 of which 2,514
were fatal. The number of days lost was 2,442,219 and the wage loss
amounted to $12,154,829.[80]
How staggering is the accident toll exacted by industries may be seen
from the following Pennsylvania figures. During the five
years—1916–1920—since the inauguration of the Compensation Bureau of
Pennsylvania, there occurred a total of 995,863 industrial accidents, of
which 14,108 were fatal. The total number of days lost amounted to
14,590,701. The total wage loss amounted to $50,146,055.
The accident toll exacted by modern industries from the wage-earners
engaged in them, is also evident from the following. The accidents in
the metal mines in the United States in 1916 amounted to 48,237; 46,286
in 1917,[81] and 42,915 in 1918.[82] The number of coal mine fatal
accidents were as follows:[83]
Year Number
1916 2,226
1917 2,696
1918 2,580
1919 2,309
1920 (first 8 months) 1,340
In the iron and steel industry from 1910 to 1918 the industrial
casualties were as follows:
1910 45,283
1911 38,811
1912 56,164
1913 57,182
1914 38,469
1915 13,940
1916 21,537
1917 58,885
1918 54,601[84]
The number of casualties on the steam roads in the United States were as
follows in 1917: Killed 10,087; injured 194,805.[85] In 1918 the total
casualties on the steam roads amounted to 9,286 killed and 174,575
injured.[86]
That it is the poorest workers who are largely affected by accidents is
evident from the Fifth Annual Report of the Industrial Accident Board of
Massachusetts. This report analyzes the accident cases for the year
1916–17 and finds that 65 per cent. of the non-fatal injuries were in
the $8.01 to $15.00 a week wage group. What effect this has upon the
family is further revealed from an analysis of the dependents left by
460 fatal cases in California in 1918, made by the Industrial Accident
Commission of that State. The 460 individuals killed left a total of 817
persons who were completely dependent upon them. Of this total 329 were
wives whose average age was 37.6 years; 455 were children whose average
age was 8.5 years, while 33 others consisted of dependent parents and
relatives whose average age was about 65 years.[87] In Pennsylvania also
of the 995,863 total industrial accidents which occurred during the
period of 1916–1920, 582,609, or almost two-thirds of the cases, were
married persons. The total number of dependents of the injured ones
amounted to 802,236 during the five-year period.
It is out of place to dwell here upon the tremendous price which is
being paid annually in human and economic values in this country,
largely as a sacrifice to greed and greater efficiency. That the
accident rates are declining in practically all occupations is, of
course, encouraging. The relation of the above figures to dependency,
however, is obvious. What this annual hecatomb means in terms of
destitution and mental and physical suffering to the victims and their
dependents permits no estimation.
CHAPTER VI
THE CHASM BETWEEN THE COST OF LIVING AND WAGES
The wages earned by the labouring classes in the United States are too
intimately related to aged dependency and too important not to require
the most thorough and careful consideration. It is all too frequently
assumed that the lack of individual savings for old age is an indication
of thriftlessness and lack of foresight of the wage-earner or his
family. The plain fact is that the prevailing standard or daily wage is
generally based upon the daily minimum needs, and permits of little or
no saving. Rarely is it taken into consideration by either party to the
labour contract in modern society that the basis of the daily wage must
make provision for such exigencies as sickness, accident, disability and
old age. Wage rates today depend largely upon demand and supply, and
when labour is purchased as a commodity in the open market it is
naturally bought at the lowest possible price. Such a bargain obviously
takes into consideration only the essential and immediate needs of the
wage-earner and his family. Indeed, in determining the wage scale it is
as if, in respect to old age, both employer and employé had accepted
what has falsely been represented as Dr. Osler’s theory, that men 60 and
over have no right to live. Under such circumstances it is really
surprising to find, as was disclosed in a previous chapter, large
numbers of wage-earners who have actually had savings that were swept
away by sickness and other misfortunes by the time they reached old age.
Indeed, an examination of available wage statistics seems to show that
the great mass of wage-earners in this country have at no time received
a wage which would enable them to procure the American standard of
living set by students government authorities as necessary to support a
family consisting of the father, mother and three small children with
the absolute necessities of life.
1890–1900
Prof. John A. Ryan in his book “A Living Wage” made an exhaustive and
careful study of the Census Reports of 1890 and 1900, as well as of
numerous other statistical reports prepared by the Federal and various
State labour bureaus, regarding wages and the cost of living during the
last decade of the nineteenth century and the beginning of the twentieth
century. His studies of the cost of living during that decade convinced
him that:
“The conclusions that seem to be abundantly justified by the facts
brought out may, therefore, be stated as follows: first, anything less
than $600 per year is not a Living Wage in any of the cities of the
United States; second, this sum is probably a Living Wage in those
cities of the Southern States in which fuel, clothing, food and some
other items of expenditures are cheaper than in the North; third, it
is possibly a Living Wage in the moderately sized cities of the West,
North and East; and fourth, in some of the largest cities of the last
named regions, it is certainly not a Living Wage.”[88]
In addition to Professor Ryan’s estimate, the United States Bureau of
Labour in 1901 studied the incomes and expenditures of 25,440 families
whose average size was 4.88 persons. This investigation showed that it
cost at least $700 on the average to support each of these families.[89]
After he had established his standard Professor Ryan then made a further
study of wage reports and taking his estimate as the minimum basis,
presented the following proportion of underpaid workers in the different
industries:
No. of Adult Per Cent. of
Males Adult Males
Employees and Years Represented Represented Underpaid
In 50 Manufacturing Industries in 1890 757,865 51
In Iron and Steel, 1891 17,650 81
In Railway Occupations, 1889 206,604 85
In 34 Manufacturing Industries, 1890 93,544 66
In 34 Manufacturing Industries, 1900 142,638 64
In Railway Occupations, 1900 and 1903 2,125,717 72
In Manufacturing, Mass., 1890 and 1891 367,311 59
In Manufacturing, Wis., 1891 70,326 61
In Manufacturing, Minn., 1899 and 1900 99,872 53
In Manufacturing, Mass., 1899 and 1900 511,727 64
In Manufacturing, Wis., 1899, 1900, 1901 217,522 75
In Manufacturing, N. J., 1899, 1900, 1901 387,903 60
In Manufacturing, Ill., 1900 and 1901 135,890 58[90]
The important feature of the table, summarizes Professor Ryan:
“Is the percentages, which may be taken as fairly representative of
average wage conditions in manufacturing and railway industries. And
the general level of remuneration in these two fields is undoubtedly
quite as high as the average of the other urban occupations. It is to
be noted, moreover, that these percentages reflect the conditions of
1890 and 1900–1903, when wages were about as high as they are at
present (1905), fully as high as the average of the last fifteen
years, and higher than that of the last twenty-five years.”[91]
During the same period, according to Streightoff,[92] the yearly
remuneration of the garment makers in 1894 in New York ranged from
$249.94 for knee-pants-makers to $402 for cap-makers: and the male
machine operators and handworkers of Chicago earned on the average $430
and $325, respectively, the average recompense of all male workers in
the cloak-making trades being $330.42. In 1900, in North Dakota, were
2,168 men investigated, whose wages averaged $535; Minnesota recorded
66,889 workmen at an average of $492; and Wisconsin 120,131, at $449. In
the same year the average earnings of male cotton operators was $405.69
in Massachusetts, $243.34 in Georgia, $216.39 in North Carolina, and
$207.58 in South Carolina.
1901–1904
In analyzing the labour reports of the States of New Jersey and
Massachusetts for 1901, Streightoff found that 64.75 per cent. of all
adult male factory employés in the manufacturing industries of the
former State and 62.86 per cent. of the male employés in similar
industries in the latter State earned less than $12 per week, or
approximately $600 per year.[93]
A study of family incomes made by the Massachusetts Bureau of Statistics
of Labour in 1902 revealed that it cost on the average about $800 to
support each of these families, whose average size was 4.8 persons.[94]
In the same year also the New York Bureau of Labour Statistics estimated
that an income of $10 a week, or $520 a year, was inadequate for a
family living in a city.[95]
From the 1902 reports of the Labour Bureaus, Streightoff[96] found that
62.51 per cent. of the male employés in the manufacturing industries in
New Jersey, and 61.35 per cent. of the male employés in Massachusetts
earned less than $12 a week or approximately $600 per year. The Indiana
returns for the same year showed the average earnings of pumpmen as
$2.20 per day, while that of trappers who worked only 215 days in the
year was $1.13 per day. Professor Ryan also points out that the
Interstate Commerce Commission’s Reports for the year 1903 revealed that
72 per cent. of the more than two million railroad employés investigated
earned less than $600 per year.
In 1904 Robert Hunter stated that:
“It was shown by the Massachusetts Bureau of Statistics that it takes
$754 a year for a family of five persons to live on. John Mitchell has
said that a minimum wage of $600 a year is necessary in the anthracite
district for a worker with a family of ordinary size. The New York
Bureau of Labour considers that $10 a week or $520 a year is
inadequate for city workmen. A prominent official of one of the
largest charities in New York City thinks that $2 a day, or about $624
a year, is necessary for a family of five in that city.”[97]
From these estimates Hunter expressed the opinion that $624 was not too
much for a family in New York City. “When one gets below these figures,”
he declared, “every dollar cut off may mean depriving a family of a
necessity of life, in times of health even, and unquestionably in times
of sickness.” But in order to be thoroughly conservative he estimated
“more or less arbitrarily, $460 a year as essential to defray the
expenses of an average family,—a father, a mother, and three
children,—in the cities and industrial communities of the New England
States, of New York, Pennsylvania, Indiana, Ohio, and Illinois.” “This
estimate,” he concluded, “would approach very nearly a fair standard for
the poverty line; that is to say, if any working-class family should be
unable to obtain this wage, they would in all likelihood be unable to
obtain the necessaries for maintaining physical efficiency.”[98]
One of the most extensive investigations of wages in the United States
was made during 1903–1904 by the United States Census Bureau. This
investigation covered 3,297,811 wage-earners of whom 2,619,025 or 79.4
per cent. were men; 588,599 or 17.9 per cent. were women and some 90,167
or 2.7 were children.
EARNINGS OF MALES, SIXTEEN YEARS AND OVER, ENGAGED IN
MANUFACTURE IN THE UNITED STATES IN 1904[99]
PERCENTAGES
Weekly Wage Number Actual Cumulative
Under $3 56,346 2.2 2.2
$ 3 but under $ 4 57,597 2.2 4.4
$ 4 „ „ $ 5 87,739 3.4 7.8
$ 5 „ „ $ 6 103,429 4.0 11.8
$ 6 „ „ $ 7 161,940 6.2 18.0
$ 7 „ „ $ 8 196,981 7.5 25.5
$ 8 „ „ $ 9 207,954 7.9 33.4
$ 9 „ „ $10 343,812 13.1 46.5
$10 „ „ $12 409,483 15.6 62.1
$12 „ „ $15 450,568 17.2 70.3
$15 „ „ $20 385,647 14.7 94.0
$20 „ „ $25 106,046 4.0 98.0
$25 and over 51,511 2.0 100.0
The accompanying table indicates that during the period studied, over
one quarter of the male workers were earning less than $8 a week, or
less than $420 a year; 46 per cent. earned less than $10 a week, while
over 70 per cent. or nearly three-fourths were earning less than $15 a
week, or $780 a year. Ninety-eight per cent. of all wage-earners earned
less than $25 a week. The average for all classes is $10.06, or
approximately $520 per year, the average for men being $11.16, for women
$6.17, and for children $3.46.
In the same year Streightoff made the following estimate of the
distribution of income in the United States derived primarily from
labour:[100]
Approximate number of males, 16 years old or over, employed
in 1904 19,658,000
Number earning under $600 yearly, or under $12 weekly 12,738,000
Number earning $600, but under $1,000 yearly, $12 but under
$20 weekly 5,315,000
Number earning $1,000 or more yearly, or $20 or more weekly 1,605,000
On the basis of the above data, Streightoff concluded that in 1904 over
60 per cent. of the males, at least 16 years of age, employed in
manufacturing, mining, trade, transportation, and a few other
occupations were earning less than $624 per annum, or less than $12 per
week on an average. Summarizing the official reports which he studied,
Streightoff also shows[101] that 46.5 per cent. of the Illinois miners
earned less than $500 per year. He gives the percentages of adult males,
exclusive of officers, clerks and salaried persons, engaged in
manufacturing in the same year, whose earnings were less than $12 per
week, as 62.35 in Massachusetts; 60.8 in New Jersey; 58.05 in Missouri;
31.15 in Illinois, and 67.95 in Wisconsin.
1905–1907
From an intensive study of the budgets of 200 wage-earning families in
New York City during the years 1903 and 1905, Mrs. More concluded as a
result of her investigations that “a fair living wage for a workingman’s
family in New York City should be at least $728 a year or a steady
income of $14 a week.”[102]
According to the Census of Manufactures, the 4,244,538 men engaged in
manufacturing in 1905 received an average income of $533.95. Of 13,796
railway men in North Carolina, in the same year, 11,295 were found to
have averaged less than $1.62 per day or $500 per year. In 30 Maine
clothing factories in 1905, 234 men investigated received wages
averaging $10.82 per week, while 1078 women earned a mean weekly wage of
$6.78. Of the adult males engaged in manufacturing industries during the
same year, 58.5 per cent. in New Jersey and 57.09 in Massachusetts
earned less than $12 per week.[103]
In concluding his estimates of what constitutes a living wage Professor
Ryan states:
“According to careful studies and estimates made by several groups of
investigators in 1906, the minimum cost of decent living for a family
of moderate size was: in New York, $950; in Chicago, $900; in
Baltimore, $750; while the average for these and several other large
cities was $938.”
Professor Ryan, however, declares:
“The conclusion seems justified that at least sixty per cent. of the
adult male workers in the cities of the United States are today (1905)
receiving less than $600 annually.”[104]
During 1906, the percentages of adult male employés engaged in
manufacturing industries who earned less than $12 per week were as
follows:[105] In New Jersey, 57.49; in Massachusetts, 55.12, while in
San Francisco, where wages have always been higher, of all employés,
including women and children, in the same year 63.40 per cent. earned
less than $12 per week. In Indiana during the same year the earnings of
railway workers were found as follows: 1,870 conductors earned an
average of $1,084.93; 2,287 engineers averaged $1,284.69; 4,408 station
men averaged $508.37, and 88,967 track men earned $378.93 each on an
average that year.[106] The 30,742 miners investigated in Illinois in
1906 worked only 189.6 days during that year and earned on an average
$480.82.[107] Of 9,679 men at work in cotton factories in New Hampshire
during the same year the average wage amounted to $417.31.
Little improvement occurred the following year. In 1907 of the adult
male factory employés (exclusive of officers, clerks and salaried men)
engaged in manufacturing industries in New Jersey, 54.5 per cent. of the
total earned less than $12 per week, while of those engaged in the same
industries in Massachusetts, 51.64 per cent. earned a similar wage.[108]
1908–1909
Quite a large number of investigations regarding both minimum standards
required and wages actually received were carried on during 1908. The
United States Bureau of Labour estimated that in Fall River, Mass., in
1908, the minimum standard of living for an average family could not be
less than $484.41 per year. This standard the Bureau defined as follows:
“If the family live upon this sum without suffering, wisdom to
properly apportion the income is necessary. There can be no amusements
or recreations that involve any expense. No tobacco can be used. No
newspapers can be purchased. The children cannot go to school because
there will be no money to buy their books. Household articles that are
worn out or destroyed cannot be replaced. The above sum provides for
neither birth nor death nor any illness that demands a doctor’s
attention or calls for medicine. Even though all these things are
eliminated, if the family is not to suffer, the mother must be a woman
of rare ability. She must know how to make her own and her children’s
clothing; she must be physically able to do all the household work,
including the washing. And she must know enough to purchase with her
allowance the food that has the proper nutritive value.”[109]
The Bureau estimated that a fairer standard of living for Portuguese,
Polish and Italian families required at least $690.95, and $731.99 for
English, Irish and Canadian-French families. This higher standard, the
Bureau said:
“Will enable him (the father) to furnish them (his family) good
nourishing food and sufficient clothing. He can send his children to
school. Unless a prolonged or serious illness befall the family, he
can pay for medical attention. If a death should occur, insurance will
meet the expense. He can provide some simple recreation for his
family, the cost not to be over $15.60 for the year. If this
cotton-mill father is given employment 300 days out of the year, he
must earn $2 per day to maintain this standard. As the children grow
older and the family increases in size, the cost of living will
naturally increase. The father must either earn more himself or be
assisted by his younger children.
“But even this standard is by no means an ideal one. It does not allow
savings to meet the contingency of any unusual event, such as lack of
employment or accident to the father. It makes provision for old age.
It provides for culture wants only in the most limited manner, viz.,
one paper costing $1 a year. It provides elementary schooling for the
children up to their twelfth year only.”[110]
The Massachusetts Bureau of Statistics investigations during the same
year showed that the average wage of all cotton-mill employés in Fall
River was only $447.40, quite below even the minimum standard set for
the same city.[111] The average remuneration of all the 176,377
anthracite miners in Pennsylvania in that year was $496.13, just above
the lowest standard; that of the bituminous miners averaged only $447;
while the average for all the employés amounted only to $458.29,[112]
considerably less than the minimum required. Of the male employés
engaged in factories, 56.7 per cent. in New Jersey and 51.70 in
Massachusetts earned less than $12 per week.[113]
“In 1908 the railroads of the United States employed 61,215 firemen at
an average per diem compensation of $2.64; 57,668 enginemen at $4.45;
43,322 conductors at $3.81; 114,580 other trainmen at $2.60; 41,419
section foremen at $1.95; 299,448 other trackmen at $1.45; and 46,221
switch tenders and crossing watchmen at $1.78.”[114]
In the same year the New Jersey roads employed some 42,514 men at an
average annual wage of $657.22, considerably below the fair standard set
for Fall River.
On the basis of numerous statistical reports of wages in Massachusetts
during 1908 furnished by the different State Bureaus, Nearing concluded
that:
“It may be fairly stated that no more than one adult male wage-earner
in every twenty employed in the industries of Massachusetts receives,
in annual earnings, for a normally prosperous year, more than $1,000.
On the other hand, more than one-third of all the adult males are paid
wages under $500; more than one-half receive wages under $600; while
nearly three-quarters receive less than $700 annually.[115]
In cotton goods, the leading Massachusetts industry, Nearing found that
wages were very much lower than in the State at large, nearly
three-fifths of all the adult male employés having received less than
$459 in 1908.
From budget studies made by Dr. R. C. Chapin in 1909, the New York State
Conference of Charities and Corrections concluded that:
“It is fairly conservative to estimate that $825 is sufficient for the
average family of five individuals, comprising the father, mother and
three children under 14 years of age, to maintain a fairly proper
standard of living in the borough of Manhattan.”[116]
In 1909, Nearing made a study of wages in New Jersey similar to that
which he had made the year before of wages in Massachusetts and found
that:
“For the State of New Jersey at large, and for the five industries
employing the largest numbers of persons, it appears that after
deducting the known unemployment, between one-third and one-half of
the adult males received less than $500 in 1909; that from one-half to
three-fifths received less than $600; that about three-quarters were
paid less than $750; nine-tenths received less than $950; while from
one-twentieth to one-tenth received $950 or over. The wages of adult
females were very much lower. From three-quarters to four-fifths
received less than $400; nine-tenths were paid less than $500, while a
vanishing small percentage received an annual wage of more than
$750.”[117]
A study of wages in the leading industries of Kansas in 1909, by the
same writer, showed that while the industrial conditions in Kansas
differ from those in Massachusetts and New Jersey, about one-third of
the male employés in the car and shop construction and slaughtering
industries received less than $500, one-half less than $600 and
three-fourths received less than $750 per year. The proportion of
females earning less than $520 was exactly twice that of males.[118]
Nearing’s conclusions are fully borne out by official investigators. The
1910 Census Reports give the average number of wage-earners engaged in
manufacturing in 1909 as 6,631,931. The total amount spent in wages in
those industries during that year was $3,434,734,000. When this total is
divided by the average number of wage-earners the quotient is $517.91,
which was the average wage during that year and which is below $10 per
week.
The U. S. Department of Agriculture also gave the farm wages during the
year 1909. Farm labour by the day in the lowest type of work averaged
$1.71 in 1909, outdoor farm labour with board averaged $1.43 a day,
while the average monthly wage for outdoor farm labour quoted for the
year without board was $25.46 or $305.52 per year.[119]
1910–1913
In 1910, after a most exhaustive study of wealth possessions, Dr.
Willford I. King estimated that 95 per cent. of the families of the
United States had incomes of less than $2,000 a year; 82 per cent. had
incomes of less than $1,200; while 69 per cent. were living on less than
$1,000.[120]
An elaborate Congressional investigation of the iron and steel industry
in the United States, covering 172,706 employés, found the wage rates
per year as of May, 1910, as follows: Eight per cent. earned under $500,
60 per cent. under $750, 85 per cent. under $1,000, and 97 per cent.
under $1,500. The separate rates of the employés of the Bethlehem Steel
Company during January of that year were found to be less than $500 per
year in one-third of the cases; less than $625 in two-thirds, while only
eight per cent. averaged $1,000 and over.[121]
The Census Reports also show that in 1910 the average number of
wage-earners engaged in mining industries was 1,093,286. The total wages
earned by them was $606,135,238. The average wage secured when the total
sum earned is divided by the total number of workers is $554.42, or
$10.66 per week.
The Federal Immigration Commission’s report of 1910 announced that not
one of the 12 basic American industries paid the average head of a
family within $100 a year of the minimum for family subsistence, and
two-thirds of the 12 industries paid the family head less than $550 a
year.[122]
From the exhaustive studies made by Streightoff of incomes and actual
expenditures in different parts of the country, he presented for 1911
the following minimum of expenditures necessary for a family consisting
of a husband, a wife, a boy between 11 and 14, a child between 7 and 10,
and a baby under three. These expenditures obviously include only a
minimum of the most essential necessities:
Food $297
Rent 100
Clothing 120
Fuel 40
Church and Other Organizations 20
Medical Attendance 12
Amusement 20
Miscellaneous 40
————
Total $649
Mr. Streightoff concludes:
“The above would show that it is conservative to set $650 as the
extreme low limit of a Living Wage in cities of the North, East, and
West. Probably $600 is high enough for the cities of the South. At
this wage there can be no saving and a minimum of pleasure. Yet there
are in the United States, at least five million industrial workmen who
are earning $600 or less a year.”
Streightoff then calls attention to the fact that:
“It will be remembered that 1,116,199 men engaged in manufacturing
alone are earning no more than $400 per annum, and 2,009,914 are
receiving no more than $500. If all industrial occupations are
considered probably four million men are not enjoying annual incomes
of $600.”[123]
During the period of 1911–12 a number of wage studies were brought out
by the United States Department of Labour. In the cigar industry studied
in that period, of 3,615 males investigated, three-tenths received a
wage of less than $750, while half of those studied earned wages under
$1,000 per year. Four-fifths of the 7,551 females investigated received
a wage of less than $750 per year.[124]
The Tariff Board made extensive investigations during the same period of
wage rates in the cotton industry. These studies disclosed that in the
North five per cent. and in the South 22 per cent. of the males 16 years
of age and over in the cotton industry received a wage rate of less than
$250 per year. Half of the employés in the North and more than
four-fifths of those employed in the South were paid at the rate of less
than $500 per year. The figures for women range much lower than those
for men.[125]
For the dyeing and finishing woolens and worsted industry the Tariff
Board reports that four-fifths of the male dyers earned less than $500
and nine-tenths less than $700 per year.[126]
The wages of employés engaged in woolen, worsted and cotton mills of
Lawrence, Mass., in 1911 were similar to those found by the Tariff
Board. In that city half of the men studied received wages below $500
while seven-eighths earned less than $600. In the case of female
employés more than four-fifths earned less than $500, while 94 per cent.
received less than $600.[127]
The U. S. Labour Department in its investigations in the textile
industry brought out similar results. In the cotton industry
three-fifths of the males and four-fifths of the females received wages
of less than $500 per year, while 99 per cent. of the females and 97 per
cent. of the males earned less than $750 per year.[128]
In 1911–12 the Oklahoma Department of Labour reported that of 668 male
wage-earners in the telephone and telegraph industry 27 per cent.
received less than $500; 78 per cent. less than $750 and 95 per cent.
less than $1,000 per year. Of the 1,143 female workers employed in the
same industry 17 per cent. were earning under $250, 96 per cent. under
$500 and 99 per cent. under $750.[129]
A typical Chicago slaughter-house in 1912 paid 82 per cent. of its
employés less than 20 cents an hour. This company worked their men on
the average of 37½ hours in the week, and this gave the 55 per cent. of
the men who averaged 17 cents an hour, an income of $6.37 a week.[130]
From reports compiled by the different State Bureaus of Labour, Nearing
found the following percentages of wages during the years 1911–12:
Per Cent Earned Less Per Cent Earned Less
State Year Than $500 Than $750
California 1911 7.7 30
Iowa 1912–13 12. 61
Massachusetts 1912 28. 67
New Jersey 1911 36. 71
Oklahoma 1911 17. 68[131]
In 1913 Nearing in his book, “Financing The Wage Earner’s Family” (p
97), concluded from his examination of numerous reports and wage studies
that:
“The available data indicate that a man, wife and three children under
fourteen cannot maintain a fair standard of living in the industrial
towns of Eastern United States on an amount less than $700 a year in
the Southern, and $750 in the Northern States. In the large cities
where rents are higher, this amount must be increased by at least
$100.”
A joint investigation carried on during that year by the Consumers’
League of Eastern Pennsylvania and the Department of Labour and Industry
of that State, showed that the wages of women in Philadelphia department
stores were as follows: 16.5 per cent. received less than $5 per week,
63.8 per cent. more earned between $5 and $10 and only 3.2 per cent.
received $15 or over per week.
1914
The year following Prof. J. H. Hollander, of Johns Hopkins’ University,
estimated:
“That in order to maintain a decent standard of living in the United
States for an average family of five, an annual income of $600 to $700
is insufficient; that $700 to $800 requires exceptional management and
escape from extraordinary disbursements consequent upon illness or
death; and that $825 permits the maintenance of a fairly proper
standard.”[132]
An even higher estimate during the same year (1914) was set by the
Bureau of Personal Service of the Board of Estimate and Apportionment of
New York City, which declared $845 as the least minimum of subsistence
for families of unskilled labourers in that city. The New York Factory
Investigating Commission declared that $876 was the lowest minimum wage
possible for the year 1914.
The actual earnings during this period were found by the Pennsylvania
Department of Labour and Industry in a study of over 20,000 industrial
establishments to have averaged $720 a year or $14.40 a week for all
males—quite below the minimum standard set. The average annual wage for
all females was $335, or slightly over $6 a week.
The total amount paid in wages in the States of Massachusetts and
Pennsylvania in the year 1914 amounted to $869,262,517. The number of
employés in these two States was 1,531,176 and the average wage per
worker amounted to $568 per year.[133] The New York State Industrial
Commission, which in that year began to compile figures of nearly
600,000 factory and office workers, found that the average weekly wage
for the last six months of 1914 amounted to $12.48, which would give an
annual wage of $648.96 if employed fifty-two weeks in the year.
In 1915 Lauck and Sydenstricker after a comprehensive study of wages and
costs of living stated that four-fifths of the heads of families
obtained less than $800 per year, while two-thirds of the female
wage-earners were paid less than $400 per year. According to a statement
of the Chamber of Commerce of Akron, Ohio, the 30,511 workers engaged in
the rubber industry in that city received an average annual wage of $628
during the year of 1915.[134] In the same year the Pennsylvania
Department of Internal Affairs, which keeps records of the total
pay-roll amounts and the number of workers employed in that State, found
that the average weekly wage per wage-earner (exclusive of salaried and
office workers) amounted to $581.68. The New York Industrial Commission
gave the average weekly wage received in that State during the year 1915
as $12.85, or $668.20 per year. The Final Report of the Commission on
Industrial Relations declared that it is certain that at least one-third
and possibly one-half of the families of wage-earners employed in
manufacturing and mining earn in the course of the year, less than
enough to support them in anything like a comfortable and decent
condition.[135]
The weekly wages received during the year 1915 throughout the United
States in the various industries, have been compiled by the Bureau of
Applied Economics from the published surveys of the United States Bureau
of Labour Statistics. These were found as follows in the different
industries:[136]
Industry Per Capita Earnings Per Week—1915
Boots and Shoes $12.12
Cotton Finishing 10.54
Cotton Manufacturing 8.31
Hosiery and Underwear 7.75
Iron and Steel 11.76
Men’s Ready-made Clothing 11.92
Silk Manufacturing 8.99
Woolen Manufacturing 9.70
Car Building and Repairing 13.20
Cigar Manufacturing 9.33
Automobile Manufacturing 17.23
Leather Manufacturing 11.76
Paper Making 13.20
An analysis of the standard of living in the District of Columbia by
Professor Ogburn, for the Bureau of Labour Statistics in 1916, led him
to conclude that:
“An average family of man, wife and three children, of ages four, six
and eight years, in the District of Columbia in 1916 was in debt if
the annual income was less than $1,155.”[137]
During 1915–16 the average daily wage for males in many Pennsylvania
establishments reported by the Department of Labour and Industry as
working on war contracts was found to be only slightly higher in 1916
than in 1914, $2.76 in the latter year as against $2.40 in 1914. For
females the rise reported was from $1.11 to $1.30. The average daily
wage of males engaged in public service industries, such as street and
steam railways, etc., was $2.55.[138] The average wage received by all
wage-earners in Pennsylvania as given by the Department of Internal
Affairs was $737.96 in the year 1916. Salaried and office workers were
not included in this tabulation. In the rubber industry of Akron, Ohio,
the average annual wage according to the Chamber of Commerce of that
city amounted to $759 in 1916. The wages for that year as found by the
New York State Industrial Commission were very similar. The average
weekly wage was $14.43, or, if employed for fifty-two weeks in the year,
$750.36 per year.
WAR CHANGES IN WAGES AND COSTS OF LIVING
The year 1914 may be considered a landmark for both wages and costs of
living. Since then money wages have increased in all industries. Even
greater, however, has been the rise in the cost of living. Standards of
living in terms of money wages need therefore considerable adjustment,
and a revaluation in purchasing power. According to the Pennsylvania
Health Insurance Commission, the standard “minimum of subsistence”
budgets, estimated in 1914 as $845 by the Bureau of Personal Service of
the Board of Estimate and Apportionment of New York City for unskilled
labourers’ families; $875, the estimate made by the New York Factory
Investigation Commission in 1914, and $900, the estimate by Dr. Chapin
for a family of five in 1907, became in June, 1918, $1,320, $1,360 and
$1,390 respectively. Similar estimates for 1918 were made by the
Commission of the Interchurch World Movement in its Report on the Steel
Strike.
The Philadelphia Bureau of Municipal Research stated in December, 1917,
that the necessary minimum cost of healthful living for a family of two
adults and three children was $1,200 a year. But in the autumn of 1918
it found $1,636.79 as necessary for a similar standard of living.
In November, 1918, the United States Bureau of Labour Statistics
estimated that the minimum necessary for subsistence for an average
family in a large eastern city was about $1,500. In the same year, the
National War Labour Board drew up a “minimum comfort” budget which
amounted to $1,760 per year for a family of five.[139]
It is interesting to note, that the above estimates regarding the
minimum budget necessary for subsistence, although showing some
variation as would be expected, do not show considerable differences.
However, in 1918 the United States Bureau of Labour Statistics made an
investigation of the budgets of working families in a number of cities.
The average actual expenditures of these families per year in the
different cities investigated follow:
AVERAGE ACTUAL FAMILY EXPENDITURES IN VARIOUS CITIES
Total Average
Number of Average Yearly
Families Persons in Expense Per
City Investigated Family Family
Baltimore (white) 195 4.8 $1,260.96
Boston 407 5.3 1,438.13
Bridgeport, Conn. 143 4.6 1,540.24
Buffalo 256 4.6 1,460.00
Chambersburg, Pa. 77 4.9 1,241.90
Dover, N. J. 74 5.3 1,608.92
Fall River, Mass. 158 5.4 1,320.84
Johnstown, N. Y. 78 4.5 1,308.51
Lawrence, Mass. 109 5.3 1,504.67
Manchester, N. H. 112 5.2 1,370.83
Newark 147 4.7 1,445.41
New York 518 4.9 1,525.66
Philadelphia and Camden, N. J. 301 4.9 1,469.40
Pittsburgh, Pa. (white) 254 5.1 1,412.10
Portland, Me. 97 4.9 1,412.84
Providence, R. I. 158 5.3 1,303.18
Rutland, Vt. 80 5.1 1,264.29
Scranton 151 5.2 1,344.99
Syracuse, N. Y. 158 4.9 1,407.03
Trenton, N. J. 100 4.4 1,418.50
Westfield, Mass. 74 5.2 1,494.84
Wilmington, Del. 98 4.6 1,640.50
In summarizing the data, the Bureau found that of 12,096 white families
investigated in 92 industrial centres scattered throughout the country
comprising 4.9 average persons, the average yearly expenses per family
was $1,434.36 in 1918.[140]
In 1918 investigations of the Pennsylvania Commission on Health
Insurance the following data are given:
“In the Philadelphia Survey which covered 1,850 families in seven
districts in Philadelphia the average family income was but $21.60 a
week, and almost a third of these families contained over five
persons, the normal standard.”
“In the Visiting Nurse Study, 80.6 per cent. of the 438 families had
incomes of less than $30.00 a week. In the Sickness and Dependency
Study 94.3 per cent. of the families had incomes of less than this
amount.”
“Wages for women, proverbially lower than those for men, proved in the
Working Women’s study to be in 98.1 per cent. of the cases under
$25.00 a week; in 92 per cent. of the cases, under $20.00.”
“In the Pittsburgh Factory Investigation, made in August–November,
1918, covering the work places of over 9,000 women, it was found that
in 70 per cent. of the operations the wages were between $5.00 and
$15.00 per week. In only two processes were the weekly wages over
$25.00.”
“In a study made by the Consumers’ League in New York in 1916–17 among
417 women working in steam laundries, it was found that 78.3 per cent.
earned less than $10.00 a week, and almost half earned less than
$8.00.”
“The Kensington Survey, which covered the most representative
industrial group, showed that more than half—56.6 per cent. of the 608
families had incomes under $30 a week, 42 per cent. were living on
less than $25.00 a week.”[141]
From July 1st, 1914, to April 1st, 1918, the wholesale prices of 46
essential commodities given in Bradstreet’s showed a rise of 115 per
cent. According to the Bureau of Labour Statistics, its study of the
increase in the cost of living in shipbuilding centres in 1918, showed
that the cost of living for white families had risen 67.17 per cent. in
August, 1918, over the cost in December, 1914, in Philadelphia; in New
York it was 62.07 per cent. in December, 1918, over December, 1914.
While the cost of living and prices have thus increased from 60 to 115
per cent., a study of the rise in wages made by H. S. Hanna and W. J.
Lauck, led them to conclude:[142]
“That the rise in wages between 1914–15 and December, 1917, or
January, 1918, was only 18 per cent. for anthracite miners; 26 per
cent. for machinists in the Philadelphia Navy Yard; 30 per cent. for
bituminous miners working by hand, and 34, 36 and 37 per cent,
respectively for shipbuilders, and pipe fitters in the Philadelphia
Navy Yard. The rise in the building trades was 12 to 20 per cent. The
wages in some industries had actually decreased, while some remained
stationary.”
The Thirty-third Annual Report of Massachusetts on Statistics of
Manufacture states that during the year 1918 the total disbursements in
wages paid to labour amounted to $679,401,273. When compared with the
year 1913 the increase in the total wages disbursed amounted to 93.4 per
cent. However, the average yearly earnings for all wage-earners without
distinction as to age, sex or skill which in 1917 were $758.23 per
capita, rose only to $944.65 per capita in 1918. Compared with 1913,
when the per capita wage in manufacturing industries was $569.43, the
increase amounts to 65.9 per cent.[143] During the year 1918, the
average wage in Pennsylvania was $1,213.54. In the rubber industries in
Akron, Ohio, it was $1,173 and in New York State $1,058.20—quite far
below the actual family expenditures during that year as found by the
United States Bureau of Labour Statistics in the different cities.
The Administrative Committee of the National Catholic War Council in its
Social Reconstruction Program in 1919 reached the conclusion that the
average rate of pay has not increased as fast as the cost of living.
That this conclusion is fully justified and that a considerable number
of wage-earners, both men and women, have not been receiving what is
generally considered a living wage, even during the time when money
wages were at their highest peak, is clearly indicated by the following
recent investigations, which throw some additional light upon the
continuous chase and struggle between increased prices and increased
earning power.
In 1919, the National Industrial Conference Board, an organization
composed of employers of labour, in an investigation of the cost of
maintaining a minimum standard of living for a representative
wage-earner’s family of five, reached the conclusion that in Lawrence,
Massachusetts, in order to maintain the lowest standard, $1,385.79 was
required or an average weekly income of $26.65 the year around. A more
liberal standard, which would make no provision for savings except such
as were secured through insurance, was found to require a yearly
expenditure of $1,658.04, or a steady income of $31.88 per week.[144]
In August, 1919, the United States Bureau of Labour Statistics in a
study of budgets of government employés’ families in Washington, D. C.,
set the standard necessary for the maintenance of a family of five in
that city at $2,262.47.
The extent to which wages have increased during the same period is
significant. The National Industrial Conference Board has recently
published a report analyzing the wage changes in several important
industries from 1914 to 1919. The average weekly earnings of male
employés in the specified industries from 1914 to 1919 follow.[145]
The figures in several instances show actual decreases between
September, 1918, and March, 1919, and not a single group earned the
minimum wage necessary for the support of a family with the most
necessary comfort as conservatively estimated by the employers’
organization itself.
Sept. Sept. Sept. Sept. Sept. March
Industry 1814 1815 1816 1817 1818 1818
Boots and Shoes $14.70 $15.33 $16.50 $18.36 $24.04 $25.80
Chemical Mfg. 12.85 13.26 16.10 20.50 26.80 26.20
Cotton Mfg. 10.00 10.05 11.85 14.22 20.60 17.10
Metal Mfg. 13.18 14.80 17.22 20.08 26.80 24.75
Paper Mfg. 12.75 12.75 15.03 18.03 22.40 22.40
Rubber Mfg. 14.00 14.85 18.60 22.80 22.60 28.35
Silk Mfg. 11.77 12.66 14.10 15.50 21.54 22.68
Wool Mfg. 11.52 11.05 13.51 16.87 23.21 18.61
Early in 1818 the United States Bureau of Labour Statistics conducted
extensive wage studies in a number of industries throughout the country.
Some of its findings are presented here:[146]
AVERAGE ACTUAL EARNINGS IN VARIOUS INDUSTRIES IN 1818
Average Actual Earnings Average Actual Earnings
Per Week for Male Per Week for Female
Industry and Occupation Employés Employés
Paper Box Mfg. $18.40 $11.05
Women’s Clothing Mfg. 35.11 15.85
Confectionery Mfg. 18.45 10.08
Overall Mfg. 25.02 12.06
Cigar Industry 20.84 15.54
Men’s Clothing Industry 24.78 14.75
Hosiery and Underwear 20.80 12.88
Silk Mfg. 22.78 15.28
Brick Mfg. 20.00
Chemicals Mfg. 20.80 12.35
Glass Mfg. 22.66 18.38
Leather Mfg. 26.03 13.40
Paper and Pulp 26.47 13.44
Pottery Mfg. 26.60 13.37
Rubber Mfg. 27.04 14.85
Automobile Mfg. 25.87 16.88
Car Mfg. 26.78
Elect’l Apparatus Mfg. 25.53 15.30
Foundry Mfg. 26.28 12.66
Machine Mfg. 26.85 12.80
Machine Tool Mfg. 26.74 16.62
Typewriter Mfg. 26.77 14.67
It is of interest to note that the above figures show that a living wage
was obtained in only one industry—the Women’s Clothing industry—which is
now thoroughly organized, and which only a few years ago was one of the
most underpaid industries.
The 1818 Industrial Survey made by the United States Bureau of Labour
Statistics covered 2,365 establishments, 28 industries scattered through
43 States, 780 different occupations, including a total of 404,758
employés. These investigations[147] disclosed that of the 318,846 men
workers, 151,725, or 47.5 per cent., earned less than 50 cents an hour.
As the average number of hours per day was found to have been 7.6, at
least half of the male workers earned less than $22.80 per week. The
average weekly wage for all was $25.58.
In the case of the women workers, of the 85,812 persons investigated,
47,817, or 54.75, earned less than 30 cents per hour. The average number
of hours here was 7.5 per day, which means that more than half of the
female workers earned less than $13.50 per week. The average weekly wage
for all was $13.54.
The 1818 minimum wage standards for women workers in the States that
have established such were as follows: District of Columbia (mercantile
trade) $16.50; California $13.50; Washington $13.20; Massachusetts
(candy occupations) $12.50; and Kansas $11.00. In 1818–1818, the wage
investigations of the Massachusetts Minimum Wage Commission showed that
from 57 to 88 per cent. of the women workers investigated in five
industries in that State earned less than $11.00 per week. In New York
the minimum weekly budget set for a single working woman in 1818 was
$16.13. Studies of 500 working girls chosen at random by the New York
State and City Consumers’ Leagues early in 1820 showed that 443 or 88
per cent. of the girls investigated received less than $16.00 per week.
In spite of the increased cost of living in 1818, 28 per cent. of the
women investigated reported no wage increase during the same year.[148]
In the same year despite the minimum wages established, the United
States Bureau of Labour Statistics found the following weekly earnings
of women from payrolls:[149]
Industry Average Weekly Earnings
Glass $10.12
Confectionery 10.25
Paper Boxes 10.88
Overalls 12.26
Hosiery and Underwear 13.04
That women workers frequently work for less than the amount necessary
for their maintenance has recently been revealed from an investigation
carried on in 1820 by the Industrial Welfare Commission of Texas. The
Commission investigated 2,028 women in 40 cities in Texas. The figures
were sworn to and represent actual expenditures on maintenance and not
estimates. A study was also made of the weekly wages of 13,311 employés
as furnished by employers in these 40 cities. The results are given as
follows:[150]
Industry Cost of Living Per Week Average Wages Per Week
Telephone $14.14 $12.31
Mercantile 15.44 12.88
Laundry 13.78 8.38
Factory 14.65 11.52
—————— ——————
Average $14.78 $11.88
In December, 1818, the Bureau of Labour Statistics published a complete
study of wages and hours of labour in the coal-mining industry as found
in the early part of that year. This study included 551,646 workers
throughout the United States. The actual earnings of these miners in the
bituminous fields as studied during one-half-month pay-roll by States is
given as follows:[151]
AVERAGE ACTUAL EARNINGS IN BITUMINOUS MINES IN
ONE-HALF MONTH PAY-ROLL PERIOD BY STATES
State Hand Miners Machine Miners Loaders
Alabama $40.41 $45.88
Colorado 47.42 $73.73 50.65
Illinois 47.72 61.02 51.03
Indiana 36.47 55.78 40.02
Iowa 43.37 52.55 34.17
Kansas 42.75
Kentucky 34.38 58.62 40.42
Maryland 50.57
Missouri 36.42 43.27 42.86
New Mexico 52.12 36.45 50.80
Ohio 63.56 86.86 58.40
Oklahoma 53.82 50.66 48.58
Pennsylvania 57.48 72.02 55.21
Tennessee 34.08 26.25 33.36
Utah 57.66 82.07 57.85
Virginia 52.66 38.83
West Virginia 52.58 71.80 47.53
Wyoming 57.08 45.85
—————— —————— ——————
Total $47.12 $67.58 $50.51
In the case of the anthracite miners, the average earnings made in
one-half month pay-roll period in 1818 are given as follows: Inside
occupations averaged $65.17 while those engaged in outside occupations
averaged $55.37 per two weeks’ pay-roll.[152] The figures presented by
the operators to the Coal Commission in 1820, and which were greatly
disputed by the representatives of the miners, showed that the average
wage of 68,416 miners examined in 1818 was $1,422, but declined to
$1,234.44 in 1818. The miners presented figures of much lower averages.
The Bureau of Labour Statistics also keeps records of the changes in
union wage scales. The year 1813 is taken as the basis of the index and
set at 100. Accordingly the rates of wages per full-time week are
presented as follows:[153]
1813 100
1814 102
1815 102
1816 106
1817 112
1818 130
1818 148
1820 188
Further compilations of increases in union rates of pay per hour from
1814 to 1818 in the building trades in about 30 cities in the United
States were made by the Bureau of Applied Economics.[154] The increases
received as given by the international unions concerned were as follows:
INCREASE IN UNION RATE OF PAY FOR THE BUILDING TRADES
Occupation Percent of Increase from 1814 to 1818
Bricklayers 30.8
Carpenters 53.8
Cement Workers and Finishers 36.3
Inside Wiremen 51.4
Painters 60.8
Plasterers 32.2
Plumbers 50.0
Sheet Metal Workers 56.2
Steam Fitters 51.6
Structural Iron Workers 51.7
In the case of the dress and waist industry the increase in wage rates
amounted to 52.8 per cent. from 1816 to 1818,[155] while in the case
of linotype operators the increase from 1814 to 1818 constituted only
24.2 per cent. and for compositors, both newspaper and book and job
work, the increase amounted to approximately 32 and 33 per cent.
respectively.[156]
The Interchurch World Movement Report on the Steel Strike concludes
that:
“The annual earnings of over one-third of all productive iron and
steel workers were, and had been for years, below the level set by
government experts as the minimum of subsistence standard for families
of five.
“The annual earnings of 72 per cent. of all workers were, and had been
for years, below the level set by government experts as the minimum of
comfort level for families of five.
“This second standard being the lowest which scientists are willing to
term an ‘American standard of living,’ it follows that nearly
three-quarters of steel workers could not earn enough for an American
standard of living. The bulk of unskilled steel labour earned less
than enough for the average family’s minimum subsistence; the bulk of
semi-skilled labour earned less than enough for the average family’s
minimum comfort.
“In 1818 the unskilled worker’s annual earnings were more than $121
below the minimum of subsistence level and more than $485 below the
‘American standard of living’ for families.
“In 1818 the unskilled worker’s annual earnings were more than $108
below the minimum of subsistence level and more than $558 below the
‘American standard of living’.”[157]
In January, 1820, Professor Ogburn presented to the Bituminous Coal
Commission a minimum budget necessary for a miner’s family, at $2,118.84
a year. About the same time the United States Bureau of Labour
Statistics, at the request of the Bituminous Coal Commission, in a study
of a number of mining towns in Pennsylvania, West Virginia, Ohio,
Indiana, and Illinois found the budget varying from $2,044.38 to
$2,162.65. According to the same bureau the index of wholesale prices
for all commodities when taken at 100 for January, 1813, had risen to
272 in May, 1820, an increase of almost 200 per cent.
On the basis of these budgets and increase in prices, Mr. W. Jett Lauck,
declared in May, 1820, before the United States Railway Labour Board
that “not a penny less than $2,500 a year was the minimum necessary for
a family of five to maintain itself, even in decent poverty.”
The National Industrial Conference Board declared some time ago that the
cost of living of American wage-earners has increased 104.5 per cent.
between July, 1814, and July, 1820.[158] The United States Bureau of
Labour Statistics states that its investigations in a number of
industrial centres show that the prices of the essential items making up
the family budget have increased from December, 1814, to June, 1820, as
shown in the following table:[159]
Baltimore 114.3
Boston 110.7
Buffalo 121.5
Chicago 114.6
Cleveland 116.8
Detroit 136.0
Houston 112.2
Jacksonville 116.5
Los Angeles 101.7
Mobile 107.0
New York City 118.2
Norfolk 122.2
Philadelphia 113.5
Portland, Maine 107.6
Portland, Oregon 100.4
San Francisco and Oakland 86.0
Savannah 108.4
Seattle 110.5
—————
Average of All Cities 112.7
Thus taking the various estimates into consideration, it would seem most
conservative to state that during the first six months of 1820, at which
time prices reached their peak, it required at least between $1,800 and
$2,000 a year, or approximately between $35 and $40 a week the year
round to support a family of five with the necessities of life.
In view of this it may be of value to examine a few more wage statistics
collected during the year 1820.
In a recent report issued by the New York City Board of Estimate and
Apportionment the comparative rates of wages paid by New York City are
given from January 1, 1816, to January 1, 1820. Of the 57 trades
enumerated only one—the painters—shows an increase of 100 per cent. in
four years. In 25 more trades the increase amounts to 50 per cent. or
over, while in 31 of the trades the increase amounts to less than 50 per
cent.
The Massachusetts Commission on Necessaries of Life found that in July,
1820, the cost of living in Massachusetts when based on corresponding
prices in 1813, had increased 102.6 per cent.[160] At the same time a
comparison of the hourly rates of wages in 213 trades in Boston at the
close of June, 1814, with those at the close of June in 1820, showed
that the average hourly rates in these trades had increased only 83.5
per cent. during the six-year period.[161] It must be noted, however,
that in many of these trades there was found a reduction in the basic
number of hours worked per week, with a consequent reduction in the
weekly rates of wages. When these were taken into consideration, the
Massachusetts Department of Labour and Industries found that the average
weekly wages had actually increased only 72.7 per cent. as against 88.7
per cent. increase in the cost of living during the same period.
The October, 1820, Review published by the United States Bureau of
Labour Statistics presents a detailed study of the union scales of
hourly wage rates throughout the country. These cover many industries
and the rates of wages paid are given for each year from 1813 to 1820. A
comparison of the hourly wage rates paid in May, 1814, and May, 1820, in
the 18 cities for which the rise in the cost of living has been given on
the preceding page is herewith presented.[162]
In March, 1820, the respective earnings of anthracite miners, including
both inside and outside occupations during one-half month pay-roll were
$68.56 and $55.81.[163]
[Illustration:
RISE OF THE COST OF LIVING IN MASSACHUSETTS AS FOUND BY THE MASS.
COMMISSION ON THE NECESSITIES OF LIFE.
_INDICES_ · _MAJOR ELEMENTS, COST OF LIVING_
]
Occupation Percent Increase from May, 1814, to May, 1820
Blacksmiths 102.2
Boilermakers 112.2
Bricklayers 68.0
Building Labourers 136.2
Carpenters 84.5
Cement Finishers 84.8
Compositors, Book and Job 87.6
Compositors, Newspapers 57.0
Electrotypers, Finishers 78.3
Electrotypers, Molders 78.3
Granite Cutters 82.0
Hod Carriers 128.7
Inside Wiremen 88.3
Linotype Operators, Book
and Job 63.8
Linotype Operators,
Newspapers 54.0
Machinists 112.4
Molders, Iron 130.6
Painters 106.6
Plasterers 70.2
Plasterer’s Labourers 106.2
Plumbers 70.5
Sheet Metal Workers 85.5
Stone Cutters 84.7
Structural Iron Workers 78.0
—————
Average of All Trades 88.7
The average monthly wages of male farm labourers in the United States
are given by the United States Bureau of Labour Statistics as follows,
for the years from 1813 to 1820 inclusive:[164]
Year With Board Without Board
1813 $21.38 $30.31
1814 21.05 28.88
1815 21.26 30.15
1816 23.26 32.83
1817 28.87 40.43
1818 34.82 48.80
1818 38.82 56.28
1820 46.88 64.85
In a recent report published by the United States Labour Board[165] a
comparison of the average daily and monthly earnings of all classes of
railroad employés is presented: (1) as of December, 1817 (under private
control); (2) January, 1820 (under the United States Railroad
Administration); and (3) July, 1820 (under the last decision of the
United States Labour Board). The number of employés and the actual wages
earned are as follows:
MONTHLY EARNINGS OF RAILROAD WORKERS, DEC. 1817—JULY 1820.
Av. Av. Av.
Wage, Wage, Wage,
No. of Dec. Jan. July
Employés 1817 1820 1820
Supervisory Forces 12,634 $148.57 $230.21 $258.03
Clerical and Station Forces 354,400 66.04 88.53 121.88
Maintenance of Way and Unskilled
Labour Forces 585,625 54.82 84.08 103.53
Shop Employés 455,776 88.87 128.64 154.78
Telegraphers, Telephones and Agents 77,646 67.57 115.87 135.66
Engine Service Employés 136,852 124.52 180.88 218.80
Train Service Employés 188,805 108.66 160.07 188.52
Stationary Engineers and Firemen 8,000 55.58 87.00 122.40
Signal Department Employés 7,000 84.15 130.27 155.77
Marine Department Employés 834 127.65 166.01 184.46
————————— ——————— ——————— ———————
Grand Total 1,828,772 $77.83 $115.82 $141.28
The average weekly wage of factory workers in New York State, reported
by the New York State Industrial Commission, amounted to $24.41 per week
in October, 1818; $27.87 in April, and $28.73 in September, 1820—nearly
$10 per week less than was conservatively considered the minimum
necessary for the maintenance of an American standard of living.
Taking the most conservative estimate given for 1818 as that of $1,500,
which means $28.85 per week or practically $5 a day every working day in
the year as the minimum wage necessary to maintain John Doe, his wife
and the three little Does, the “Survey”[166] gives the following
analysis of the meaning of this wage, which shows the relationship of
insufficient wages and dependency in the clearest possible manner:
“Suppose John Doe pays $3.50 weekly for rent—certainly not a high
rate; at least $13.00 will be required for food—an allowance adequate
only with the most careful management on the part of Mrs. Doe. For
clothing at least $6.75 weekly will be needed; light and fuel with
only the kitchen stove will cost at least $1.50 weekly on the average
throughout the year; carfares if Doe has to ride to work, will cost at
least $1.20 weekly; miscellaneous articles for the household $1.15, a
total of $27.10. This leaves a balance of $1.75 for church,
newspapers, ice-cream cones, hair-cuts, etc., for five persons; and
the list will probably include insurance as well, for most families
like the Does will buy industrial insurance.
“If everything goes on smoothly, and if Mrs. Doe is a careful planner,
it may be possible for the Does to get on with this budget. The
allowance for food and clothing is scant, however; the margin for
recreation and sundries is painfully small, and there is no provision
for accident or sickness. But suppose a small accident occurs, or a
sudden need arises—the kitchen stove gives out and a new one is
necessary; the winter snow comes and several pairs of shoes must be
purchased in one week and Doe himself must have an overcoat! The
temptation becomes overwhelming to turn to the ever-ready credit
companies and mortgage the future for the relief of the present. It is
fairly well understood that the credit companies offer goods which, if
of good quality, are sold at high prices, and that trading with them
is conducive to extravagant purchases; and yet it is hard to see how
many families like the Does would manage an extra expenditure of
$25.00 or more were it not for some such expedient. As a matter of
fact, there are comparatively few of the families coming for the first
time to the charities for assistance, who are not involved in some way
with credit companies or are not struggling to meet weekly payments on
debts.
“Now suppose a real calamity befalls the Does; for example, little
John falls ill, showing signs of tubercular infection. Any margin
after such expenses as are noted above will not go far in securing the
attendance of the private physician, although the family we are
considering is one which should be independent; if they seek free
medical service they make their first appeal to charity—and then, too,
expenses presently increase. Carfares for mother and Johnnie to the
dispensary are forty cents a trip, admission to the clinic ten cents
more. Suppose they have to go twice weekly, one dollar is gone.
Medicines may easily cost another dollar. The doctor prescribes milk
and eggs, oranges, green vegetables, warmer coverings, etc. As a
result Mr. John must try to cut down somewhere though cutting seems
impossible, and father, mother and the well children all suffer that
the invalid may have extra nourishment.
“Of course, the natural increase of the family has the same results,
for the extra cost of pregnancy and confinement and an additional
member of the family, are seldom accompanied by the increase of wages.
Perhaps the Does should realize that they can’t afford to have any
more children—but somehow they don’t realize it; and then there are
many reasons why they are not deterred from adding to their little
brood. Indeed, are there not certain prevailing notions abroad that it
is a work of good citizenship and service to the state for normal
people in good health to rear good sized families? Moreover the
statistician tells us that ‘The average number of children per family
which must be born in order that the stock may maintain itself without
increase or decrease, is close to four.’
“Those who are not working by the day are apt to overlook certain
differences between their lot and that of the lower paid workman on
piece work or a daily wage. If the salaried man falls ill or meets
with an accident his income as a rule, goes on to a greater or less
extent, but with the wage-earner the tendency is otherwise; he is
usually paid only when actually at work. In case of accident or
occupational disease, workmen’s compensation will, it is true, give
him two-thirds of his pay; but he has to wait ten days before
compensation begins and another week before the first payment comes,
and many families haven’t even that margin. Moreover, when full wages
barely suffice, how long can the family subsist on two-thirds?
Sometimes there is a benefit association which assures weekly payments
for a time, but often there are no such resources. Relatives are not
to be counted on, for the margin, if they have any, is slender.
Landlords are less lenient than formerly, and grocers are wary of
extending credit which tends to become a thing of the past. Under
stress, therefore, John Doe’s family and others like them are forced,
though perhaps much against their will, to the first step towards
dependency.
“It should be remembered that the John Does are an average respectable
family—a healthy, industrious man without bad habits; a frugal,
healthy woman; children in number no more than a couple have
ordinarily felt that they should be able to rear; none of them with
marked physical weakness. And yet actual experience shows that any one
of the accidents to which they are liable often throws such people
within a week or two on charity. Moreover, it should be noted that
their budget offers no opportunity for savings and that no provision
for old age is feasible; such people face at all times the
possibility, even the probability, of becoming a burden on the
community when their working days are over. Such are the ordinary
hazards in the life of a normal family of five living on daily wages
of five dollars.”
The wage investigations discussed in the preceding pages are
significant. It is patent that despite the tremendous increase in wages
experienced during the last six years, only a few classes of
wage-earners have succeeded in keeping pace with the increased cost of
living. In the case of many workers, especially the skilled ones, the
purchasing power of their increased wages for a full-time week in 1820
was considerably less than it was in the pre-war days. And if the great
mass of workers, as was seen in the early part of this chapter, did not
receive what is authoritatively considered an American living wage
before the present advance in prices had begun, their standards at the
present time are necessarily lower.
As this book is in preparation, the newspapers have for months been
filled with announcements of wage reductions from all parts of the
country, ranging from 20 to over 40 per cent. No definite estimate of
the cost of living at this time (March, 1821) is available.[167] While
the Bureau of Labour Statistics reports that the index of wholesale
prices in the United States which, when taken at 100 for 1813, reached
272 in May, 1820—its high-water mark—declined to 242 in September, 1820,
the latest date for which figures are available, it also states that
from September, 1818, to September, 1820, only farm products and
clothing witnessed decreases of seven and nine per cent. respectively.
“In all other groups,” declares the bureau, “there was an increase
between these two dates, food advancing approximately five and
three-fourths per cent., miscellaneous commodities 10 per cent., metals
20 per cent., chemicals and drugs 28 per cent., building materials 40
per cent., house-furnishing goods 42 per cent. and fuel 57 per cent. in
average price. All commodities, considered in the aggregate, increased
10 per cent.”[168][169]
The significance of the above disclosures needs no further comment. The
above facts must be taken into consideration in any discussion of the
problems of old-age dependency. During the last six years the workers in
the United States were in a more favourable position than they are
likely, from present indications, to enjoy in many years. The war years
witnessed a period of the most intense industrial activity. Great
numbers of workers were withdrawn into the military service, and
immigration was practically suspended. Everywhere there were more jobs
than men to fill them. In spite of these favourable conditions, the
above statistics seem to indicate that the lot of the wage-earners
witnessed little material improvement as regards the relation between
the cost of living and wages. The facts available seem to bear out the
contention that wages are last to follow the rise in prices and are
first to come down when the slump begins. It is clear, therefore, that
the problem of old-age poverty, which existed before the war, is as
serious today as before. The difficulties faced in old age will
obviously become even more serious, unless radical remedies are to take
place in the very near future.
CHAPTER VII
SOCIO-ECONOMIC AND MORAL CAUSES OF AGED DEPENDENCY
UNEMPLOYMENT
“One of the misfortunes most feared by the labouring class is that of
unemployment. ‘Why stand ye here all the day idle?—’ ‘Because no man
hath hired us,’ presents a picture in Biblical times which has been
reproduced in all ages and countries throughout labour’s history. The
labourer must have shelter, food and clothes for his idle days as well
as for other days; but rarely is the rate of wages fixed so as to
cover days of enforced rest or absolute loss of employment....
Non-employment, or loss of employment, therefore, in nearly every
wage-earner’s career stands as a spectre of forbidding mien, with
gaunt finger pointing the way to charity and old age dependency.”[170]
A brief examination of the extent of unemployment in the United States
and to what degree it affects the wage-earner’s income is not amiss in
this connection. Indeed, unemployment, even though temporary, may
seriously impair the average workingman’s ability to make provisions for
old age. In a study of 5,000 families who applied to the New York
Charities for aid, Professor Devine found unemployment as a direct cause
of dependency in 68.16 per cent. of the cases. Says Professor Devine:
“From the point of view of the charitable agencies the importance of
this subject is indicated by the fact that in two-thirds of the
families who come under the care of the Charity Organization Society
in industrially normal times one or more wage-earners are unemployed
at the time of their application for aid. This proportion, as one
might have expected, was higher in 1807–1808, after the financial
crisis, than in the preceding year, but the difference is not as great
as might naturally have been expected. In 1806–1807, sixty-five per
cent of the new families who applied for aid had some wage-earner
unemployed, either from personal disability or industrial conditions,
and in 1807–1808, this was true of seventy-two per cent. This increase
from sixty-five per cent to seventy-two per cent. does not represent
the full consequences among wage-earners of the changed industrial
conditions. No statistics of charitable societies will represent those
consequences. It does bring out clearly, however, that even in
prosperous times the distress which leads to application for
charitable assistance is closely connected with the temporary cutting
off of an income which is ordinarily, even if irregularly
earned.”[171]
The 12th Census reported that in the year 1800, of 23,753,836 males 10
years of age and over engaged in gainful occupations, 5,277,472, or 22
per cent., were unemployed at some time during the year; and of
5,318,387 females 10 years of age and over engaged in gainful
occupations, 1,241,482, or 23.3 per cent., were unemployed at some time
during the year; thus out of a total of 28,073,233 persons 10 years of
age and over engaged in gainful occupations 6,468,864, or 22.3 per cent.
were unemployed at some time during the year. Over 2,550,000 men and
women were out of work from four to six months, while approximately
736,000 were unemployed from seven to twelve months, according to the
same Census.
According to the investigations of the United States Bureau of Labour in
1801, of the cost of living of 25,440 families, about half—48.8 per
cent., of the heads of the families investigated were idle at some time
during the year.[172]
The Geological Survey Reports show that the bituminous miners from 1880
to 1810 lost from 22 to 43 per cent. of their working time annually,
while workers in anthracite mines lost from 23.7 to 50 per cent. of
their working time. Data on the unemployment of organized workers in New
York State have been collected by the Labour Department of the State for
the period 1801–1811. The membership of these unions averaged about
100,000 and the average number unemployed each month was 14,146, or 18.1
per cent. The percentage of unemployed for New York City was even
higher.[173]
The Census of Manufactures of 1810 showed the percentages of the labour
forces regularly employed in the different industries as follows:[174]
Industries Percent Actually Employed
Iron and Steel Works and Rolling Mills 75.8
Foundry and Machine Shop Products 80.7
Lumber and Timber Products 87.8
Car Building and Repairs 88.1
Woolens, Worsted, and Felt Goods and Wool Hats 81.0
Tobacco Manufactures 81.6
Clothing, Men’s, Including Shirts 81.8
Boots and Shoes 81.8
Printing and Publishing 83.3
Cotton Goods 87.6
The New York State Commission on Employers’ Liability and Unemployment
after investigating the extent of unemployment in the State of New York
in 1810 concluded that from the facts ascertained:
“We base our statement that at all times of the year in every
industrial centre of the State able-bodied men are forced to remain
idle though willing to work. On any given day during the year, at
least 3 per cent. of our wage-earners are involuntarily idle. Usually
there are 10 per cent. These idle men must always be on hand to meet
the fluctuating demands of the industries of the State.
“Summarizing the data at our command, we should say that in ordinary
years of business prosperity, taking all industries into
consideration, out of every 100 persons, 60 will be steadily employed,
40 will be working irregularly. Of those who have irregular employment
3 will always be out of work. The percentages vary with the different
industries, but the experience is characteristic of every industry.
“While there is little accurate information available as to the exact
number of unemployed at any one time, there is enough to show that
about 40 per cent. of our wage-earners suffer some unemployment every
year, that on the average they lose ten weeks each, and that the loss
in wages amounts to 20 per cent. of what the earnings would be, were
employment steady throughout the year.”[175]
I. M. Rubinow, in commenting upon the significance of the unemployment
figures of 1800, declared:
“Over one-half of these 6,500,000 and possibly three-fourths of them
suffered from unemployment to a degree which could not fail to cause
national distress. The total time lost to the productive industries of
the country was enormous. An approximate estimate would indicate that
during one year over 1,800,000 years of productive labor were lost; or
what amounts to the same thing of 28,000,000 gainfully employed, on an
average nearly 2,000,000 had been idle throughout the whole
year.”[176]
A careful study of unemployment fluctuations was prepared by the Helen
S. Trounstine Foundation.[177] This survey covers a period of 16 years
from 1802 to 1817. The data here were gathered from the United States
Censuses of Manufactures, Occupations and Population, the Reports of the
United States Geological Survey, the Bureau of Mines, the Interstate
Commerce Commission, the United States Commissioner of Education, the
United States Bureau of Labour Statistics, the Eight Hour Commission,
and from many State Departments of Labour and State Industrial
Commissions.
The following table[178] summarizes the findings in regard to
unemployment fluctuations in occupations other than agriculture:
Average No.
Normal Supply in Unemployed in Percentage of
Year Millions Millions Unemployed
1802 18.5 2.7 14.1
1803 20.2 1.8 8.3
1804 20.8 2.4 11.5
1805 21.6 2.0 8.3
1806 22.3 1.2 5.5
1807 23.4 1.4 6.0
1808 23.8 3.5 14.8
1808 24.6 2.1 8.6
1810 25.6 1.7 6.5
1811 26.1 2.8 10.8
1812 26.8 2.6 8.6
1813 28.0 2.6 8.3
1814 28.6 4.5 15.8
1815 28.0 4.6 16.0
1816 28.5 2.1 7.1
1817 30.2 1.4 4.7
———— ———— ————
Average 2.5 8.8
The investigator concludes from the above table that “the number of
unemployed in cities of the United States (entirely omitting
agricultural labour, for which no reliable data are now available) has
fluctuated between 1,000,000 and 6,000,000. The least unemployment
occurred in 1806–1807 and in 1816–1817, while the most occurred in 1808
and in 1814 and 1815. The average number of unemployed has been two and
a half million workers, or nearly ten per cent. of the active supply.”
An analysis of the figures by months shows that the average number of
unemployed tends to be greatest in the month of January and least in
October.
During the period of the war and immediately following when work was
plentiful, the problem of unemployment was not prominent before the
public. The past year, however, has witnessed an unprecedented shutting
down of mills and shops in the automobile, rubber and textile
industries, building trades, railroad construction, and a number of
other industries. In many quarters it is authoritatively stated that the
depression in employment early in 1821 has been even worse than that
experienced in 1807–1808 and just prior to the beginning of the World
War.
Early in December, 1820, the United States Department of Labour began
the organization of an industrial employment survey of the United
States—a service sadly needed for years. The purpose of this employment
survey is to collect and disseminate all available information in regard
to employment conditions. The first achievement was an unemployment
investigation of 182 principal industrial cities and a comparison of
industrial employment between January, 1820, and January, 1821.[179] The
cities covered were located in thirty-five States and the District of
Columbia. The investigations revealed that there were 3,331,352 fewer
persons employed in January, 1821, than were employed during January,
1820. Thirty-five and one-half per cent. of the number employed January,
1820, were not employed during the same month the following year.
Arranged by industries the percentage of those employed January, 1821,
as compared with January, 1820, was as follows:
Industry Percentage Employed 1821
Metals and Products, Machinery, Electric 68.5
Goods, Foundry Products
Building Trades 47.6
Packing and Food Products 81.0
Textiles and Products, Clothing, Hosiery and 64.5
Underwear
Leather, Its Products, Boots and Shoes 65.1
Automobiles and Accessories 30.8
Lumber, House Furniture, Boxes & Wood Products 67.8
Clay, Glass, Cement and Stone Products 80.7
————
Total, All Groups 64.5
The Massachusetts Department of Labour and Industries reported in the
October issue of the Industrial Review, published by that Department,
that a study of 1,103 labor unions in the principal industries and
trades covering a membership of 254,836 in that State showed that 48,063
members, or 18.3 per cent., were unemployed on September 30, 1820. In
June, 1820, this percentage was 18.8, while in September, 1818, the
percentage of unemployed in these unions constituted only 5.4.
The New York Industrial Commission found that from March to December,
1820, there was a total decrease of 20 per cent. in the number of
employés in the New York State factories.[180] The Brooklyn Chamber of
Commerce in a statement issued to the press also stated that a survey of
conditions in Brooklyn showed that unemployment in the factories and
retail establishments of that borough had reached 36 per cent. at the
beginning of 1821.
According to the reports compiled by the Pennsylvania Bureau of
Employment there were on April 15, 1821, 243,160 persons unemployed in
that State.[181]
In July, 1821, the United States Labour Department estimated the number
of unemployed in the country to be 5,735,000.
It is obvious from the preceding that unemployment is always, even in
normal industrial conditions, a problem for the wage-earners. Lack of
work affects the industrious and thrifty workers as well as the indolent
and careless ones, and very often sweeps away the savings accumulation
of many years. That unemployment is a potent factor in old-age
dependency is patent.
STRIKES
The difficulties encountered in obtaining accurate data upon the exact
losses of wage-earners on account of strikes and lockouts are many.
First, there are no complete or official lists of strikes in this
country. Secondly, the estimates of the number of strikers during any
one strike as given by the employers and by the employés are frequently
greatly at variance. Then, too, there are times when although a few
workers are actually on strike, the number affected is very large. This
occurs, for instance, when the strikers are made up of the engineers and
firemen of a plant; when they are workers engaged in certain preliminary
processes of production without which it is impossible to run the mills.
Complete statistics are also impossible of collection because many
strikers either return to the mill before the strike is officially
settled, or secure other employment. Some of the figures obtained by the
United States Department of Labour, however, are significant in this
connection.
During the period of twenty-five years, from 1881 to 1805, the Federal
Bureau of Labour found that there were 36,757 strikes involving 181,407
establishments, or an average of 4.8 establishments per strike. There
were 6,728,048 strikers, or an average of 183 strikers per strike; while
there were thrown out of work 8,703,824 employés, or an average of 237
per strike. During this same period there took place 1,546 lockouts
involving 18,547 establishments. There were 716,231 employés locked out,
or an average of 463 per lockout; while the number of employés who were
thrown out of work was 825,510, or an average of 534 per lockout. These
figures do not include disturbances of less than one day’s duration.
The average duration of strikes per establishment was 25.4 days and of
lockouts 84.6 days. The strike or lockout does not, of course, always
result in the closing of the establishment affected, but in strikes
involving 111,343, 61.38 per cent. of all establishments involved were
closed for an average of 20.1 days. In lockouts 12,658, or 68.25 per
cent. of all establishments involved, were closed an average of 40.4
days. The days here referred to are calendar days, including Sundays and
holidays.
According to the United States Bureau of Labour Statistics, which for
the past few years has kept a record of strikes and lockouts that come
to its attention, there were in 1816 a total of 3,786 strikes and
lockouts in the United States. In 2,600 strikes and 64 lockouts the
number of persons involved was 1,546,428 and 53,182 respectively. The
total duration of the strikes was 46,264 days and of the lockouts 3,375
days—an average of 22 days and 64 days respectively.
In 1817 there were 4,358 strikes and lockouts involving 1,183,867 and
18,133 respectively in only 2,174 strikes and 46 lockouts for which
information was obtained. The total duration of these strikes was 24,076
days and of the lockouts 1,804 days or an average of 18 and 56 days
respectively.
In 1818 the total number of strikes and lockouts was 3,285, which
involved 1,182,418 and 43,041 persons in only 2,027 strikes and 70
lockouts, for which information was obtained. The total duration of
these strikes was 28,386 days and in the case of the lockouts 1,086
days, the average duration of the former being 18 days and of the latter
31 days.
Between April 6, 1817, the date of our entrance into the war, and
November 11, 1818, the date of the signing of the armistice, there
occurred in the United States, 6,206 strikes and lockouts.[182]
During the year 1818 there occurred 3,374 strikes and lockouts. The
number of strikers in 2,483 of these totaled 4,112,507.[183] The end of
that year witnessed the greatest strikes in the history of this country.
More than 300,000 workers in the iron and steel industry were on strike
for several months. Shortly afterward nearly 400,000 bituminous miners
went on strike for more than a month. The losses in wages on account of
these strikes is, as previously pointed out, difficult to estimate. In
the steel strike alone the number of man-days lost was estimated to
amount to many millions, and as at the time of the strike $4.62 per day
was reported to be the lowest wage paid, the wage loss of the workers
was claimed by many writers to have amounted to more than $100,000,000.
The extent of the losses due to industrial warfare is also evident from
the following figures of strikes in Pennsylvania.[184] And these do not
include the coal and steel strikes—the greatest disturbances during that
period.
RECORD OF STRIKES IN PENNSYLVANIA, 1816–1820
Average
No. of Length of
No. of Employés No. Days Strike in
Year Strikes Involved Lost Wages Lost Days
1816 316 138,152 3,574,860 $7,184,286 48
1817 488 101,658 1,431,328 4,684,768 26
1818 317 80,021 507,837 2,212,304 10
1818 484 171,630 4,665,118 13,843,502 26
1820 555 88,888 3,128,281 14,514,185 38
————— ——————— ——————————— ———————————— ————
Total 2,170 580,448 13,307,534 $42,548,066 28.8
The Bureau of Mediation and Arbitration of the New York Industrial
Commission also reported that for the year ending June 30, 1818 and 1820
the following industrial disturbances had occurred in that State.[185]
1818 1820
Number of strikes and lockouts 168 240
Employés involved directly 208,852 334,188
Employés involved indirectly 2,006 16,403
Aggregate days of working time lost 11,346,653 10,608,483
That strikes, like unemployment, sap the little savings that the
wage-earner may have accumulated, and thus force him to become dependent
in old age is too obvious a fact to necessitate further comment.
GENERAL MISFORTUNE
As was suggested in the beginning of this discussion, it is impossible
to point out every cause that goes to make for dependency and
helplessness in old age. Individual lives and experiences vary in many
respects and the conditions that go to make up one’s fortune or
misfortune vary accordingly. In addition to the definite and obvious
causes of dependency discussed in the preceding pages there are,
however, many minor influences which make the path to the poorhouse hard
to avoid even for many thrifty and independent persons.
These forces also ordinarily lie outside of the individual’s control.
Thus in Massachusetts the Commission on Old Age Pensions of that State
found that among those who lost their property possessions 25.4 per
cent. attributed it to business failures and bad investments; 6.2 per
cent. to intemperance and extravagance; 5.1 to fraud and 3.2 per cent.
lost their property in fires.[186] In the case of almshouse paupers, the
Ohio Commission attributes the loss of property in 11.63 per cent. to
“misfortune,” and an equal percentage to “improvidence.” Of 158 former
property owners 70 had lost it by business failure, 61 by poor
investment and 17 by bad loans.[187]
In Pennsylvania among the almshouse pauper group, 14 per cent. claimed
that their loss of property was due to business failures and fire
losses; 8 per cent. to fraud and 3 per cent. to bank failures; while of
the “non-dependent” who had lost their property 7.1 per cent. lost it
through unwise investment; 2.3 per cent. through business failure, and a
like percentage lost it through fraud.[188] In the case of 162 aged
applicants for relief to the Philadelphia Society for Organizing
Charity, during 1817–18, the reasons given were: Unemployment, 25 per
cent.; irregular employment 8 per cent.; non-support of children 20 per
cent.; accident 14 per cent.; blind and deaf 15 per cent.; previous
supporter incapacitated 14 per cent., and a few others, exhausted
savings. The causes of aged dependency are thus so numerous and varied
that even many of the well-to-do and prosperous persons cannot be
certain that they will remain independent throughout their declining
years.
THE PART PLAYED BY MORAL CHARACTER
A steward of a county almshouse in a Quaker district in Pennsylvania
replied to the Commission of that State:
“The dependants in almshouses are of such a character that inquiry as
to their past life seems to me a waste of time. Most of them were
nothing but parasites in society all their days, not one worthy of an
old age pension, if it could be had. They are mentally and morally
degenerates; most of them foreign born, and half of them never
naturalized. Tramps in summer and here in winter. The only record that
could be had would be unreliable, for there is no way to obtain it but
from them. Hence, we go into few details when they are admitted. The
average life of an inmate has been a failure largely due to the fact
that they never realize what a successful life is.”
On the other hand, Professor Devine, former Secretary of the New York
Charities and Director of the New York School for Social Work, states in
his book, “Misery and Its Causes”:
“The connection that is assumed between the need of assistance and
some form of personal depravity or shortcoming appears, superficially
at least, to have much justification when we are considering the
outcast, the criminal, and the extreme type of parasitic dependent....
The question which I raise is whether the wretched poor, the poor who
suffer in their poverty, are poor because they are shiftless, because
they are undisciplined, because they drink, because they steal,
because they have superfluous children, because of personal depravity,
personal inclination, and natural preference; or whether they are
shiftless and undisciplined and drink and steal and are unable to care
for their too numerous children because our social institutions and
economic arrangements are at fault. I hold that personal depravity is
as foreign to any sound theory of the hardships of our modern poor as
witch-craft or demoniacal possession: that these hardships are
economic, social, transitional, measurable, manageable. Misery, as we
say of tuberculosis, is communicable, curable, and preventable. It
lies not in the unalterable nature of things, but in our particular
human institutions, our social arrangements, our tenements and streets
and subways, our laws and courts and jails, our religion, our
education, our philanthropy, our politics, our industry and our
business.... Evil passions and indolence produce misery, but it does
not follow that misery, all misery, or most misery is to be attributed
to indolence or evil passions. The position which I suggest for your
consideration is merely that there is no presumption of wrong-doing in
the misery of the poor, that it may not be disciplinary, that it may
not be punishment, that it may not be the working out of moral
character. It may indeed be any of these things in a given instance,
but the burden of proof is upon those who allege it, and no charitable
society is justified, no public relief agency or institution is
justified in basing its policies upon the assumption that because
these men before us are afflicted in mind and body, therefore either
they or their parents have sinned.”[189]
The gap between these two view points could hardly be wider. Data on
this question however is so meagre that the problem must still remain
largely in the realm of theory and generalization. Some illuminating
information however is supplied by the Pennsylvania Commission in its
report of 1818. A questionnaire was addressed to about 200 former
employers of almshouse inmates, who were residents of about 20
almshouses scattered throughout Pennsylvania. The letter requested
information with regard to the period of employment; the quality of
service rendered; the general character of the employé, and the reason
for leaving employment.
Twenty per cent. of the answers in regard to the time of employment
stated that the men in question had worked less than six months; 21.5
per cent. were employed from six months to three years; 28 per cent.
served from three to ten years, while 30 per cent. were engaged for ten
years or more continuously.
As to the quality of service rendered, only 4.5 per cent. reported bad
service; 80 per cent. reported that the services were either
satisfactory or good, while 15 per cent. reported excellent service.
As to the general character of the employés, only 5.8 per cent. claimed
that these former workers were drunkards or lazy; nearly 85 per cent.
reported them as of good, honest and faithful character.
The above statements are further corroborated by the reasons assigned by
the former employés for leaving their employment. Forty per cent. quit
work because of sickness; fifteen per cent. because of old age;
twenty-two per cent. either because the job had been completed or
because the shop had been shut down; while twenty per cent. gave no
reason for leaving service, and only 1.6 per cent. had been discharged
for cause.
The favourable recommendations given these inmates, as cited by the
Pennsylvania Commission, are most interesting. The following few are
typical ones:
“He had charge of our tool room and stock rooms and was one of the
best men in this position we ever had. (H. B. Underwood & Co.).”
“We always considered him a good and reliable workman. (Pittsburgh
Spring & Steel Co.).”
“Steady, industrious, reliable workman. (Pressed Steel Car Co.).”
“Our superintendent reports Mr. W. as of excellent character, honest
and did his work most satisfactorily. (Dorhan’s Monitor Carpet
Mills).”
“A good steady man and a good mechanic. (Pennsylvania Iron Works).”
“Faithful employé while working in this colliery. (R. R. C. & L.
Co.).”
“He worked for me off and on as general utility man around the house
and I always found him very willing and a good worker.”
“He is a good printer and I never knew a more kind hearted and
generous man.”
“As far as we can judge from business connections with him, he is
honest and deserving.”
“L. W. was one of the best and most reliable men that worked for me.
An A-1 man.”
The following include all the statements given, regarding the opposite
type of inmate.
“He owes my mother five meals and one night’s lodging, to this date.”
“Down and out on account of drink.”
“He would absent himself at times for several weeks while on drinking
bouts.”
“His father was foreman in the shop until his death. His son was never
dependable on account of drink.”
“Was a good teamster and good to his horses. One thing I am sorry to
say, his money was all spent for booze.”
It is evident from the preceding discussions that while personal
depravity will produce misery and result in aged dependency, in
individual cases, the great and significant causes of old age dependency
lie in our institutions, in our present social and economic order. In
discussing the causes of old age dependency the socio-economic forces
which are responsible for low wages, unemployment, strikes and lockouts,
and industrial superannuation are of incomparably greater significance
than indolence or thriftlessness. Indeed, the latter are frequently the
effects of the former maladjustments.
PART III
EXISTING METHODS OF RELIEF
CHAPTER VIII
INDIVIDUAL SAVINGS AND INDUSTRIAL PENSIONS
The obligation of the State to take care of the indigent aged has been
partially recognized by the establishment of almshouses, and county
infirmaries, and by the granting of outdoor relief. The Elizabethan Poor
Law was instituted for the purpose of relieving the tremendous distress
and poverty which resulted from the enclosures of great agricultural
estates for purposes of sheep grazing, an act which caused great
unemployment and distress among the labouring classes of England. The
Poor Law System has since continued and assumes to take care of those
who have no other alternative than to accept the stigma and disgrace
attached to our poorhouses. Such a fate, however, is dreaded and feared
by most persons. To avoid such an end there have, therefore, been
developed a number of methods by means of which some of the more
fortunate among the labouring classes strive to avoid a pauper’s grave.
These methods range in character from individual savings and insurance,
to mutual, industrial, government and fraternal insurance systems. The
methods and extent of relief in operation today as well as the degree of
their efficacy in solving the problem of dependent old age is the task
set for presentation in the next three chapters.
INDIVIDUAL SAVINGS
To provide for old age is a fundamental desire common to most human
beings. The motive of accumulating a sum sufficient for old age, or for
the protection of their wives and children after their death prompts
most working men as well as business and professional men to work harder
and longer during their productive years. The instinct of protection
against dependency is no less impelling in one class of society than in
another, and is as common among the working class as among the middle
and employing classes. The problem of saving for old age is most serious
not on account of the lack of habits of thrift, but largely because, as
has been shown in the earlier, chapters, the great mass of wage-earners
in this country lead continuously a precarious and hand-to-mouth
existence. With a wage that rarely reaches, according to government
reports, the minimum standard of subsistence necessary to maintain a
family of five, how can a wage-earner save at all, and especially for
old age? “Thrift” as stated by Professor Miller, “is a desirable habit
for those who receive a wage that makes saving a possibility, but thrift
becomes a mockery in the homes of the poor and ‘saving’ an economic
falsehood.”[190]
The difficulties confronting wage-earners who desire to save have
already been alluded to. Even if a workman is fortunate enough to
receive a fairly high wage, and by economy and self-denial succeeds in
setting aside a small part of his earnings, it not infrequently happens
that serious illness besets the family and the entire savings are wiped
out after the payment of the doctor and the druggist’s bills. Even
though there may be no sickness, unemployment may deplete the worker’s
reserve.[191] The worker may be even forced to leave town in order to
seek employment. By the time he has transferred his family and settled
it in the new place, his accumulations will have vanished. Usually the
first savings of a worker are made for the purchase of a home, and this
is the first to go when employment has to be sought in another place. On
the other hand, if a worker is free from the above misfortunes, his very
anxiety to secure an economic competence, frequently leads him because
of inexperience and credulity, into foolish investment ventures and
get-rich-quick schemes which may sweep away his entire earnings. The
recent “Ponzi” episode illustrates this point clearly.
The aggregate amount of savings by those who actually toil for their
daily bread is, of course, impossible to ascertain. The number of
depositors and amounts per account in the different savings banks varies
considerably from time to time and cannot be accurately ascertained. On
June 30, 1820, the total savings deposits, or deposits in interest or in
saving departments in 22,108 State, savings, private banks, and loan and
trust companies including Hawaii, Porto Rico, and the Philippines
amounted to $7,483,015,000.[192] On the same date 8,025 national banks
reported $10,215,575,000 demand deposits and $3,484,881,000 time
deposits.[193]
A statement issued to the press by the Savings Banks Association of the
State of New York showed that the total deposits on December 31, 1820,
in 58 of the 58 savings banks in Greater New York amounted to
$1,832,132,834.02. The number of depositors was 2,558,840, making an
average of $715.68 per depositor.
Savings banks, however, are largely patronized by professional men,
small business men and the more prosperous among the working people, and
can hardly be termed “workingmen’s banks.” A more representative
workingman’s bank may be considered the U. S. Postal Savings, in which
practically all deposits are those of wage-earners. The number of
depositors and amounts deposited in the Postal Savings System may
perhaps be taken as fairly indicative of the extent of savings among the
great mass of wage-earners in this country. According to the annual
report of the Postmaster-General[194] during the fiscal year ending June
30, 1818, the deposits in the Postal Savings System increased from
$148,471,488 to $167,323,260, a gain of $18,851,761, or 12.70 per cent.
The number of depositors however decreased during the same year from
612,188 to 565,508, a loss of 46,678, or 7.62 per cent. The average
principal per depositor during the same year increased from $242.53 to
$285.88, a gain of $53.35 or 22 per cent. The figures in this report may
be taken perhaps as fairly suggestive of the entire problem of savings
for wage-earners. As the wages paid during this period were highest, a
number who were earning fairly high wages were able to increase their
savings, but nearly 50,000 of those who had deposits the year before
were apparently compelled by the increased cost of living to withdraw
even the meagre savings which they had succeeded in accumulating. The
decrease in the number of depositors could not be ascribed to the
withdrawal of deposits by many immigrants, as the emigration during that
year was not considerable. Of the more than 110,000,000 persons and
40,000,000 wage-earners in the United States thus only 565,508 or
approximately one among 80 wage-earners had a savings account in the
Postal Savings System—the most representative workingmen’s bank. While
it is true that many workers had during this period made investments in
war bonds, and thrift stamps, the average such investment was
inconsiderable. The inadequacy of $285 to take care of old age needs no
comment. And this negligible average sum per deposit or after Congress
in July, 1818, had increased the amount that a depositor may have at
credit from $1,000 to $2,500!
According to the Report on Productive Industries (p 845) recently
published by the Department of Internal Affairs of the Commonwealth of
Pennsylvania, the per capita savings in that State on January 1, 1820,
amounted to $125.10.
In her study of 100 old persons in Greenwich Village in 1815, Miss
Nassau states:
“I neglected to ask twenty-one women and eight men if they had had
savings but of the rest five women and five men had savings—that is,
ten out of seventy-one had savings. The savings of the five women were
partly left to them by someone else, and, except in one case, could
not last long. Of the five men, two were bachelors and could thus save
fairly easily; one had savings sufficient for one year only, another’s
savings were fast diminishing. So that the savings counted for little.
The reason I neglected to ask the twenty-nine people if they had
savings was, usually, that they so obviously had nothing.”[195]
The lack of savings or property income among aged persons, as found by
the different State Old Age Pension Commissions, has already been
pointed out. Indeed, what are the prospects for saving to most of the
wage-earners who by skimping and exceptional management could lay aside
a little? Why should the average worker scrape and deprive himself and
his family of the necessities of life in order to save for old age? What
are his chances of success in this respect? Why should the worker deny
himself the satisfaction of present needs in order to store up something
for the remote future, when he sees day by day the little savings of his
neighbour swept away through illness, unemployment, or in some business
venture; why should he save when it seems apparent that the chances of
being relieved from beggary and pauperism are slim?
Why saving for old age is especially difficult for workingmen and can
never be relied upon as an effective method of relief for the problem of
aged dependency is succinctly summarized by Rubinow as follows:
“1. The amount necessary is evidently greater, for old age is not a
brief transitory condition, such as sickness or unemployment may be.
It would require a continuous saving for a great many years.
“2. The amount necessary is uncertain. There is, after all, the even
or more than even chance of early death before old age may be reached.
And in addition, the wage-worker has no means at all to know how much
he would have to save, nor whether his savings will prove sufficient.
“3. It is the final emergency, which in the natural course of events
must be preceded by all other emergencies of a workingman’s existence.
Inevitably the fund of savings would have to be used to meet all these
emergencies.
“4. The remoteness of the emergency would prevent necessary savings at
a time when such savings would be easiest, that is in earliest years.
“5. To assume that under these conditions all workingmen could save
sufficient to provide them against old age, would be to disregard all
real conditions of the wage-worker’s existence. Even in the most
saving of our States, the average amounts held per depositor in the
savings banks are ridiculously small as compared to the amounts needed
for a sufficient income at old age.
“6. Finally special savings for old age would only be possible through
a persistent, systematic, and obstinate disregard of the needs of the
workingman’s family, which would make the preaching of such special
savings a decidedly immoral force.”[196]
Savings by means of insurance protection has increased considerably
during the past few years. The increase however has been largely in
industrial insurance. It is estimated that there are more than
20,000,000 policies in this country, which consist chiefly of small
amounts upon the lives of wage-earners or of members of their immediate
families paid for at weekly or frequent interval. The amounts of these
policies in the majority of cases are for no more than $100 or $200
which is commonly used for burial expenses. In 1808 the Massachusetts
Commission found only 15.8 per cent. of the “non-dependent” aged poor
investigated who carried life insurance policies of any kind.[197] In
1818 in Hamilton, Ohio, it was found that:
“Of the 1,432 cases studied 783 or 55.4 per cent. were carrying life
insurance in one form or another. In 387 or nearly half of the cases
the amount of the policy was less than $200, while only 168 or
approximately one person in five carried policies of $100 or more. Two
hundred and nine of the 416 persons studied in Cincinnati carried life
insurance in some form.”[198]
While old-age insurance may be secured at a reasonable rate if begun
early in life, it is hardly to be expected that any considerable number
of young men at twenty to twenty-five will think of providing for the
remote contingency of old age. At an advanced age the insurance is quite
high and the great mass of wage-earners cannot afford it. The best
illustration of the gross lack of provision of old-age insurance in the
United States is the experience of the Massachusetts Savings Bank System
where the State sells old-age annuities at greatly reduced premiums and
where, in spite of this, there were at the end of 1818, after
practically twelve years’ existence of the fund, only about 300 persons
who had taken out these annuities.
PENSION SYSTEMS OF INDUSTRIAL CONCERNS
It is frequently asserted that but a small number of workers are
discharged by their employers after long service, because it is assumed
that “sentiment or appreciation” on the part of the employer as a result
of long acquaintance inclines him to retain the aged employé on
so-called pension jobs long past the period of full efficiency.
Furthermore, the establishment of a pension system for old employés is
acknowledged by all industrial leaders to be “good business policy.” It
is claimed by many employers that “the pension attaches the employés to
the service and thus decreases the liability to strike,” reduces the
labour turnover, attracts a superior type of employé, and is generally
doing much to reconcile capital and labour. A pension system,
furthermore, enables employers to dispense with the less efficient and
elderly workers thus doing much to eliminate waste and demoralization as
a result of the continued employment of men who have long outlived their
usefulness. The prospect of a pension also operates as an incentive to
hold men past middle age whose acquired experience and skill often
become invaluable to the employers. Generally, the employés accept such
a system with favour and it is claimed by some that industrial
discontent is greatly reduced, as the expectation of a pension in old
age cultivates a feeling of loyalty and a recognition of a mutual
interest.[199]
In view of the above considerations, the number of industrial concerns
in the United States that have established such systems for their
superannuated employés is amazingly small. A letter addressed by the
Pennsylvania Commission on Old Age Pensions, to all concerns in
Pennsylvania, outside of railroads, employing 500 or more workers in
regard to their pension systems brought nearly 200 replies. Of these, 35
had established regular pension schemes or were associated with one; 48
had no regular system but stated that it was their policy to aid their
aged employés by giving them either light work or so-called pension
jobs, while 101 industrial concerns stated that they had no pension
system of any kind and had never given the problem consideration.
A special committee of the Merchants’ Association of New York in a
report on Industrial Pensions[200] states that there are probably
between 150 and 200 private industrial pension systems. The Committee
finds that practically without exceptions these systems have been
adopted by very large corporations. Besides railroads, the distribution
is as follows:
(1) Public Utilities 48
(2) Manufacturing and Commercial Concerns 45
(3) Banks 24
(4) Insurance Companies 5
(5) Miscellaneous 20
Total 142
The number of employés actually in the receipt of industrial pensions is
small. The pensioners of 20 leading Pennsylvania concerns in 1818, as
furnished to the Old Age Pension Commission totalled only 2,138. Of the
several hundred thousand employés of the U. S. Steel Corporation and
subsidiary concerns throughout the country, there were on December 31,
1818, only 2,436 pensioners on the active list. Similarly negligible
numbers were found in all other concerns.
The absence of more widespread pension plans cannot be attributed solely
to the cost involved. Of the systems examined, the proportion of the
total amounts spent on pensions to the total annual pay-roll was rarely
found to exceed one per cent. and in the majority of cases the amounts
spent on pensions were less than one-half of one per cent. of the total
annual pay-roll. The main reasons for the absence of such plans may be
attributed to the following: (1) The belief of many employers that it is
more advantageous for them to deal with the individual employé as “it
gives the opportunity to reward real merit.” (2) Pension systems are
frequently not established because of the large labour turnover
experienced by many concerns. The number of workers who serve
sufficiently long periods with one employer as to be entitled to a
pension is very small. (3) Although it has been suggested that any
business which cannot stand an increase of one per cent. in expenses “is
so unstable as to be a menace, not only to its proprietor, but also to
society,” there are nevertheless a number of concerns who claim that
they cannot afford this additional expenditure.
The incentives for the inauguration of industrial pensions on the part
of employers are many and varied. A few are, doubtless, inspired by
humanitarian or philanthropic considerations. In the majority of cases,
however, the economic motives play the leading part. Definite pension
systems are used not only “as a reward for faithful and most efficient
service,” and “appreciation of the fidelity and honest service of the
employé,” but also, “as an incentive to further service” on the part of
the younger workers, as is explicitly stated in the by-laws of many
corporations. And the latter purpose could not be achieved when the old
and decrepit are scrapped indiscriminately. It is perhaps not correct to
state that one of the chief purposes, as has been advanced by several
students, in establishing a regular pension system, is to lessen the
attractiveness of labour unions, and make men loyal to their employers
rather than to any labour organization. An examination of the industries
having established pension systems discloses the fact, however, that
very little trade union organization exists in most of them. Again,
Miles M. Dawson, a well-known actuary, relates an instance when “A
Canadian railway company which had not engaged to pay pensions, except
at its pleasure, recalled retired employés to its service upon the
occasion of a strike, on penalty of forfeiting their pensions. This
involved depriving an old employé of the reward of a lifetime of service
unless ready to dishonour himself by betraying a Brotherhood of which he
had been a member for a quarter century or longer.”[201] Reverend Father
John O’Grady also declared:
“I have known a case recently in which a large organization in this
country notified all its old men that if they did not return to work in
the event of a strike they would lose their pensions.”[202] During the
so-called “outlaw” strike of railroad workers early in 1820, many
newspapers reported pensioners who were compelled to work in order to
break the strike.
The Special Committee on Industrial Pensions of the New York Merchants’
Association frankly states the motives underlying industrial pensions:
“In addition to the desire to reward faithfulness or to fulfill a
duty, there is usually in the mind of the employer the hope of
attaining definite beneficial effects on the efficiency and prosperity
of the business. Most prominent among these effects are: increased
loyalty of employés and development of their personal interest in the
success of the business, which are exceedingly valuable assets to an
employer; increased efficiency of individual employés; reduction of
labour turnover; attraction of a superior type of employé; decrease—or
even elimination—of labour troubles; and increase in thrift of
individual employés,—all of which are more or less related
effects.[203]
The principal features of industrial pension systems may be summarized
briefly as follows: (a) Industrial pensions in this country are of
comparatively recent origin, and many of them are still in the
experimental stage. (b) With few exceptions, industrial pension systems
are straight service pensions financed by the employer and without
contributions by the employés. (c) The employés are given no
representation in the administration or management of these funds. (d)
Membership is not compulsory and the pension allowance, ordinarily,
applies to all employés.
AGE OF RETIREMENT
The general age period for compulsory retirement of male employés is set
at 70 years of age, although, practically all provide that employés may
retire at 65 at their own request or at the discretion of the company.
Sixty years of age is generally the age period set for the retirement of
female workers, although a number have more liberal provisions and
permit the retirement of women workers at 55. Age is rarely required for
total disability allowances. These usually depend on length of service.
YEARS OF SERVICE
The period of service required for the retirement upon an industrial
pension varies’ between 10 and 25 years. The length of service required
is less uniform than the age requirements. Continuous service is
required in considering the period of employment, and leave of absence,
suspension, or lay-off for a period longer than six months, in the
majority of cases, constitutes a break in the service, and employés lose
all credit for previous employment.
PENSION AMOUNT
The amount of the pension is generally computed upon a certain
percentage of the employé’s wages, usually by taking one per cent. of
the average wages of the employé for the last ten years and multiplying
it by the number of years of service. Some corporations, however, pay a
straight sum of about $15, or $20 a month. In granting pensions,
concerns are explicit against any inference of vested rights or
privileges granted employés, and usually reserve the right to discharge
an employé or terminate a pension for violation of any of the company
laws or gross misconduct, etc.
The regular rates of pensions are in many cases limited by maximum or
minimum yearly pensions or both. The report of the New York Merchants’
Association, already referred to, states that:
“In industrial establishments the maximum limits vary from $500 to
$5,000 per year, and the minimum limits vary from $144 to $244 per
year. In banks the maximum limits vary from $1,800 to $6,000 per year.
In some cases the limit is a maximum salary upon which a pension is
computed. In other cases it is a maximum per cent. of highest salary,
in which case the figure is usually from 60 to 75 per cent. so that
few employers are actually affected by it, because even under a three
per cent. rate, more than a 20-year period of service at least is
necessary to reach the maximum rate.[204]
The granting of a pension ordinarily does not debar the pensioner from
engaging in any other business. But in a few cases the amount of annuity
varies inversely with the income from other sources. That it would,
however, be practically impossible for any employé to follow the line of
work he could do best and to which he was accustomed, is obvious from
the provision made by practically all concerns that he cannot engage in
any other business which may be prejudicial to the company’s interest.
Nor may he be further engaged by the same company.
Objections to industrial pensions are based on the following grounds:
(1) They are generally opposed by organized labour because it is said
they are established largely for the purpose of lessening the
attractiveness of labour unions and make men more loyal to their
employers rather than to one another.
(2) Industrial pensions, it is also argued, are merely deferred wages,
and it is commonly known that wages are frequently found to be lower in
those industries which have the best pension schemes. The Illinois
Pension Laws Commission concluded in its 1816 report that:
“Whether the contribution to a pension fund be taken wholly from the
employé’s wages or salary, or be paid wholly by the employer, or be
derived in part from each, these contributions are in all three cases
to be regarded as in reality a deduction from wages and salary. The
existence of a pension system in connection with any position or
employment is taken into account by both parties to the contract of
employment, and broadly speaking, wages and salaries actually paid are
in due course reduced below what they otherwise would be by the amount
of the total contributions from both the employer and employé to a
pension fund. The employé will thus pay for his pension by deductions
from his wages or salary, whether he is conscious of it or not. Indeed
it is quite possible that with a sound fund in existence the reduction
in wages and salaries may in time materially exceed the amount of the
total contributions owing to the advantages of such a fund to the
employé under present economic conditions. This consideration further
emphasizes the advantage to the employer of having such a fund
established.”[205]
Professor de Rode also declared:[206]
“In order to get a full understanding of the old-age and service
pensions, they should be considered as a part of the real wages of a
workman. There is a tendency to speak of these pensions as being paid
by the company, or, in cases where the employé contributes a portion,
as being paid partly by the employer and partly by the employé. In a
certain sense, of course, this may be correct, but it leads to
confusion. A pension system considered as part of the real wages of an
employé is really paid by the employé, not perhaps in money, but in
the foregoing of an increase in wages which he might obtain except for
the establishment of a pension system.... It seems to me on the whole
that most of the pension systems adopted by private employers are
merely very shrewd bits of wage bargaining. The absence of any
contractual right and the lack of assurance that a pension will be
paid upon fulfilling the conditions, gives merely the shadow of
provision for old age and not the substance.”
(3) Industrial pension systems prevent the mobility of labour, often to
the detriment of both the individual and the community, and offer
opportunities for arbitrary discriminations against workers. The
administration of these funds is in most cases in the hands of the
employer. As a result, notwithstanding the definite regulations provided
for the granting of a pension, the latter is always contingent upon the
nature and loyalty of services rendered and the opportunities in the
hands of the employer for discriminations are evident. For, while the
employer is left free to discharge him, cut down his wages or
discriminate against him generally, the worker must remain loyal at all
times. He must not, for instance, take part in any movement which the
employer may consider detrimental to his interests, such as associating
himself with his fellow workers, in order to increase their wages or
improve their working conditions generally. He not only can do little to
better his own conditions and those of his fellow workers, but he cannot
even leave his employment in order to seek more suitable work, as it
means losing his pension privileges for which he has laboured many
years. That it is undesirable and even socially harmful to tie a man to
his job and discourage him from changing from one employer to another is
generally recognized and need not be emphasized in this connection.
(4) Industrial pensions are also objected to because the age for
retirement is generally too high and the pension too low.
(5) In the case of many concerns there is no guarantee that the pension
promised will be lasting and permanent, even if all requirements are
lived up to, as practically all concerns reserve the right to either
reduce the pension rate when the demands are in excess of the sums
fixed, or discontinue the entire fund “without vesting any rights to
such a pension to any individual member.”
The Committee of the New York Merchants’ Association, it is worthy to
note, points out that pension systems that may at any time be
discontinued are immoral. It says:
“Even if the pensions are apparently the free gift of the corporation,
and the economic possibility of this for a considerable period is
doubtful, the employé is entitled to look forward with assurance to
the pension promise. A pension promise that is not certain involves an
uncertain morality.... To provide, as is often done, that the
corporation may wind up the pension plan at any time without
fulfilling the promises already made, and then to expect employés to
look forward with confidence and order their lives upon the strength
of these promises, is certainly inconsistent. When the economic aspect
of pensions is considered, such retroactive power of revocation can
hardly be considered as moral.”[207]
While it is true that the very large industrial concerns are not likely
to terminate their pension systems without sufficient notice there are
nevertheless many of the smaller concerns which are continuously facing
such emergencies. A large industrial concern in Pennsylvania in 1818
wrote to the Old Age Pension Commission of that State:
“We have for many years paid pensions to a few of our employés who had
served long periods with our concern. We have no regular system for
this, however, and during the business depression prior to the war,
which hit us severely, we had to suspend payment of these in some
cases.”
That this situation is fraught with the greatest danger is obvious. Mr.
L. W. Squier addressed a letter to a corporation reliably reported as
having a pension plan in operation and it was returned unopened and
stamped “Firm Dissolved.” He comments
“The question naturally comes to the mind of the thinking working man:
What is the measure of the disappointment of the scores, perhaps
hundreds, of employés of the corporation who were looking forward to
pensions for the support of old age and are now helpless and
unprovided for? Such a condition is analogous to that of the crew of a
vessel who, after a long hard voyage over dangerous seas with food
exhausted, nerves racked and strength almost gone, have only one hope
left,—that of speedily making an hospitable harbour; but alas, find
themselves shipwrecked upon a barren island.”[208]
(6) Industrial pensions are also objected to by some, on the ground that
they have a depressing effect upon wages, due to the competition of
returned pensioners who accept jobs for less money because added to
their pension their needs are more readily satisfied. This objection,
however, has little basis of fact, as it is common knowledge that with
most industrial pensioners their life power had been already spent
before retiring. Indeed of the number retired on pensions by the United
States Steel and Carnegie Pension Fund in 1817, 15 per cent. had died in
the same year “indicating,” as commented on by the manager of the Fund,
“that they had given their full measure of loyalty to the service.” At
any rate, the fact of receiving a pension would hardly make one a more
dangerous competitor in the labour market. One would certainly display
keener competition were he left starving at the age of 60 or 70, and
still able to perform some useful labour.
Other objections to these pensions are as follows: (7) They generally
make no provision for cases of total disability when an employé has not
served the required time. (8) Only corporations employing wage-earners
on a large scale can afford to establish well defined systems of
retirement. (8) Some companies provide that the employés forfeit claim
to pensions when leaving service, under strike orders. (10) Generally
before a pension is granted, one must have lived up to the most
stringent requirements and provisions.
RAILROAD PENSION SYSTEMS
The railroads were the first in this country to establish retirement
systems for their employés. This is, doubtless, explained by the fact
that railroad employés are very often required to be under the most
prolonged tension of both mind and body. Men in modern transportation
systems are subject to greater hazards and wear out more rapidly than in
many other branches of industry. With the rapid and unprecedented
development of the American railroads, the problem of what to do with
the superannuated worker loomed up earlier in this industry than in any
other. Railroads in this country thus began to establish private
retirement systems about the same time that European governments first
engaged in instituting systems of public pensions and insurance.
The main development in railroad pensions did not begin until the early
days of the present century. The Baltimore and Ohio Railroad has the
distinction of introducing the industrial private pension system in this
country.[209] Its pension fund was established in 1888—the same year in
which the government pension scheme was adopted by Germany. More than a
decade passed before the next railroad—the Pennsylvania—saw the
necessity of following the example. The great majority of the railroads
have established a regular system of pensioning since 1800.
What is true of the pension plans of the industrial concerns is, in a
descriptive sense, true of all the railroads, namely: the administration
of these funds is either by the direct control of the board of directors
of the various companies, or by a board appointed by them, or by the
president of the railroad. The only exception to this is the Baltimore
and Ohio Fund, which requires four years’ membership in the Relief Fund
for eligibility and which is controlled by the same executive committee
as administers the latter department. Such absolute control is readily
explained by the fact that excepting the Baltimore and Ohio Fund the
employés make no contributions to any fund. The payments are entirely
gratuitous on the part of the company “as a reward for faithful services
rendered,” and the funds are therefore controlled by them.
As is the case of the industrial pension plans, a compulsory and
voluntary age of retirement is provided also in the transportation
systems. With very few exceptions the former is set at seventy years.
The period of service required before an employé can retire on a pension
differs. It ranges from ten years to thirty years. Where the shorter
period of service is specified, however, it is generally provided that
no person is eligible to a pension who enters the service after 40 or 45
years of age. In a few cases the age of eligibility to service is as low
as 35 years. That the longer period of service is thus necessary before
a pension can actually be secured is obvious.
In the majority of railroad pension establishments, the difference
between the age when one is compelled to retire and the period when one
may retire voluntarily on account of physical incapacity, amounts only
to five years. Seventy being the age of compulsory retirement, it is
usually provided that an employé may retire on account of physical
incapacity between the ages of 65 and 68. A few corporations, however,
provide for no set age or service but leave it to the discretion of the
Board of Directors to decide upon the merits of the individual case.
The differences in the terms of service required for the granting of a
pension by the industrial concerns and the various railroads are
significant. Twenty-five years of service is the maximum set by the
different industrial establishments. Many require twenty or fifteen
years of service and a few require only ten years of service. In the
case of railroad pensions, however, twenty-five and thirty years of
service is generally specified or implied. This difference may be
explained by the fact that the labour turnover is much greater in the
case of industrial firms and also because railroad lines are more
anxious and better adapted to retain employés for longer periods.
With the exception of the Baltimore and Ohio Railroad, practically all
the railroads have an identical method of computing the annuities
awarded. Most railroads provide for a pension computed upon the basis of
one per cent. of the average monthly wages for the ten years next
preceding retirement, multiplied by the number of years of service.
Incapacity annuities whenever provided are computed in the same manner.
Although a great number of establishments do not provide for either
maximum or minimum pensions, two hundred and fifty dollars per month
seems to be the highest limit set, while five dollars per month is
generally the lowest.
Only few railroads make provisions, by means of pensions, for employés
who have been injured and have become totally disabled while performing
their duties. These few concerns state that an employé, in case of
injury or total disability, may be pensioned regardless of his age or
length of service. The majority of companies, however, make no
provisions for such employés before they have completed the required
period of service.
The transportation companies, as was indicated in the case of the
industrial concerns, generally specify that the granting of a pension
does not debar any employé from engaging in any other business, but
state that he cannot re-enter the service of the company. The pension
funds of the great majority of railroads are fixed at a certain amount.
It is also provided by practically all of these concerns that “when
basis of pension allowance shall create demands in excess of the sums
fixed, a new basis, ratably reducing the pension allowances may be
established.”
Additional characteristics generally typical of these pension systems
may be summarized as follows: In computing the length of service it is
usually specified that “leave of absence, suspension or dismissal
followed by re-instatement within one year or temporary lay-off is not
to be considered a break in the continuity of service.” Practically all
companies “reserve the right to terminate pensions for gross misconduct”
and “reserve the right and privilege to discharge from service at any
time any employé without liability to a pension.” Some provide that
“employés who are dismissed from or voluntarily leave the service of the
company for any cause whatsoever relinquish all claims to consideration
or pension allowances.” Others specify further that “employés’ forfeit
claim to pensions when leaving service under strike orders.” The
objections offered against the pension systems of industrial concerns
are of course applicable also to railroad pensions.
The efficiency of railroad pensions in the relief of the problem of aged
dependency among railroad employés may be judged from the following
figures which need no further comment. The Pennsylvania Railroad with
its nearly 300,000 employés had retired on pensions from January 1,
1800, the time of the inauguration of the plan, to December 31, 1818, a
total of 8,128 employés. The Philadelphia and Reading Railway Company
pensioned from 1802 to 1820, a total of 876 employés. The New York
Central, and all its associated railroads, pensioned 2,828 employés
during the first ten years’ existence of the fund—1810–1820. From
October, 1884, to March, 1820, a period of 36 years, the Baltimore and
Ohio Railroad retired on pensions only 2,758 of its employés.
CHAPTER IX
FEDERAL, STATE, MUNICIPAL EMPLOYÉS, AND TEACHERS’ PENSIONS
The problem of the aged government employé is of paramount importance,
especially from the viewpoint of the tax-payer. There can hardly be a
greater waste of the tax-payer’s money than to retain on the pay rolls
of our Federal, State, and Municipal services, men and women who have
long outlived their usefulness. Furthermore, the continuation in the
employ of our government at full wages of old men and women who are no
longer capable of rendering efficient service is not only a waste of
money but is demoralizing to the entire service. The burden of this
“dead weight” carried on government pay rolls becomes especially
pernicious as the volume of work continuously increases and as newer
methods and higher standards of efficiency are introduced into the
administration of our governmental departments.
The full extent of the government’s burden in this respect cannot be
definitely determined. That there are few governmental departments,
however, whether Federal, State, or Municipal, whose efficiency could
not be greatly improved by replacing the older and less able employés
with younger men who are more adaptable to the newer methods of work, is
a fact known to all. In one Federal department it was estimated that 250
people could do the work at present performed by 1,000 superannuated
employés. “Some of these were said to be working at only 80 per cent.,
50 per cent., 25 per cent., and even nearly as low as zero per cent.
efficiency.”[210]
Former Secretary of the Treasury W. G. McAdoo in 1817 declared: “The
Treasury Department bears upon its rolls a large number of aged employés
whose efficiency is gradually waning.” Former Secretary of Commerce
Redfield also corroborated this by stating: “that the efficiency of the
executive civil service is seriously impaired by reason of its
superannuated employés, is a fact conceded by practically all persons
who are at all familiar with the problems of the service.” The burden of
dead wood carried on the pay rolls of the different States and
municipalities, where civil service requirements are less strict than
that of the Federal government, or do not exist at all, is doubtless
even greater. The Massachusetts Commission on Old Age Pensions, in
co-operation with the Mayor of Boston, made a study in 1808 of the aged
employés of that city and the results found, as given in the report of
the above Commission, were as follows:
“The total number of employés over 65 years is 481; over 70 years,
168. The amount of compensation paid to employés over 65 is
$418,888.45; over 70, $273,888. The number over 65 reported as
inefficient is 286. The compensation paid to this group is
$200,184.35.
“The percentage of inefficient employés among the employés over 65
years is strikingly large in many departments. For example, in the
cleaning and watering division of the street department 35 are
employed, of whom all are reported inefficient; in the cemetery
department 16 persons over 65 years are employed, of whom all are
reported as inefficient; in the park department 27 are employed, of
whom 24 are inefficient.
“The period of service is over 30 years in the case of 118 employés
over 65, or 25 per cent. of the total. Only five per cent. or 42
persons, have been in the employ of the city less than five years.
“The leading departments, in respect to number of pensionable
employés, rank as follows: (1) paving division of street department,
108 over 65 years; (2) water department, 65; (3) Sanitary department,
47; (4) cleaning and watering division, street department, 35; (5)
park division, 27; (6) ferry division, street department, 26; (7)
cemetery department, 16.”[211]
As an employer of labour, however, the government can least afford to
set the example of discharging outright and turning adrift, or carting
off to the poorhouse those employés who have grown old in the service
and who have spent the best years of their lives and have given of the
best they possessed to the service of the Nation, the State or the
Municipality. It has long been the policy of nations to provide relief
in old age to soldiers and sailors who hazard their lives in the defence
of the nation in times of war. Is it not obvious also, that the work
done by the armies of the various government employés in maintaining the
orderly process of government, so essential to the peace and welfare of
the country, as well as to the protection of life and property of their
fellow-citizens in time of peace is no less important and essential a
service to the nation, and as such, merits some sort of protection
against the days when they are no longer able to render efficient
service or to provide for themselves? In the case of our municipalities
especially, where many thousands of common labourers are employed who in
many instances, are paid a lower rate of wages than that paid in local
private industries, the problem of retirement seems most pressing. These
men who are known to do the “dirty work” of our cities which is
essential to the health and welfare of all residents, are obviously
least able to provide for old age. That these men who are responsible
for the maintenance of sanitation and of the manifold other comforts
furnished by our modern cities, and who loyally and faithfully serve the
municipality under all sorts of conditions through the best period of
their lives, should not be left helpless in their old age is so
manifestly a matter of justice that it would seem superfluous to stress
it further.
The problem of the superannuated government employé must not, however,
be considered solely from the viewpoint of justice. Evidently, what is
recognized as “a good business policy” for private employers ought to
prove of profit also to our national, state and city administrations, in
their respective capacities as employers of labour. The advantages of
retiring aged workers on pensions are now recognized by all progressive
employers of labour. This is witnessed by the rapid development of these
systems within recent years as was shown in the preceding chapter. Their
small number may be accounted for by the fact that only large employers
are able to establish regular pension plans. The establishment of such a
system for government employés would afford an opportunity not only to
raise the standards and enhance the quality of service rendered, but
would also act as an incentive to attract better ability to the
particular line of work. The heads of the executive departments of the
government have long recognized the importance of a retirement provision
for civil service employés. Urging the adoption of such a plan before
the U. S. Senate Committee on Civil Service and Retrenchment,[212]
former Secretary of War Newton D. Baker said:
“The effect of such a law would be to give an assurance of a competent
and comfortable old age. It would relieve the employés from the fear
of loss of occupation and of livelihood, would further inspire them to
loyalty to the Government as an employer, thus improving the general
quality of the service rendered by the Government employés, and would
permit the replacement of some employés in the various departments who
have long and faithfully served the Government and reached venerable
but enfeebled years without having had an opportunity to accumulate
any competence upon which their retirement can rest.”
Secretary of Commerce Redfield declared:
“Efficient service and justice to the employés demand a comprehensive,
wide-reaching, and effective scheme of retirement pensions, the
advantage of which is being more and more widely recognized by
progressive commercial establishments and by foreign governments.”
Former Secretary Wm. B. Wilson, of the Labour Department, wrote in his
Annual Report:
“In a previous report of the department attention was drawn to the
difficulties confronting executive officers of the Government impelled
in the interest of a good administration to dispense with the service
of employés whose efficiency has been materially impaired by advanced
years. On the other hand, they are met with the fact that the business
of the Government could be more efficiently handled by active persons,
whereas on the other hand there looms up before them the spectre of
hardship and in many cases absolute want, which would be enforced upon
faithful servants if they were thus to be summarily removed from the
only means of gaining a livelihood for which through years of training
they are qualified.
“It is inevitable, therefore, that until such times as heads of
departments can accomplish this change in the personnel without
visiting undue hardship upon their subordinates they will be deterred
by a consideration of the humanitarian phase of the matter from taking
such action as the situation seems to demand.
“The department accordingly reiterates its recommendation that there
be provided through legislative enactment an equitable system of
retirement—a system which will best subserve the interests of
efficiency and economy and at the same time insure fair financial
provision for those who through long and faithful service are entitled
to some consideration in their declining years.”[213]
Former Secretary of the Treasury W. G. McAdoo also stated:
“The need for an adequate civil-service retirement law is becoming
more imperative each year. The introduction of new and improved
methods of performing the constantly increasing volume of work in the
department has served to emphasize the need for making some provision
for the older employé who is unable to keep step with progress. It
does not seem humane or fair to discontinue arbitrarily the service of
superannuated employés who have given their entire energies and spent
the best years of their lives in the service of the Government. To do
so would in most cases leave the employés without any source of income
and result in serious hardship. To reduce aged employés does not
entirely meet the need of the case, as it leaves the employé on the
rolls of the department.
“I believe that the enactment of an equitable retirement law for
superannuated and disabled employés of the civil service in the
Treasury Department would result in actual economy and increased
efficiency in the handling of the business of the department, and I
therefore recommend this subject to the Congress for its serious
consideration.”[214]
FEDERAL EMPLOYÉS’ PENSIONS
During the past two decades practically every Congress has had presented
to it a bill providing for retirement of the employés in the United
States Service. Furthermore, Presidents of the United States, Cabinet
officers, the United States Civil Service Commission and heads of
executive departments have repeatedly advocated and pleaded for the
adoption of some such measure. Among the chiefs’ of the government
departments, as was seen, there has been unanimous agreement on the
necessity for a pension provision for Federal employés by means of which
the continuously serious growing problem of superannuation could be
remedied to some extent. Notwithstanding the pleas of high government
authorities, as well as the energetic campaigns carried on by the
organized employés of the United States, and by other social agencies,
it was not until the end of the sessions of the Sixty-sixth Congress—in
the spring of 1820, in the face of a presidential election—that the
national legislature finally saw the necessity of adopting such a plan.
For many years the government employés bitterly complained against the
inactivity of Congress and accused the members of the Federal
legislature of fear that such a measure would be unpopular among their
constituents at home.
The need of finding a solution to the problem of superannuation, in
order to preserve at least some standard of efficiency in government
departments, was becoming graver day by day. At the same time many of
the employés of the government who had faithfully given the best part of
their lives to the service of the nation were, when they had become too
old, mercilessly separated from the service. These employés, broken in
body and spirit, were turned adrift penniless in their old age to shift
for themselves as best they could, and stand out as inspiring examples
for the future loyalty of service on the part of their fellow workers
who were on the threshold of old age. No pen picture can accurately
visualize the sufferings of such men who have been turned adrift in
their helplessness and compelled to face the poorhouse as the only place
of refuge. A glimpse of the fatalism of some such men and the bitterness
of feeling developed by others may be gleaned from the following
letters:[215]
Washington City Post Office,
Office of the Postmaster,
April 18, 1814.
Mr. John B. Lerch,
Clerk, Mailing Division,
Washington City Post Office,
Dear Sir: In view of the fact that your services are of little value
to the office, due to your impaired efficiency, on account of advanced
age and physical infirmities, I regret having to inform you that your
name is under consideration for separation from the service. Any
statement which you may desire to make in the premises will receive
careful consideration if submitted within five days after the receipt
of this letter.
Very respectfully,
Otto Praeger, Postmaster.
To Mr. Praeger’s communication Mr. Lerch made the following reply:
Hon. Otto Praeger,
Postmaster, Washington, D. C.
Dear Sir: Yours received, and in reply I have to say that by the
recommendation of Abraham Lincoln, President of the United States, I
was appointed a clerk in this office April 1, 1865.
It is not my place to defend my ability to do my work; for this you
please must inquire of my superior officers.
I am 81 years old, but my record will show how little time I have lost
on account of sickness in all these years, and I firmly believe that I
am still able to perform work to the satisfaction of those over me.
Furthermore, I have to inform you that, through misfortune, I am
penniless, my wife having been a helpless invalid for the last 15
years.
One thing is sure, if I have to go out of this office I do so with a
clear conscience that in all my service I have done my duty
faithfully.
(signed) John B. Lerch.
Another post office clerk, in San Francisco, noticed the following item
in the Union Postal Clerk:
“Rodney, a faithful Army horse, who has served the Government steadily
for 20 years is to be retired from active duty and cared for by Uncle
Sam for the rest of his life. This will be done on recommendation of
Capt. C. D. Mortimer, Third Field Artillery. Rodney was never sick a
day, rendered signal battle service in the Spanish-American War, was
sold at auction as too old for service, was bought by a member of the
Third Field Artillery for $107, rendered hard service at Fort Myers,
and is now pensioned.”
And he writes to the Secretary-Treasurer of his Union:
My dear Mr. Flaherty: I see by the February number of the Union Postal
Clerk that after many years’ service the Government has pensioned an
old horse. All I can say is “Lucky old horse,” and for the purpose of
drawing a pension it would have been better had I been born a horse
than a human being. I have been a “wheel horse” for the Government for
the past 50 years and can not get a pension.
(signed) John W. Perry.
And Mr. Flaherty adds some information, and comments:
“After 50 years a clerk in the San Francisco Post Office, entering the
service in 1861, and on the very day he completed his golden
anniversary of 50 years’ service he was told he was inefficient and
would have to take indefinite leave of absence, without pay of course,
and now he is unable to get back in the service. He is 80 years of
age, has devoted 50 years, 50 productive years of his life, all this
time devoted to the perfection and management of the Postal Service.
Only in the ranks, unknown and unheard of, a minor cog; but I know
that it is men like Perry who made our Postal Service what it is
today—the most efficient mechanically of any government institution,
and I emphasize mechanically. It is not humanely efficient. It has not
yet developed any system whereby the dismissal of these old men can be
eliminated.”
The reports in regard to the effects and the working out of the recent
Sterling-Lehlbach Act of Congress providing for the retirement of
employés in the classified civil service, are expected to yield some
very valuable data on the problem of Old Age Pensions. As these lines
are written, however, the law has just become operative and predictions
in this respect would be of no value. The law provides for the
compulsory retirement on a pension of all employés in the classified
civil service of the United States who have reached the age of 70 years
and have rendered 15 years’ service. Mechanics, letter carriers and post
office clerks are eligible for retirement at 65, while railway postal
clerks may retire at 62 years of age after they have rendered at least
15 years of service. An employé, if he so desires, may, at the
discretion of the head of his department and approval by the Civil
Service Commission, be continued in his position beyond the retirement
age for a period of two years and at the end of that period may be
continued for another two years and so on until ten years after the act
has become effective when it is provided that no employé shall be
continued in the service for more than four years beyond the age of
retirement.
The Pension Law just enacted provides for a compulsory-contributory
system of retirement. All employés are made to contribute two and
one-half per cent. of their income, which is deducted from their monthly
salaries or wages, by the Treasury Department, and which goes to help
make up “the civil service retirement and disability fund.” This
contribution, it is estimated, will cover about one-third of the
expenses of the act. The remaining two-thirds will be paid by the
government as its contribution. The entire cost of this retirement
provision was estimated by Senator Smoot to probably amount to over
$2,000,000 for the first year increasing steadily to amount to more than
$18,500,000 in the 77th year of its operation.
The amount of the pension is generally based upon two per cent. of the
average annual salary multiplied by the number of years of service. Thus
Class A after thirty years of service receive a pension amounting to
sixty per cent. of their yearly salary; Class B, twenty-seven years of
service fifty-four per cent. of salary; Class C, twenty-four years of
service forty-eight per cent. of salary, etc. The maximum amount of
pension, however, is set at $720 which is sixty per cent. of an annual
salary of $1,200 and which means that while the higher paid men
contribute proportionately more for their annuities, they can receive no
pension on salaries above $1,200 per year. There was little objection to
this on the part of the higher priced men as they were glad to forego
larger annuities for the sake of getting the needed pension system
adopted. The minimum pension is set at $180 per year.
The Sterling-Lehlbach Act also provides benefits for those who become
disabled before reaching the retiring age. This must be preceded by
proper medical examination certifying that the disability is “not due to
vicious habits, intemperance, or wilful misconduct.” The amount of the
pension is computed in the same manner as provided for the regular
pension. No benefits are paid for less than fifteen years’ service.
In the case of withdrawal from the government’s service, or death before
the pensionable age, or if an annuitant dies before he has received
benefits equivalent to his contributions and accumulated interest, his
contributions or the difference in his contributions is to be returned
to him or his legal heirs in a lump sum, together with four per cent.
compound interest. The Commissioner of Pensions under the Secretary of
Interior is charged with the administration of the Act. In case of a
complaint an appeal may be taken from the Commissioner of Pensions to
the Secretary of Interior.
MILITARY PENSIONS OF THE U. S.
In contrast with the, until recently, lamentably deficient provisions
for old age assistance, and the total neglect by the government of its
permanent and peace time employés, must be considered the exceedingly
generous care the government has taken of those who had given it
temporary service during times of war.
“After all,” says Dr. Rubinow, “it is idle to speak of a popular
system of old age pensions as a radical departure from American
traditions, when our pension roll numbers several thousand more names
than that of Great Britain. It is preposterous to claim that the cost
of such a pension would be excessive, when the cost of our pensions is
over $160,000,000, or more than three times as great as of the British
pension system. In the face of such a cost, it is childish to consider
the system of war pensions as a sentimental problem only, and to speak
of the millions spent for war pensions as the cost of the ‘Civil War’.
We are clearly dealing here with an economic measure which aims to
solve the problem of dependent aged and widowhood. No state legislator
will claim, unless it be in a peroration to a fourth of July outburst
of oratory, that the constant pressure for extension of war pension
benefits, and the systematic political work which creates such
pressure, which neither party has had the courage to resist—is all the
result of patriotic enthusiasm only. It is necessary to face the
situation frankly, and apply to the system of war pensions the
ordinary standard by which any piece of legislation is judged, inquire
how far it meets the problems, how efficiently, economically, and
justly it may work for their solution.”[216]
The amounts spent on war pensions in the United States are startling.
Since the end of the civil war—1866 to June 30, 1818—the total amount
paid out in pensions, exclusive of the cost of maintenance of the
Pension Bureau, was $5,521,074,858.16. In 1866 there were 126,722
pensioners and the annual expenditures on pensions amounted to
$15,450,548.88. The number of pensioners was highest in 1802 when it
reached almost the million mark. Since that time the number has been
steadily declining. The total number of pensioners in 1818 was only
624,427. The total amount paid out in pensions, however, has risen from
year to year. In 1802 when there were 888,446 pensioners the amount paid
out in pensions was only $137,504,267.88, but in 1818 the total amounted
to $222,158,282.70. Furthermore, although there were 22,368 pensioners
less at the end of the fiscal year of 1818 as compared with the previous
year, the amount paid out as pensions increased from $178,835,328.75 in
1818 to $222,158,282.70 in 1818, which is an increase of $42,323,863.85
in one year.
Practically every Congress sees some new War Pension legislation
enacted, whether by the passage of general or of special acts. At the
close of the fiscal year ended June 30, 1818, the number of pensioners
in each class under the general pension law and special acts of Congress
was as follows:
Classes Number of Pensioners
Regular establishment: General Laws Special Acts
Invalids 14,128 527
Widows, etc. 4,104 458
Act Feb. 6, 1807, survivors 578
Act May 11, 1812, survivors 260,127
General Law, Civil War:
Invalids 6,288 4,180
Widows, etc. 38,552 4,585
Act June 27, 1880:
Invalids 267
Minors, etc. 2,205
Act April 18, 1808, widows 250,471
Act Aug. 5, 1882, nurses 81 38
War with Spain:
Invalids 21,881 1,481
Widows, etc. 3,488 316
Act July 16, 1818, widows, etc.
War of 1812, widows 1,065 8
War with Mexico 73
Survivors 207 8
Widows, etc. 2,577 164
Indian War:
Survivors 3,388 38
Widows 1,864 63
War of 1817:
Invalids 60 1
Widows, etc. 54
——————— ——————
Total 612,528 11,888
During the same year the following pension amounts were paid out on
account of the different wars:
Civil War $212,211,880
War with Spain 3,878,188
War of 1812 17,704
War with Mexico 758,156
Indian Wars 1,561,537
Regular establishment 3,701,782
War of 1817 30,081
————————————
Total $222,158,288
The average amount of the pension of the different wars during the
fiscal year 1818 was as follows: Civil War, $373.38; War with Spain,
$137.28; War of 1812, $218.57; War with Mexico, $256.48; Indian Wars,
$285.84; Regular Establishment, $182.62. The average amount for all
pensions was $355.78 per year. In 1820, Congress further increased the
pensions of civil war veterans to $50 monthly and those of widows of
veterans to $30 per month. This was estimated to add about $65,250,000
to the present pension budget. Veterans of the World War are cared for
by the War Risk Insurance Bureau which is expected to prevent the burden
of war pensions from falling as heavily upon the taxpayers as in
previous wars.
That Congress in passing war pension legislation has practically never
taken cognizance of the economic necessity of such pensions has been
demonstrated so frequently and is so generally known that there is
little need for its lengthy discussion here. The best indictment against
the Congressional policy with regard to war pensions is brought by Dr.
Rubinow, who comes to the conclusion that: “the most singular feature of
the American System is that it primarily rebounds to the advantage of a
class least in need of old age pensions.” He states:
“The extensions (of war pensions) were based primarily upon a more
lenient attitude towards the requirement of past services and records
rather than upon any effort to adjust this annual distribution of
enormous sums to economic need. As a result the preposterous situation
is created that various sized portions of this official melon are
given to thousands of people who may not at all require it. No
satisfactory statistics on this point exist, but it is a matter of
common knowledge not only that pensions are obtained upon fraudulent
representation of past services, forged records, fictitious marriage
certificates, etc.,—an aspect of the problem sufficiently important in
itself, which need not be discussed here at any length however,—but
what is economically much more important, a large proportion of this
amount goes to individuals who have no economic need whatsoever of
financial assistance.”[217]
It is a fact known to all that but few of those who are now receiving
United States Pensions are really in need of them; nor do those who
receive pensions represent the most needy class. The present war pension
schemes reach largely the native aged who are generally representative
of the middle class of this nation. The great bulk of wage-earners,
which is made up largely of the foreign born Negroes, benefit little or
nothing from such pensions. War pensions as a method of relief in old
age for the great mass of aged wage-earners, despite their tremendous
cost, are obviously inadequate and ineffective. As pointed out by
Rubinow in conclusion:
“The economic effects of the war pensions have been so carelessly
treated in the pension legislation that it surprises no one to find a
war veteran drawing a substantial salary as a public employé (after
having obtained the appointment under privileged conditions), and at
the same time his war pension for disability; and perhaps the most
striking and ludicrous example of this was the well-known case of a
prominent veteran, who some years ago received one month a high
pension especially voted by Congress because of total and permanent
incapacity, and immediately after that an important and responsible
position in the Federal Civil Service, which carried with it a salary
of $3,500 per annum.”[218]
PENSIONS FOR STATE EMPLOYÉS
Massachusetts is practically the only State in the Union which has
established (since 1812) a system for the retirement of State employés
exclusive of employés of counties and municipalities. A number of
States, namely, Louisiana, Maine, Maryland, Massachusetts, Minnesota,
New Jersey, New York, Rhode Island, and Pennsylvania, have had pension
systems for State judges of the Supreme, Superior and other courts, as
well as for certain limited classes of State employés, for some time.
The New York provision for judges’ pensions applies also to all employés
of the supreme court of the first, second and ninth districts. The
latter also requires a contribution of one per cent. of the annual
salary of the employés. All the other state pension provisions are
non-contributory and the amounts of the pensions vary from one-half to
the full salary of the pensioner. Most plans set the retirement age at
70 years but in case of disability retirement is generally permitted at
an earlier age.
The Massachusetts Retirement Plan for state employés enacted in 1811
represents a compromise between the contributory and non-contributory
principles. In the Bay State system both the State and the employés
share the expense of the retirement system equally between them. The
employés are required to contribute regularly from their wages or
salaries in accordance with the rate set by the administering board. It
is provided, however, that this is to be not less than one per cent. nor
more than five per cent. of the annual salary or wage.
The voluntary retirement age is set at 60, and at 70 years the
retirement is compulsory. An employé may also retire after 35 years of
continuous service, regardless of age. The annuity is computed as
follows; First, he receives an annuity of such amount as his own
contributions have earned for him, and, secondly, a pension from the
State which is equivalent to his own annuity. The total amount of the
retirement allowance including the annuity and pension cannot be less
than $200 nor to exceed one-third of the annual salary.
The system is administered by a board of three members which includes
the State Treasurer, a second member elected by the employés and a third
chosen by the former two. Participation in the plan was made compulsory
for all employés who entered the service after the fund had been
established, but was left voluntary for employés who were in the service
at the time the law was enacted. More than half of the latter class of
employés, however, joined the fund when the act went into effect.
The Massachusetts Retirement Act also provides that the contributions of
employés be refunded upon leaving the service of the State before the
pensionable age. Since the establishment of this system, it is claimed
by reliable authorities, it has worked to the satisfaction of both
employés and administrative officials. It is stated[219] that it has
brought about an improvement in the efficiency of the service through
the retirement of inefficient employés and has created a feeling of
greater well-being and security on the part of employés of the State.
MUNICIPAL EMPLOYÉS’ PENSIONS
The movement for the pensioning of municipal employés, such as policemen
and firemen, although it came later in the United States than in
European Cities, has nevertheless, preceded the entire campaign of old
age retirement provisions for all other classes of workers. In the
United States this movement is about fifty years old. Municipal
employés’ pensions being the earliest to be adopted in this country, it
is therefore, not surprising to find these funds the most haphazard and
unsystematic of pension experiments. In reviewing these numerous pension
funds one fails to detect any consistency with regard to either general
principle, system, or standard, and excepting the very recent ones,
practically none have given much thought or consideration to actuarial
principles. Almost every pension scheme in operation is the product of a
long process of amendments and modification which it has undergone since
its original establishment. To cite a few instances: the Pittsburgh
Firemen’s and Policemen’s funds were amended a number of times since
their establishment in 1883 and new amendments are further considered.
In Cleveland, before the establishment of the city’s present Police
Fund, the latter was operated under three different plans, with a total
of ten amendments. In New York City the Firemen’s Pension and Benefit
systems were amended forty times before the general consolidation with
the funds of other boroughs took place a few years ago. In October,
1820, a new law went into effect creating the New York City Employés’
Retirement System, dividing the municipal employés into three classes:
labourers and unskilled workers, mechanical and skilled workers, and
clerical, administrative, professional and technical workers, including
heads of departments.
No less confusing and chaotic are the administration and the classes of
workers protected by these municipal funds. Some of these are
administered in connection with State or County funds, while others are
administered by the city alone. Again, certain classes of city employés
are well taken care of and others neglected by some cities, while other
cities act vice versa. Only very few cities, however, make provisions
for the general municipal employés exclusive of firemen, policemen and
teachers. There is also a great difference to be found in regard to the
principles of contributory and non-contributory schemes, and where
contributions are provided, they generally range from one to three and
one-half per cent. of the salary. The annuity paid also varies from
one-half to three-fourths of the salary at time of retirement. The
retirement age is not specified in many funds, depending largely on the
years of service. Where age provisions are made they range from 55 to 70
years, and where the length of service necessary for retirement is
stipulated it is usually about twenty years. In a number of cases
benefits are also provided for widows and dependents.
In one-third of the 167 firemen’s and policemen’s funds analyzed by the
United States Bureau of Labour in 1810 the annuity was an entirely
gratuitous gift of the municipality, while in the other two-thirds the
funds were made up in part by the municipality and in part by
contributions from the employés.
In the funds studied by the above Bureau it was found that in about 40
per cent. of these the sole qualification for pensions, on the part of
firemen and policemen, was permanent disability incurred while in the
performance of duty regardless of age or service. The other 60 per cent.
usually specified the length of service at about 20 years, coupled in
one-third of the funds with qualifications of age 50, 55, 60 or 65
years.
In only about 40 per cent. of these funds were the employés found to
have representation in the management of the foundations. Twenty funds
were also found to pay benefits for temporary disability; 36 paid a lump
sum death benefit and 113 paid annuities to widows or to other
dependents. Where payment was allowed for temporary disability it was
generally half of the permanent annuity. Aside from these municipal
funds there are also to be found in most localities mutual benefit
associations which pay temporary and death benefits and to which the
majority of firemen and policemen contribute.
In addition to the regular contributions to these funds made by the
municipalities and employés, there is also a miscellaneous source of
revenue such as: “fines on policemen” or “fines on firemen,” which
include not only fines imposed for violation of duty or regulations but
also deductions made from pay for lost time, etc. Other revenues are
such as “unclaimed property” and “unclaimed money” which include lost,
stolen, or abandoned property in the possession of the police
department. Many municipalities provide also that the city’s or State’s
contributions to these funds shall be secured from a special revenue
such as taxes on excise, insurance companies, etc.
Complete municipal pension systems including policemen, firemen,
teachers and all municipal employés are in operation in the following
cities:
New York
Chicago
Philadelphia
Boston
Pittsburgh
Minneapolis
Oakland, Cal.
Lowell, Mass.
Lynn, Mass.
Yonkers, N. Y.
Waltham, Mass.
Brookline, Mass.
Harrisburg, Pa.
Pensions for policemen, firemen and teachers only, exclusive of other
municipal employés, exist in the following cities:
St. Louis
Cleveland
Baltimore
Detroit
Buffalo
San Francisco
Milwaukee
Cincinnati
Los Angeles
Newark
New Orleans
Washington
Jersey City
Seattle
Indianapolis
Providence
Portland
Rochester
Denver
Louisville
St. Paul
Columbus
Toledo
Worcester
Passaic
Charleston
Elmira
Syracuse
New Haven
Scranton
Paterson
Omaha
Hamilton
Auburn
Mt. Vernon
Dayton
Cambridge
Trenton
Albany
Duluth
Niagara Falls
New Rochelle
La Crosse
Utica
Troy
Hoboken
South Bend
Terre Haute
Watertown
The following cities have pension schemes for only one class of
municipal employés, i. e., either that of teachers, policemen, firemen,
or other municipal employés:
Atlanta (M. E.)
Fall River (P.)
Salt Lake City (T.)
Reading (T.)
Oklahoma City (F.)
San Diego (P.)
Malden (F.)
Berkeley (P.)
Chicopee (P.)
St. Joseph (F.)
Wilkes-Barre (T.)
Jacksonville (P.)
Jamestown (F.)
Bayonne (F.)
Fitchburg (M. E.)
Topeka (P.)
Allentown (F.)
Lima, Ohio (F.)
Altoona (F.)
Pawtucket (P.)
Binghamton (F.)
York (F.)
Montgomery (F.)
Joliet (F.)
Quincy (P.)
Bay City (F.)
Shreveport, La. (F.)
Santiago (P.)
Woonsocket (P.)
Norwich, Conn. (P.)
Decatur, Ill. (F.)
Meriden (P.)
Kingston (P.)
Pensions for teachers and firemen or teachers and policemen only are to
be found in these cities:
Wilmington
Poughkeepsie
Lancaster, Pa.
Newburgh
Perth Amboy
Newport
Pittsfield
The following cities have pensions for policemen and firemen only:
Birmingham
Spokane
Grand Rapids
Nashville
Bridgeport
New Bedford
Hartford
Camden
Tacoma
Des Moines
Council Bluffs
Zanesville
Richmond
Youngstown
Elizabeth
Waterbury
Akron
Peoria
Fort Wayne
Savannah
Brockton
Portland, Me.
Holyoke
Waterloo
Elgin
Haverhill
Kansas City, Mo.
Springfield, Ill.
Mobile
Sacramento
Saginaw
Sioux City
Atlantic City
Rockford
Augusta
Springfield, Ohio
New Britain
Chattanooga
Bloomington
Clinton, Iowa
Salem
Springfield, Mass.
Davenport
Racine
Newton
Superior
Dubuque
Galveston
East Orange
Cedar Rapids
Jackson, Mich.
Aurora, Ill.
Lorraine, Ohio
Colorado Springs
Madison, Wis.
Stamford
Chelsea
The cities of Memphis and Dallas have authorized the establishment of
retirement funds, but did not establish such in the period studied. San
Antonio had neither established nor authorized one when this
investigation was made.
As seen in the preceding enumeration, every one of the eighteen cities
in the United States with a population of more than 300,000 inhabitants,
in 1810, has a pension fund for its policemen and firemen. The six
cities with 200,000 to 300,000 inhabitants also pension their policemen
and firemen. Nearly all the cities with populations between 100,000 and
200,000 have some form of pensions for one class or another of municipal
employés. In addition, many of the smaller cities also provide one form
or another of retirement for particular groups of their employés. Thus
thirty-nine of the fifty-four cities with populations from 50,000 to
100,000 have some sort of pension plan, thirty-one of them pensioning
both policemen and firemen. Of the one hundred and twenty cities whose
population in 1810 ranged from 25,000 to 50,000, only 68 have any
definite pension plan. Fifty-eight cities whose population according to
the thirteenth census was less than 25,000 also have either established
municipal pension funds or have been authorized to do so. While
policemen and firemen are thus fairly well protected in their old age,
only a few of the bigger cities—New York, Chicago, Philadelphia, Boston,
Pittsburgh, and Minneapolis—have thus far made provisions for their
other municipal employés, who constitute the great bulk of city
servants.
TEACHERS’ RETIREMENT FUNDS
The two primary functions of old age retirement systems are: First, the
protection of individuals and their dependents against the contingencies
of old age and disability. Secondly, the provision of a means of
improving the efficiency and raising the standard of the services
rendered, by eliminating from the service the superannuated and disabled
who are no longer efficient, and by attracting better ability into the
particular service. It is hardly necessary to point out, that nowhere
are these functions of greater significance than in our educational
system. It is of paramount importance that the best available talent and
ability, and that superior men and women should be attracted to our
schools for the development of the moral character and ideals of our
children. It is further evident, moreover, that teachers living
continuously in the dread of old age are not the most desirable persons
for the instruction and inspiration of our younger generation. To
provide our teachers—the moulders of the future generation—against the
day when they are no longer able to provide for themselves, becomes thus
not only a matter of justice but an essential factor in the welfare and
high standard of our school system. In the case of teachers the problem
of relief from superannuation is even more aggravated. It is an admitted
fact that our teachers form one of the most inadequately remunerated
classes. In many instances, indeed, although their wages are on par with
the lowest compensated groups in the particular community, a
comparatively high standard of living is required of them. Sufficient
saving for old age under the circumstances is thus out of the question.
To this must be added the obvious fact that many in the teaching
profession—especially is this the case with women teachers—remain
unmarried, and ordinarily, have no one to depend upon in old age, which
aggravates their problem of superannuation.
It is, therefore, rather surprising to learn that although the United
States led the world in establishing compulsory education laws at public
expense, it is one of the last to make provision for the care and relief
of superannuated and aged teachers. While Russia, under the Czar,
established a system of relief for its aged teachers as early as 1818,
the first legislative interest in retirement systems for teachers in
this country did not come until 1884, when New York City teachers
secured the passage of a retirement law in the New York Legislature.
According to Mr. Studensky,[220] the history of the movement for
teachers’ retirement pensions in the United States may be divided into
three distinct periods. (1) The period from 1868 in which there first
began the establishment of teachers’ insurance and mutual aid
associations. (2) The period from 1884 until approximately 1815. This
was a period of retirement legislation without regard to sound
principles and is still not altogether a matter of the past. (3) The
movement just beginning, tending to the reorganization and remodeling of
pension systems on a more sound actuarial basis. In the first two
periods the government and the public remained indifferent to the
voluntary funds established by the teachers themselves. The funds were
regarded as private teachers’ associations in which the public had no
concern. Since 1815, however, the government has taken an active and
intelligent participation in the protection of teachers in their old
age, as it has begun to recognize the value of such provisions both for
the welfare of our educational system as well as for the protection of
the teachers.
In the beginning, teachers’ protective associations were formed largely
for the purposes of securing burial or death benefits. These loosely
established organizations required no regular assessments, but assessed
their members from fifty cents to a dollar whenever necessary. Permanent
capital they considered unnecessary and therefore had none. Later these
burial and death benefit associations branched out to include also sick
benefits for a limited period. This resulted in the introduction of a
regular system of dues payments which ranged from one to seven dollars
per year. As they progressed they were still further extended to provide
for old age and disability annuities, and regular contributions based
upon one or two per cent. of the annual salary were introduced. The
teachers’ contributions were generally swelled by donations from
charitable agencies and incomes from “benefit entertainments” arranged
for the funds.
Government participation in teachers’ retirement systems first began in
1884. By this time the teachers realized the failure of their voluntary
associations and requested the assistance of the city government. They
were encouraged and stimulated to ask for this help by the fact that the
city had already established pensions for other municipal employés, such
as policemen and firemen. They justly called attention to the benefits
derived from such systems in removing the dead wood of the school
system, as well as increasing the efficiency of teachers, which would
result in such a plan. As a result of this campaign the New York
Legislature in 1884 provided for the establishment of a teachers’
retirement fund. The resources of this fund were to come, on the part of
the teachers themselves, only from deductions made from the pay because
of absence. The teachers were not required to make direct contributions.
In the following year or two, similar funds which, however, required
contributions from teachers, were established in Brooklyn, Detroit,
Chicago, St. Louis, San Francisco, Buffalo, Cincinnati and the State of
New Jersey. Most of these plans were compulsory in character and the
teachers’ contributions amounted to one per cent. of their salary.
As practically none of these plans took any account of actuarial
principles of insurance, it soon became evident that the teachers’
contributions alone were not sufficient. It did not take long to
discover that in practically all of these systems no provision was made
for permanent capital, and the funds needed to meet obligations as they
arose “were provided only by hopes.” The teachers then began to ask for
direct contributions from the cities or states, pointing out the
benefits to be derived from such provisions by the school system and to
the fact that other funds of municipal employés were already helped
along by these cities or states. These arguments were so successful,
that for more than two decades afterwards the government’s contributions
continued to rise steadily while the teachers’ contributions in most
instances remained stationary. Furthermore, from 1884 to 1817, according
to Mr. Studensky,[221] no less than six cities and five states adopted
teachers’ pension schemes in which the government bears the entire
expense of the fund. During the same period sixty-four cities and
fourteen states established systems of joint contributions by the
government and the teachers.
These funds, excepting those established more recently in Connecticut,
Massachusetts, New York and Pennsylvania, and which are organized in
accordance with sound actuarial principles are, says Mr. Studensky:
“Insolvent in so far as they have failed to provide for adequate
reserves with which to meet accrued liabilities as well as liabilities
incurred through service rendered since the establishment of the
system. It matters not that most of these systems are still able to
make payments, still have unexpended cash on hand, and are and will
for a few years continue to be able to meet their payments. They are
no less insolvent than the systems which are already bankrupt. Only by
shifting their huge deficiencies ahead year by year do they continue
their existence. By doing so they increase of course these
deficiencies because of the continued failure to discount future
liabilities. The longer they operate, therefore, the greater are the
deficiencies and the more insolvent the funds become.”[222]
The main features of these funds may be summarized as follows:
Retirement age.—The retirement age is not specified in the case of many
funds, the former being dependent entirely upon the number of years of
service. Where provision is made for the age of pensioning it is
generally 60 years. In some cases also it is set at 60 for men and 55
for women. The period of service required before one can qualify for a
pension, ranges from 25 to 30 years, except in a few instances where
only 20 years or less, or 35 or more years of service are required. In
many systems the age attained and the number of years of service are
alternate conditions for retirement, i. e., a teacher may retire upon
completing a fixed period of service regardless of age or, having
reached the maximum age, may be pensioned even though he or she has been
in the service a smaller number of years. In considering service years,
credit is usually given—except in the newer systems—for teaching
experience in other states or localities.
Pension amount.—The amount of the pension is usually set either at a
fixed sum of $500 or less per year, or is determined by the number of
years of service; or as provided in some funds is entirely dependent
upon the average salary received. The annuity in these cases is based
approximately upon one-half of the salary of the last few years or upon
both salary and length of service. In the new funds it is generally
provided that the benefit is divided into an annuity and a pension. The
first is based upon the contributions and age of the pensioner while the
pension equals that of the annuity and is given by the government.
Contributions.—The contributions to the funds in most cases are derived
from three general sources. The contributions of the teachers
themselves; appropriations from the different school boards; and
whatever is derived from accrued interest, donations, legacies,
bequests, and so forth. In most systems the teachers’ contributions to
the funds amount to from one to three per cent. of their annual
salaries. These are usually graded in accordance with the number of
years in the service, the contribution being highest for those longest
in the service. In the new systems the contributions of each teacher
depend upon the age at which he begins to contribute and upon the number
of years of prior service. The “pension” is fixed at a certain
proportion of the teacher’s salary and increases with each year of
service up to 35 years, when it ceases to increase.
In case of mental or physical incapacity partial annuities are generally
provided in most funds. These are computed by taking a percentage or
fraction of a percentage of the yearly salary multiplied by the number
of years of service. A minimum period of service is usually required
even for the granting of partial annuities. This latter period varies
from five years in most city funds to twenty-five years in a few others.
In practically all retirement systems, provision is made for both
compulsory and optional retirement age periods. The latter is usually
determined at the discretion of the Board of School Directors, and may
precede the compulsory retirement age period by about five years.
Of the 24 systems analyzed in detail by Mr. Studensky, it was found that
while 18 of these exact contributions from the teachers, only eight
provide refunds in case of death. Of the latter a few provide for the
refund of one-half of the contributions without interest; in others,
especially the newer ones, the entire accumulation with compound
interest is returned. In case of dismissal or resignation most systems
provide for the return of all contributions, although a number make no
such provision.
In 1817 there were in existence in the United States 84 teachers’
retirement systems; 22 of which were State systems and 74 local systems.
These covered a total of 332,554 teachers. Fifty-seven of the 84 systems
have been in existence only since the last decade. The extent to which
these funds may be expected to take care of the superannuated teachers
may be appreciated from Professor W. F. Willoughby’s summary in his
introduction to Mr. Studensky’s book. To quote Prof. Willoughby:
“Of the nearly one hundred teachers’ retirement systems now in
operation in the United States, only a few can escape total collapse
unless fundamentally altered. Some of these systems include ten,
fifteen, or even twenty thousand teachers each. Twenty-two of them are
state-wide in their operation. They apply to over three hundred
thousand public school teachers, i. e., to nearly one-half of the
total number of teachers in the United States and they have
liabilities in the neighbourhood of half a billion dollars, for the
discharge of which, in large part, there are no assured assets.
Besides the necessity for putting these systems upon an equitable and
sound financial basis, there is need for the establishment of
retirement allowance systems in those states and localities which as
yet have none. At present seventeen states have neither state nor
local pension systems for their public school teachers, and in twelve
of the remaining states there are only a few local systems.
Approximately one-half of all the public school teachers in this
country are not covered by any pension provision.”[223]
CHAPTER X
OLD AGE BENEFITS OF FRATERNAL AND TRADE UNION ORGANIZATIONS
FRATERNAL INSURANCE
The earliest forms of mutual assistance and insurance benefits organized
by the middle and working classes were through the agency of fraternal
organizations. Many of these had their beginning in the mediaeval trade
guilds. The industrial revolution, with its resultant hazards, spurred
and swelled these organizations tremendously until there have been
developed the numerous fraternal orders and secret societies now in
existence most of which have benefit provisions of one form or another.
The fraternal organizations, as incorporated associations, supply to
their own members on a co-operative plan, various forms of
insurance—largely against sickness, death and disability. When
confronted with problems of old age relief, these societies, ordinarily
raise only sums sufficient to cover contingencies as they arise. This
usually results in the younger generations granting aid to the older
members with the expectation that in their old age they, too, will be
provided for in a similar manner. The inevitable effect of this is that
as the burden of supporting the older members becomes heavier, fewer
younger members are attracted into these societies. Furthermore, many of
the younger group, when confronted with heavy assessments, drop out and
leave the older members to hold on until the final collapse. It is,
therefore, not surprising to discover that the early history of these
societies, as insurance instruments, is strewn with financial wrecks.
Few of these societies have even today adjusted their rates on a
scientific basis or upon actuarial principles, and many are still
insolvent.
Of the hundreds of fraternal societies in the United States the number
of those having benefits which may be classed as old age pensions is
insignificant. Only three out of 117 fraternal associations in
Massachusetts in 1807 had such benefit provisions. Still more negligible
is the number of aged who are actually in receipt of such benefits.
“A Circular of inquiry addressed to 60 of the leading fraternal
beneficiary corporations organized outside of the State of
Massachusetts brought 36 replies. Of the associations replying, 31
stated that they pay an old age pension and annuity allowance, or
gratuity in some form. Five have no old age benefits. Some of the
latter, however, pay benefits for total and permanent disability. The
age of 70 is the usual age at which an old age pension is payable.
Twenty-four societies out of 26 answering the inquiry on this point
give the age 70, and two the age 75, as the pensionable age. In many
cases permanent disability is also required as a condition for the
receipt of an old age pension. The amount of the pension is commonly
one-tenth of the face value of the insurance certificate carried by
the member. It is usually provided that the one-tenth shall be paid
annually until the whole amount of the certificate has been canceled,
or for ten years, or until the age of 80. Twenty-five associations pay
this amount of benefit. Two societies pay only one-twentieth of the
amount of the certificate; one pays one-fifth in five installments;
and one pays one-half of the certificate upon its surrender. The great
majority of the societies have thus far paid nothing on account of old
age benefits, as they have been organized but a short time and
payments are not yet due. Fourteen societies report payments on this
account, as follows: $100 for two members; $200 for one member; $200
for two members; $400 for one member; $400 for two members; $3,886.40
for 12 members; $7,276.58 for 17 members; $2,642.73 for 24 members;
$5,700 for 34 members; $5,125 for 56 members; $10,000 for 200 members;
$14,800 for a number of members unstated; $48,021.85 for 385 members;
and $104,788 for 748 members.”[224]
The Pennsylvania Commission also studied 155 fraternal organizations
listed in the Report of the Insurance Commissioner of that State. The
membership of many of those organizations ran into the thousands. The
report listed 85 fraternal corporations with charters from other States
and 58 with charters from Pennsylvania. In the case of the former only
nine were listed definitely as giving old age benefits. The number of
Pennsylvanians receiving such benefits was 31. A letter of inquiry
addressed to all the Pennsylvania organizations brought thirty-nine
replies. None of these paid old age benefits as such. Thirty-two paid no
benefits which could even be classified as superannuation allowances,
although a number paid disability benefits.
On May 11th, 1821, the Indiana State lodge of the Eagles adopted the
following resolution:—
“WHEREAS, Modern industry, with its intricate, swiftly moving
machinery, and rush for production, requires the steady nerve, ready
initiative, and exhaustless energy of youth, and places the elderly
workman at a serious disadvantage, even if it does not debar him from
employment; and
“WHEREAS, Experience has proved that the remuneration received during
his productive years is, in many cases, through no fault of his own,
utterly inadequate to enable the workingman to “lay by” sufficient to
provide for the non-productive years of later life—statistics showing
that in the United States, alone, there are 1,250,000 such old-age
dependents on public and private charity; and
“WHEREAS, Such charity, with its brand of pauperism, inflicts an
unjust stigma upon those unfortunate victims of our industrial system
who have expended the energy of their vigorous years in production for
the benefit of society; and
“WHEREAS, The pension is not a form of charity, but an honorable
recognition of hitherto not fully rewarded service; and
“WHEREAS, Among civilized nations, the United States is the only
prominent one that has not in some form or other recognized the
obligation of the state to the humble toilers whose labours are the
basis of its prosperity; and
“WHEREAS, The Fraternal Order of Eagles is particularly interested in
this question, not only because of the economic status of a large
portion of its membership, but also because of its fundamental
principle of upholding justice. Therefore, be it
“_Resolved_ by the Indiana State Aerie, That we are in favour of
governmental old age pensions, and that we invite our sister State
Aeries and the subordinate Aeries of the Order to unite with us in
requesting the Grand Aerie of 1821 to take such action as will awaken
public sentiment to the wisdom of State and Federal provision that
shall remove from the minds of the labourers of the land the haunting
fear of want and pauperism in old age.”
TRADE UNION SUPERANNUATION BENEFITS
Mr. Samuel Gompers, President of the American Federation of Labour,
stated in a letter addressed to the “Committee on Miners’ Home and
Pensions”: “The general purpose—that the organization ought to take care
of its aged and indigent members, and to make some provision for their
welfare and protection—is a most worthy one. It is in accord with the
general fraternal concept that underlies the whole organized labour
movement. It has much in common with the more sensitive social
conscience that has led to general provisions for those in want.” He
further warns that “Many of the proposals for social insurance are of a
compulsory nature. Wage-earners now find themselves confronted by this
alternative; either labour organizations must make more comprehensive
and more adequate provision for trade union benefits, or else they will
have forced upon them compulsory social insurance under the control and
direction of government agencies. Compulsory social insurance will
inevitably result in supervision by the Government of the normal
activities of trade unions and in the delegation to governmental agents
of all matters that vitally affect the interests, the rights, the
welfare and the freedom of wage-earners.”
It is also the general conviction of trade unionists, that a pension
paid by the union to its old members is of inestimable value. Trade
union experience, with established benefit features, has proved these to
be sources of strength. They are “holding and binding the membership
together in a bond of human sympathy, winning the admiration and respect
of even those who are opposed to union organization.” As an organizing
factor, it is invaluable. It attracts and prompts to identify themselves
with labour organizations, members who would perhaps otherwise remain on
the outside. The fact that a member is rewarded for loyalty to the union
by being provided for in his declining years not only promotes greater
promptness in the payment of dues, but reduces the lapses of dues to a
minimum. Furthermore, it causes many to consider well before
contemplating the severing of their connection with the union for any
but very serious reasons.
It would appear from the preceding that among trade unions at
least—where the principle of fraternal brotherhood is most firmly
established—there would be found complete measures and comprehensive
schemes for the protection of their members in their declining days.
This, however, is not the case; and thus far, the American labour
movement has done comparatively little in the way of providing
opportunities for protection against old age. While it is true that the
more radical element in the labour unions abhor the idea of belonging to
an “insurance company” rather than to a class-conscious labour
organization, the influence of this group has as yet been comparatively
ineffective and the lack of old age provisions cannot be credited to its
opposition.
The 1808 Report of the United States Commissioner of Labour lists 18
Trade Union organizations as paying benefits for temporary disability
and death. Four of these pay benefits for temporary disability,
permanent disability, and death; three pay benefits for temporary
disability, permanent disability, death and superannuation, and two pay
benefits for temporary disability, permanent disability, death and
superannuation and death of members’ wives. Of the 83 unions that pay
death benefits, 18 pay permanent disability benefits. Only four were
paying superannuation benefits. Four other unions were at that time
accumulating a fund for the payment of superannuation benefits which are
now in operation.
THE INTERNATIONAL TYPOGRAPHICAL UNION
The first American Trade Union to institute an old age pension system
was the International Typographical Union. The history of the pension
system of this labour organization is so interesting and indicative of
the whole problem of fraternal insurance that it is of value to discuss
it at length. This union, which began to take care of its aged workers
as early as 1882, has ever since been in the vanguard of the movement to
extend old age pensions to all persons. As early as 1884 the
International Typographical Union opened its Union Printers’ Home at
Colorado Springs, Colorado, in order to take care of the old and infirm
members, “who through their steadfast loyalty and many sacrifices to the
I. T. U. have made the present organization possible.” After several
years of experience with this Home—generally conceded to be a good
one—the I. T. U. became aware of the fact that many aged and
incapacitated members were unable to avail themselves of the benefits of
the Home because of family ties and long associations in their
respective communities. Once this was realized, to further insure the
members against abject poverty and public or private charity, an old age
pension system was established at the annual convention of the Union in
1807. This became operative in March, 1808.
The plan, as originally adopted, provided for the payment of four
dollars per week to members 60 years of age, having a continuous active
membership in good standing of years, unable to obtain sustaining
employment at the printing trade, and not earning more than $4.00 per
week at the trade. At the 1810 Convention the law was amended so as to
render eligible to pension, members 70 years of age, having a continuous
active membership in good standing of ten years. Provision was also made
in the law for members totally incapacitated for work whose applications
for admission to the Home had been disapproved by reason of their
affliction; such members were required to have twenty years’ continuous
active membership in good standing.
In 1811, at its convention in San Francisco, the I. T. U. finding that
the preceding amendment still did not reach a large number of men whom
it was necessary to assist and also that the experience of the first few
years of its pension fund warranted a further extension of the benefits,
increased the pension allowance to five dollars per week to the
following three classes of members:
First: Members 60 years of age who have been members in good standing
for a period of twenty years, including and ante-dating the enactment of
the pension law, and who find it impossible to secure sustaining
employment at the trade. Applicants under this provision of the law must
have been members in good standing at the time the pension law became
effective and must have maintained active membership since that time.
Second: Members who have reached the age of 70 years and who have been
in continuous good standing for a period of ten years and who find it
impossible to secure sustaining employment at the trade.
Third: Members who are totally incapacitated for work, who have been
continuous active members for twenty years, and whose applications for
admission to the Home have been disapproved because their afflictions
are such as to render them ineligible for entry to that institution. In
January, 1820, the pension was further increased to six dollars per
week.
The fund for the payment of pensions is provided by a tax of one-half of
one per cent. of the weekly earnings of all members.
Since March, 1808, when the assessments were first made, the total
receipts of this fund up to May 31, 1820, were $3,856,161.08, from the
tax assessment, $204,833.58 was derived from interest, and $1,378.50
from returned pensions. The total receipts were $4,085,467.02.
The expenditures made during the same time were $3,022,448 paid to
pensioners; and $86,158.26 for administration and registration system.
The balance of the fund on May 31, 1820, was $886,858.76.
The financial operations of this fund during the first few years were
declared eminently satisfactory. So much so that when the receipts in
the first year exceeded the amount expended there was a temptation to
reduce the amount of assessment. Gradually, however, it was found that
although the assessments continuously increased, the expenditures on
pensions grew steadily until in 1817 the latter exceeded the total
income by nearly $20,000. At the 1817 Convention of the I. T. U. it was,
therefore, recommended that the provision whereby a member at the age of
70 of but ten years standing was entitled to a pension be repealed. This
was done the following year. During the year 1818, however, the income
from assessments exceeded the amount expended on pensions by more than
$200,000, although the number of pensioners during the same year
increased from 1,483 to 1,510. The secret of this remarkable revival
lies in the increased average earnings of the members of the
International Typographical Union upon which the assessments are based.
The annual wages of the I. T. U. members increased, according to the
Secretary of the Union, from $1,264.88 in 1818 to $1,615.25 in 1818.
From the above conditions it is obvious that the future of the Old Age
Pension Fund of the I. T. U. is neither stable nor secure. Should there
be a depression in business or a lowering of wages the existence of the
fund is threatened, unless the accumulated revenue fund is sufficiently
large to protect it. Otherwise, it will necessitate either a reduction
in the pensions or an increased rate of assessment.
Up to May 31, 1820, 3,083 applications for pensions by the I. T. U. were
received. Of this number 82 petitions were disapproved, 82 were
withdrawn and 2,808 were approved. Death removed 1,388, leaving 1,510
pensioners on May 31, 1820. The high death rate of 45.23 per cent. among
these pensioners is significant. This is doubtless due to the advanced
ages of the pensioners. The average age of all applicants is 64.24
years. The membership of the unions having members on pension in 1820
was 57,520. The pensioners’ represented 2.62 per cent. of the membership
of these unions which in return constituted over three-fourths of the
total membership of the I. T. U. During the fiscal year ending May 31,
1820, 156 pensioners were added.
THE ORDER OF RAILROAD TELEGRAPHERS
The Order of Railroad Telegraphers has established a pension fund for
life annuities to old and faithful members of the order who have reached
an advanced age in life, as well as to those totally disabled through
physical and mental infirmities. In order to be eligible to membership,
one must be a member continuously for at least five years, immediately
prior to the filing of application for membership with the pension fund.
Members 60 years of age and over are not eligible to membership in the
pension fund after January 1, 1816.
The fund is maintained from an admission fee of five dollars from all
applicants for membership in the pension fund and from a semi-annual
assessment thereafter “equal to an equal division of $240 over the
period ensuing between the age of the applicant at the time of admission
to the pension fund and his 65th birthday after which his or her
assessments shall cease.”
When a member of the pension fund attains the age of 65, he is paid a
monthly salary of $20 during the balance of his or her natural life.
In order to obtain a total disability pension, eight years’ membership
is required. The assessments cease as soon as placed on retirement roll.
The pension fund is entirely self sustaining and can in no way create
any financial liability to the Order of the Railroad Telegraphers.
The Secretary and Treasurer of the Order writes: “We will probably
discontinue our pension plan at our next convention, due to the fact
that this proposition has not received the support of our members as was
anticipated. If it is discontinued, all money paid into the fund will be
returned to the members of this department.”
THE BRICKLAYERS’ FUND
The Bricklayers’, Masons’ and Plasterers’ International Union of America
has an Old Age and Disability Relief Fund. This Union provides that when
a member has been in continuous good standing for a period of twenty or
more years, and has passed the age of sixty and who through some bodily
infirmity is unable to secure sustaining employment at any occupation
and has no means of support, he is then entitled to make application and
receive five dollars per week benefit from the Relief Fund.
A member who meets with some accident while working at his trade on a
building, during working hours, and is incapacitated from work, and who
has ten years of continuous standing to his credit, is entitled to
disability relief, of five dollars per week.
The widow of a member, entitled to old age or disability relief, who is
without means of support and who has reached the age of sixty years at
the time of her husband’s death, is entitled to the five dollar weekly
payment until she dies or remarries.
It is provided in the by-laws, that each member shall pay into the
treasury of the International Union such relief dues as may from time to
time be levied by the International Union in convention assembled. The
present assessment to the fund is fifty cents a month for each member.
This Union has jurisdiction over the United States and Canada. The
general average membership for the first five years’ existence of the
fund was approximately 72,000. About 4.67 per cent. of the membership
made application for relief, of which only about two-thirds were
approved. In May, 1820, the union had on its rolls 1,387 old age
beneficiaries; in addition 83 were receiving disability benefits and 248
widows were on the relief list. Each of these was drawing five dollars
per week as a pension. The Secretary of the union states:
“Our experience shows that the number on the relief roll is
continually growing larger, although the last two years the increase
has been very small, but it will continue to grow larger for the
reason that the percentage of claims rejected are for the reason that
they lack a year or two from being old enough, or a year or two from
having the required number of years continuous good standing.”
OTHER UNIONS
The Brotherhood of Locomotive Firemen and Enginemen reports “an
insurance feature in which every member must participate if he is able
to pass the required medical examination,” but “has no Old Age Relief
Fund.”
The Order of Railway Conductors of America has a relief fund. All
members of this Order are eligible to participate and receive assistance
from this Fund, provided they are totally disabled and without means of
support for themselves and families.
It is encouraging to note that the labour organizations which have
established pension systems of late, have learned somewhat from the
experience of their predecessors and are at least attempting to adjust
their rates on a more sound actuarial basis; and in addition they
provide many other safeguards for the stability of their funds which do
not exist in the earlier systems.
The Pension Association of the Brotherhood of Locomotive Engineers was
first authorized in 1812 and was revised and readopted May 22, 1818. Its
constitution provides that after the passage of this law, no one 60
years of age and over shall be admitted to membership. On and after June
30, 1816, no application shall be received for membership to the Pension
Association from those who have reached the age of 50 years. And on and
after December 31, 1818, no one can join who has reached the age of 45
years, while after December 31, 1820, members who have reached the age
of 40 years are barred from membership. It is also provided that only
such members of the B. of L. E. who are earning at least $60 per month
are eligible to membership in this Association; also “no person who is
out of employment temporarily caused by sickness or injury, can become a
member of this Association, during such period.” In addition to these
restrictions, “All applicants for membership in this Association will be
required to pass a physical examination by a competent and reliable
physician, and those having physical or mental defects may become
members of this Association, provided that proper and legal waivers be
furnished by such applicants exempting this Association from any and all
liabilities resulting therefrom.”
Benefits are extended to the following: First: “Any member of this
Association in good standing, who was in active service at the time of
enrollment as a member, but who from physical or mental cause is totally
and permanently disqualified, or has been retired on account of old age,
shall from the funds of this Association a monthly pension as
hereinafter provided.
“Any member of this Association who voluntarily retires from active
service will not be entitled to receive a pension on account of old age
until he has reached the age of 65 years.”
Second: “Any member of this Association, in good standing, who was not
in active service at the time of enrollment as a member of this
Association, who from physical, mental, or other cause, is unable to
perform any kind of remunerative employment, or who has reached the age
of 70 years, shall receive from the funds of this Association a pension
as hereinafter provided; provided further, however, that no member shall
receive a pension for disability caused by his use of intoxicants, or
unlawful acts.”
Third: “All members of this Association, who are 65 years of age and are
in active service, may if they so elect, voluntarily retire permanently
from such service, and thereupon become eligible to a pension at once.
All other members who have reached the age of 70 years shall be granted
a pension.”
The contributions and the pensions of this Association are graded, and
vary in accordance with the age and period of contribution. The amount
of dues paid by each member follows:
“All active members under the age of 30 years shall pay 50 cents per
month.
“All active members from the age of 30 to 35 years shall pay $1.00 per
month.
“All active members from the age of 35 to 40 years shall pay $1.50 per
month.
“All active members from the age of 40 to 45 years shall pay $2.00 per
month.
“All active members from the age of 45 to 50 years shall pay $2.50 per
month.
“All active members from the age of 50 to 55 years shall pay $3.00 per
month.
“All active members from the age of 55 to 60 years shall pay $3.50 per
month.
“All active members from the age of 60 to 65 years shall pay $4.00 per
month.
“All active members from the age of 65 years shall pay $4.50 per
month.”
The pensions allowed are based upon the following scales:
“Any member of this Association who has been declared a pensioner by
the board of Governors, who shall have paid dues for 60 months, or
less, shall receive a pension from this Association for the remainder
of his life, of $25.00 per month.
“Those paying the dues from 61 months to 120 months, $30.00 per month.
“Those paying the dues for 121 months to 160 months, $30.00 per month.
“Those paying the dues for 161 months to 180 months, $35.00 per month.
“Those paying the dues for 181 months to 240 months, $40.00 per month.
“Those paying the dues for 241 months to 300 months, $45.00 per month.
“Those paying the dues for 301 months to 360 months, $50.00 per month.
“Those paying the dues for 361 months to 420 months, $55.00 per month.
“Those paying the dues for 421 months to 480 months, $60.00 per month.
“Those paying the dues for over 480 months, $65.00 per month.”
The Brotherhood of Locomotive Engineers also has in addition an Indigent
Fund and an Insurance Relief Fund.
The Pressman’s Union adopted a pension plan, by first creating a sinking
fund from the accumulations of a 25 cent assessment per month for all
members for five years, before the payment of pensions became operative.
This, it is believed, will create a sufficient fund which when placed on
interest will insure stability and prevent the gradual increase of the
per capita tax as was the case with other established funds.
Since 1813, District Number 21, United Mine Workers of America, has had
the following pension system:
Each member pays 40 cents assessment per month, which may be raised or
lowered when necessary.
All members, 60 years of age, when they have discontinued work in the
mines, or those physically disabled from performing further labour in
and around the mines, having no other means of support, and who have
been in good standing for five years preceding January 1st, 1813,
receive $3.00 per week. Those joining the Union after January 1st,
1813, are not eligible to benefits unless they have been members in
good standing for five years prior to making application for pension.
THE UNITED MINE WORKERS OF AMERICA
At the 1816 International Convention of the United Mine Workers of
America, a Committee was appointed “to investigate and report on the
advisability and possible cost, to the International Union, of erecting
and maintaining a suitable home wherein to care for the aged, infirm and
decrepit members.”
After a careful investigation of the Soldiers’ Home, and Homes for the
Aged, maintained by the different unions, and fraternal organizations,
in the United States and England, the Committee reached the conclusion
that “taking the estimate of other homes, it would cost about $40.00 per
month for each resident for clothing, food, medical attendance and
medical supplies.”
The Committee further reported that “The question of pension, with or
without a home, was early called to our attention, and as the different
organizations with whom we came in contact either had pension systems in
active operation or were preparing to adopt pension systems, we deemed
it advisable to gather all the data possible on the subject.” In
comparing the safeguards adopted by other organizations, and in its
“endeavours” to select such as are actually necessary, to make the plan
a success, the Committee at the 1817 International Convention of the U.
M. W. A. recommended the following plans for creating and maintaining a
pension system.
“(1) An old age disability pension fund is hereby enacted by an
assessment of 40 cents per month per member, which shall automatically
be raised or lowered as necessary under the direction of the board of
trustees hereinafter provided for, but in no case shall the assessment
exceed 50 cents per month per member.
“(2) Said assessment shall be in full force and operation on and after
April 1, 1818.
“(3) A sinking fund shall be created by the accumulation of said
assessment for a period of three years from and after April 1, 1818.
“(4) That on and after April 1, 1821, all members in good standing who
have reached the age of sixty-five years and who have been continuous
members in good standing for a period of ten years immediately preceding
their application for pension and have paid their regular monthly
assessment to the pension fund for at least three years, whose earning
capacities have been reduced to less than twenty-five dollars per month,
and who have no visible means of support other than their labour, shall
be eligible to receive a pension of twenty dollars per month payable
monthly.
“(5) That on and after April 1, 1821, any member who has been a
continuous member in good standing for ten years immediately preceding
his application for pension and who has paid his regular monthly
assessment to the pension fund for at least three years and who is
totally incapacitated for work by reason of accident or sickness of a
permanent character, who has no visible means of support other than his
labour and who has been denied aid from compensation laws or has tried
and failed to recover reasonable damages for injuries sustained, shall,
upon satisfactory proof, be allowed a pension of twenty dollars per
month, payable monthly; the trustees to have the right to appoint a
physician or physicians to make an examination if they deem it
necessary.”
From a canvass of 608 miners’ locals with a total membership of 120,568
the Committee has learned that there were 4,188 members from 60 to 65
years old; 1,828 from 65 to 70 years of age, and 156, from 70 and over.
In addition there were also 1,487 incapacitated members under 60 years
of age.
The Committee admitted that this was a very large per cent., as compared
with the membership of other organizations, but recommended the adoption
of 65 years of age as the minimum age for the payment of pensions.
It accepted the experience of the International Typographical Union as a
safe guide for its own contemplated plan. It stated that in the latter
Union there is a fraction more than 22 pensioners to each 1,000 members,
which they assumed would hold true of their own membership. Since that
time the miners have given up the plan of establishing their own pension
fund but have instructed their committee to work for the passage of old
age pension laws.
During the Convention of the United Brotherhood of Carpenters’ and
Joiners of America in September, 1820, the officers of the Union were
instructed to formulate plans for an old age pension system for the
members of the organization.
The experience of even the firmly established and best intentioned
fraternal pension systems in this country has not proved these to be
very satisfactory instruments. It is, doubtless, this recognition that
has prompted the International Typographical Union to adopt the
following resolution at its 1817 Convention:
“Whereas, The United States of America is the only great nation in the
world (excepting Russia) that does not provide old age pensions for
its worn out and worthy workers; and
“Whereas, The consequent necessity of American workers to provide
their own benefits is a gross injustice, and frequently ends in
failure through no fault of the workers; and
“Whereas, The Government of the United States of America has demanded
that its citizens protect the honour of the nation with their lives in
a great war, while this Government has not in the past been responsive
to the demands of its workers to protect their honour; therefore, be
it
“Resolved, That the International Typographical Union, in convention
assembled, endorse and urge the passage of the old age pension bill
introduced in Congress by George I. R. Sherwood, for the benefit of
all American workers.”
And in May, 1820, the Pennsylvania State Federation of Labour also
adopted by a unanimous vote the following resolution:
“Whereas,—The United States is now the only industrially developed
country that has as yet made no provision for the aged and
superannuated workers, and
“Whereas,—The recent Report of the Pennsylvania Commission on Old Age
Pensions shows conclusively that the problem of old age is largely due
to the industrial development of our state as a result of which aged
workers are relegated to the industrial scrap-heap as useless and of
no value as soon as their pace begins to slacken, and
“Whereas,—It is now obvious to all that with prices soaring skyward
from day to day, and with wages never catching up with the advancing
prices, it is absolutely impossible for the wage-worker to provide for
old age from his own earnings, and
“Whereas,—The only present alternative facing the aged worker is
either that of going to the poorhouse or accepting charity, as even
when the worker attempts to save, by denying himself and his family
the most essential comforts, he often fails at the end because of
sickness or unemployment, which is not only an evil and unjust, but
ultimately works to the detriment of industrial efficiency, as well as
the welfare of the State, and
“Whereas,—It must be recognized that the worker who has helped to
create the wealth of this country and who has spent the greatest part
of his life in productive labour, has by his work, made sufficient
contributions to the progress of the state and nation to entitle him
to a living when industry or exhausted health longer permits him to
work for a living, and
“Whereas,—The Pennsylvania Old Age Pension Commission plans to submit
a bill to the 1821 State Legislature providing for a state system of
old age pensions, therefore
“Be It Resolved,—That the Pennsylvania Federation of Labour in
convention assembled in Altoona, goes on record as urging the above
Commission to submit such a bill to the Legislature, and the
Federation further urges every State Senator and Assemblyman to do his
utmost in helping to promote this sadly needed and humane Legislation,
and be it further
“Resolved,—That the secretary of the Federation be instructed to
include in his questionnaire to candidates for the State Legislature,
a question regarding the candidate’s attitude to proposed legislation
on the question of Old Age Pensions, and no candidate shall be
endorsed by the State Federation who has declared himself against such
Legislation.”
That attempts made by the working classes to provide against old age may
frequently end in failure, is well borne out from the preceding analyses
and is generally recognized. Labour organizations and labour leaders
have therefore been most active in agitating for governmental pension
systems in old age. Knowing the difficulties confronting them in
establishing their own provisions, labour unions have repeatedly
declared that “The responsibility of caring for the veterans of industry
who in times of peace have been the mainspring in the work of material
progress, and in times of war have always been ready to sacrifice their
all, either in the field of active operations or in bearing the burdens
of taxation and support, should as a matter of right and justice rest
upon the Government.”
The inadequacy of the present means of protection in old age is thus
evident from the preceding three chapters. Under the present conditions
of costs of living and wages, thrift and individual savings sufficient
for old age cannot be seriously considered possible for many
wage-earners. Neither can the industrial concerns be depended upon to
take care of their aged workers, since they have no assured permanency
and take care of only a fraction of the workers they employ. While the
recent Federal Retirement plan will take care of many a needy employé,
there still remain thousands of other Federal employés as well as
employés of states and municipalities who need to be protected. The
fraternal and trade union old age benefit funds are generally insecure
and, at best, the number that they can protect is inconsiderable.
The insufficiency of the present methods of aged relief in the United
States is succinctly summarized by the Pennsylvania Commission regarding
such provisions in that state. The Commission states that:
“Of all the multifarious forms of industrial, municipal and fraternal
pensions in the State the number of Pennsylvania wage-earners actually
on pension lists in 1818 hardly reached ten thousand. In the seventeen
leading industries listed the number of former Pennsylvania employés
actually receiving old age pensions was 2,152. The number of
wage-workers receiving pensions from concerns having no regular
pension system would hardly exceed an additional five hundred. Of all
the railroad workers in the State only about four thousand aged
employés are receiving old age support. However, even if these systems
were operated more extensively, it is clear that they are largely
dependent upon the arbitrariness of the employer, which makes the
receipt of a pension very uncertain for many employés. The period of
service required is often too long. These schemes, it was apparent,
discriminate unfairly against those who cease to be employés. In a few
cases in the contributory schemes, employés either do not have their
contributions returned or have them returned without interest.
Generally industrial pensions are considered merely deferred wages.
These industrial systems specify that a pension may be terminated at
any time; that the establishment of such a system is not to be
construed as conferring a contractual right, and that the company
reserves the right to discharge an employé or terminate the system at
any time.
“Of the nearly fifty thousand public school teachers in Pennsylvania,
only a little more than 600 are receiving pensions from the various
pension funds. The number of policemen, firemen, and other municipal
and State employés in the State receiving old age pensions did not
exceed 1,700. The inadequacy of protection against old age provided by
trade unions, or fraternal organizations has already been discussed.
It was seen that most of these are not established upon sound
actuarial principles. Many have become insolvent and many more are
liable to dissolution at any time. As a rule, all these pension funds
are exempt from the strict supervision required of private insurance
companies. The total number of pensioners in the State (not including
pensioners of the United States) constitutes three per cent. of the
total population over 65 years of age in the State. In other words,
only three out of every hundred or thirty out of every thousand
persons, 65 years of age and over, were protected by old age benefits
in Pennsylvania in 1818. This percentage is computed on the total
population 65 years of age and over as given by the 1810 Census. It is
obvious that it would be still lower if the increase in the aged
population during the past eight years was taken into
consideration.”[225]
PART FOUR
OLD AGE PENSIONS: WHAT THEY ARE AND THEIR OUTLOOK FOR THE UNITED STATES
CHAPTER XI
THE PURPOSE AND NATURE OF PENSIONS
A pension may be defined as a regular allowance or payment made in
consideration of past services. Pensions were granted first by kings and
other royalties to persons who distinguished themselves in art,
literature, and science, as well as to feudal retainers for military or
political services. It was also customary to grant pensions to prominent
jurists, university professors, and well-known clergymen, who had
rendered distinguished public service. The grant of a royal pension to
an individual was usually taken as a token of gratitude for valuable
contributions made to the credit or benefit of the crown, the country,
or the public. In more democratic nations the government still pensions
soldiers and war veterans in recognition of their devoted service in the
defence and protection of their country.
The more recent demands for the establishment of old age pensions, as a
social policy, applicable to all citizens, is merely the natural
extension of this principle to the veterans of industry, to men and
women who by brain and brawn have made vital and essential contributions
to the social welfare. To extend this protection in old age to the
working classes is merely to recognize the changes wrought in our
industrial system which make the welfare, comfort and happiness of all
the people depend largely upon the labour of those who work for wages.
The smug business man who takes his train in New York after theatre
hours at night, goes to sleep in his pullman-car and upon awakening
finds himself in Pittsburgh or Boston ready to transact his business
there, doubtless never thinks of the thousands of manual workers who
toiled to make these achievements possible. Neither does the
self-sufficient citizen think of these workers when he steadily speeds
along at forty miles per hour on a well-paved highway in his comfortable
limousine, or at any other time when he accepts all the modern comforts
and conveniences as a matter of course due to him. Even those, who, like
Carlyle, still hark back and sing praises of the eighteenth century, do
not fail to take advantage of the comforts of the nineteenth and
twentieth centuries, such as the railways, telephone, telegraph, and
even the talking machine. Despite their condemnations of modern
conveniences, they never go back to the stage-coach when they go from
New York to Pittsburgh or any other city. Whatever the evils and faults
of the modern industrial order—and its evils are legion—it cannot be
denied that on the whole it has worked to the ultimate good of most
concerned. Only the old and superannuated wage-earners derive little
benefit from industrial development. The immediate effect upon them is
their replacement by machinery and their inability to find other
employment. For it is known to all that aged persons are not wanted in
modern industry. With the introduction of newer processes of production,
the experience of the old workers counts for little, and they are
generally eliminated from industry and are thus deprived of the only
means by which they can secure a livelihood. To grant pensions to such
workers, during the days when modern industrial development permits them
no longer to provide for themselves, would be merely a recognition of
their services and a compensation for their losses, even as we
compensate property owners for disturbance to property when it is taken
from them for the general good.
In the preceding chapters the inadequacy of the existing provisions
against old age have been recited, together with the difficulties which
the old face in attempting to obtain security, under the conditions of
modern life. It is obvious that the lack of old-age provisions
demoralizes the individual and is harmful to society as a whole.
Society’s loss, as a result of this insecurity, is inestimable.
Furthermore, from whatever angle it may be examined, it is evident that
the problem of economic support of the aged is with us, and whether met
in one form or another, society ultimately bears the burden. An old-age
insurance or pension system would unquestionably raise the general
standard of living, as it would eliminate to a great extent the dread
and fear of old age which now affects adversely the productivity and
efficiency of a great many individuals. That the granting of alms,
either private or public, is not only insufficient and unsatisfactory,
but exercises a degrading effect upon the recipients and is repugnant to
the self-respecting person, and can therefore not at all be considered a
constructive policy, seems evident from the preceding discussions. As
aptly expressed by a Committee of the National Association of
Manufacturers in a special report upon this subject:
“While the social activities of the state are marked by humane
legislation in many forms, for the betterment of the individual, its
system of poor relief is antiquated. Poor relief makes no distinction
between the worthy and the unworthy; the social stigma, the
depravation of the citizenship and often the publication in the town
report of the name of the recipient and the amount doled out to him,
make the system onerous and the opprobrious epithet of ‘pauper’ is the
price the citizen pays for help.”
That there is a problem of old age which is largely the creation of
modern machine industry, is now recognized by all. Practically all
civilized governments now consider this an important national problem
which must be dealt with without delay. Its solution is generally sought
in a broad constructive social policy rather than in the haphazard
charitable and individual methods of relief. There are few industrially
developed nations at present that have not yet adopted a definite course
of social action in remedying the problems faced in old age. Of all
English-speaking peoples, the United States is most backward in this
respect, despite its high industrial development.
In dealing with this problem European governments have generally
followed one or two of the following methods of caring for their aged. A
number of countries also adopted plans which involve a combination of
features of each scheme. The methods generally followed may be
classified under the following headings: (1) A system of voluntary
insurance. (2) Compulsory-contributory insurance. (3) Gratuitous or
straight pensions by the Government. While the writer has formed decided
opinions upon the merits of each of these schemes, it is the intention
to present here an unbiased analysis of the arguments in favour and
against each of these systems. The adoption of any one of them depends a
great deal upon the social and economic conditions of the particular
State, or Country, and an impartial discussion of each system is
essential.
I. VOLUNTARY INSURANCE
Voluntary insurance against old age may be classified into several
types. (A) Private voluntary insurance. (B) Voluntary insurance under
Public Administration. (C) Voluntary subsidized Insurance.
(A) Private Voluntary Insurance.—Under this head may be included: (1)
The old age mutual insurance as provided by trade unions and fraternal
organizations, (2) insurance against old age by industrial corporations
and (3) insurance with private companies. All of these forms are
business propositions pure and simple. They involve no State action
other than supervision. The extent of old age insurance by means of the
above agencies, is very limited.
(B) Voluntary Insurance Under Public Administration.—With this form of
insurance there is no state subsidy, but the government sells annuities
and insurance at cheap rates. In addition to governmental guarantees,
the State in most instances bears the expense of administration. This is
the underlying principle in the State Savings Bank System in force in
Massachusetts and Canada and to a minor extent in respect to insurance
in Wisconsin. The aims of this insurance is to facilitate savings
against old age and to make it attractive and accessible to
wage-earners. The amount of insurance is limited and opportunities are
offered employers of labour to co-operate with their employés either by
making contributions towards the payment of the premium or by collecting
it. The advantage of this form of state savings over private insurance
lies in the cheapening of the premiums by the elimination of profit and
the cost of administration.
(C) Voluntary Subsidized Insurance.—The object here is to put a premium
on savings for old age. The State, in this case, subsidizes individual
thrift by means of a State contribution. These systems were practised
for some time in France, Belgium, Italy, and Spain and still exist in
some of these countries. They are devised with the special purpose of
serving the wage-workers. The amounts of the subsidies vary in each
country. The latter are not given to the insured but deposited to his or
her account and go to swell the amount of the pension purchased.
The three preceding forms of voluntary insurance are the evolutionary
outgrowth of one another. The chief reason urged in favour of voluntary
insurance is that it encourages thrift and maintains the self-respect of
its beneficiaries. It is pointed out however by all experts that in
practice after many decades of effort it has failed to accomplish its
purpose. Even generous subsidies do not seem to attract more than a
small part of the wage-earners, and in most countries these systems have
been partly or entirely superseded by other methods. Reference has
already been made to the Massachusetts experiment where after twelve
years existence of the savings system only about three hundred persons
took advantage of this form of insurance. Even subsidized insurance,
according to the experiences of the different countries, has at no time
or in any land accomplished its purpose. The working people obviously
either cannot or do not avail themselves of such insurance. Neither is
this fact surprising in view of our previous analysis of the actual
conditions of wage-workers. Dr. Rubinow, after an exhaustive discussion
of the voluntary scheme in the several European countries concludes:
“1. That even a heavily subsidized system of voluntary old age
insurance attracts only a small proportion of the working class,
presumably of the better paid strata.
“2. That even of those who begin accounts, a large and growing
proportion fails to continue to make the necessary contributions with
any regularity.
“3. That usually only the minimum is contributed which is necessary to
acquire the subsidies.
“4. That the workingmen are forced to reduce their old age pensions in
order to safeguard the interest of their families, and
“5. That the pensions actually acquired are pitifully small.”[226]
II. COMPULSORY-CONTRIBUTORY INSURANCE
The contributory form of insurance came about as a logical result of the
failure of the voluntary systems. The great mass of wage-workers being
either unwilling or unable to insure themselves against old age,
European governments sought to overcome this by making it obligatory for
certain classes of wage-workers—whose yearly income did not exceed a
certain amount—to insure themselves against old age. The government
continued making it attractive by subsidizing the insurance. Germany was
the first country in Europe to establish compulsory insurance for
working people. A system patterned after the German one was adopted by
France in 1810. Systems embodying the compulsory principles were also
established in Austro-Hungary, Chile, France, Greece, Iceland, Italy,
Luxemburg, Netherlands, Portugal, Roumania, Russia, Spain, Sweden, and
Switzerland.
Under the compulsory form of insurance all wage-workers earning below a
certain income are compelled to insure. Salaried workers above a set
amount are not obligated to insure but may, in common with other
classes, take out voluntary insurance. Participation in the plan begins
at an early age. Contributions are generally made both by the employer
and employé in equal parts. The state’s contribution consists of bearing
the expenses of administration. In addition, the latter also makes a
direct contribution to the pension after it has matured. In Germany the
contributions of the workers are graded in accordance with their income,
while in France it is uniform for all adult males, females and minors.
The employés’ contributions are collected by the employer who is allowed
to discount them from the wages of his workers. The age when one becomes
entitled to a pension is set at 60 years of age in France, and 70 years,
until 1817, in Germany. Before a person, however, can receive a pension
he must have made a minimum number of contributions; this in Germany is
1,200 weeks, and in France thirty annual contributions. To protect also
those who cannot make the required number of contributions, provisions
are made in both countries reducing the required period of contributions
by 40 weeks for each year of age over 40 in Germany and 30 in France,
when the law went into effect. The amount of the pension allowed under
these plans is very small, rarely exceeding $60 a year previous to the
war—an allowance which obviously could not go very far. No country which
has introduced compulsory insurance has at any time attempted to raise
more than fifty per cent. of the necessary funds from the insured
persons. In Germany the contributions from the insured persons amounted
to about 40 per cent. of the total disbursements, while in other
countries it amounts to about 30 per cent. of the funds disbursed.
The advantages of the system of compulsory-contributory insurance are as
follows: (1) Its possibility of universality. By means of compulsion,
insurance not only can be extended to all classes that need most the
protection against old age, but can also be made most effective.
(2) Compulsory insurance removes any suggestion of charity. Under this
system the worker gets his pension a matter of right even when he is not
poor. “It is not a dead-level system. It preserves a normal relation
between the standards of life before and after the age of pension and
also preserves a just relationship between services rendered and the
rewards granted, for it is usually based upon the length of
contributions, which is the length of activity.”[227] (3) It encourages
thrift even though not of a voluntary nature. (4) The need of old age
pensions is largely a result of the industrial problem and ought to be
borne by industry. “It is economically just, in so far as it exacts a
contribution from the industry, for superannuation is not less a factor
of modern industrial life than is the rate of accidents or of sickness.
If it be just that each industry should contribute to the cost of
accident compensation in proportion to the number of accidents
occurring, rather than that the entire cost be forced back upon the
national treasury, it would seem to be equally just that an industry
which uses up men by 45 or 55 years may be made to contribute to the
cost of old-age support in a greater degree than another industry or
occupation in which men can preserve their productive life until 65.
Looking upon it in another way, the justice of the claim may be
admitted, that a contribution on the part of the industry to old-age
insurance is but a deferred wage ... if, under modern industrial
conditions, it could be expected that the wage-workers themselves would
be able to raise the standard of wages to the necessary level so as to
include the cost of old-age support, and that they would use this
additional increment for that purpose, no compulsory system would be
necessary. But the compulsory system is necessary just because these two
conditions are found to be impossible.”[228] (5) It does not burden
taxation directly. (6) Compulsory insurance is also urged because of the
fact that more countries have adopted this plan than any other, and
because it has proved successful in several countries where it has been
in effect for some years.
The objections to the compulsory principle of insurance are: (1) It
cannot be made universal, as it omits many who may need such protection
no less than wage-earners. It is evident that it can only be made to
apply to persons who are in regular employment. It is next to impossible
to collect contributions from persons who are irregularly employed, from
agricultural labourers, from those who are their own employers, from
women who work at home not for wages, from small merchants, and so
forth. (2) Even through compulsion it is difficult to reach the poorest
classes of workers who are most in need of old-age support. These people
simply cannot save enough to contribute to pension funds. Thrift among
workers who do not receive a living wage is a delusion, and even if
possible, is uneconomic and unsocial. (3) Compulsory insurance, it is
contended, lessens the quality of self-help and reliance in the
individual. Said the Chairman of the Massachusetts Commission: “If this
is the country of wealth it is also the country of individualistic
ideals and achievements. It was founded to secure individual liberty of
thought and action with opportunities for working out one’s own
salvation. This is its peculiar destiny and its special mission, and its
greatest contribution to humanity will be in terms of character rather
than wealth. Not for any reason of sentiment, but because our national
progress under the individualistic ideal has been such as to demonstrate
its wisdom and soundness, do I believe we should take no steps
calculated to take us away from this path of development.”[229]
(4) Where the compulsory system is established the sums contributed by
the insured are practically insignificant. Not only does the state make
a direct subsidy to the insured, but it also bears the expenses, which
because of the inherent complexities of conducting the administrative
machinery and the recording of facts for a long period of years with
reference to contributions, is enormously expensive. It has, therefore,
also been advanced that there is practically no difference between the
state paying pensions outright, and collecting the contributions by the
compulsory principle. (5) Compulsory insurance, it is argued by some, is
class legislation, as it places the wage-earning classes under a special
régime. It necessitates the creation of a vast bureaucratic system. “It
would be nothing but taxation, and being exacted from unwilling
subjects, would carry with it none of the good influences of voluntary
thrift.”[230] (6) Old Age is not a problem of industry alone, for people
grow old despite all human efforts. (7) The amount of the pension under
the compulsory-contributory system is small and the age set is too high.
The pensions as paid in European countries are, as is commonly
expressed, “too little to exist on and too much to die on.” (8)
Compulsory contributions, furthermore, are inelastic and cannot be
adjusted to the particular needs of the various industries and
localities. (8) The proponents of American individualism also declare
that it is un-American, distasteful and contrary to the American spirit.
The compulsory principle, it is claimed, is intolerable and would not be
accepted by the American citizens. Mr. Arthur M. Huddell, a dissenting
member of the Massachusetts Commission states the case as follows:
“To my mind, compulsory insurance is un-American, and cannot be
considered in any way as a solution of this question. The wages of the
workman will not permit any compulsory assessments for insurance.
There is a vast difference between this and compulsory sanitary laws,
compulsory education and compulsory quarantine laws. A poor man can
comply with any of the above laws without an expenditure of money or
in any way reducing his wages, which he could not do with a compulsory
insurance law, as that would be equivalent to a reduction in wages.
There is not sufficient margin between the living expenses and the
wages of the workman to permit that reduction in his wages.”[231]
(10) The compulsory principle is also believed to be unconstitutional,
as it obligates certain groups to set aside a certain percentage of
their earnings to provide for old age.
III. STRAIGHT OR NON-CONTRIBUTORY PENSIONS
Just as the compulsory insurance principle was largely an outgrowth of
the failure of voluntary insurance the establishment of straight pension
systems may also be said to have come about principally because of the
complexities involved in and the limited effectiveness of the compulsory
insurance principle. While straight or gratuitous pensions are
comprehensive and immediately effective, compulsory insurance forms
require a long term of years before they can become operative and
capable of coping with the immediate problems. State pensions were first
inaugurated in order to secure an immediate means of relieving the
pressing problem of the aged poor. This form of outdoor relief is a
marked improvement over the indoor relief previously followed which
involves the destruction of the _amour propre_ and independence of the
recipients. A straight pension is an economic remedy for an economic ill
readily adapted to the needs created by the modern industrial
development. Under this system neither the employer nor the employé make
direct contributions. The funds are paid out from the general treasury.
Systems of gratuitous pensions have been adopted in Alaska, Australia,
Denmark, France, Great Britain, New South Wales, New Zealand, and
Uruguay.
State pensions are usually granted to all persons who have complied with
the requirements of the particular law. The specifications usually
provide that a person before receiving a pension must have attained a
certain age; that he must have been a citizen with a long period of
residence; that he must not have an income from any source above the
specified amount. Sometimes it is also required that he must have
fulfilled a certain period of service. In addition to these, most
countries require also certain moral and character qualifications. In
many countries pensions are denied on account of family desertion,
neglect of minor children, drunkenness, or prison sentence. It is
generally specified that pensions are given to the “deserving poor.” The
first of these gratuitous systems was established in Denmark in 1881.
Due to the influence of Lloyd George, a straight old-age pension system
was adopted by Great Britain in 1808. In 1815, the Territory of Alaska
and the State of Arizona had enacted similar systems, the latter of
which was declared unconstitutional by the Supreme Court of that State
before it became operative. Although the principles involved are the
same in all countries, the requirements and qualifications are widely
varied in the several countries operating these systems of pensioning
the aged.
The non-contributory form of old-age relief is one of the most popular
and most widely discussed plans. The particular points in favour of this
scheme as over the voluntary and compulsory systems may be outlined as
follows:
(1) Its simplicity. Straight pensions are given only under definite and
well defined conditions; the amounts are fixed and little administrative
expense is required.
(2) Straight state pensions are just, as it is the duty of the state to
take care of its aged poor. This obligation of the state, was recognized
by the latter long ago in its distribution of poor relief. Pensions in
old age, while following the same principle, remove the stigma and
degradation of the present system of poor relief. It is pointed out that
the state at present attempts to relieve most classes of suffering,
except old age. Pensions, are, therefore, simply an extension of the
duties of the state aimed to remove the suffering and terror associated
with old age. “It is compulsory now upon our citizens to make a living,
but if they wish to become criminals, the state will support them. But
the man who wants to remain a law-abiding citizen and try to support his
family is compelled to provide for old age, when the facts are that he
is unable at the present time to secure many of the comforts of life.
Every law-abiding citizen has rendered to his country some service,
which entitles him to look forward to a pension given in return; and as
at present the premium placed upon crime and poverty is un-American,
something should be done to provide for the law-abiding, self-supporting
citizen.”[232]
(3) Governmental pensions while nominally non-contributory, have in
reality been contributed by all in the taxes paid. Mr. Lloyd George
states this as follows:
“As long as you have taxes upon commodities which are consumed
practically by every family in the country, there is no such thing as
a non-contributory scheme.... Again, the worker who has contributed by
his strength and his skill to the increase of the national wealth, has
made his contributions to the fund from which his pension is to come
when he is no longer able to work.”[233]
It is thus evident that those who have given a considerable part of
their lives in useful service have already made those contributions to
the state and are entitled to freedom dread and anxiety over their needs
during their declining years, as well as from the disgraceful brand of
pauperism.
(4) Non-contributory pensions by the state would stimulate people to
greater loyalty, ambition, independence and hopefulness; and would give
the individual a stake in his country, thus increasing his patriotism
and his interest in government and national affairs. James T. Buckley, a
dissenting member of the Massachusetts Commission, argues that:
“Assurance through a pension, contributory or otherwise, that one’s
last days would be spent in peace and comfort, with no fear of poverty
and want, would have a strengthening influence upon the individual,
enabling him to go to his daily task with a calm and contented mind,
and would tend to increase ‘the sense of personal responsibility and
independence.’”[234]
“A pension in old age,” declared also John Metcalfe, “would be no
small gain and certainly a most conservative measure to give the
expression ‘my country’ some little material meaning, even if that
tangible something was but the security that after 65 years of
individual struggling with the tasks of life, the state provided a
small pension for every man and woman in the land. It would be no
small gain if this measure led the men and women to look out on life
with more hope and on national and commercial affairs as something
which affected them personally, and in which they should take a deep
interest.”[235]
(5) A pension to be secured in old age would encourage thrift and
savings. As the pension alone is rarely sufficient to cover all the
needs, the wage-earners would make an effort to lay aside whatever
possible, so that their savings together with the annuity would assure
them of a minimum of comfort. The fact that they can never save
sufficiently to provide for old age is, perhaps, the greatest deterrent
factor which prevents people who could afford to do so from saving the
little they can. When there is assurance, however, that one’s last days
would be spent in peace and some comfort with no fear of want and the
poorhouse, it would have an encouraging influence tending to cause most
persons to make some provision for the future. Says Mr. Metcalfe:
“The principle which underlies the habit of saving, in my opinion, is
exactly the same as that which induces a hen to lay its egg where
there is at least one egg already—what I will call the principle of
the nest egg—and that just as you induce a hen to lay its egg where
you have placed one egg you would induce the artisan and labourer to
begin to put something by from his earnings by providing him with a
certain small sum in the shape of a pension for old age.”[236]
Indeed, the savings accumulations of the countries which have adopted
this system of pensions such as Denmark, Great Britain, New Zealand,
etc., seem to bear out this contention.
(6) Pensions in old age would keep families intact. They would increase
filial affection and respect for parents. What we respect and venerate
in the aged is not old age as such, but the superiority in judgment,
experience and independence of means. And one of the principle reasons
why the aged in modern society, especially as found among the lower paid
wage-earning classes, are less esteemed, is, doubtless, because the aged
wage-earner instead of having steadily improved his position is
compelled to steadily give way to younger men. Unable to earn a living
wage, in his regular employment, he is compelled to do the work that
needs little mental and physical labour. This generally means accepting
employment of a menial nature. In this work he naturally loses his own
self-respect, and once that is lost, the loss of respect for him on the
part of his fellowmen and even of his own relations follows soon. A
pension in old age would not only protect his independence and respect,
but also would very often make him a welcome addition to the family of
the son or daughter, where without it he would be a burden.
(7) A non-contributory pension system is unquestionably the most
feasible plan to be suggested at the present time for the United States.
The Massachusetts experiment has shown how futile and inadequate
voluntary insurance systems are in this country. As most of our social
legislation was first originated in the States and only later on
followed by national legislation, a system of compulsory insurance by
the individual States would, under our conditions of free labour
migration and mobility, necessitate an expenditure upon the accounting
and recording of statistics, an essential to the compulsory-contributory
principles, which would make it almost prohibitive from consideration.
ARGUMENTS AGAINST NON-CONTRIBUTORY PENSIONS
The Massachusetts Commission on Old Age Pensions, Annuities and
Insurance, brought the chief arguments against a non-contributory
pension plan for the United States in its report of 1810. The Commission
concluded that: “The adoption of any scheme of non-contributory pensions
in Massachusetts, or in any other American state, seems inadvisable and
impracticable.” The reasons given against this plan by the Commission
and other critics are as follows:
(1) The heavy expense involved in such a plan. The Commission estimated
that for Massachusetts to pay a pension of $200 per year or four dollars
per week for half the population 70 years of age and over, would cost
that State not less than $10,000,000 per year. The cost would, of
course, be greatly increased if the pensionable age is set at 65.
While this is true it must be remembered that a great deal of this cost
is already being paid by the citizens at present through the different
charitable and philanthropic agencies, as well as public poor relief. To
a considerable extent, therefore, the cost of the pension would be met
by savings on the present expenditures of public and private
philanthropy.
Indeed, according to Prof. Woodbury,[237] the proportion of paupers over
70 years of age in England fell from 23 per cent. of the population of
this age in 1805 to 18.6 per cent. in 1810, one year after pensions
began to be paid. After the 1811 amendment, which entitled persons
receiving poor relief to pensions, the number of those 70 years of age
and over who were given outdoor relief in England decreased from 138,323
persons in January, 1810, to only 8,563 in January, 1813, a decrease of
84.6 per cent. The number of indoor paupers also showed a decrease of
18.8 per cent. from 1806 to 1812. The cost of outdoor relief in 1810
dropped from 11¼ to 7½ pence per head of population. In New Zealand,
also, the expense per capita of the population on poor relief fell 10.5
per cent. from 1888 to 1801 as a result of a grant of 11,000 pensions.
Moreover, as is advanced by a dissenting member of the Massachusetts
Commission, the argument of heavy expense:
“is fallacious, for the ultimate expense of any given project is the
same, whether that cost be levied directly upon those who are to
benefit by the scheme, as in the proposed contributory scheme, or
indirectly upon the same beneficiaries through the medium of the State
tax.”[238] Again Dr. Rubinow justifies the increased cost on the
ground that: “when an institution is to be established, first its
necessity, its usefulness, or harmfulness must be considered, and only
then the question of ways and means comes into the foreground.”[239]
(2) Straight pensions, it is contended, is class legislation, as they
tax the rich for the benefit of the poor. “There is no real ground for
the assertion that because an industrious man has failed to earn a
sufficiency, he has a right to be rewarded for his industry out of the
proceeds of a tax levied upon his neighbours, to whom he has rendered no
service, or none which has not been paid for in wages.”[240]
(3) Gratuitous governmental pensions, some argue, would destroy the
habit of thrift, as it would lessen the sense of personal responsibility
and independence. The ultimate test of a pension system, it is
contended, is not the degree of comfort and security bestowed upon the
aged poor but its effect upon the character and self-dependence of the
workers. A pension to all, it is claimed, puts no premium upon thrift
and would only demoralize the class it is intended to help. This case is
stated by a leading opponent of social insurance in this country as
follows:
“It (gratuitous pensions) will undermine and tend to destroy the
self-respecting character of our people as citizens of a democracy
where economic independence achieved by individual efforts,
self-sacrifice and self-denial, is, after all, the only aim worth
while. However much we may be inclined to permit ourselves to be
deceived by specious arguments of guesswork philanthropy into
believing the gift is to help the recipient and not to hinder, such
gifts, with rare exceptions, are opposed to principles of
character-building and of a character-maintenance throughout all the
years which constitute the span of human life.... Hold out the
prospect that such effort is not necessary, that earnings may be
squandered for a thousand and one needless purposes, that restraint
upon family expenditures is not required, and the most powerful
incentive which makes for character and growth in a democracy is taken
away.”[241]
President A. T. Hadley, of Yale University, also stated:
“We need measures which shall increase individual responsibility
rather than diminish it; measures which shall give us more
self-reliance and less reliance on society as a whole. We cannot
afford to countenance a system of morals or law which justifies the
individual in looking to the community rather than to himself for
support in age or infirmity.”[242]
The moral level upon which the above arguments are based is obvious.
These critics who display so much apprehension of undermining the much
talked of habit of thrift with which every working man is supposed to be
endowed, ignore the fact that the great majority of the people who reach
old age and who qualify for pensions in the countries having pension
systems, is in itself sufficient evidence that there was either no habit
of thrift to be destroyed, or that the conditions of the wages were so
low that savings were impossible, as was conclusively shown in a
previous chapter. Where was the thrift habit of the 58.8 per cent. of
the aged 70 and over who in 1812, when pensions began to be paid out,
qualified for pensions in England and Wales; the 68.4 per cent. who
qualified in Ireland; the 34 per cent. in rich Australia and New
Zealand; the estimated 16 to 26 per cent. in prosperous Germany; the 35
per cent. in thrifty Denmark, and the 50 per cent. of the aged who
qualified for pensions in the land of the most thrifty of peoples,
France? It is preposterous to contend that the habit of thrift can be
destroyed by a pension, which at best, is hardly sufficient to keep body
and soul together—paid at the remote and uncertain possibility of
attaining old age. On the contrary, it would doubtless prove an
incentive to saving, as the pension allowance meeting only the bare
necessities would enable a person with a little savings to spend his
declining days in comfort. The Wisconsin Industrial Commission, in its
report of 1815, points out that non-contributory pensions do not
discourage savings and cites the example of Denmark, which was the first
to establish such a system, and where after twenty years of experience
the number of applicants for old-age pensions shows a tendency to
decrease rather than the contrary, so that it cannot be said habits of
thrift have declined.
“I have found in Denmark that the people who had most right to speak
with authority on the subject maintain that the law has not acted in a
way detrimental to thrift. The Inspector General of the Sick Relief
Funds holds that they are more thrifty.” (Miss Seller’s evidence
before Aged Pensioners Committee, 1803, p 5).[243] “Whether we take
Germany, Australia or Denmark, the answer is the same. Thrift, instead
of vanishing before old age pensions, has actually increased. There
has been more money placed in the German Savings Banks since
1881.”[244]
The Australian Royal Commission, in its report of 1807, concluded that
“The question as to whether thrift is discouraged by old age pensions
has been inquired into by your Commissioners, and they have arrived at
the conclusion that the fact of a necessitous person being entitled to a
pension of 10s. a week at the age of 65 years will not have any
appreciable influence on saving habits at an earlier age.”
Mr. Miles M. Dawson, is quoted as saying: “I think there has been an
error about pensions checking the savings. In any country where it has
been adopted, in Denmark, Great Britain, New Zealand, etc., the amount
of savings has been continually enlarging.[245]
In an article in the Survey[246] Dr. Rubinow very skilfully inquires:
“What other explanation can there be for this over-emphasis of the
virtue of thrift, unless it be the old ascetic principle that there is
virtue in practicing self-denial, in getting along without things
which we need? Humanity’s progress is based upon efforts to get things
which man wants. Has all human progress been immoral?
“Whose morals suffer therefrom? Even the unworthy old man or woman
over 70 is a weak, dependent, often decrepit, and helpless person
whose immorality represents no danger to society, and who cannot be
permitted to starve or freeze on the streets, if we are to protect our
own moral nature from destruction. And as far as the young men and
women are concerned, their conformance or non-conformance to the
recognized moral precepts will scarcely be influenced by the chance of
getting an old-age pension at seventy. Whether it be the hope of
rewards, or the fear of punishment that must be relied upon to raise
the moral level, either seems too remote and problematic. When the
fear of eternal damnation fails, the hope of five shillings per week
in the dim and uncertain future can scarcely succeed any better....
“Why do we continue to worry so much about the morals of the working
class, disregarding the fact that if freedom from anxiety as to the
future must be demoralizing there is a perceptible element in society
outside of the working classes free from such worries?
“Why can we not recognize the fact that the wage-worker does not, will
not, cannot be guided in his existence by the fear of what will happen
to him after seventy, if he lives so long? We shall fail to make
headway in our social insurance efforts until we are able to recognize
these obvious inevitable facts.
“And if it be true that the morals of the working class need reform as
much as the economic conditions of its existence, by all means let us
think of some more effective pedagogical method than the threat of
contingent punishment postponed until a day when moral regeneration is
both impossible and useless.”
(4) Non-contributory pensions would lower wages. This argument is based
upon the following assumptions: (a) Because of the direct competition of
the pensioned employé. (b) The prospect of a pension in future years
would lead workers to accept lower wages than they would otherwise be
disposed to demand. This, it is claimed, is the case in some of the
industries where pensions are now established. (c) It would encourage
undesirable immigration, as it would invite immigrants from outside the
state, and thus depress the wage rates by over-crowding the labour
market. The fallacy of the first of these objections has already been
pointed out in another place, where it was shown that the number of
people still able to do work at the age when pensions are given is very
insignificant. These men at 65 and 70 years of age are hardly a factor
in the labour market. Moreover, this argument, if true, would apply
equally as well to any form of savings or even to contributions from
children. It is evident that a man with no income whatsoever is a more
dangerous competitor in the labour market than the man with some means
of support. The second argument is obviously far fetched. It requires
considerable imagination to conceive the idea that the prospect of a
very meagre assistance in their old age would alone be sufficient to
make wage-earners work for lower wages. It is known to all students and
government experts that the wage rates paid, at the present time, do not
take into consideration any savings and bear no relation to necessary
unemployment due to invalidity and old age. While there is some truth in
the contention that in the industries having regular pension systems the
wage rates of certain classes of workers—especially those past their
middle age—may be lower than in other industries not having such
systems, it is because there is an incentive to work in the one
particular industry over the others which have no such benefits. A state
or nation-wide pension system would in the very nature of such a plan
eliminate this objection. As to the third contention of encouraging
immigration it is not borne out by the facts in the countries where such
systems are in operation. Long terms of residence within the state are
required everywhere, and immigration, as is well-known, is not popular
with men past middle age. That a small pension given when reaching old
age would hardly be a sufficient inducement to young immigrants, is
self-evident.
(5) Straight pensions, concluded the Massachusetts Commission, would
have a disintegrating effect upon the family. “A non-contributory
pension system would take away, in part, the filial obligation for the
support of aged parents, which is a main bond of family solidarity. It
would strike at one of the forces that have created the self-supporting,
self-respecting American family. The impairment of family solidarity is
one of the most serious consequences to be apprehended from an
experiment with non-contributory pensions.”[247]
Mr. A. M. Huddell, in presenting a dissenting opinion upon this point
states:
“The facts that are before us as to the influence of pensions on the
American family have either been entirely overlooked or misconstrued
by the majority of the commissioners. We have before us the pensions
of the veterans of the Civil War, their widows and orphans, and I fail
to find the evidence that warrants any statement to the effect that
this pension by the United States Government has disintegrated the
family, or lessened ‘the filial obligations’ for the support of the
aged parents; or has in any way impaired the family solidarity. On the
contrary, the pensions to the veterans of the Civil War have built up
the American family, and the filial obligations of the family have
been strengthened and its solidarity maintained. An old person living
with a married son or daughter that is striving to bring up a family
and provide for them as an American family should be provided for, and
give to the children a proper education, can find a place for the old
veteran or his widow who receives a pension from the Government in the
family, because they do not take away from the family any of the
necessities of life, or stop in any way the education of the children.
At the same time, the independence of the veteran or his widow is
maintained, because they have enough to pay for their needs at that
period of life.... With this pension the old veteran and his widow are
made comfortable in their old age by living with their children, their
friends, or in homes where they are paying their own way, and have a
feeling of independence that old people should have. They know they
are not taking away from the family any of the necessaries of life, or
hampering the education of the children through any expense of their
own support. Any extra expense in the workman’s family directly
affects the education of the child, compelling him to leave school and
seek employment to help maintain the family.”[248]
The same argument is also answered by Mr. L. W. Squier as follows:
“Fortunately or unfortunately, according to the standpoint of religion
and economics from which one views the matter, we Americans have not
that conception of the family as the unit of society, as the Oriental
in all his religious and economic training. In China and Japan it is
rare to find any individual in want about sixty years of age, who has
not some relative, no matter how remote, whose ethics and religion
command him to make a place in his home for the indigent one, and
provide for him as if he were a member of his own immediate family.
Almshouses, private indoor or outdoor relief, for the old, are hardly
known in these Oriental lands, where high ethical regard for the aged
is instilled in the individual’s common mind from infancy.
Unfortunately, however, in this country no such esteem for the aged
prevails except among his near relatives and especially in
agricultural communities. In our manufacturing centres especially, the
helpless, destitute grandfather or grandmother is regarded as a
distinct burden to the household, the carrying of which oftentimes
forces the children out of school and into the streets, factories, or
shops, in order to provide for the added increment to the household
expenses which the taking on of an aged relative, no matter how near
he may be to the immediate family, entails.”[249]
Dr. Rubinow answers it this way:
“There is a good, old-fashioned atavistic nobility of sentiment about
this argument which will greatly please all good men and women except
those who have to be supported by their children, and those who have
to support their parents and also their own families on a
wage-earner’s budget. Scientifically the argument is certainly
original, because it assumes the basis of the family to be the support
of the older generation by the younger, while it has always been
fairly well agreed upon by all students of society that the shoe was
on the other foot, and that the care of the children by the parents
was the proper function of family. It further seems to assume that we
love our burdens, and that when parents cease being burdens the
children cease loving them.
“It assumes that the standing of a superannuated parent in a family is
in an inverse proportion to the amount he is able to contribute to the
family budget. It is an appeal to an ideal of patriarchal family which
has been dead for a century in every industrial country, and which
really never had any strong hold upon American life. Of course, its
inapplicability to the aged single man or the aged spinster aunt will
be evident. For it certainly cannot be claimed that the support of all
spinster aunts is also a fundamental principle of American family
solidarity. Then again even married people may not have any children,
or may have lost them. One must remember that New England was
practicing race suicide long before the term ever became popular. As a
matter of fact, the very data gathered by the Commission shows that of
the inmates of almshouses and benevolent homes over twenty-five per
cent. were single and of those receiving outdoor relief fifteen per
cent.
“Furthermore, these data also show how these almshouses and homes do
break down the solidarity of the American family. Of their inmates
forty-two per cent. had adult children living at time of entrance, of
the several thousand pensioners receiving outdoor relief, sixty per
cent. had adult children at the time of investigation, and fifty-nine
per cent. other near relatives. It is really surprising that the
Commission did not recommend discontinuance of aid, both institutional
and outdoor, because of the demoralizing effect upon said children and
relatives.
“However, the same table which conveys the information just quoted
shows that while there were children in some 60 per cent., in only 22
per cent. were they able to render aid; that this proportion was only
some 10 per cent. in case of the inmates of homes, and about 50 per
cent. in case of persons receiving outdoor relief. Moreover, it
appears from another table that some 40 per cent. were receiving aid
from children or relatives, as outdoor relief is seldom
bountiful.”[250]
From the investigations of the Pennsylvania Commission on Old Age
Pensions it was disclosed that in the case of inmates of both almshouse
and benevolent institutions over sixty-five and a half per cent. had no
children living. Of the aged applicants for relief, about forty per
cent. had no children, and among the general aged population, although
the percentage of those having no children at all was little more than
10 per cent., only 24 per cent. of the aged were actually supported by
children, while 43 per cent. had no other sources of income.
(6) Straight pensions are objected to also because they resemble charity
much more than a system of insurance in which the worker makes a
contribution. This, however, depends largely upon public opinion.
Considered in the light of deferred real wages instead of poor relief,
the receipt of a pension would not involve any degrading effect.
Professor Coman, an opponent of the straight pension system, stated[251]
that in her investigation of the Danish old age pension system every
Dane interrogated—from tax-payer to administrator—as to whether the
pension was merely a new form of poor relief answered “No.” In Great
Britain also it is declared old age pensions are not looked upon as poor
relief but as an annuity due them from the government.
(7) Non-contributory pensions by the state, argues the Massachusetts
Commission, will result in “mischievous political effects. It would open
the door to political favouritism of various sorts.” William H. Lackey
contends that “Such a question would infallibly pass into the
competitions of party warfare. It would become in most constituencies
one of the most prominent of electioneering tests. Rival candidates
would be competing for the vote of a wage-earning electorate who had a
direct pecuniary interest in increasing or extending pensions and in
realizing the conditions on which they are given. Can it be doubted that
in many cases their first objective would be to outbid another, and that
national and party politics would soon be forced into a demoralizing
race of extravagance?”[252] These apprehensions of the Massachusetts
Commission and Mr. Lackey have so far, however, not been realized in the
countries that have established such systems. Even critics of these
schemes have so far made no contentions that party politics has
deteriorated or been affected considerably by the pension plans.
(8) The constitutionality of a non-contributory scheme is also
questioned by the Massachusetts Commission. Strangely enough, however,
it admits that firemen, policemen and teachers who “are not only
rendering peculiarly hazardous meritorious services to society, but also
have deprived themselves of the full opportunity of earning the largest
returns for their services in a competitive way ... have some claim upon
the State for special consideration in the matter of public support in
old age. This claim, however, cannot exist in the case of persons
employed in the ordinary competitive callings.” The fallacious reasoning
of the Commission at this point is self-evident. Surely, those who toil
in the bowels of the earth mining coal for the industries of the nation,
those who bring the milk to the babies in the city, and those who
provide us with food, clothing, shelter, and other necessities are just
as essential to the public welfare as the classes enumerated by the
Commission!
The basis of the Massachusetts Commission’s opposition to the
non-contributory system is summed up in its concluding paragraph as
follows:
“A non-contributory pension system is simply a counsel of despair. If
such a scheme be defensible or excusable in this country, then the
whole economic and social system is a failure. The adoption of such a
policy would be a confession of its breakdown. To contend that it is
necessary to take this course is to assume that members of the working
class either cannot earn enough, or cannot save enough, to take care
of themselves in old age. If that be true, then American democracy is
in a state of decay which no system of public doles could possibly
arrest, but would rather hasten.”[253]
While the premises of the Commission are evidently true, as was shown
conclusively in the earlier chapters of this book, it does not
necessarily follow that its conclusions are logical. Woe to the patient
whose physician upon diagnosing his illness throws up his hands in
despair and rather than operate or admit the origin of the illness
permits him to die, because he had discovered that the cause is a real
one and not an imaginary one!
IV. THE CASE FOR AND AGAINST UNIVERSAL PENSIONS
In any discussion of the merits of the compulsory-contributory or
non-contributory pension systems, the question whether it should apply
universally or only to a partial extent is always to be taken into
consideration. As compared with the present policy of poor relief, a
universal pension plan means a complete reversal of this method. It is
based no longer upon the theory of relief of destitution only. It aims
to extend pensions without any conditions to all, or almost all, the
aged above a certain age. The funds are to be drawn from the common
purse. This would necessarily involve a steady increase in both the
number of persons and cost and would, as stated by Sir Charles Booth,
mean that “The policy of doing so is the opposite of that adopted in
savage states, where the old, when incapable, are knocked on the head.”
No such complete system, however, is as yet in operation anywhere. The
principle of partial insurance or pensions is, as was pointed out
before, established now in many countries. Pensions as established now
by foreign countries are given only to men and women belonging to
certain wage groups or to persons having fulfilled certain specified
requirements.
The universal principle is advanced principally because, it is argued,
if pensions were offered to all aged persons, it would remove entirely
the savour of dependency or pauperism. Charles Booth, the foremost
advocate of universal pensions in Great Britain, presented the case for
such a system as follows:
“The idea in the minds of those who think that poverty and desert
should be the conditions of relief, tend rather to an elaboration of
the Poor Law, which by classifying those who ask its aid and varying
the awards, shall make them as often a mark of merit as a stigma of
disgrace. I must confess that this, to me, appears an impossible
ideal. I can imagine no court of inquiry that could be trusted. I
believe that the selected poor who receive pensions or were provided
for in almshouses, to which only their poverty and their good conduct
entitled them, would still be considered and consider themselves
paupers, by whatever name they might be called. If to obtain a
certificate of merit involved a searching inquiry into the past life
of each applicant, it would, I believe, be strongly resented and most
of all by the most worthy. Even the simplest form such an inquiry
could take, limiting itself to proof of thrift, would be
unsatisfactory, as the best proof of thrift would always lie in having
no need to apply.
Mr. Booth further argues:
“Indoor relief lacks humanity and outdoor encourages improvidence. We
are therefore justified in seeking some better plan. Pensions at 65
are suggested, to be acquired voluntarily with state aid. But to be
effectual, the system must be universal, or the improvident would
still trust to the rates (outdoor relief), and their treatment
unceasingly oscillate between foolish kindness and unpopular severity.
If the system is to be universal, it must be compulsory; and if
compulsory, its cost, however collected, is taxation. Moreover, to be
satisfactory, the system must apply to the old of our own time. We
shall not tax ourselves for a benefit only to be realized after 40
years have passed. But if this system is to be universal, and to apply
to our own old people, the forms of insurance become absurd. Why
ear-mark the payments and accumulate funds at all? It is not insurance
we require but the endowment of old age.”[254]
In another connection he states:
“Benefits which all may enjoy carry with them no slur. Educational
endowments as enjoyed by the rich, free elementary education as
bestowed upon the poorer classes, the facilities offered by free
libraries etc., are cases in point. Pensions open to all and paid for
out of taxation would have nothing, either morally or economically, in
common with pauperism.”[255]
And again: “No other plan of selection is possible except at sacrifice
of independence. To select the poor is to pauperize, to select the
deserving is to patronize. To do either is to humiliate.”[256]
In favour of the universal plan is also urged its simplicity and
cheapness of administration. This system requires no complicated or
troublesome conditions of eligibility, nor does it entail many details.
Many of the objections to the universal plan have already been stated in
the discussions of the compulsory and non-contributory systems. What has
been brought against the former systems may be applied equally well, and
even more justly to the universal scheme. Additional objections may be
summed up as follows:
(1) Its increased cost. A universal scheme is obviously the most costly
of all pension systems, and, to give a pension to all people—well-to-do
and wealthy who do not need them—is a waste of money.
(2) There are also objections against the giving of pensions
indiscriminately to undeserving persons such as criminals or paupers.
“The inclusion of criminals and paupers within the pensionable
population is indefensible on any ground of individual desert or public
policy. Such persons clearly have no claim to a pension, whatsoever may
be true of the deserving and respectable aged poor. Moreover, the policy
of pensioning the industrious and thriftless, the sober and the
intemperate, the deserving and the undeserving, indiscriminately, would
be in the highest degree pauperizing and demoralizing. It would put a
premium upon thriftlessness and dependency.”[257]
(3) Any such state-wide scheme has no finality to it. Once embarked upon
this venture, there would always be the agitation and temptation to
reduce the age of pensioning and increase the pension amounts.
(4) Under a universal scheme there would be even less means of
preventing fraud and imposition. This, it is pointed out, is continually
taking place in army pensions.
(5) The pensioner may dissipate his income on the day when it is paid.
The pension would benefit little those who are too old or infirm to live
alone and must reside in institutions.
(6) No country has as yet embarked upon such a broad pension plan.
CHAPTER XII
THE PENSION MOVEMENT IN THE UNITED STATES
The movement for the inauguration of a definite and constructive social
policy in regard to the superannuated workers in the U. S. is of
comparatively recent origin. Aside from military and municipal pensions,
government insurance or pensions in old age are not known in this
country. Indeed, while in England legislative committees were seeking a
solution for the problem of old age as early as the beginning of the
18th century, the first study of conditions of the aged in this country,
authorized by a State Legislature, was not made until almost a century
later. The first such study in the U. S. was authorized by the
Massachusetts Legislature in 1807. Furthermore, while practically every
government in Europe has now in operation a definite system of old age
protection which has, in some countries, been in existence for many
years, legislative solution of the problem of old age dependency in this
country seems, as yet, so distant that it is almost considered an
utopian ideal.
Although much more consideration has been given this problem by the
different industrial organizations, who are confronted by it as a
pressing economic problem, it is surprising to note that even in this
field the movement has spread largely within the last decade. As was
pointed out in an earlier chapter, the railroad concerns were the first
to establish retirement systems; but prior to the present century there
was practically only one railroad in the U. S.—the Baltimore and
Ohio—that had inaugurated a pension plan for its aged employés. It is
very likely that more than three-fourths of the pension systems of
industrial concerns now in operation, did not begin to appear until the
last decade. In 1810, L. W. Squier upon sending out over 1,000 letters
of inquiry to the largest employers of labour in the country, found only
28 systems of old age pensions of one kind or another in existence at
that time. The Massachusetts Commission in the same year found only four
firms with regular pension systems in that State. In 1818, also, the
Pennsylvania Commission in canvassing all concerns in that State
employing 500 and more workers, found only about 20 such concerns,
exclusive of railroads, having a regularly established pension fund.
Half of these, however, were not Pennsylvania concerns, but national in
scope, such as the packing houses, International Harvester Company, etc.
A thorough canvass made by the New York Merchants’ Association in 1820,
revealed only 142 regular systems throughout the country. The negligible
number of employés in the receipt of such pensions has been already
pointed out. Similarly, the scanty protection against old age afforded
the working masses, by means of municipal pensions, fraternal and trade
union insurance has also been shown in earlier chapters.
Although, from a pragmatic viewpoint there is little to point to
tangible achievements along the line of old age insurance or pensions in
the United States, the first steps towards a definite policy in regard
to this problem have, nevertheless, been made within the last fifteen
years—especially during the decade preceding our entrance into the
European war. During that period a remarkable interest in this problem
was displayed not only by numerous industrial concerns, business and
commercial groups, and students of social insurance, but the first steps
towards active governmental participation were actually taken by the
appointment of a number of State Commissions to study this problem,
through the endorsement of this movement by many high Federal and State
officials, by the introduction of a number of bills in Congress
providing for such pensions and by the actual adoption of a straight
pension plan in the State of Arizona, the establishment of a savings
bank system in the State of Massachusetts, and selling of insurance by
the State of Wisconsin. The State Commissions, together with the pioneer
students and advocates of social insurance in the United States, have,
during the last fifteen years, created a formidable and exhaustive
literature upon the subject, which at least takes these discussions out
of the realm of speculation and ignorant controversy and places the
entire problem upon a sound basis of fact and knowledge of conditions as
they prevail in the United States.
As in the case of most social legislation, Massachusetts was the pioneer
in providing some legislation in regard to the aged. Its savings bank
system was authorized by the State Legislature in 1807. Under this
insurance system the following forms of insurance are offered to
residents of the Commonwealth of Massachusetts, or persons regularly
employed therein: (1) Straight Life Insurance; (2) Twenty Payment Life
Insurance; (3) Twenty Year Endowment Insurance; (4) Old Age Annuities;
(5) Combination Insurance and Annuities and (6) Immediate Annuities. The
maximum life insurance policy written is $4,000 and the maximum annuity
cannot be for more than $800 per year.
The expenses involved in the administration of the savings bank
insurance are borne largely by the State. In order to reduce the
expenses involved in this form of insurance, banks are not permitted to
employ paid solicitors or house-to-house collectors of insurance
premiums. In addition, dividends to stockholders are also eliminated. As
a result of this, it is claimed that savings banks are able to offer
insurance at considerably lower rates than the rates formerly charged by
commercial companies. In addition, every policy holder at the end of
each year receives a check from the bank representing his share of the
net profits of the business. The different insurance banks have agencies
in large manufacturing and commercial establishments, people’s
institutes, social settlements and trade unions.
In 1807 the Massachusetts Legislature also adopted a resolution
providing for: “an investigation and report relative to the adoption of
a system of old age insurance and pensions.” A Commission on Old Age
Pensions, Annuities, and Insurance was then appointed which, after
bringing in a preliminary report, was extended and given a larger
appropriation, and in 1810 brought out a very comprehensive report. This
was the first report of its kind to bring out exceedingly valuable
information in regard to the actual conditions of the aged in the United
States as well as valuable summaries of the European pension plans.
For five years the Massachusetts Report remained practically the only
official report in this country which dealt exhaustively with the
subject of old age dependency. The Massachusetts Commission declared
itself against straight governmental old age pensions, on the ground
that any such legislation whether on the subject of old age pensions or
insurance, would be premature at that time. Its arguments against
non-contributory pensions have already been presented in the preceding
chapter. In regard to compulsory insurance the majority of the
Commission declared:
“The adoption of any scheme of insurance in this State appears to be
inexpedient at the present time. The practical objections to the
principle of compulsion are weighty. The idea itself is essentially
distasteful to Americans. In England it was abandoned as quite out of
question, in view of the prejudice against compulsion. In this
Commonwealth this practical objection is reinforced by constitutional
difficulties. In view of these conditions, it would be futile to
recommend any compulsory insurance system at this time. Whatever the
outcome of American experiments with social insurance may be, whether
in the direction of the final establishment of compulsory systems, or
the extension of voluntary schemes, the introduction of the former can
hardly be seriously considered now. In any event, long training in the
development of voluntary insurance agencies seems desirable, to
furnish the preparation and foundation of any scheme of State
insurance, if such should be found ultimately necessary and desirable.
“It is conceivable, however, that the final solution of the problem of
old age insurance may be found in some system of obligatory State
insurance.”[258]
On the other hand, Mr. Arthur M. Huddell, one of the dissenting members
of the Commission concluded:
“I am convinced that the fact of being compelled to live in the
poorhouse or dependent upon private charity in old age has a more
degrading influence on character than anything else, and should be
eliminated from among working people. A non-contributory pension
system would stimulate the citizen and help to build up his character.
It would not discourage thrift, as the man who has an opportunity is
only too eager to save, and he would strive to save over the long road
of life to the pensionable age, so as to provide for the breakdowns by
sickness or disease that every man fears.
“The thrift habit is hard to build up among the poorer class of people
because they do not earn money enough to make even a beginning.”[259]
The Massachusetts Commission also declared that it found in
Massachusetts “no alarming amount of old age destitution.” It contended:
“If any general system of old age pensions is to be established in this
country, this should be undertaken by the National Congress.”
In 1815, the Industrial Commission of Wisconsin brought out a concise
and able report on old age pensions, though less comprehensive on its
informational side. The Commission, besides presenting the pension
systems abroad, also conducted an investigation regarding the status of
the aged population in Wisconsin. Although the Commission stated that
“the present report is not to be taken as an endorsement of any plan or
scheme of old age pensions, but rather a suggestive advocacy of
legislation, favourable to the idea,” the Commission did present
definite plans for old age relief, which combined both the straight
pension and the voluntary insurance scheme. Its plan for a straight
annuity provided for the granting of a pension at the age of 65, or 60
years if permanently incapacitated, to U. S. citizens after they had
resided ten years in Wisconsin. Before a person could qualify for this
pension the plan also stipulated that he must be of good moral character
and that he did not have property above debts, valued at more than $500,
exclusive of a homestead, nor more than $2,000 inclusive of a homestead.
The applicant could have also no income more than $300 per annum if
married, nor more than $200 if single. The amount of pension was
proposed to be “such a sum which, when added to the applicant’s other
means of support, from whatever source derived, will suffice for the
reasonable comfort and well-being of the applicant, but no pension shall
exceed the sum of $150 per annum per each person.” In order to raise the
necessary fund the Commission suggested that one-half of it be furnished
by the State and the other half by the county. The State’s quota, it was
proposed, “should be raised by a special poll tax of $1.50 per annum,
upon all citizens of the State between the ages of 20 and 60.” The
Commission also proposed a State Insurance system which would sell old
age insurance on weekly or monthly premiums and should offer insurance
to trade unions, fraternal organizations and employers of labour. The
administrative expense of the fund, it was suggested, should be borne by
the State.
In 1817, the Ohio Legislature created a Commission on Health and Old Age
Insurance, which made an extensive report on Old Age Pensions, giving a
great deal of data on the conditions of the aged in Ohio, the conditions
of the inmates of county infirmaries and a description of the general
condition of these institutions. In addition, there is some discussion
of the European pension systems. The Commission’s final recommendations
were as follows:
“I. The State should provide for the payment of a weekly pension not
exceeding $5.00 per week to all persons 65 years of age, but the
combined pension and income of any such person shall not exceed $350
annually.
II. The following shall be excluded:
1. Aliens and persons who have been citizens for less than 15 years.
2. Persons who have not been residents of the State for 15 years.
3. Persons convicted of a penitentiary offense, within 10 years.
4. Persons who have disposed of any property in order to qualify for
a pension.
5. Tramps and professional paupers.
III. A voluntary system should be established and administered at the
expense of the State so that individuals may purchase annuities not to
exceed $10 a week by regular payments or by lump sum purchase.
IV. A person 65 years of age or over who qualifies for a pension, but
does not take his pension until later, should receive the deferred
pension, computed from the date of qualification as an annuity when he
does go on the pension roll. Such deferred pension shall not be
considered in determining the amount of income in Section I.
V. The property in excess of $100 of any person who receives an old
age pension shall, upon the death of such person, be transferred to
the State for disposal and from the proceeds thereof shall be deducted
the amount which has been paid to the pensioner. Any residue shall
then be paid to the lawful heirs.
VI. The old age pension system should be administered by a State Board
of Pensioners, consisting of three members.
VII. A County Board of Welfare should be created to combine all of the
welfare work of the county, including administration of old age
pensions, mothers’ pensions and blind pensions. The board should be
unpaid and should employ a county welfare director selected from a
civil service list without regard to residence or political
consideration.”
Shortly after the appointment of the Ohio Commission, the Pennsylvania
Legislature also created a Commission to Investigate Old Age Pensions.
This Commission because of its very limited appropriation and short
period of work could not arrive at definite recommendations. It
therefore asked the Legislature to extend its life for a longer period.
It brought out, however, in 1818 a very comprehensive report upon the
subject. The Pennsylvania Commission’s investigations of the aged in
that State covered a wider scope and included phases not previously
dealt with by any of its predecessors. It made exhaustive studies of the
dependents in county poorhouses, private benevolent homes, and aged
persons who resided in their own homes. It also made a study of the
moral and financial conditions, as well as the general management of
Pennsylvania almshouses. In addition, the report contains a summary of a
great many pension schemes for old age protection as operated in foreign
countries. The Commission summarizes its findings in that State as
follows:
“Aside from the aged dependents found in almshouses, benevolent or
fraternal homes, and those receiving public or private relief there is
a considerable proportion (43 per cent.) of the aged population 50
years of age and over, in the State, who, when reaching old age have
no other means of support, except their own earnings. Only a small
percentage (38 per cent.) of the general aged population in the State
claim to possess personal property of their own. This would indicate
clearly that many of these aged folk—when their power of earning is
steadily declining with advancing years—will fall dependent, in many
cases through no fault of their own, either upon the State or upon
private charity. The investigations also show that in most of the
industries in our State, many workers become unfit before reaching the
age of 50, with the inevitable result of steadily decreasing earnings.
In certain industries, like that of the railroads, for instance, it
appears that more than half of the workers become impaired before
their 50th birthday. It is also shown that when the prime of life has
passed, many Pennsylvanians are compelled to change their occupations,
which ordinarily involves a decline in wages. This decline, with the
majority of aged people, appears to be due entirely to sickness and
enfeebled age. The increasing problem of old age stands out even more
significantly when it is remembered that while the earning power of
most wage-workers is steadily decreasing, after a certain period of
age has been attained, the expenditures on food and rents, even under
normal price conditions, remain the same, while that on medicine is
steadily increasing. The investigations also disclose that as far as
Pennsylvania is concerned, the problem of support of the aged is
largely a native problem, rather than an imported one. The immigrant
paupers all claim to have had a long term of residence in both the
United States and Pennsylvania.
“Regarding the aged paupers and the non-dependent aged classes, the
outstanding differences lie, it would appear, in the respective family
connections and physical conditions. In the almshouses pauper group,
40 per cent. were found to be single, 38 per cent. widowed, and only
16.8 per cent. married. Among the inmates of benevolent homes for the
aged, the percentages were 30.1 single; 58.3 widowed; and only 7.8
married. More than 65 per cent. of both of these groups had no
children living and of those that had children, more than 80 per cent.
were reported unable to help support. On the other hand, among the
non-dependent aged, only 5.4 per cent. were found to be single, 38.2
were widowed, while 55.1 per cent. were married and still living
together. Only 10.6 per cent. of the latter group had no children
living. Again, of the paupers nearly 80 per cent. had never possessed
any property, while the percentage of the propertyless among the
non-dependent aged, was 62 per cent. With regard to the physical
condition, it is also shown that while 64 per cent. of the aged
persons residing in their own homes were still in fair or sound
physical health, the percentage of those in good health in pauper
institutions was 35.8 in the case of inmates of the benevolent
institutions, and only 12.3 per cent. in the case of the almshouse
inmates.
“That dependency in Pennsylvania is not entirely due to the personal
shortcomings of the individuals, is evidenced from the excellent
recommendations given practically all the inmates of almshouses,
followed up by the Commission, by their former employers. Giving due
consideration to the fact that most humans will strain a point rather
than give a poor recommendation, the reliable qualities of these
inmates are evidenced nevertheless, from the fact that most of these
inmates have served for long periods of time with one employer (30 per
cent. serving for more than 10 years).
“The Commission’s investigations also disclose an exceedingly
confusing and bewildering system of management of our county
poorhouses. Not only do many of the officials connected with these
institutions have little knowledge of the problems involved in the
care of the aged, but there is obviously a laxity in the management of
these institutions and the distribution of county funds. The State
supervision of these aged homes is insufficient, loose and hardly
competent. Careful records are kept in only a few institutions. There
is no uniform method of accounting. Computations of costs are made in
almost as many forms and methods as the men making them. Many of the
per capita costs of almshouses given in the report of the State Board
of Public Charities do not represent the actual cost. The latter do
not include the interest on farm products. According to the
Commission’s estimate from records submitted by the directors of the
poor to the State Board of Public Charities, the average cost per
capita per inmate, in 1817, was $5.87 per week. The cost in the
private institutions was even higher than that. It is also shown that
in a few instances the per capita costs were more than abnormally
high.
“From the Commission’s study of the existing means providing for the
protection of the aged and superannuated, it is also apparent that
they are insufficient and can never be expected to meet the situation
to any extent. It is shown that with all the numerous forms of aged
benefits provided, only about 10,000 aged people in the State are
actually benefited. Of the numerous large industries in Pennsylvania
only about twenty make it a rule to care for their aged employés after
long and faithful service. While all the large railroads in the State
pension their faithful workers—after a long period of service—the
number of railroad workers actually benefited, as compared with the
total number of workers in this industry is insignificant. It also
appears that only the first and second class cities in Pennsylvania
provide against age of their various municipal employés. The number of
persons who may expect old age benefits, as such, from fraternal or
trade union organizations is hardly worth considering.”
In its bill, submitted to the 1821 Pennsylvania Legislature, the
Commission proposed a system of non-contributory or gratuitous old age
assistance. The system was to be administered mainly by a state board
created for that purpose, although county boards were also set up for
the purpose of rendering local assistance in administering the plan.
Pension payments were proposed to commence at the age of 65 and were to
be granted to all men and women, citizens of the United States, who have
resided at least 15 years within the State. The bill also suggested that
in the case of a person who has lived in Pennsylvania for 40 years, the
residence requirements immediately preceding application should be
reduced from fifteen to five years. Excluded from the receipt of
pensions were the inmates of charitable and correctional institutions;
and those whose income exceeded $300 per year, or whose property was
valued at more than $5,000, inclusive of a homestead. The bill permitted
the retention of a homestead, when personally used, and provided for the
deduction of the total amount granted in pensions, from the proceeds of
the accumulated property upon the death of the pensioner. The maximum
pension was set at $25 per month and the funds were to be raised by the
State, either through a special tax, or by raising the current
inheritance taxes. The Commission estimated that about 100,000 persons
65 years and over in Pennsylvania would qualify for pensions which would
involve an annual cost of from $18,000,000 to $20,000,000.
In 1818, the Connecticut Commission on Public Welfare while it made no
extensive study of its own of the problem of old age in that State
concluded that:
“We may criticize the ineffectiveness and the cost of existing forms
of voluntary insurance against the disabilities of age, just as we may
realize that a considerable burden is imposed on the State by the
maintenance of those who, for one cause or another, are unable either
to work or to find work and so become wholly dependent on the State or
on private charity. Notwithstanding this, it is doubtful if the
situation in Connecticut, with regard to the extent of the disability
or the necessities of those who become so disabled, is so acute as to
call for the initial experiment in this report to be made by the
General Assembly.”
Commissions to study the subject of Old Age Pensions were also appointed
by the States of California, Illinois, and New Jersey. The latter
Commissions, however, were instructed to study both Health and Old Age
Insurance and while they have brought out reports on the health
insurance question, have given little consideration to the problems
confronting old age.
In addition to investigating commissions upon the subject, there have
been several attempts at definite remedial legislation. For several
years past the Massachusetts Legislature as well as the Legislatures of
a few other States had a number of bills presented which provided for
old age pensions. In the 1820 Legislature of Massachusetts five
different bills providing for old age pensions of one form or another
were introduced. So far, these have all met with little success.
Definite legislation on the subject in this country was first made in
Arizona in 1815. Through the initiative and referendum a law was enacted
in that year for the granting of old age pensions to all needy citizens
of the United States who have been residents of the State of Arizona for
at least five years and who have reached at least 60 years of age. The
amount of the pension was set at $15.00 per month. The act, however, was
promptly declared unconstitutional by the Supreme Court of Arizona, and
no concrete legislation upon old age insurance or pensions has as yet
been adopted by any State in the Union.
Even the National Congress did not escape the introduction of bills
dealing with remedial legislation upon the aged problem. The first bill
was introduced by Congressman William B. Wilson (ex-Secretary of
Labour), in 1808. This bill provided for the establishment of a national
old age pension system of $120 per year for all persons over 65 years of
age whose property possessions did not amount to over $1,500 or whose
income did not exceed $240 a year. This bill was drawn up under a
subterfuge of organizing an “old age home guard of the United States,”
in which the bill proposed men and women of that age could enlist in
order to receive a pension. Nothing, of course, came out of this bill.
In 1811 Congressman Victor L. Berger—the first Socialist
representative—introduced a bill providing a pension of $4.00 a week or
less to all persons 60 years of age and over who do not possess an
income of over $10 a week. The bill required 16 years of citizenship,
good and moral character and provided for the pension to increase or
decrease every twelve months in accordance with a sliding schedule. This
bill attracted great attention and brought the problem of old age
pensions before the public at that time as never before. Another bill
was introduced by Congressman M. Clyde Kelly, on June 10, 1813. Mr.
Kelly’s bill proposed to pension all persons who have attained 65 years
of age, who have been citizens for 20 years, and whose income during the
12 months next preceding the application did not average nine dollars
per week. The bill excluded from the receipt of pensions, persons who
habitually refused to work, paupers and criminals. The amount of the
pension was graded according to the claimant’s income, ranging from four
dollars per week, if the income was less than six dollars, to one dollar
if the income did not exceed nine dollars per week. The administration
was to be in charge of the Secretary of the Interior.
Since then several other bills providing for old age pensions have been
presented in the United States Congress. Before the 66th Congress there
was a bill providing for Old Age Pensions, patterned after Mr. Kelly’s
bill, introduced by Senator Charles L. McNary, of Oregon. This bill
aimed to pension all persons who have attained the age of 65 years, who
have been citizens for 20 years, and whose income from any source for
the twelve months next preceding the application did not average six
dollars per week. Pensions were not to be given to persons who had
habitually failed to work according to their ability or who were being
maintained as paupers or inmates of correctional institutions. The bill
proposed that every person who fulfilled the required conditions, should
be placed upon the pension roll and be entitled to receive a pension,
which was to be provided by an annual appropriation from Congress. The
pension was to be graded according to the following schedule: “four
dollars a week when the average weekly income of the pensioner, as
calculated under the act, does not exceed six dollars; three dollars
when the income exceeds six dollars but does not exceed seven dollars;
two dollars when the income exceeds seven dollars, but does not exceed
eight dollars, and one dollar when the average income exceeds eight
dollars, but does not exceed nine dollars. The bill further provided
that the pension may be increased or decreased every twelve months,
whenever the pensioner’s income increased or decreased, according to the
terms of the schedule. When both husband and wife are pensioners and
living together the pension of each was to be three-fourths of the
regular rate. The administration of this act was to be in charge of the
Secretary of the Interior.
In tracing the movement for old age protection in the United States
notice must be taken not only of the interest displayed by the State and
national legislatures but also of the important recognition given this
subject by industrial experts, business and commercial bodies, political
and church organizations and other associations of various kinds as well
as the demands for such legislation steadily and vigorously made by the
growing labour movement of the United States.
The second industrial conference called by President Wilson, in its
report of March 6th, 1820, declared:
“There have been many plans of health insurance and old age insurance
elaborated in other parts of the world and advocated in the United
States. Without discussing whether such plans, when based upon
government subsidy or compulsory action, are consonant with American
ideals, the Conference believes that an extension and simplification
of the insurance principle as a means of promoting thrift, saving and
independence, would be advantageous to the people. The alternative to
such insurance against sickness and old age lies in a wage adequate to
cover these items. The Conference therefore suggests that the Federal
Government should inaugurate a careful, authoritative investigation on
the whole subject.
“The problem of health and old age insurance, and its promotion by
some means consonant with national ideals, demands consideration. If
such means can be devised, they will furnish a relief to the states in
the care of the ill, the indigent and the aged.”
So far, the sentiment of the business and commercial groups in this
country has not been very sympathetic towards any governmental action in
regard to the aged. In 1817, the Boston Chamber of Commerce selected a
special committee to study this problem, which, apparently influenced by
the conclusions of the Old Age Pension Commission of that State,
declared in its report:
“Your Committee has considered various plans for non-contributory old
age pensions and is unanimously opposed to any such measure with the
non-contributory feature for the following reasons:
“1. There is no such need for legislative provision for old age in
Massachusetts as there was in any foreign country in which legislation
has been enacted. Pensions in any case would be less necessary than
health insurance. Health insurance and accident compensation lead to
preventive measures and increase the earning power of workers, but old
age pensions are remedial, not preventive and are, therefore, less
valuable socially.
“2. These foreign systems which involve contributions from employés
are, therefore, preferable to the English system of outright payment.
In France and Germany the worker gets his pension as a matter of right
even when he is not poor. In England and under the proposed plan for
Massachusetts only the poor may have pensions. That is, the proposed
plan has essentially a poor law character and is not an industrial
measure.
“3. Non-contributory pensions weaken the inducement to thrift.
“4. The inevitable effect of the establishment of a system of
non-contributory old age pensions would be a constant pressure to
lower the age limit and increase the amounts of the pension.
“5. The proposed Massachusetts law would tend greatly to increase the
taxes; and Massachusetts is at present making a radical experiment
with its tax laws. The pensions now proposed are low, the age of
eligibility is high, and few except the almshouse old are recommended
to be dealt with. The proposed tax burden will therefore increase
greatly in succeeding years.
“6. To raise the necessary money large extra taxes would have to be
levied on the capital and industries of the Commonwealth, This would
result in the first instance in a serious disturbance to present
industrial conditions. It might also have a tendency to lower wages.
“7. Owing to the uncertainty of conditions due to the great war, it
would be unwise for the Commonwealth to assume a large increase in its
liabilities.
“8. The constitutionality of such legislation is extremely doubtful.”
The National Association of Manufacturers also had a committee studying
the problem. This Committee declared in its report that:
“It is fair to state, however, that every able-bodied man who is
reasonably intelligent and industrious should through his own efforts
on reaching the age of 65, have this provision available. This does
not mean that every man should have set aside enough himself, although
many ought, but certainly should have set aside something so that with
aid from his children, he and his wife should have at least the means
of existence and not become dependent on the state or the community.
“Generally speaking, the people of the United States may be divided
into two classes in their means of support upon reaching the period of
superannuation, viz: those who have the means of support and those who
are the subjects of poor relief. This does not include those who are
mentally or physically deficient and who may be the inmates of public
institutions and not regarded as coming under the category of poor
relief.”
And it concluded, that: “After careful consideration of the entire
question of old age insurance and considering particularly the
importance of preserving the best quality of citizenship for the
United States and the maintenance of our institutions on the best
basis, your Committee recommends the following resolutions:
“We believe that evidence is lacking to prove a present necessity for
the enactment of old age pension legislation for the civil population
and we further believe that it is a moral responsibility of the
employer to encourage, assist and inspire his employés with the
importance and necessity of ways and means for making provisions for
contingencies of life, including old age.”
The merits of the above arguments have been discussed earlier and need
not be repeated here. To what extent these conclusions are based upon
facts has also been indicated in the preceding chapters. However, a more
sympathetic note is struck by Alba B. Johnson, President of the Baldwin
Locomotive Works and of the Pennsylvania State Chamber of Commerce in
his introduction to a special report on Old Age Pensions prepared for
the latter organization in 1818. Mr. Johnson states:
“A new principle is coming to be recognized, viz: that a large
proportion of those who are unfit for the competition of life are so
through no faults of their own, but because of faults in the social
system for which they have had no responsibility. Their incompetence
is part of the burden which should be carried by the more competent
and the more fortunate. In our complex civilization there are also
many who are rendered unfit by occupation or by accidents unavoidable
in the processes of industry. The undeserved penalty therefore should
be borne by the community as an essential part of the cost of
production.”
Although planks on social insurance were not adopted by the leading
political parties in the last campaign, despite their recommendation by
the advisory platform committees, the question has been before the
American public as a political subject by its inclusion in the platform
of the Progressive Party in 1812, while the demand for an old age
pension plan has been a permanent plank in the platform of the Socialist
Party since its beginning and was contained also in the platform of the
Farmer-Labour Party.
The importance of the problem of the aged is now also recognized by the
churches and their leaders. The Federal Council of Churches of Christ
has since 1811 included in its social creed a plank for suitable
provision for the old age of the workers.
The administrative Committee of the National Catholic War Council
composed of four Catholic Bishops also declared in their social
reconstructive program in 1818:
“The State should make comprehensive provision for insurance against
illness, invalidity, unemployment, and old age. So far as possible the
insurance fund should be raised by a levy on industry, as is now done
in the case of accident compensation. The industry in which a man is
employed should provide him with all that is necessary to meet all the
needs of his entire life. Therefore, any contribution to the insurance
fund from the general revenues of the State should be only slight and
temporary. For the same reason no contribution should be exacted from
any worker who is not getting a higher wage than is required to meet
the present needs of himself and family. Those who are below that
level can make such a contribution only at the expense of their
present welfare. Finally, the administration of the insurance laws
should be such as to interfere as little as possible with the
individual freedom of the worker and his family. Any insurance scheme,
or any administrative method that tends to separate the workers into a
distinct and dependent class, that offends against their domestic
privacy and independence or that threatens individual self-reliance
and self-respect, should not be tolerated. The ideal to be kept in
mind is a condition in which all the workers would themselves have the
income and the responsibility of providing for all the needs and
contingencies of life, both present and future. Hence all forms of
State insurance should be regarded as merely a lesser evil, and should
be so organized and administered as to hasten the coming of the normal
condition.”
The demands made by the labour unions for such plans have already been
pointed out.
At the time of this writing there are a number of bills providing for
old age pensions before the various State Legislatures. Their fate is as
yet unknown. But whatever that may be it is obvious to all students of
the problem that the movement for social insurance in the United States
is growing rapidly and must succeed eventually.[260] On the whole, one
may say, that social insurance in this country is being opposed by
practically the same groups who fought against the adoption of workmen’s
compensation laws, child labour regulations, and similar social
legislation, which are now on the statute books of practically all
states. It may well be that the inauguration of old age pensions in this
country will be preceded by health and invalidity insurance provisions.
But that a complete program of social insurance cannot for long be
ignored or postponed is now evident to all who are willing to face the
facts as they are, rather than hark back to traditions or prejudices
which have no basis in fact at the present time.
PART FIVE
OLD AGE INSURANCE AND PENSION SYSTEMS OF FOREIGN COUNTRIES AND VARIOUS
STATES
CHAPTER XIII
VOLUNTARY AND SUBSIDIZED SYSTEMS OF OLD AGE INSURANCE
The first State efforts to relieve the problems of old age were
generally made by means of some form of voluntary or subsidized savings
insurance. The adoption of the compulsory principle of insurance against
old age was unthought of at first. The States’ assistance was limited to
encouraging and helping the wage-earning classes to accumulate savings
which would protect them against old age. The Teutonic nations were the
first to inaugurate the compulsory principle of social insurance. In the
early days Latin speaking countries were proud of the fact that they did
not adopt the German principle of compulsion and, instead, established
voluntary systems of savings insurance. English-speaking peoples, on the
other hand, have generally followed the non-contributory or straight
government pension plans.
Voluntary and Subsidized Old Age Savings Systems were established as
early as the middle of the last century. Although practically all
countries started out with voluntary insurance plans the latter are in
operation now in comparatively few countries. Most nations were
compelled to abandon them as ineffective and substitute either
compulsory insurance or straight pensions. France was the first to
follow Germany’s example in adopting a compulsory old age insurance
system in 1810. Since the signing of the Armistice, Italy and Spain have
also changed from voluntary to compulsory insurance, while a few other
countries have either adopted compulsory insurance plans or have been
considering the adoption of such recently. The merits of these plans and
the reasons for their abandonment have been discussed in an earlier
chapter and need not be repeated here. In the chapters that follow an
account of the old age pension systems as they exist abroad is
presented. An effort has been made to bring them up to date. However, on
account of the war, and the general difficulties of securing European
data which resulted from it, this aim has been only partly realized.
BELGIUM
The Belgian “General Savings and Retirement Fund” was originally founded
in 1850. As in the case of all voluntary insurance plans, it was created
for the purpose of inducing wage-earners to provide for their old age,
by affording them opportunities to save under the protection of the
government. During the fifty years that followed the establishment of
this fund many devices were employed to attract a greater number of
persons to make deposits. This was done by reducing still further the
minimum of deposits, by influencing children from six to fourteen years
of age to join the fund and by appropriations for annual subsidies made
by the national and provincial governments to mutual aid societies and
similar organizations which induce their numbers to join the fund. In
spite of all these encouragements, however, there was little success
made in securing any considerable number of wage-earners to make
deposits and provide for their old age.
In 1800, a law was enacted which sought further to encourage
wage-earners to provide annuities for their old age by adding state
subsidies to their own deposits and by giving special grants to the
needy aged. The law permitted any person over 18 years of age to pay
into the fund for himself or for another person. The depositors were not
required even to make regular payments either at fixed periods or of a
fixed amount. The minimum of deposit was one franc (normally 18 cents).
The principal aim of this fund was to attract the poorer classes, as the
law excluded from benefits those classes who paid above a certain
maximum amount in taxes or licenses, as well as state officials who were
entitled to old age pensions by virtue of previous laws. The annuities
were paid at the age of 65 and could not exceed 1,200 francs ($231.60).
In addition to the regular annuity the government made a contribution in
the form of a premium which was added to the sums paid by the insured.
The government subsidies ceased when the total credited to the insured
person was sufficient to secure him an annuity of 360 francs ($72.00).
The government subsidies granted under the law of 1800 were small and
did not prove sufficiently attractive to the old people. The amounts
were therefore increased by an amendment passed in 1803. The latter
provided a government allowance of one hundred per cent. on the first
six francs ($1.16) deposited by a person who on January 1st, 1803, was
between the ages of 40 to 45; the subsidy increased to 150 per cent. for
those who were between the ages of 45 to 50 on that date, and amounted
to 200 per cent. on the first six francs for those persons who were 50
years old at the time the law was enacted. These extraordinary subsidies
naturally increased the number of depositors tremendously. According to
Dr. Rubinow:[261] “In 1880 the number of insured was only 12,000 and
under the influence of the subsidies began to grow, though slowly, and
by 1888 it amounted to 168,000. The systematic granting of subsidies
ordered by the act of 1800, in one year doubled the number of
depositors. In 1802 it reached half a million. The increase in the rate
of subsidies in 1803 brought the number to 636,000 and by 1810 it was
well over 1,000,000.” There are no figures available in this country to
show the tendency of the savings fund since the conclusion of the war.
Savings in general, however, have greatly increased in Belgium. During
the last eleven months of the year 1818, the Belgian postoffice savings
banks received deposits amounting to 368,000,000 francs as against
262,000,000 francs in 1818.[262]
The savings fund could not meet the immediate problem of old age. The
Belgian government, therefore, in addition to subsidizing savings,
practically established a system of temporary old age pension grants.
These pensions were given to all persons 65 years of age and over,
provided they were Belgian subjects and had been residing in Belgium at
least one year prior to their application for relief. These straight
pension grants were given only to workmen, i. e. “men and women actually
working with their hands for an employer, in consideration of a wage,
whether such work be performed on time wage or piece wage, at home or
away from home, and whether it be domestic, agricultural, industrial or
handicraft work.” The claimant, the law also specified, must be in want,
which was defined as “a state in which the resources of the person are
insufficient to enable him to support himself and his family in
accordance with the standard of comfort prevailing among workmen of his
trade in the district in which he resided.”
The amount of the straight pension given was very small, namely 65
francs ($12.55) per year. The pensions were originally intended to cease
in 1811 and government subsidies were to be given only to those who had
made deposits in the savings fund. However, in May, 1811, the law was
further extended to continue till 1814.
The experiences of the Belgian fund are sometimes pointed to as
indicating the success of voluntary insurance. However, while it is true
that the Belgian experience has proved quite successful, it must be
accounted for by the extreme measures undertaken to attract depositors.
It is obvious that subsidies of 150 to 200 per cent. would attract a
great number of persons. But these are hardly different from straight
pensions. Prior to the war, it was also claimed by students of social
insurance that in spite of all efforts, the average annual payment per
deposit in Belgium was steadily declining.[263]
CANADA
The Canadian Parliament, in 1808, passed an act authorizing the issuing
of government annuities for old age. This act was amended in 1808, in
1810, in June, 1813, and in 1820. The law originally authorized the
Minister of Trade and Commerce to make contracts with any person
domiciled in Canada for the sale of an immediate deferred annuity, as
follows: “(1) for the life of the annuitant, (2) for a term of years
certain, not exceeding 20 years, provided the annuitant shall so long
live, (3) for a term of years certain, not exceeding 20 years, or for
the life of the annuitant, which ever period shall be the longer. Also
for an immediate or deferred annuity to any two persons domiciled in
Canada during their joint lives and with or without continuation to the
survivor.”
The system of government annuities is at present in charge of a
Superintendent of government annuities in the Post Office department.
Payments are made in three forms: weekly payment, yearly payment, and
single payment. The rates for females are somewhat higher than those for
males. Premiums may be paid to the department directly or to any
postmaster. Any person resident or domiciled in Canada may now purchase
an annuity. Plans are also provided by which employers may co-operate
with their employés in the purchase of annuities.
No annuity can be granted on the life of any person other than that of
the actual annuitant. It cannot be less than $50 a year and the total
amount payable by way of an annuity cannot exceed $5,000 a year. The age
limit of 55 years formerly required at which an annuity could begin was
abolished in 1820. If the annuitant dies before the expiration of the
specified number of years, the annuity must be paid to his legal
representatives for the remaining number of years, unless agreements to
the contrary have been made between the State and the annuitant. The
rate of interest on moneys returnable was increased from three to four
per cent. by the 1820 amendment.
Up to Dec., 1820, there were a total of 4,857 annuities issued in
Canada. The total receipts up to the same date were $4,751,677.17. The
average amount of annuity purchased was about $250.[264] This small
number of annuitants is exceedingly significant in view of the fact that
the Annuities Act “was passed in order to promote habits of thrift, and
to afford facilities whereby the people of Canada might be aided and
encouraged to make provision for old age by the purchase of Annuities”
and by the department’s advertising the fact that under the recent
amendment if “a man who began at the age of 20, to buy an annuity of
$500 to commence at 60—which he could do at a cost of but little more
than one dollar per week—were to die just before the first payment of
annuity was due, his heirs would receive the tidy sum of $5,181.83.”
In addition to the voluntary system of insurance against old age, the
government has also provided, for the benefit of the employés of the
Intercolonial Railways and Prince Edward Island Railways, a separate
fund which was established by an act of March 27, 1807, and which was
later amended in 1808, and in June, 1813. Under this fund, the insured
persons and the state contribute equal shares; the latter’s
contribution, however, cannot exceed $100,000 per annum. The employé’s
first monthly contribution is fixed at three per cent. of the monthly
wages and the remainder at one and one-half per cent. Pensions are
given, (1) to those who have attained the age of 70; (2) to those who
have become physically or mentally incapacitated; (3) to persons who
have attained the age of 60 and wish to be retired from service (after
15 years of service in all three cases); (4) to persons permanently
disabled, as a result of injuries while at work; and (5) to persons who
at the time when the act was passed have already reached the age of 70
and who have been at least ten years in the service. The amount of the
pension is based on one and one-half per cent. of the average monthly
pay received during the eight years immediately preceding the granting
of the allowance, multiplied by the number of years of service. The
maximum pension is limited to $20 per month, and cannot be more than
two-thirds of the average monthly wage. It is also provided that before
an employé can become entitled to participate in any of the benefits he
must serve six months on probation, during which period he must
contribute to the fund.
The Canadian Royal Commission on Industrial Relations in its report of
1818 declared:
“We recommend the question of making some provisions by a system of
State Social Insurance for those who through no fault of their own are
unable to work, whether the inability arises from lack of opportunity,
sickness, invalidity, or old age. Such insurance would remove a
spectre of fear which now haunts the wage-earner and make him a more
contented and better citizen.”
JAPAN
A postoffice life insurance system was adopted by the Diet of Japan in
the 1815–16 Session and went into operation in October, 1816. The
business is under the Minister of Communications. Each of the 7,000
postoffices in Japan acts as an agency for the receiving of contract
applications and the collecting of premiums for life insurance policies.
All persons between the ages of 12 and 60 inclusive, are eligible for
insurance.
Policies are of two kinds, whole life and endowment. The latter are
divided into 10, 15, 20, 25, 30, 35 and 40 year endowment policies.
Medical examination is not required but in all cases individual
applicants must have a personal interview with a postoffice official.
Provisions are also made for group insurance.
On March 31, 1820, there were a total of 1,588,715 insurance contracts
in operation. The total premiums amounted to $347,085 and the contracts
in force to $76,355,222. Over 58 per cent. of the policies were whole
life policies and 41.6 per cent. were endowment policies.[265]
In October, 1820, the government established a bureau in the department
of Communications to deal with the question of State life insurance.
Hitherto only a small section had been engaged in this work. The new
bureau with its increased staff is expected to take up the matter of
State life insurance on much broader lines.[266]
SWITZERLAND
There is no federal insurance law in Switzerland at the present time.
Each Canton makes its own insurance provisions. As a result both the
voluntary and compulsory-contributory insurance plans can be found
there. The two voluntary cantonal insurance organizations are the Social
Insurance Fund of Canton Neuchatel and the Old Age Insurance Fund of
Canton Vaud. The former is a mutual organization with optional
membership which was established by the cantonal law of May 15, 1806,
and which enjoys a cantonal subsidy. It provides straight life insurance
policies as well as combination and annuity policies.
Of the total number of policies in Canton Neuchatel during the year
1813, 6,620 policies, representing insurance to the amount of
$1,242,820, were straight life insurance policies, and 7,707 policies
representing $2,653,750, were mixed policies and 545 policies,
representing $50,180, were annuity policies.
The Old Age Insurance Fund of Canton Vaud was established by a law
enacted in March, 1807. This fund combines old age insurance with the
various forms of savings deposits. The premiums or deposits may be
either definite or provisional. In the latter case deposits may be
withdrawn within ten years after payment. The principal purpose of this
fund is to enable employers to provide for old age insurance for their
workmen without being compelled to risk losing such payments, in case of
the premature death or disability of the insured. The insurance fund
also makes special efforts to encourage deposits by women and children,
especially school children. In addition the cantonal government makes
very liberal contributions to the premiums or deposits of citizens of
the Canton, who are industrial tradesmen or workmen, whose annuities do
not fall due before their 55th year, and whose annual premiums or
deposits range from six francs ($1.16) and do not exceed 60 francs
($11.58).
The total number insured persons in this fund during the years 1812 and
1813 were 13,823 definite and 14,886 provisional. The total premiums
received during the same year were $30,141 and $33,531 respectively, to
which there was added $15,052 and $16,664 cantonal contributions. The
total payments to the insured amounted to only $470 and $724
respectively. The comparatively low payments are explained by the fact
that the fund has been in existence a short time.
A commission of experts appointed by the Swiss Federal Assembly to study
the problem of social insurance brought in a comprehensive report[267]
in regard to the problem in June 1818. The Commission recommended the
adoption of a Federal compulsory insurance system against old age and
invalidity. The insurance, it suggested, should be made compulsory
either for certain classes of workers or for the entire Swiss
population. The Commission recommended that the pensionable age be set
at either 60 or 65 years. The contributions, the experts suggested, are
to be made by the insured persons, the employers, the confederation, the
Cantons and the Communes. It made no definite recommendations in regard
to either the amounts of contributions or the pensions payable. It left
to the law givers to decide whether they shall be uniform as in France,
or shall vary in accordance with earnings, contributions and age as in
Germany and in a few other countries. The Commission favoured a uniform
rate of pension, however, although it did not preclude a modest
graduation according to the length of time insured, or the taking out of
supplementary insurance.
To meet the immediate needs of the aged, the Commission recommended the
granting of straight annuities to those who have passed the age limit at
the time the law is enacted. This to apply only during the period of
transition, until this class gradually disappears. The Commission also
recommended the continuation of the voluntary insurance plans now in
existence for purposes of supplementary insurance.
MASSACHUSETTS
The Massachusetts system of Savings Bank Life Insurance and Old Age
Annuities was devised and sponsored largely by Supreme Court Justice
Louis D. Brandeis and the Massachusetts Savings Insurance League which
Justice Brandeis organized. The plan first went into operation in June,
1808. Under the State law, savings banks were authorized to establish
insurance departments, and to issue policies upon the lives of persons,
as well as to sell annuities in accordance with the regulations provided
by the State Insurance Commissioner. These savings banks insurance
departments have no stockholders and are established solely for the
benefit of the depositors.
The Massachusetts system of Savings Bank Insurance is a State aided plan
in so far as the State largely bears the expenses involved in the
administration of the system, and aims to give to Massachusetts
wage-earners and their families all that their money can possibly buy of
real insurance. Justice Brandeis stated that the purpose of the act was
(1) “To give Massachusetts wage-earners an opportunity to secure safe
life insurance at the lowest possible cost, as a substitute for
industrial life insurance; (2) To give to Massachusetts wage-earners an
opportunity to make provisions for their old age by the purchase, out of
current earnings, of annuities at the lowest possible cost. (3) It is
also designed to furnish a partial solution of the problem of providing
for the superannuated workingman, by making the opportunities for saving
the workingman’s money as numerous as the opportunities for wasting
it.”[268]
In addition to purchasing straight life insurance policies, residents of
Massachusetts may, under the State’s Savings Banks Insurance System,
secure also (1) Twenty Payment Life Insurance; (2) Twenty year Endowment
Insurance; (3) Old Age Annuities; (4) Combination Insurance and
Annuities; and (5) Immediate Annuities. The maximum annuity is limited
to $1,000. Agencies for collecting premiums have been established by the
Insurance Banks in large manufacturing and commercial establishments,
peoples’ institutes, social settlements, and trade unions. In 1820 there
were more than 300 such agencies scattered throughout the State. The
amounts of the monthly payments for the different policies are given in
a table on the following page.
MONTHLY PREMIUMS OF SOME OF THE OLD AGE COMBINATION INSURANCE ANNUITIES
IN MASSACHUSETTS
——Old Age Annuity—— Combination Insurance & Annuity
Beginning $250 Insurance and $250 Insurance and
Annuity Annuity Annuity $200 Annuity at Age $200 Annuity at Age
at Age at Age 60 at Age 65 60 65
15 $1.68 $1.06 $1.88 $1.28
16 1.76 1.10 1.87 1.33
17 1.84 1.16 2.06 1.38
18 1.84 1.20 2.15 1.44
18 2.04 1.26 2.25 1.50
20 2.14 1.32 2.36 1.57
21 2.24 1.38 2.47 1.64
22 2.36 1.46 2.58 1.71
23 2.48 1.54 2.72 1.78
24 2.62 1.62 2.85 1.87
25 2.76 1.70 2.88 1.85
26 2.82 1.78 3.15 2.05
27 3.08 1.88 3.31 2.14
28 3.24 1.88 3.48 2.25
28 3.44 2.08 3.68 2.36
30 3.64 2.20 3.88 2.48
31 3.84 2.32 4.11 2.61
32 4.04 2.44 4.35 2.74
33 4.34 2.58 4.61 2.88
34 4.62 2.74 4.88 3.03
35 4.82 2.80 5.18 3.22
36 5.24 3.08 5.53 3.40
37 5.60 3.28 5.88 3.60
38 6.00 3.48 6.28 3.82
38 6.44 3.70 6.75 4.05
40 6.84 3.86 7.24 4.31
41 7.48 4.22 7.78 4.58
42 8.08 4.52 8.40 4.88
43 8.76 4.86 8.08 5.23
44 8.54 5.22 8.88 5.61
45 10.42 5.62 10.78 6.02
46 11.44 6.06 11.80 6.48
47 12.62 6.58 12.88 7.02
48 14.02 7.14 14.38 7.58
48 15.66 7.78 16.06 8.25
50 17.66 8.52 18.07 8.00
51 20.12 8.38 20.54 8.87
52 23.18 10.36 23.63 10.88
53 27.16 11.54 27.62 12.07
54 32.50 12.82 32.87 13.48
55 40.00 14.60 40.48 15.18
56 16.68 17.28
57 18.28 18.82
58 22.66 23.32
58 27.20 27.88
60 33.56 34.28
For the eleven years the system has been in operation there were, early
in 1820, over 20,000 policies written of all kinds. The number of old
age annuities was less than 300. The small number of old age annuitants
may be taken as a fair indication of the possibilities of voluntary
insurance in this country. With a population of nearly four million and
after eleven years’ experience, less than 300 persons are taking
advantage of this form of old age insurance in Massachusetts. Miss Alice
H. Grady, Secretary of the Savings Bank Life Insurance, while admitting
that the Massachusetts experience would seem to show that the people are
either unwilling or unable to purchase old age annuities, contends,
however, that: “this inference is not entirely correct, the simple fact
being that the people do not know about them. For lack of funds we have
not yet been able to demonstrate what could be done by means of an
educational campaign to teach the people what deferred annuities are and
the advantage of this form of savings against old age.
“We believe,” continues Miss Grady, “that if the time shall come when we
are able to bring home to our people, by means of a systematic
educational campaign, the knowledge and benefits of this system, we
shall find them both intelligent and responsive to this form of appeal,
and ready to make voluntary savings against old age, as they are now
learning to do against sickness and death.”
That the Massachusetts experience with voluntary insurance has proved
unsuccessful seems obvious. To explain the general apathy on the ground
of mere ignorance is to ignore the basic problems discussed in the
preceding pages. The difficulties of saving for old age are
unquestionably more fundamental and are indicative of the success
voluntary old age insurance systems may have in this country.
Unfortunately, the persons who need this insurance most cannot take
advantage of it. However, there are other advantages which, it is
claimed, have come about as the result of the adoption of the Bay State
plan. Miss Grady contends that: “Coincident with the establishment of
savings bank life insurance in Massachusetts, the big industrial
companies not only improved the conditions of their policies but also
reduced the cost of their weekly premium insurance about 20 per cent.
The great significance of this reduction has become increasingly
apparent as the years have come and gone. For instance, during the year
1815, the wage-earners of Massachusetts alone paid to the industrial
insurance companies on weekly premium policies the astonishing sum of
$12,000,000. Had it not been for the reduction in cost above referred
to, it is a fair assumption that the amount paid to the industrial
companies last year (1816) by our Massachusetts people would have been
not $12,000,000 but $15,000,000. Those $3,000,000 remain in the pockets
of the Massachusetts wage-earners or have been used by them to purchase
other necessities of life. Bearing this in mind it is not difficult to
understand why the State is willing to contribute the modest sum of
$20,000 a year toward the support of an institution which has been
instrumental in bringing about this immense saving to our people. One
might even go so far as to hazard the suggestion that the people of
Massachusetts are getting an extraordinary good return on an exceedingly
small investment.”[269]
WISCONSIN
In 1811 the Legislature of Wisconsin authorized the issuing of policies
of life insurance and annuity contracts by the State. This was done by
establishing a “Life Fund,” “to be administered by the State without
liability on the part of the State, beyond the amount of the fund, for
the purpose of granting life insurance and annuities, to persons who at
the time of the granting of such insurance and annuities, are within the
State or residents thereof.”
Applicants must be between the ages of twenty and fifty inclusive. These
may purchase the following policies: (1) Ordinary life; (2) Twenty
payment life; (3) Ten year endowment; (4) Endowment at age sixty-five;
or (5) Term to age sixty-five. The advantages of this state fund are:
(1) Its soundness; (2) Its low cost of operation, as profits are
eliminated and no agents’ commissions to be paid; (3) No great overhead
expense, as it is under the State Insurance Commissioner and only
clerical help are being paid from the Life Fund.
When the Wisconsin Life Fund was established its promoters, among the
many other advantages claimed for it, declared that: “it is the stepping
stone to annuities to protect old age and perhaps to solving other
economic and industrial problems.” Unfortunately, the life fund in
Wisconsin has been a political pawn. It was sponsored and established
during a LaFollette State administration and the Fund was fairly
successful in its first few years. Then an opposing State administration
came in and efforts to develop the life fund have slackened until it has
become practically unknown in the State. Today, it is said that the only
persons who are maintaining their insurance policies are the university
professors at Madison.
CHAPTER XIV
COMPULSORY-CONTRIBUTORY OLD AGE INSURANCE
AUSTRIA
A system of old age insurance for salaried persons and several other
classes, was advocated in Austria as early as 1888, about the time the
German Old Age Insurance plan was adopted. The first bill providing for
such insurance, however, was not introduced until 1801. The first law
enacted went into effect on January 1st, 1808. This act provided a
limited system of contributory old age and invalidity insurance,
restricted to certain classes of salaried employés. On June 25, 1814,
the law was’ amended in essential respects by an Imperial decree, which
was to become effective on the first of October, 1814. On account of the
declaration of war, an order dated August 24, 1814, provided that the
benefits should be retroactive as from the first of August, 1814.
Although the object of this insurance also was to build up a right to an
invalidity or old age pension for the insured persons, the Austrian
system differed from most other compulsory schemes. For instead of being
a system of working-class insurance, it was established for the
middle-classes and the salaried employés. Under this plan only the
following classes were compelled to insure: (1) Employés working in
Austria, who have the character of officials by virtue of their
position; (2) Those engaged in duties of a preponderately intellectual
character, both of which groups must have at least a total annual income
under one and the same employer of 600 kr., (normally $121.80); (3)
Those engaged in the managements of works or departments of works; (4)
Supervisors over the work of other persons; and (5) Those serving on the
staffs of offices and counting-houses. Salesmen and other clerks were
included under the compulsory insurance only if they have received the
required higher education. The law did not compel those engaged in
domestic service, to insure, or as workers and apprentices in the
production of goods, in industry, mining, agriculture and forestry.
Exempted from the compulsory insurance were also persons who did not
enter an employment to which the insurance applies until they were 55
years of age; employés of the state, communes, etc., for whom other
provisions have already been made, but only in case their pension is
higher than the lowest provided by the law. A number of other classes of
employés were also exempted.
The obligation to insure under the Austrian law begins at the end of the
18th year. The insured are divided into six classes, according to their
annual salaries which range from 600 kr. ($121.80), for the lowest
class, to over 3,000 kr. ($608) for the highest class. Allowances,
gratuities, etc., are included in the total income. The premium paid
monthly for the six classes, prior to the war, ranged from six kr.
($1.22) to 30 kr. ($6.08), and by the 1820 amendment was increased in
the same proportion for the various classes. The employer was made to
pay two-thirds of the premium in the four lower classes and one-half of
the premium in the two higher classes. An amendment adopted July 23,
1820 increased the classes to 16, ranging from 600 kr. as originally
required in the lowest class to those earning salaries of 18,000 kr. in
the highest class. In case of an annual income over 7,200 kr.
($1,461.60), the insured person was to pay the whole premium himself.
An old age pension was to be paid, in the case of insured men, either
after 40 years of contribution at any age, or it was to be paid after
five years of contribution on reaching the age of 70. In case of women,
only 35 years of contributions were required, when the age of 55 had
been reached, or after five years of contribution after reaching the age
of 65. This was changed by the 1820 amendment to 60 for men and 55 for
women. The amount of the pension varied with the salaried classes and
the number of contributions made. The pension ranged from 180 kr.
($36.54) for the lowest class to 270 kr. ($54.81) the second class; 360
kr. ($73.08) the third class; 540 kr. ($108.62) the fourth class; 720
kr. ($146.16) the fifth class, and 800 kr. ($182.70) for the sixth
class. The new amendment increased this pension to 645 kr. for the first
class and 5400 kr. for the sixth class. Pensions of half the amounts
were also paid to the widows of insured persons, who drew an invalidity
or old age pension during their lives or had acquired a right to such a
pension.
The administration of the insurance plan is under a central pension
institution and its local offices. In 1811 there were 108,311 persons
insured in Austria. Due to the Allies’ partition of Austria and its
general state of bankruptcy, comparative statistics at the present
writing, even if they are possible, would be of little value.
The State also has had a compulsory old age pension fund for the
government mining employés which was established as early as 1854. The
State paid one-half of the contributions to that fund.
CZECHO-SLOVAKIA
Compulsory insurance against invalidity and old age for salaried
employés was established in what is now Czecho-Slovakia, as the result
of a law of 1806, which was amended in 1814. The following forms of
insurance are offered: (1) Invalidity pensions in case of incapacity for
work; (2) Old age pensions to men after 40 years of membership, and to
women after 35 years of membership; (3) Pensions corresponding to
one-half of that granted the insured to the widow of the insured; (4)
Grants for the education of children until they reach 18; and (5) A
grant from the total indemnity in case the insured dies within the first
five years. In the case of invalidity pensions medical care is provided
in addition.
As is the case with the Austrian system the insurance is compulsory for
those who are 18 years of age and upward whose income exceeds 600 crowns
but not over 3,000 crowns. The contributions from both employer and
employé as well as the pensions are similar to those described in the
Austrian system.
In 1818 the following amendments to the law were to be submitted to the
National Assembly: (1) The age for admission to be decreased from 18 to
16 years; (2) The minimum salary conditions to be abolished and new
salary levels to be included in the compulsory law; (3) The invalidity
and old age pensions to be supplemented by grants for education of
children; (4) The provision of a burial benefit; and (5) That the
pension be increased up to the amount of 50 per cent. if the health of
the beneficiary requires the constant care of outsiders.[270]
CHILE
In February 1811, a law was enacted in Chile requiring state railroads
to establish an insurance fund for the retirement of incapacitated
salaried employés and workmen and for the compensation of persons
injured in the service.
The fund is made up from the following sources: (1) By deducting five
per cent. from the employés’ wages; (2) By the retention of the first
monthly increase in pay; (3) By the accumulation of fines and penalties,
unclaimed pay, etc., and (4) By adding 54.8 cents to every $365
receipts.
Office employés who have been in the service for ten years and who are
completely incapacitated for work, may be retired with as many fortieths
of 75 per cent. of earnings as their years in service. Day labourers
employed in the maintenance of ways, etc., having ten years of service
and totally incapacitated for work may be retired with 50 per cent. of
wages. Persons engaged in the upkeep of rolling stock, 65 years of age,
30 years in the service and incapacitated for work, retire with 50 per
cent. of wages. The year’s work must be of not less than 250 days.
Persons permanently incapacitated because of accident are compensated by
the payment of full wages.
FRANCE
For more than half a century France has experimented with voluntary and
subsidized old age insurance, but without success. Finally in 1810
France was the first country to follow Germany’s example, and adopted a
national compulsory system of old age insurance. The original act has
since been amended several times, especially by the acts of September
20, 1812; August 17, and December 25, 1815.
The present act provides that all workers and peasants (salaried or
wage-earners) earning less than 3,000 francs (normally $578) must take
out old age insurance. State employés who do not come under the
regulations of civil and military pensions are also required to insure
themselves. The law exempts several large industrial groups who were
already protected by more liberal compulsory provisions. The insuring of
a person may begin from the age of 12.
The contributions to the insurance fund are of three kinds, depending
upon the age and sex of the insured person. Adult males pay nine francs
($1.34) per year; adult females six francs ($1.16) per year; and minors
under 18 years of age pay four and one-half francs ($0.87). The employer
is required to duplicate this contribution and is also made responsible
for the entire payment of the premiums. He is permitted to deduct the
worker’s share from his wages, and receipts it by a system of special
stamps which are affixed to the employé’s card.
The age when one may be pensioned is 60. Pensions may be drawn, however,
at 55 with a proportionate deduction in both the amount of pension and
the state subsidy. The amount of a pension is based upon the number of
contributions made and the age of the insured. In order to obtain a
regular pension, 30 payments are required. This is reduced to 28 for all
who have performed at least two years of military service; and in the
case of women, one annual payment for the birth of each child is
deducted from the required thirty years. The State adds to each regular
pension 100 francs ($18.30). This is still more increased by one-tenth
to those persons, of either sex, who shall have brought up at least
three children to the age of 16. For those who have made less than
thirty payments, but more than fifteen, the state subsidy is computed on
a basis of 3.33 francs ($0.64) for each year of contribution. No state
subsidy is given in cases of less than fifteen annual payments.
To meet the immediate problem of relief for the aged, the law of 1810
also provided that all persons who were already 35 years of age at the
time the law was passed, must insure. To those between the ages of 35
and 40, regular state subsidy was given. If 46 years old, in 1810, the
subsidy was raised two francs and thereafter it was raised two francs
for every additional year at which insurance began. Those over 65 years
of age at the time the law went into effect, were continued to be given
pensions in accordance with previous laws.
On January 1, 1814, the number of insured persons was 7,710,380, of
which number 686,821 were voluntarily insured. The figures given for
1815 were 6,722,332 compulsory insured and 584,511 voluntarily insured.
The year following, 1816, the numbers were 7,078,726 and 510,734
respectively. The smaller numbers in the war years are not due however
to an actual decline, as two or three provinces which were included in
1814, were not included in the two following years, due to the German
invasion.[271]
That the declaration of war affected materially the receipts of the fund
is evident from the fact that while for the first half of 1814 the
receipts amounted to $3,665,833, the second half of the year yielded
only $1,588,135. Indeed a comparison of the receipts for the pre-war and
war years shows that more than one-half of the persons insured have been
unable to continue their payments into the fund during the state of war.
The amount of premiums paid into the fund in these years was as
follows:[272]
1812 8,483,740
1813 8,786,428
1814 5,264,858
1815 3,704,035
1816 4,611,287
Since 1811, when the law first went into effect, the number of persons
retired each year was as follows:
1811–12 186,082
1813 706,714
1814 220,825
1815 115,026
1816 87,842
—————————
Total 1,326,588
On December 31, 1816, there were 1,158,325 retired persons under the
Labourers’ and Peasants’ Retirement Fund.[273]
The principle of compulsory insurance against infirmity and old age was
applied to French miners long before the adoption of the general
compulsory insurance law. The former was established in 1884. An
amending act dated February 25th, 1814, repealed the previous
legislation and created an Autonomous Pension Fund for miners, to be
administered by a council of 18 persons, the employers, employés and the
government to be represented by six members each. For the purpose of
forming a basic capital for these pensions, the act provided that the
mine owners pay every month into the fund four per cent. of the wages of
the workers. The regular contribution is borne one-half by the employers
and one-half by the workers. The right to a pension begins at 55 years
of age. Miners who can prove that they have worked for wages for at
least 30 years or at least 7,820 days (absence on account of sickness is
not deducted) in French mines have the right, in addition, to a state
allowance of 100 francs and a bonus from a special fund. In case of
permanent incapacity a miner is entitled to a pension regardless of age.
The state was to pay, according to the amended act, 2,000,000 francs
annually towards the general administrative expenses and certain other
purposes.
On the ninth of March, 1820, the law was amended providing for greater
subsidies from the state. The state’s subsidy in the future will be 860
francs per annum for miners, and 430 francs for their widows. The total
annual pensions were raised to 1,500 francs and 750 francs respectively.
Another feature of the amendment is the inclusion of persons, who, after
having worked as miners for ten years, become trade union
officials.[274]
On October 21, 1818, a law was promulgated also providing for a minimum
retirement pension of 1,800 francs for each male employé upon reaching
the age of 60 years after 30 years in the service of the state and 1,500
francs per each female employé upon the age of 55, after she has been 30
years in the state’s service. The state’s service includes the following
industries: Manufacture of tobacco and matches; manufacture of goods in
transit; general bureaus of printing and engraving, posts and
telegraphs, and of mints and metals; military establishments under the
supervision of the ministers of war and industrial reconstruction; and
arsenals and naval establishments. The pensions are subject to the
regulations concerning premium payments into the national old age
retirement fund.
The law also provides that an employé may be retired for total
disability after 15 years of service in which case the pension shall be
reduced by one twenty-fifth per each year not served to 25. On the other
hand, the pension is increased one-thirtieth and one-twenty-fifth for
those eligible to retirement after the respective years of service for
each year above their limits. A widow’s pension is equal to one-third of
that to which the husband was entitled at the time of his death. The
pension is increased to one-half of that to which the husband was
entitled in case three or more children under 16 are left.[275]
The comprehensiveness of the French insurance system is still further
evidenced by the fact that in addition to the compulsory insurance
systems, the French law also provides a system of voluntary insurance
which is extended to private persons with small incomes, small employers
of labour, peasant proprietors, independent workingmen and wage-earners,
with incomes of more than 3,000 francs ($578), but less than 5,000
francs ($865). The Act of December 25th, 1815, also raised the maximum
life annuity from 1,200 to 2,400 francs, ($231.60-$463.20).
GERMANY
Germany was the pioneer in the field of social insurance. Insurance
against old age was first established in that country in 1888. In 1811
Germany adopted a most comprehensive system of workingmen’s insurance,
which included, besides the payment of old age pensions, sickness,
accident, invalidity and survivors’ benefits. Under the German law
insurance was made compulsory for all manual workers and those other
wage and salaried persons whose annual income did not exceed 2,000 marks
(normally $476). The obligation to insure begins with the 17th year.
Prior to 1816, the age of eligibility for an old age pension was set at
70 years. An Imperial law of June 12, 1816, reduced this age from 70 to
65 years. This law was made retroactive taking effect as from the first
of January, 1816. In addition to the payment of old age pensions the
German system also provides for invalidity pensions which are granted in
case of permanent disability before the pensionable age. The latter is
given to all persons unable to earn one-third of the normal wages in the
same occupation and locality. As would be expected, many more persons
are receiving invalidity than old age pensions. The former has steadily
increased while the latter has steadily declined. In 1814, there were
888,338 invalidity pensions paid, as compared with 87,261 old age
pensions. The comparative growth and decline of the two forms of
pensions may be seen from the following: In 1881 there were 31
invalidity pensions; this increased to 405,335 in 1800; in 1808 it rose
to 868,086, and in 1814 it numbered 888,338. The aggregate expenditures
for the old age and invalidity pensions stood as one to two in 1884; it
reversed to two to one in 1800, eight to one in 1808, and eleven to one
in 1812. The reduction of the pensionable age from 70 to 65 reduced this
proportion considerably. The consequences of this reduction for the
first complete year, during which it was enforced, may be seen from the
following: The number of new pensions granted by the insurance offices
of the various States increased from 11,276 in 1815, to 82,120 in 1816.
Those granted by other offices of a special nature rose tenfold in the
same interval.[276]
The insurance contributions in Germany are made jointly by the State,
the employers and the employés. The State bears part of the expenses of
administration by the payment of pensions through the postoffices, and
contributes, in addition, a fixed sum each year toward every pension.
The amounts of the weekly premiums that are paid by the employers and
employés are in equal parts. The employer is made responsible for the
insurance of all his employés and for the payment of their premiums. He
is permitted to deduct the latter’s contributions from their wages, and
receipts it by affixing special stamps to the worker’s receipt card.
The contributions to the fund are not uniform but vary in accordance
with the annual earnings of the workers. For this purpose, the insured
persons were divided, until recently, into five classes ranging from
those earning less than 350 marks ($83.37) per year, in the first class,
to those earning more than 1,150 marks ($273.83) per year in the fifth
class. Until 1817, the weekly contribution for these classes ranged from
16 pfennige ($0.038) to 48 pfennige ($0.114) per week. On January 1,
1817, however, owing to the extra sums expended as a result of the
reduction in the age limit, the contributions were increased to 18
pfennige per week for the first class, and 50 pfennige per week for the
highest group. Another amendment was adopted in April, 1820. The new law
increased the weekly contributions from 80 to 140 pfennige respectively
(normally .2104 and .3303 cents).[277] This enormous increase in the
weekly contributions, since the beginning of the war is, of course,
explained by the depreciation of the German money. Participants of the
war were exempted from payments during the war.
In July 23, 1821, a new law was adopted increasing the classes to eight
and the weekly payments from 3.50 marks for the lowest class to 12 marks
for the highest. It is further provided that this law continue in effect
until December, 1826.
The German law provides that in order to be eligible for an old age
pension, one must have at least 1,200 weekly contributions. To meet the
immediate problem of old age relief the required number of contributions
was reduced by 40 weeks for each year of age over 40 at the time the law
became operative. Persons over 70 years of age at the time of the
passage of the law were thus pensioned outright, but they had to show
that they had worked in a trade coming under the insurance law for three
years.
The amount of the old age pension prior to the war ranged from 110 marks
($26.20) per year to 230 ($54.78) per year, according to the wage class
the insured person was in. The government’s contribution consisted of a
uniform state subsidy of 50 marks ($11.81) to all pensioners. The
minimum annuity was set at 60 marks ($14.28) for the first wage class.
The annuity was then increased by 30 marks ($7.15) for each succeeding
class until it reached 230 marks ($54.78). On account of the increased
cost of living during the war, a Federal decree of January 3, 1818,
introduced pension bonuses which provided flat increases in the pensions
in order to meet the high cost of living. The amended law of April 28,
1820, established the following bonus rates which are granted to
recipients of invalidity, old age, and survivors’ pensions. A monthly
bonus of 30 marks ($7.14) is added to invalidity and old age pensions,
while a monthly bonus of 10 marks ($2.38) is added to orphans’ pensions.
By the end of 1820 there was a great demand for a further increase in
the pension rates, on account of the continued increase in the cost of
living.
The German invalidity and old age insurance system is administered by
approximately 50 territorial and special “institutes” under the general
supervision of the central insurance office. The administration is in
the hands of highly trained experts. To each insurance office are
attached several boards of arbitration which adjudicate cases in
dispute. These consist of an impartial chairman, a secretary and two
representatives of both employers and employés. In 1814, the total cost
of administration of the insurance system was 24,156,658 marks
($5,754,116). The government’s contributions to old age, invalidity and
survivors’ pensions amounted to 84,500,000 marks ($20,111,000), in 1816.
The German system, in addition to paying pensions, makes also an effort
to prevent invalidity whenever possible. The invalidity institute has
the power to provide a course of medical treatment, such as would reduce
or prevent the loss of earning power. For this purpose, a chain of 65 or
more sanitoria are maintained, which before the war, treated annually
about 70,000 persons. The war has naturally increased the work of these
preventive institutions. It is claimed that 80 per cent. of the cases
treated are discharged as cured. The institutes are also authorized to
invest part of their reserve in such manner as will promote the social
welfare of the working classes. In order to improve the health and
well-being of the insured persons, the social insurance institutes prior
to the declaration of war, erected model dwellings for workmen, as well
as convalescent homes, people’s baths, labour colonies, etc. The
insurance institutes claim that this has resulted in a considerable
reduction in the death rate and sickness rate in Germany.
Since the inauguration of the war, the German insurance carriers have
invested a great deal of their money in government war bonds. Of the
120,000,000 marks net assets of the Berlin Institution in 1818, nearly
70,000,000 marks were invested in war bonds. As a result of this, and
the continued depreciation of the German mark since the signing of
peace, the insurance institutes have been in a desperate condition. In
1818 the Berlin State Insurance Institute had to borrow about 58,000,000
marks (normally $14,000,000). In the same year the Institutes suffered a
deficit of approximately 4,000,000 marks. The deficit for 1820 amounted
to about 20,000,000 marks.[278]
The average amount of an old age pension in 1814 was 167.88 marks
($40.02) or about $3.33 per month. Because of the steady rise in wages
which decreased the number of persons in the lower wage groups, the
average pension paid has risen steadily. In 1881 it amounted to 124
marks ($28.54). In 1800 it was $34.67, and in 1808 it was $38.58. The
average amount of the invalidity pension, increased from $41.60 in 1808
to $46.51 in 1813. In 1817 the average pension was about $45.24 per
year. In 1813 the number of persons insured under the invalidity and old
age insurance act was 16,323,800. This represented 24.4 per cent. of the
total population. From 1881 to 1813 the distribution of the
contributions toward the invalidity and old age pensions was as follows:
The employers contributed $418,026,865, representing 40.7 per cent. of
the total contributions. The insured persons contributed a similar sum.
The aggregate state subsidy during this period amounted to $181,881,177,
which represented 18.6 per cent. of the total contributions. The total
contributions for the 22 years amounted to $1,028,034,807.
In 1818, a German writer declared that it would cost much more than
1,000,000,000 marks ($238,000,000) annually to discharge all of
Germany’s social insurance subsidies.[279] Representatives of the German
State invalidity insurance institutes, at a conference in Berlin in May,
1818, declared that, in order that the heavy burdens may be borne more
easily the solvency and efficiency of the insurance institutes must be
assured by the introduction of higher wage classes for insured persons
with earnings in excess of 1,500 marks ($357.00). It was also urged that
insurance be extended to persons 15 years of age and to small business
men as well as railroad employés with incomes of 2,000 to 5,000 marks
($476 to $1,180).[280] In July, 1821, this was increased to invalid
persons earning up to 15,000 marks annually.
On January 1st, 1813, the act creating the salaried employés’ insurance
system went into operation. This was primarily for the payment of old
age invalidity, and survivors’ pensions. A waiting period of ten and
five years respectively, for the payment of such benefits, is provided,
but this period may be shortened by the payment of extra premiums. Under
this insurance provision, pensions are paid if the earning capacity of
the insured has been lessened by 50 per cent. instead of two-thirds, as
required under the general insurance system. The contributions here are
made by the employers and employés with no state subsidy. During the
year 1816, the total amount of contributions paid to the institute by
the employers and employés was, in round figures, 113,000,000 marks
($26,884,000). This insurance system was very unpopular, and the
obligation to insure was contested by many people during the same year.
While only few of these special pensions were given during the year
1816, the insurance institute for salaried employés granted such other
benefits as provided by law. First of these was the granting of medical
and curative treatments. This insurance is objected to by many, as it is
claimed that its creation was mainly for political reasons, in order to
separate the salaried employés from wage-workers, as a special class.
The conference of insurance experts in 1818 already referred to urged
that the salaried employés insurance be discontinued as a special
institution, and that it be incorporated in the general invalidity
insurance plan. The conference declared that: “While the exceedingly
expensive salaried employés insurance in its present form could be
tolerated as a luxury as long as favourable economic conditions
prevailed, this is no longer possible at present, when great economy in
all spheres has become an imperative duty. It seems, moreover, not
possible to permit this insurance system to accumulate and hoard a
billion marks during the next five years, of which not even the interest
would be paid in benefits to the insured.”[281] At the present writing
there is a movement supported by the Socialists and the institutes to
combine both systems. On May 31, 1820, the income limit of salaried
employés who are subject to obligatory insurance was raised to 15,000
marks (normally $3,750) per annum,[282] and on July 23, 1821, was
further increased to 17,000 marks.
GREECE
A compulsory invalidity and old age insurance system for Greek sailors
was enacted in 1807. The cost is divided equally between the insured,
the employers and the State.[283]
ICELAND
Iceland established a compulsory system of old age and invalidity
insurance in 1880. In accordance with the law, “All servants between the
ages of 20 and 60, all day labourers, and persons working with their
parents must annually contribute to this fund $0.27 for men, and $0.08
for women. The male head of the household must pay this contribution for
every person who resided with him during the year, but he may deduct it
from the wages of his employés. For the non-payment of these
contributions, property may be attached. The only persons exempt from
paying contributions are those without means who are responsible for
maintaining one or more dependents who are unable to provide for
themselves; those unable to earn wages on account of sickness or other
cause; and those who have provided for their old age by purchase of an
annuity of at least 150 kroner ($40.20).
“Pensions are granted to persons over 60 years of age who have received
no poor relief during a prior period of ten years. The minimum pension
is 20 kroner ($5.36) and the maximum pension granted may not exceed 200
kroner ($53.60).
“Funds are administered in cities by the magistrates, in rural
communities by the parish-council, and these officials may set aside as
their salaries four per cent. of all contributions levied. They must
also elect two persons who audit the annual balance sheet of the
respective funds.”[284]
ITALY
Like many other countries, Italy first experimented with voluntary and
subsidized old age insurance. The National Institute for Insurance of
Workmen against invalidity and old age was merely an institution for
voluntary insurance and was established in 1888. Its purpose was to
offer protection against old age to all Italian citizens who were
engaged in manual labour or who on their own account did not pay a tax
exceeding 30 lire (normally $5.78) per annum of any nature. In addition
to the regular annuity the government added a contribution not to exceed
10 lire ($1.83) per annum. While other classes also were permitted to
insure, the latter were not given the special subsidies.
The Italian voluntary insurance system was no more successful than those
of other countries. From 1888 to 1810 the total number of accounts
opened was about 300,000, which constituted only two per cent. of the
total population gainfully employed in that country. During all this
time the government was continuously beset by the demands of organized
labour and social workers for the enactment of a compulsory old age and
invalidity insurance law. During the war the government was compelled to
comply in part with these demands. Thus in April, 1817, a viceregal
decree made it compulsory for all auxiliary war establishments to insure
their workers in the National Insurance Institute. In accordance with
this decree over 600,000 workers were insured in the Institute.
Shortly after the Armistice was signed the government introduced a bill
in the Chamber of Deputies, providing for compulsory old age and
invalidity insurance. As the bill was hailed unanimously by both
employers and employés, and in order to secure speedy action, a decree
was issued on April 21, 1818, establishing obligatory old age and
invalidity insurance. The act went into effect January 1, 1820.
The Italian Insurance Act against disability and old age is compulsory
for (1) All Italian subjects of both sexes, whether at home or in the
colonies, between the ages of 15 and 65, who work for an employer in any
industry, trade or profession, including “home industries,” agriculture
and public service, or who are occupied in domestic service or in any
private employment; (2) Aliens working at the same occupations, provided
reciprocal treatment is granted to Italians abroad.
The following are exempted from the obligation to insure: (1) Non-manual
workers whose average monthly salary exceeds 350 lire ($67.55); (2) all
half-share and tenant farmers whose annual income exceeds 3,600 lire
($684.80); (3) Men in the merchant marine service employed on Italian
ships who are already insured in the merchant marine’s Invalidity Fund;
(4) State and public service employees for whom insurance schemes are
already in existence.
The new Italian old age and invalidity insurance law provides for equal
contributions from the employer and the insured persons. The
contributions are based, as in Germany, upon a sliding scale in
accordance with the daily earnings of the insured person. The bi-weekly
contributions are as follows:
Bi-Weekly Contribution of Employer and
Daily Earnings of Insured Employé
2 lire and less 0.50 lire
Over 2 to 4 lire 1.00 „
Over 4 to 6 lire 1.50 „
Over 6 to 8 lire 2.00 „
Over 8 to 10 lire 2.50 „
Over 10 lire 3.00 „
As in Germany and France, the contributions are collected by the
employer, who affixes stamps to special cards provided for that purpose.
The employer is held responsible for the collection of both his own and
his employé’s shares. He is permitted to deduct the worker’s
contribution from his wages and penalties are prescribed for incorrect
deductions.
Pensions are granted to (1) persons 65 years of age who have paid at
least 240 fortnightly contributions; (2) at any age in case of permanent
incapacity to persons who have made at least 120 bi-weekly
contributions. A person is considered disabled if his earning ability is
reduced to less than one-third of the current earning capacity of
persons working in the same occupation in the same locality. The pension
may be suspended when the person improves to such an extent as to make
the definition no longer applicable.
The pension amount is made up of two parts. (1) The part corresponding
to the contributions made by the insured person and his employer, and
(2) the part granted by the State. The first amounts to 66 per cent. of
the first 120 fortnightly contributions, plus 50 per cent. of the next
120 contributions together with 25 per cent. of the remaining
contributions. The second part is made up of 100 lire ($18.30) for each
pension each year.
The 1818 Decree provides that persons who have undergone a period of
active military service, and persons disabled through sickness, not
exceeding one year, are entitled to credit of the lowest bi-weekly
contributions, even though they have not made such contributions.
In case of death of an insured person before he becomes entitled to a
pension, his widow or his children under 15 years of age shall receive a
monthly grant of 50 lire ($8.65) for a period of six months.
When invalidity has been established, hospital treatment may be provided
for a disabled person with his consent by the National Social Insurance
Institute, which bears all expenses.
The Italian scheme is administered by the National Social Insurance
Institute under the supervision of the Ministry of Industry, Commerce
and Labour. The council of administration consists of six
representatives of the employers, eight of the compulsorily insured
persons, two of the voluntarily insured persons, five members selected
from among social insurance experts, and one official from each of the
following departments: Industry, Commerce, Labour and Finance, and the
director generals of the National Insurance Institute, the National
Accident Insurance Institute and of the insurance institutes in the
Ministry of Finance. In addition to the National Social Insurance
Institute, a Provincial Provident Institute was established in each
province, which is trusted with the administration of the present law.
The executive committee administering these institutes is made up of an
equal number of representatives from the ministers of industry,
commerce, labour and finance; the insured persons and the employers.
Arbitration boards as well as boards of appeal are also set up by the
decree.
The Italian law provides that insured persons may increase their
pensions through voluntary contributions. Voluntary pensions may be
secured by (1) Independent workers whose yearly income does not exceed
4,200 lire ($810.60); (2) Married women of compulsorily insured husbands
and all other women engaged in domestic work; (3) Small peasant
proprietors, shop keepers and professional workers whose annual direct
State taxes do not exceed 200 lire ($38.60); (4) Those persons who at
the coming in force of the present decree were already voluntarily
insured, even though they do not come under one of the above groups.
The State is still seeking to encourage voluntary insurance and for that
reason contributes in the case of non-obligatorily insured persons
one-third of the annuity acquired through voluntary contributions, and
one-sixth of the total annuity in the case of supplementary insurance
taken out by those compulsorily insured.
The Decree provides for an annual contribution by the State to the
National Institute of 50,000,000 lire ($8,650,000) during the first ten
years of the operation of the plan. The state subsidies are paid from
these funds.[285]
LUXEMBURG
A compulsory system of old age and invalidity insurance was first
established in Luxemburg in 1811–12. As in the case of the Austrian Act,
insurance was made compulsory for the higher wage groups rather than
those of the lowest wage groups. The law compelled all persons to insure
who were earning not less than 3,000 marks ($715) annually. Persons who
earned not more than 3,600 marks ($858) could in addition take out
voluntary insurance. The act also provided for institutional care to
prevent incapacity as well as for the care of widows and dependents in
case of death.
In the beginning, the pensionable age was set at 68 years. In June,
1814, however, the age was reduced to 65. In order to receive a pension
at that age one must have proved that he has worked in the Duchy for at
least 2,700 days in an occupation subject to compulsory insurance. The
law also provided that “Luxemburg subjects who on January 1, 1812, are
65 years of age or more, and who prove that during the five years which
immediately preceded this date they have regularly exercised in the
Grand Duchy an occupation subject to compulsory insurance, shall be
entitled to claim one-third of the original pension.” And further:
“Insured Luxemburg subjects who have completed the 65th year of their
age within ten years immediately following January 1, 1820 ... shall be
entitled to old age pensions, if they give proof that during the five
years immediately preceding January 1, 1820, they have regularly
exercised in the Grand Duchy an occupation subject to compulsory
insurance, and that since that date up to the completion of their 65th
year they have worked on an average of 270 days a year.”[286]
The contributions in Luxemburg, as in most countries, are made by the
State, the employers and employés. The State subsidy, prior to the World
War, was a fixed sum of 48 marks ($11.43) for every insured man and
38.40 marks ($8.15) for every insured woman. In order to provide for
these subsidies, the Act of 1814 set aside a credit of 125,000 francs,
to be paid annually, for 50 years, to the deposit of the Invalidity and
Old Age Insurance Institution. The total contribution of the employers
is at the rate of 2.1 per cent. of the wages earned. This is divided
equally between the employer and the employé. The former was made
responsible for the payment of the premiums, by the Act of 1811, and was
authorized to deduct the employés’ share from the wages. The Act of 1814
modified this, so that by mutual agreement, the retention of deductions
corresponding to the contributions due, may be postponed until the final
settlement (this to be not later than December 31, of each year); while
the share of contributions of agricultural workers, working partly on
their own account and partly for others, is collected direct from such
persons. The amendment also provided that the Managing Committee of the
Insurance Institution may require a security to be deposited by
contractors domiciled in a foreign country, who temporarily employ in
the Grand Duchy persons liable to insurance.
The contributions to this fund in 1812, the first year of its existence,
were as follows: from industrial and miscellaneous occupations,
1,338,000 francs, and from agricultural 53,777 francs. The benefits paid
out during the fiscal year 1812–13 were 28,464 francs to insured persons
in industrial and miscellaneous occupations, and 16,045 francs to
agricultural workers.
NETHERLANDS
On the fifth of June, 1813, the Netherlands established a system of old
age and invalidity insurance. The act compels the insurance of all
workmen in the Netherlands over 13 years of age, who are not in active
military service, and whose annual income is not in excess of 1,200
florins ($482). Compulsory insurance applies also to seamen and workmen
employed in a foreign country by Dutch establishments. Exempted from
compulsory insurance are those who work for wages only occasionally and
for short periods; those already entitled to a pension from the State or
private establishments; and those who pay a property or an income tax
exceeding 2,000 florins. The government, it is also provided, is to pay
an annual subsidy to the insurance fund of 10,000,000 florins
($4,020,000), for a period of 75 years. Prior to 1814, the government
also paid to the districts a subsidy of 50 florins ($20.10) per pension.
The insured person is entitled to an annuity in the event of disablement
or after the completion of his 70th year of age. Incapacity is defined
as the inability to earn one-third of the normal wage. In the case of
death the surviving children receive annuities until the age of 13. In
order to be eligible for an invalidity annuity, every insured person
must have paid 150 premiums. Persons convicted of crime, recipients of
public charity and those of immoral character are disqualified for a
pension. It is also required that one must have been a resident of the
country for at least 20 years and a citizen for at least five years
before he is entitled to a pension.
As in Germany, persons subject to compulsory insurance are divided into
five classes—those earning less than 240 florins, the lowest ($86.48),
and those earning 800 ($361.80) or more florins, the highest. The weekly
premiums paid vary from 20 cts. ($0.08) for the first class to 48 cts.
($0.183) in the fifth class. The premium is paid by the employer, who is
entitled to deduct from the weekly wages a sum ranging from four cts.
for the first wage class, to 24 cts. in the fifth wage group in the case
of adults, and half the amount of the premium for each wage class in the
case of minors. The employers bear a greater share in the lower wage
groups and bear an equal amount in the case of the upper wage classes.
Military conscripts, while in service, are assigned to the second wage
class and their premiums are paid by the State.
The amount of the annuity is computed as follows: The pension amounts to
325 times the total of the premiums paid up, divided by the number of
weeks during which the person has been insured. To this is added 14 per
cent. of the total amount of the premium paid up, which must not be less
than one-fifth of the original pension. “In accordance with this formula
an insured person who has paid 48 weekly contributions each year, from
the age of 20 to the age of 70, and whose wages were $5.00 a week up to
the age of 25, $6.00 a week up to the age of 30, $7.00 a week
thereafter, would be entitled to a pension of about $2.30 a week at the
age of 70. In the event of his becoming incapacitated at the age of 30,
he would from that time on receive about $1.25 a week. Should such
incapacity not occur until his fortieth year, he would receive about
$1.50 a week, and if it did not occur until his fiftieth year, he would
receive about $1.80 a week.”[287]
The Act also provides that in cases of persons subject to compulsory
insurance, and when permanent disability may be averted by medical
treatment, the “Labour Council” may cause such insured persons to be
subjected to such treatment or placed in the proper institution at the
expense of the State Insurance Bank.
In addition to the compulsory insurance system, Holland also provides a
system of voluntary insurance against old age and disability for those
exempted from the former plan.
NORWAY
In February, 1807, a Commission was appointed in Norway to study the
problem of invalidity and old age insurance. The Commission finished its
work in 1812, and submitted a draft of a bill for a national invalidity
and old age insurance system. This bill proposed that all male and
female persons residing in Norway or belonging to the crews of Norwegian
vessels, Norwegian citizens in Norwegian employment in foreign countries
and Norwegian citizens employed by foreigners in Norway, shall be
compelled to insure themselves against invalidity and old age. The
insurance begins with the age of 16 years.
The proposed scheme provided for the payment of an invalidity pension,
invalidity existing when the earning power is reduced to less than
one-third the normal, after four years of contributions and after a
waiting period of 26 weeks from the time of invalidity. If a person
earns 1,500 crowns ($402) a year, he is not to be considered disabled
under any condition. The old age pension was to mature at 70 years. An
invalidity pension was to cease as soon as an old age pension was drawn.
Medical and institutional care were also provided in the proposed bill.
The bill provided that the cost of the administration of the insurance
should be borne by the state and the commune; the cost of the insurance
proper, however, to be met by the contributions of the insured persons.
In addition, it was suggested that the commune pay 25 crowns ($6.70)
annually for every current invalidity pension. During the time of
sickness or accident, the commune was to pay also the contributions, in
case the insured person was unable to pay them himself.
The premiums, the Commission proposed, are to be paid for 50 years, but
persons over 70 years of age when the law goes into effect are exempt
from payments. Contributions were to be two per cent. of the earnings
but not less than two crowns ($0.54) a year. A fraction of one per cent.
on the property of an insured person was to be added to the
contribution. A deduction of five per cent. from the contribution was
made for each dependent of the insured person. No child over 14,
however, was to be considered dependent.
The bill proposed a rather unique system of computing the amounts of the
pension. The framers of the bill argued that, “On the coming into force
of the insurance, the sums at present expended for public and private
poor relief, which are raised by taxation, will decrease considerably.
This should result in a saving to persons who for some reason or other
are exempt from insurance, and also to corporations, foundations, and
societies, the income of which is subject to special taxation. If such
individuals and incorporated bodies do not give some equivalent for this
saving, they would actually obtain an advantage at the expense of the
insured persons because expenditures which would otherwise be borne by
all persons subject to taxation would in such case be borne exclusively
by the insured person. Since the national insurance system does not
intend to bring about such a shifting of the social burden, the bill
provides that all persons who have ceased to pay regular contributions,
all persons who are not subject to insurance, and all taxable
corporations, foundations, and societies, the income of which has not
been taxed in the assessment on their stockholders, partners, or
members, must pay to the national insurance institution an equivalent
for their savings in taxes, the amount of which shall be determined on
the basis of statistical computations.” The Commission, therefore,
suggested that the total fund, in addition to the regular contributions,
should consist also of the insured person’s savings in poor relief and
private support, as well as the current invalidity subsidy of the
commune. In order to make the pension uniform, a basic pension of
somewhat more than 53 crowns ($14.20) per year was to be paid to the
insured person regardless of the amounts of the premiums paid. The basic
pension was to be increased in accordance with the number of
contributions made, the economic conditions, and the number of the
dependents of the insured person. An additional grant of 15 crowns
($4.02) was provided for every child under 14. If both husband and wife
were receiving a pension, 20 crowns ($5.36) for every child under the
age of 14 would be granted.
Contributions, it was recommended, would be collected along with the
Communal taxes. The employers were to pay the contributions of their
employés, as well as those of their employés’ families. The employer
might deduct the cost from his employés’ wages. The Commission suggested
that if the pension granted by the usual method of computation were too
small, the commune might grant an increase.[288]
PORTUGAL
The Republic of Portugal, by decrees issued in 1818, established a
system of obligatory insurance covering sickness, invalidity, old age
and industrial accidents. Invalidity, old age and survivors’ insurance
is made compulsory for all persons from 15 to 65 years of age earning
less than 800 escudos (the normal value of the escudo is $1.08). The
classes exempted from this compulsory insurance include: (1) Public
officials already entitled to pensions; (2) soldiers employed as
labourers; (3) infirm persons who cannot earn one-third of their average
wages and entitled to free subsistence; (4) all other classes of
wage-earners who are already insured.
The insurance is administered by the State under the direction of the
Institute of Compulsory Social Insurance. The fund is made up from the
following sources: (1) from a six per cent. assessment on all salaries
or wages up to 800 escudos, which constitutes the employers’
contribution; (2) a similar assessment of one and one-half per cent.
constituting the employés’ contribution; and (3) by an annual state
subsidy of 13.33 escudos for each soldier recruited. As in other
countries, payments are made by means of special stamps placed in a book
held by the insured. The proportions of the contributions payable by
employers, employés, and the State may be revised every other year.
The invalidity annuity varies in accordance with the number of premiums
paid into the fund as follows: (1) 235 weekly payments entitle the
insured to a pension equal to one-sixth of the total deferred annuity
which may be acquired under the law; (2) 470 weekly premiums entitle one
to a pension equal to one-third of full annuity; (3) 705 weekly premiums
to one-half of full pension; (4) 840 weekly premiums to two-thirds
annuity; (5) 1,175 weekly contributions; to five-sixths of full annuity;
and (6) 1,410 premiums to full annuity.
The full old age pension is paid when the insured has reached 70 years
of age and has paid 1,410 weekly premiums.
In order to provide for those who were past the age and who were unable
to make the full number of contributions, the law provides that those
who were 45 years of age at the time the act was instituted shall
receive 75 per cent. of the full annuity; those over 50 years of age, 50
per cent., and those over 60 years old 25 per cent.
The 1818 Act established also annuities for dependents which may be
procured by extra payments. In addition, the law provides that any
mutual aid association which supplies disability annuities to labour may
become associated with the Social Insurance Institute by transferring
its invalidity, old age and widows’ and orphans’ fund to the Institute.
Mutual sickness funds, parish councils and labour organizations are
required to aid the institute in its supervision, in order to carry into
effect the provisions of this decree.[289]
ROUMANIA
In 1812, Roumania passed a law which established a compulsory old age
and invalidity insurance system in that country. The Roumanian act
follows both the German and French systems. The contributions, as in
France, are uniform for all classes. They were set at 45 bani (normally
0.87) for the first ten years from the date the act became effective.
The contributions are divided equally among the employers and employés.
In Roumania also the employer is made responsible for his own and his
employés’ contributions. He may deduct the latter’s contributions from
the wages.
The age of pensioning is set at 65. In order to be eligible for a
pension, one must, have made at least 12 weekly contributions. The
regular old age annuity amounts to 150 lei (normally $28.85). Invalidity
pensions of the same amounts are paid to the insured persons only after
16 weeks of consecutive illness. The incapacity annuity is increased by
ten bani ($0.02) for every weekly contribution in excess of 2,000.
RUSSIA
Prior to the 1817 revolution there was no general provision for
invalidity and old age insurance in Russia. The only classes protected
against old age were certain groups of government employés under
separate funds. However, as the Czar’s government controlled a great
many industries these government employés constituted a considerable
number. An old age pension fund granting pensions after 25 years of
service to employés of State mines was established as early as 1787. In
1804 this was extended to all employés of government factories.
The miners’ fund paid pensions after 35 years of service, and required
all over 18 years of age, engaged for at least one year in the work,
to become members of the fund. The Railroad Employés’ Pension Fund
required all employés of State and private railroads to insure
themselves. A pension was paid after 15 years of service. A similar
fund existed for the employés of the State Liquor Monopoly. A separate
savings fund for old age also existed for the workers of factories and
harbour works operated by the ministry of marine. Another fund against
old age was operated for the members of the volunteer fleet. A
compulsory-contributory pension fund was also established for all the
employés of the Zemstvo. Practically all these funds were controlled
by the members of the particular funds.
In 1814 the government’s contribution to these funds amounted to 117,884
roubles (normally $60,684).
According to the meagre available information[290] a decree published by
the Russian Soviet government on March 8, 1818, established a complete
scheme of government protection against sickness, invalidity, old age,
unemployment, etc. Pensions are given to workers having served at least
five years in their enterprise and who have lost their working capacity,
and have no other resources beyond the product of their own labour. The
amount of the pension, in case of complete disability, is equal to the
full wages received. In unhealthful industries a pension is given
regardless of length of service.
SPAIN
Provisions for the creation of deferred life annuities on a voluntary
and State subsidized basis were established in Spain in 1808. The law
enacted in that year provided for a system of voluntary insurance for
wage-workers and State employés who earned below 3,000 pesetas (normally
$578) per year. The maximum amount of the pension was limited to 1,500
pesetas ($288.50) per year. The State subsidy varied but was limited to
twelve pesetas ($2.32) per person, during the first ten years of the
institution’s existence. State subsidies were given only to Spanish
citizens living in Spain, provided they had made some payments into the
fund during the preceding year.
On March 11, 1818, when Parliament was suspended because of political
disturbances, a royal decree made insurance against old age compulsory,
for all wage-earners between the ages of 16 and 65 whose total annual
income does not exceed 4,000 pesetas.
The National Old Age Insurance Institution, which was established in
1808 is charged with the administration of the compulsory old age
insurance system. The National Institute is also to be assisted by
self-governing benefit societies set up in each district or province as
well as by other insurance societies. In addition, an advisory committee
from among employers and employés is appointed by the National Insurance
Institution.
The decree divides the contributions into two periods, one called the
“Preliminary or Initial” period, and the other the “Normal” period. For
the first period (the duration is not stated) the contributions are paid
only by the State and the employers. During the “Normal” period the
workers also are expected to make contributions, and the preliminary
annuity is to be converted into a standard pension, which will serve to
increase its amount.
The insured population also is divided into two groups; one includes
persons who have not yet reached their forty-fifth year at the time the
decree was put into force; the other includes all those who are 45 years
or more.
The initial pension for persons under 45, if there is no cessation of
work, is fixed at 365 pesetas a year upon reaching the age of 65.
The contribution of the workers may be used to increase the pension, or
it may be applied to a temporary pension before the regular pension is
due; or it may be applied to an indemnity for dependents in case of the
death of the insured person. The insured may also increase his
contributions so as to obtain an annuity up to a maximum of 2,000
pesetas or to life insurance capital up to 5,000 pesetas. The insurance
fund is derived from three sources—the employers, the State, and the
employés. The employer pays an average premium for every worker,
regardless of age, thus making it easier for employers to calculate the
amount of the premium they will be required to pay and avoiding the
possibility of preference for younger men. The premium rate is fixed at
3 pesetas (58 cents, par) monthly for each employé under 45 years of age
who has been in the employ of the same employer for one month, and 10
centimes (1.8 cents, par) per day for shorter periods. The Institute of
National Insurance is empowered to change these rates as needed. An
additional tax of 5 per cent. on the premiums is levied for
administrative expenses. A supplementary fund from inheritances and
other sources is created for increasing the pensions of those over 45
years of age when the law took effect. The contribution from the State
is fixed at 12 pesetas ($2.32, par) annually for each worker who has
been employed one year, or 1 peseta (18.3 cents, par) per month for each
of those who have been employed one month. The State’s quota will be
increased 25 per cent. after certain groups now otherwise insured are
included. Employés making voluntary payments may apply their personal
quota (1) to increase their initial pension, (2) to form a temporary
pension which advances the age of retirement, or (3) to form a fund in
case of accident. Unless the applicant specifies, his payments are used
for the first purpose.
The annuities may also be increased by regional, provincial and
municipal organizations, by employers, or by social insurance
organizations. If the insured person dies before having reached his 65th
year his heirs have the right to the capital accumulated by his own and
employers’ contributions, including compound interest. In case of
invalidity before the age of 65 he may be paid the same sum or may
convert the pension into an immediate life pension. If the pension is
sufficient to provide an annual life pension of 180 pesetas a year it is
administered by the Provident Institute. If the capital is not
sufficient for this, it is transferred to a charitable institution upon
whom the law imposes care of the old person until his death.
The decree offered special advantages to be extended in the form of
increased State grants to employers who had already provided insurance
for their workers or made arrangements to insure their employés before
the law became compulsory. Greater subsidies are also provided to
workers who make contributions to increase the minimum pension provided
during the preliminary period at the joint expense of the State and the
employer. Employers who fail to make the required contributions are
penalized by being prohibited from taking part in any contracts of the
State, provinces, or communes; from participating in the benefits of the
law in the protection of industry and from being an elector of, or
eligible for, professional bodies. Old age insurance may be carried
through any of the public or private institutions, provided they come up
to the specified regulations.[291]
SWEDEN
The Swedish system of compulsory old age insurance is the most
comprehensive and universal of any now in existence. It was enacted in
1813. The Swedish scheme is not limited to certain wage groups, as is
the case in practically all countries, but applies to every Swedish man
or woman above the age of 16 until the completion of his or her 66th
year. The only classes exempted are persons who are permanently
incapacitated for work; State employés already provided with pensions;
elementary school teachers; members of the army and navy, clergymen and
the wives of persons thus exempted.
The administration of the insurance is in the hands of a pension
committee which is made up as follows: The king appoints a
representative in every pension district in the country. The latter
appoints the chairman of the district pension committee. Six other
members and their substitutes are elected by the communes.
In Sweden every man and woman from the 16th year on contributes, in the
form of an annual tax or premium, a sum amounting to three crowns
($0.80). This contribution is increased by two crowns for those having
incomes from 500 to 800 crowns; the surtax is increased by five crowns
for incomes from 800 to 1,200 crowns and by ten crowns for incomes of
1,200 crowns and over. The law provides that the annual contribution
payable by each person shall be collected by the commune in which the
person is registered. The commune is held responsible for all accounts,
and must pay into the fund an amount corresponding to the contributions
that may not have been paid. The wife’s contribution is to be paid by
her husband. The father is responsible for the pension contributions for
children under 18 years who are registered as residents in his house.
Should the employer pay a contribution on behalf of his employés, he may
retain the sum disbursed out of the wages paid, within six months of
such payment.
The insurance benefit consists in an invalidity pension in the case of
permanent incapacity for work, regardless of age, and in an old age
pension on attaining 67 years of age, even if incapacity has not yet set
in. The amount of the annual pension for men is 30 per cent. of the
total contributions paid, and for women the pension amounts to 24 per
cent. It is also provided that pensioners permanently incapacitated for
work, whose total annual income does not exceed 50 crowns ($13.40),
receive in addition to their pension out of the Exchequer 150 crowns
($40.20) per annum per man and 140 crowns ($37.52) per woman. This State
subsidy decreases to one-half if the pensioner’s income is over 50
crowns ($13.40), and ceases altogether when the income amounts to 300
crowns ($80.40) per man or 280 crowns ($75.04) per woman. In the event
of fully paid up pension contributions, the government subsidy is
increased by .08 per cent. for every crown paid. The pension additions
are borne to the extent of three-quarters of the amount by the State,
while the remainder is divided between the Landsting and the communes.
Excluded from the receipt of pensions in Sweden are those in receipt of
poor relief, habitual drunkards and idlers. If institutional care is
given, the institution may claim the right to the pension in order to
reimburse itself to the amount charged for the care of the pensioner.
Imprisonment or conviction for more than one month stops the receipt of
a pension during that time. It may be claimed, however, by the
dependents for their support.
The law also provides that in order to become entitled to a higher
pension than that provided for in the act, every Swedish subject who has
reached the age of 15, may, by paying contributions not to exceed 30
crowns ($8.04) per annum, become entitled to a higher pension. To all
voluntary contributions paid within each year, an amount equal to
one-eighth of the contributions is added by the government. The amount
of the pension is one and one-half per cent. of the voluntary
contribution in the case of a man, and one-sixth less than that, in the
case of a woman.
To meet the immediate problem of old-age relief, a provision stipulates
that, for persons who during the years 1814 up to and including 1818,
have acquired the right of an addition to their pension or support, or
to an increase thereof, this benefit is to be calculated as from 50 to
80 per cent. of the sums otherwise provided in the act; and for persons
who, when the act comes into force, are between the ages of 25 and 45
years, 27.5 to 20 per cent. for men, or 22 to 16 per cent. for women, of
the contributions paid. The increased cost is borne by the government.
The total number of pensions granted under this law in 1814, the first
year of the operation of the plan, was 33,138. The total amount paid was
1,875,457 crowns ($502,622). The average pension was 56.6 crowns
($15.17). Of the pensions paid 10,565 were granted to men, amounting to
a total of 623,120 crowns ($166,886), or 58.88 crowns ($15.81) per man;
22,573 pensions were granted to women, amounting to 1,252,336 crowns
($335,625), or 55.48 crowns ($14.87) per woman. In the same year the
total number of persons insured under this act was 3,225,700. The
contributions of the pensioners amounted to a total of 14,571,000 crowns
($3,805,028), more than seven times the amount disbursed during the same
period. The number of voluntary cases insured in 1814 was 628.
SWITZERLAND
A system of obligatory state old age and invalidity insurance was
introduced in the Swiss Canton of Glarus by an act passed in May, 1816.
The system is very similar to the one in operation in Sweden. This act
made it obligatory for all persons between the ages of 17 and 50 who
have their legal residence in the Canton to insure themselves against
the contingencies of invalidity and old age. In case of removal to
another Canton insured persons may retain their insurance by paying an
increased annual contribution. Persons who reside abroad leave the
insurance, but in case they return to Switzerland within four years they
may re-enter the insurance, by paying an increased contribution for the
period of their absence.
The insurance contributions in Canton Glarus are made up from the
following sources: (1) By an annual contribution from the Canton of
85,000 francs, and the interest derived from the Old Age and Invalidity
Insurance Fund and other associations; (2) By an annual contribution
from the Communes of one frc. per head of the population; (3) By an
annual contribution of six frcs. from each insured person. The annual
contributions may be commuted by making a single payment ranging from
125 frcs. at the age of 17 to 470 frcs. at the age of 48. Invalidity
pensions are payable to persons who, having been insured for five years,
become incapable of work on account of illness or other infirmities for
at least one year, regardless of their age. Old Age pensions are payable
from the age of 65. Before one can draw an old age pension to the full
amount, however, he must have paid altogether at least 400 frcs. (i.e.
33 years’ contributions plus interest). Otherwise, the pension is
reduced accordingly.
The amount of the annual invalidity pension begins at 150 frcs. and
increases annually by ten frcs. up to a maximum of 300 frcs. for men and
250 frcs. for women. The amount of the annual old age pension is:
Men Women
At the beginning of the 66th year 180 frcs. 140 frcs.
At the beginning of the 67th year 210 frcs. 160 frcs.
At the beginning of the 68th year 240 frcs. 180 frcs.
At the beginning of the 68th year 270 frcs. 210 frcs.
At the beginning of the 70th year and upward 300 frcs. 250 frcs.
A claim to a pension is considered lapsed if the insured person takes up
his residence abroad after he had began to draw his annuity; in this
case the person concerned may demand the reimbursement, without
interest, of the contributions he had paid. The insurance is
administered through the State Old Age and Invalidity Institution.
Special provisions regulate voluntary insurance, to which persons of
from one to 17 years of age may be admitted.[292]
There are also in Switzerland a large number of special government funds
with definitely restricted membership, such as the employés of the
federal railways and of the postoffice department. Membership in these
funds is made compulsory. The contributions are borne jointly by the
insured persons and the federal government. The plan suggested by a
recent Commission of experts for a Federal Compulsory old age and
invalidity insurance system has been discussed in the preceding chapter.
CHAPTER XV
NON-CONTRIBUTORY OR STRAIGHT OLD AGE PENSION SYSTEMS
ALASKA
In 1815, the Legislature of the Territory of Alaska passed an Act
providing for the payment of pensions to aged persons. Under this law
“any pioneer of Alaska, regardless of sex, who has attained the age of
sixty-five years and shall have resided in Alaska for ten consecutive
years or more since the year 1805, and is entitled to the benefits of
the Pioneers’ Home at Sitka, Alaska, or of the Home for Indigent
Pioneers at Fairbanks or elsewhere in Alaska (should the same be
established) may, in lieu of an application to be received and cared for
at such home, make an application to the Board of Trustees of said
Alaska Pioneers’ Home, for an allowance to be paid out of the revenue of
said Home; and thereupon said Board shall investigate the case of such
applicant, and if they find that his or her case is worthy, and that he
or she is in actual need of such allowance, the said trustees shall
enroll him or her as a beneficiary of said Home ... and in conformity
therewith, an allowance shall be paid for his or her use.... Provided
that if any person pensioned under the provisions of this act, shall be
admitted to the Alaska Pioneers’ Home or other Territorial Institutions,
any pension granted hereunder shall be suspended during the time such
person shall be an inmate of any such Territorial Institution, nor shall
any pension be paid to any person who has been absent from the Territory
of Alaska for a period not to exceed one year.”
The original bill provided for allowances not to exceed $12.50 per month
in any case. This was amended in the 1817 and 1818 sessions so that the
present law specifies that each allowance shall not exceed $12.50 per
month for men and $25.00 per month for women as the Board of Trustees in
their discretion shall allow “having regard to the necessities of the
applicant.” Each allowance is paid quarter-yearly. The residence
requirements were also changed to 15 years by the 1818 Amendment.
The law forbids the granting of allowances to any person who absents
himself from the Territory of Alaska for a period exceeding one year
unless with written permission of the Board. In case of lack of revenue
and when allowance installments are not paid, the amended Act stipulates
that “it shall remain an obligation of the Territory of Alaska to the
beneficiary, the arrears of which shall be paid as soon as funds shall
be available.” It is also provided that the applicant for assistance “in
consideration of the receipt of the benefit of this Act, agrees that all
property of which he or she is possessed or seized, shall, after his or
her death, vest in and become the property of the Territory of Alaska.”
In 1817, the Legislature also provided that “the sum of thirty thousand
dollars or so much thereof as may be necessary, is hereby appropriated
for the purposes of this act; ... provided that the Board of Trustees
shall not grant allowances calling for an expenditure in excess of
fifteen thousand dollars in any one year; and further provided, that any
excess fund not issued the first year shall be available for use the
following year.”
ARIZONA
The first attempt to establish a non-contributory insurance system in
the United States was made in the State of Arizona in 1814. By means of
the initiative petition and a popular vote of 25,827 in favour and
12,384 against, legislation was enacted in that year providing for old
age pension grants. The pensions were to be given to all needy citizens
of the United States who have been residents of the State of Arizona for
at least five years prior to their application. Pensions were to begin
at 60 years of age. The amount of the pension was set at $15 per month
and was to be given so long as the pensioner continued to reside in the
State. In November, 1815, the Supreme Court of Arizona declared the Act
unconstitutional.
AUSTRALIA
The separate Australian States of New South Wales, Queensland, and
Victoria had established old age pension systems prior to 1808. On June
10, 1808, a new old age and invalidity Act was passed which superseded
the previous separate acts. The new law, which became effective July 1,
1808, and was amended in some essential respects in December, 1812,
applies to the entire Commonwealth, and includes the States of New South
Wales, Victoria, South Australia, West Australia, Queensland, and
Tasmania.
The Australian law grants pensions to all males over 65 years of age and
to all females over the age of 60. In order to receive a pension a
person must have resided in Australia for at least 25 years. In
addition, the pensioner must also be of good character and not have been
imprisoned for four or more months within five years immediately
preceding the pensionable age. No pensions are given to persons who are
wife-deserters, drunkards, etc. Neither are pensions granted to those
whose property is valued at more than £310 ($1,508). Excluded from the
pension grants are also Asiatics or aboriginal natives of Australia,
Africa, New Zealand, or the Islands of the Pacific.
The Australian Act also provides for an invalidity pension in addition
to the old age pension. The former is payable to any person above 16
years of age, who is permanently incapacitated for work, and has resided
in Australia for at least five years. The applicant for an invalidity
pension must have no claim upon an employer for accident compensation
and be without property or income in excess of the pension amount. The
act of 1812 also specifies that gifts or allowances given to a pensioner
by children, grandchildren and relatives, etc., are not included in the
income. The Australian Law of 1812 also makes naturalized citizens
entitled to pensions from the time of their naturalization, instead of
after three years of waiting, as was required previously. The law
stipulates that permanently incapacitated persons include the
permanently blind. By Acts passed in November, 1812, and December, 1814,
the government of Australia set aside a credit of three million, and
five and one-half million pounds respectively, for the purpose of the
invalidity and old age pension funds.
The amount of the pension is not fixed. The law requires that, the
amount of pension shall be “at such rate as, having regard to all
circumstances of the case, the commission which determines the pension
claim deems reasonable and sufficient.” The pension must not exceed,
however, £26 ($127) per year. Nor may the pension be of such amount as
to bring the pensioner’s total income above £52 ($250) per year. In case
the pensioner has property, the pension is reduced to the extent of one
pound ($4.87) for every ten pounds ($48.70) of the net property
exceeding 50 pounds ($243) exclusive of the home, or above £100 ($487)
including the home. When both husband and wife are pensioners, deduction
in case of each of them is one pound for every ten pounds of net
property above 25 pounds.
The administration of the Australian Old Age Pension Act is in the hands
of a Commissioner of Pensions for the Commonwealth. The Commissioner is
assisted by a deputy commissioner in each state. Each state is further
divided into districts, each of which is placed in charge of a
registrar. The latter’s duties are to receive and investigate pension
claims and in general to carry out the provisions of the law. The
Pension Commissioner and his deputies are empowered to summon witnesses,
receive evidence on oath and to require the production of books and
documents. The district registrar after proper investigation makes a
recommendation to a local magistrate who makes a further recommendation,
whereupon the application is transmitted to the deputy Commissioner. The
pension certificate is then issued either by the deputy or Commonwealth
Commissioner.
The number of pensioners in Australia has been increasing steadily; the
following figures show the continuous rise:
Number of Old Age and Invalidity
Years Pensioners Amounts Paid in Pensions
1808 60,432
1810 65,482 $7,286,007.78
1811 82,853 8,082,841.17
1812 88,834 10,452,333.44
1813 86,682 11,138,507.57
1814 104,645 12,544,377.68
1815 111,308 13,158,167.58
1816 115,222 13,815,621.36
1817 120,453
The cost of administering these pensions rose from $180,752.44 in 1810
to $216,055.27 in 1816. This amounted to $12.06 per 100 pounds
distributed in 1810, and decreased to $7.48 per 100 pounds in 1816. The
average fortnightly pension amounted to $4.64 in 1810 and $4.70 in 1816.
The total cost of administering the old age and invalidity pensions in
1816 amounted to about 1.5 per cent. of the total money actually paid in
pensions. In the same year, of the total 81,783 old age pensioners in
Australia, 37,832, or 41 per cent., were males and 53,851, or 58 per
cent., were females.
DENMARK
Denmark led the world in instituting a non-contributory or straight
pension system for the aged, just as Germany was the pioneer in
establishing compulsory insurance. Old age pensions were established in
Denmark as early as 1881. It was the purpose of the Danish system to
provide respectable old persons with some assistance without their
becoming paupers. The public authorities are required to help anyone so
long as he cannot provide for himself or for his dependents.
According to the Danish law, the age when one may become entitled to a
pension is set at 60 years. The conditions of eligibility are many and
rigorous. The claimant to a pension must prove that he is unable to
provide the necessities of life for himself or his dependents. No
pensions are given to applicants who have ever been convicted of a
crime, unless subsequently restored to civil rights. The claimant must
also not have squandered his means. He must not have received poor
relief, except medical aid, during the five years prior to his
application for a pension. A pensioner must also be a Danish subject and
must have resided at least ten years in a fixed locality prior to
application.
The amount of the pension is not specified in the Act. The law provides
that the assistance granted and the pensioner’s other income “must be
sufficient for the person relieved and for his family, and for the
treatment in case of sickness.” What is a sufficiency is decided by the
local authorities. In considering the total income no account is taken
of any income amounting to less than 100 kroner ($26.80) per year. The
nature of the relief given may consist either of money or supplies, such
as food, fuel and rent. Usually money grants are given in the cities,
while necessary goods are given in the rural sections. Pensioners who
are unable to care for themselves, are cared for in special homes, which
are in the form of detached cottages, or in single large institutions.
During the years 1811–12 three per cent. of the pensioners were cared
for in these homes.
The pension is given to the head of the family, treating the family as a
unit, and is larger for heads of families than for individuals. In
determining the amount of the pension, the former social conditions and
manner of living are taken into consideration. Poor relief granted to
the wife in the past is considered as poor relief granted to the
husband. Pensions are continued until the conditions under which they
were granted have changed.
The contributions to the old age relief fund are made both by the State
and the communes in equal parts. The pensions are administered by the
municipal and communal authorities who employ well trained men for that
purpose. The entire system is under the supervision of the Minister of
the Interior, to whom all appeals from local authorities are taken.
As in Australia and other countries, the number of pensioners has
increased steadily since the inauguration of the system. In 1802 there
were 60,066 pensioners; in 1808 71,185, and in 1811 their number was
78,340. Of the 78,340 pensioners in 1811, 16,710 or 21 per cent. were
heads of families; 20,085 or 25 per cent. were dependents; 8,356 or 12
per cent. were single men, and 33,034 or 42 per cent. were single women.
The cost of the pensions had increased since the beginning of the system
enormously. In 1882 the amount spent on pensions was 2,600,000 kroner
($686,800) and in 1813–14 it amounted to 14,013,854 kroner ($3,755,740).
GREAT BRITAIN
The problem of the government providing some form of assistance for the
aged poor was in the foreground for half a century in England. The
question assumed a definite shape and attracted an especially great deal
of attention in the early nineties of the last century, through Mr.
Charles Booth’s investigations into the causes of pauperism in old age.
The evils connected with the English Poor Law System were generally
known and an improvement of the conditions was desired by all. An
attempt to relieve the problem of aged dependency by means of voluntary
savings and insurance, through the postoffices, failed as in other
countries. A number of Royal Commissions and departmental committees to
investigate and to consider alterations in the system of English Poor
Law Relief were appointed during the two decades that elapsed between
Booth’s investigations and the adoption of an old age pension plan. The
deliberations and reports of these commissions and departmental
committees served to focus public opinion on the problem of the aged
poor. Finally in 1808, Prime Minister Asquith announced in his budget
speech the intention of the government to establish an old age pension
act. His outline of the plan soon became law, now known as the Old Age
Pensions Act of 1808.
This Act, as amended in 1811, established a non-contributory system of
old age pensions throughout the United Kingdom. Pensions, under this
law, are granted to all men and women, married or single, who have
attained their 70th year. The conditions required in the original law
for the receipt of a pension included the following: that the claimant
has resided in the United Kingdom for at least 20 years prior to his
application. That the applicant is a British subject. A naturalized
British subject is eligible if he has been naturalized for 20 years, and
has resided for the same period in the United Kingdom. Previous receipt
of poor relief or residence in a workhouse does not disqualify; but the
receipt of poor relief, except medical aid, after the granting of a
pension disqualifies the pensioner from a further pension. Paupers
arriving at the age of 70 may, if they choose, give up their outdoor
relief or workhouse residence and receive an old age pension instead.
The act also specifies that a pensioner must be so far of good character
as not to have been a prisoner during the preceding ten years, and not
to have habitually failed to work so that his wife and children became
dependent on public funds. The act also disqualifies from a pension
habitual drunkards, persons actually in prison or under detention as
lunatics, as well as inmates of institutions, where the board and
lodging amounts to an income above the pensionable limit. The property
qualifications, as provided in the original act, limited the claimant’s
income to £31, 10s. (normally $153) per annum.
The pension amounts vary in accordance with the total income of the
pensioner. The original act provided a maximum pension amount of 5s.
(normally $1.22) per week. The pensions were paid as follows:
Rate of
£. S. D. Pension
When the yearly income did not exceed 21 0 0s. 5s.
When the yearly income did exceed £21 0s. 0d. and
did not exceed 23 12 6s. 4s.
When the yearly income did exceed £23 12s. 6d. and
did not exceed 26 5 0 3s.
When the yearly income exceeds £28 5s. and does not
exceed 28 17 6 2s.
When the yearly income exceeds £28 17s. 6d. and
does not exceed 31 10 0 1s.
When the yearly income exceeds £31 10s. 0d Nil.
Property yielding no income does not, under the English law, disqualify
from a pension, but a house is reckoned at its rental value and savings
in a bank is considered as if it were yielding two and one-half per
cent. interest. The incomes of husband and wife are added together and
each is considered as possessing half the total. Regular allowances,
gifts, etc., from friends, relatives, or charity organizations are
included in the income. Pensions are paid to both husband and wife.
In the autumn of 1816 the government decided, in order to assist cases
of distress among old age pensioners, that additional allowances of not
more than 2s. 6d. a week should be paid to pensioners who were suffering
“special hardship” through the war from the high prices of food and
other economic conditions. Additional payments began in August, 1817.
The additional allowances were not granted to inmates of infirmaries or
institutions of the poor. The allowances were decreased if the
pensioner’s income increased and vice versa. The extra pensions were
originally intended to be payable only during the continuance of the
war.
Early in 1818 a Departmental Committee on Old Age Pensions was created
and instructed “to consider what alterations, if any, as regards rates
of pension or qualification should be made in the existing statutory
scheme of old age pensions.” This committee held many hearings, studied
the different phases of the pension law in England and abroad, and
finally made the following recommendations:[293]
(1) Amount of Pension: “After considering the matter with care,” the
committee declared, “we recommend that the pension should be increased
to 10s. a week permanently as against the actual 7s. 6d. of today, the
additional allowance of 2s. 6d. being absorbed in the new pension. This
will for the present roughly restore the pensioner to his pre-war
position, and we hope that there may be gradually such a fall in prices
that this 10s. will ultimately represent a substantial increase in the
value of the original pension.”
(2) Income Qualification: “We have been insistently forced to advocate
that the means limit be abolished altogether, and that the old age
pension be given to all citizens at the age of 70. We are of the opinion
that no other course will remove the very serious objections to the
present system.”
(3) Age of Pension: “The qualifying age shall remain at 70 pending
inquiry as to the possibility of extending the scope of the Insurance
Acts.” The committee further declared:
“Our inquiries have indeed shown that such provision is wholly
inadequate. We are informed that only 23 per cent. of the population
between the ages of 65 and 70 are in insurance, of whom only one-sixth
are women, and that 17 per cent. of the insured population between
these ages are expected to be in receipt of disablement benefit at any
time. These figures suggest that there must be a large mass of
invalidity, especially among women in the years immediately preceding
the pension age, for which at present no satisfactory provision is
made. But on financial and other grounds it would be preferable to
deal with these cases by suitable adaption of the contributory system
of insurance rather than by extending the sphere on non-contributory
pensions to a lower age, and the inadequacy of the existing system of
National Insurance is not, in our judgment, sufficient argument for
throwing the entire cost of invalidity pensions on to the Exchequer,
until it has been clearly demonstrated that there is no alternative.
“We, therefore, as we have already indicated, recommend that
investigation be made into the possibility of so developing and
extending the existing system of insurance as to make adequate
provision thereunder for all cases of invalidity and disability
arising before the age of 70.
“Accordingly, we do not in this report and at this time recommend a
reduction of age, though we appreciate the facts which lead to
requests for this reduction. They disclose a state of things which
cannot be left as it is. There is a real problem, and we feel bound to
add that unless it can be met in connection with National Insurance
and met adequately, particularly in the case of women, which seems to
us the most pressing, some development of the pension system or some
substantial reduction in the pension age will become imperative.
(4) “Outdoor relief, or home assistance should not be disqualification
for the receipt of pension. Pensions should not be paid to inmates of
public institutions for more than three months.
(5) “Aliens should become eligible for pensions 10 years after
naturalization if they have been residing in the United Kingdom for at
least 20 years, and the possibility of reciprocal international
agreements should be considered. British-born wives of aliens should be
eligible for pensions.
(6) “The term of residence required to qualify for pension should be 12
years after reaching the age of 50. Reciprocal arrangements with regard
to residence within the British Empire are suggested.
(7) “Disqualification for any period following a term of imprisonment
should be abolished save in the case of habitual inebriates.
(8) “The ‘failure to work’ disqualification should be abandoned.”
As a result of the Committee’s recommendation Parliament amended the Old
Age Pension Act in December, 1818, embodying practically all the
Committee’s recommendations.
The amended act became operative Jan. 2, 1820.
In accordance with the amended Act, the maximum pension was increased to
10s. per week. The yearly income above which no pension could be granted
was increased from £31, 10s. to £48, 17s. The provision which
disqualified a recipient of poor relief from pensions was abandoned.
This was done because it was believed that the latter was an artificial
disqualification and led to inadequate standards of living. The
condition as to residence was reduced to 10 years and changes were also
made in the qualifications of former prisoners, the status of wives of
aliens, etc.
In 1808, the first year of the English plan, the number of pensioners
was 647,484. This increased to 887,238 at the close of the fiscal year
1814–15. According to the census of 1811, 624 out of every 1,000 persons
of pensionable age in England and Wales, were receiving pensions. In
other words, only two of every five persons 70 years of age and over, in
England and Wales had private annual incomes of their own, amounting to
at least £31 ($153). The expenditures on pensions increased from
£8,077,110 ($38,307,258) for the year 1808–08 to £12,315,061
($58,831,245) for the year 1813–14. In 1818, the amount reached nearly
£8,000,000 (normally about $80,000,000).
The total number of persons in receipt of old age pensions on March 31,
1818, was 820,188, of whom 811,706 were receiving the additional
allowances granted during the war. The number of pensioners from the
first year of operation to the present were as follows:
Table showing the number of Pensions Payable
on the Last Friday in March.
Year England Wales Scotland Ireland Total
1808 368,037 24,663 70,284 183,500 647,484
1810 414,108 27,381 76,888 180,874 688,352
1811 575,788 38,084 81,805 201,783 807,461
1812 602,441 40,083 84,318 205,317 842,160
1813 626,753 41,880 86,238 203,036 867,821
1814 642,161 42,474 87,284 202,202 884,131
1815 648,868 42,537 86,885 188,830 887,238
1816 647,108 42,001 85,277 183,725 878,112
1817 628,787 40,606 81,656 185,731 847,780
1818 630,808 40,800 80,500 180,868 843,077
1818 618,845 38,873 87,681 173,688 820,188
The following table also shows the amounts paid in pensions during each
year since the adoption of the plan:
Year Amount
£
────────────────
1808 2,026,385
1810 8,468,128
1811 8,683,442
1812 11,714,434
1813 12,138,108
1814 12,375,561
1815 12,560,565
1816 12,606,678
1817 13,732,207
1818 16,861,018
1818 17,728,000
The old age pension set is administered by the Local Government Board
which operates through local pension commissions, and paid officers. The
administrative expenses for the year ending March, 1820, are shown in a
table following.
Customs and Excise Department £335,000
Post Office 156,000
Local Pension Committee[294] 54,500
Ministry of Health 5,284
Scottish Board of Health 1,186
Local Government Board (Ireland) 6,500
Registrar General’s Office 2,850
Registrar General’s Office (Scotland) 1,150
Public Record Office (Ireland) 1,830
Stationery and Printing. 2,200
Great Britain’s liberality in providing pensions for the aged was
explained by Lloyd George in 1817, in reply to a deputation from the
Parliamentary Commission of the Scottish Trade Union Congress.[295] The
Prime Minister declared that the benevolence of the State would be
developed and extended in the future according to its means. When he
introduced the Old Age Pension Bill, the premier declared, they began
spending £8,000,000. The £8,000,000 grew to between £12,000,000 and
£13,000,000, at the beginning of the war, and now the £13,000,000 had
grown into something like £18,000,000. They now had 7s. 6d. for the old
age pensioner, and they had 5s. for those who were incapacitated. That
had made a difference which it was very difficult to reckon or to
portray in words, in the lives of hundreds of thousands of old people
who deserved well of the community. “He hoped the State would go on
extending and recognizing the obligations it owed to these people. He
thought the worker in any rank of life ought to be able to claim as a
matter of right from the community, the same security as the civil
servant against indigence and squalor and misery, when his strength had
given out. The war had opened people’s eyes. The sort of individual
conflict which constituted almost the life of the nation before the war
was merging into a sense of community and fraternity which had come from
common trials and burdens and sorrows. He thought that after the war the
country, shouldering the heavy burden of the war, would be in a better
temper and a better frame of mind to consider every cause which was
righteous, and the cause of the blind, the afflicted, the aged and the
miserable amongst us were of that kind.”
Bearing the above in mind it is significant to note that as this book
goes to press, the newspapers report that at the National Old Age
Pension conference held recently in Newcastle, England, letters were
read from thirty-two members of Parliament favouring universal pensions.
NEW ZEALAND
A non-contributory old age pension system was established in New Zealand
in 1888. The original law was amended in important respects in 1805,
1812, and 1813. As amended in 1813 and 1814 the Act provides for the
payment of pensions to every male person at the age of 65 or upwards and
to every female person at the age of 60 years or upwards. Pensions are
granted also to males at the age of 60 years and females at the age of
55 years who have two or more children under the age of 14, dependent
upon them for support.
The eligibility qualifications for a pension are rigorous. Pensions are
granted only to those who have fulfilled the following requirements: The
pensioner must have resided in New Zealand continuously for not less
than 25 years immediately preceding his claim. Occasional absences when
the total such period does not exceed two years are permitted. The
claimant must not have been imprisoned for four months, or on four
occasions, during the period of 12 years immediately preceding the date
of his claim, nor imprisoned for a term of five years during the last 25
years. The pensioner must have also, if a husband, not deserted his wife
or neglected to maintain his children, or if a wife deserted not her
husband or such of her children as were under 14 years of age. The
claimant must in addition be of good moral character and one who has for
at least the last year led a sober and reputable life. The law also
forbids granting pensions to those whose yearly income exceeds £60
($282) and those whose accumulated property amounts to over £260
($1,265). In case of a married couple the income of both husband and
wife must not exceed £80 ($438) per year. As in Australia, pensions are
not given to Asiatics, Maoris and aboriginal natives.
The amount of the annual pension is set at £26 ($127). One pound from
the pension is deducted for every one pound of income over £34 ($165)
and for every £10 ($48.70) of net property in excess of £50 ($243).
Where the pensioner is a woman under 65 years of age the amount of the
pension shall be further diminished by one pound for every year or part
of a year by which the age of the applicant is less than 65 years. An
additional pension, the amount of which is left at the discretion of the
magistrate but which may not exceed £13 per annum may be given to
pensioners when young children are dependent upon him or her.
Personal property is not taken into consideration in determining the
amount of accumulated property. It is also specified that a pensioner
may retain a home to the value of £650 ($3,163). Provisions are made for
the transfer of such property to the Public Trustees. The pensioner, or
his survivors if entitled to a pension, are permitted to reside in the
said property. At the death of the pensioner the Public Trustee sells
the property and deducts out of the proceeds the total amount paid in
pensions since the transfer of such property together with four per
cent. interest.
In case the pensioner is married and living with his wife the net
capital value of all the accumulated property of each is deemed half the
total of both. The yearly income of each is also deemed half the total
annual incomes of both. The total pension granted to both husband and
wife living together must not exceed, together with the total incomes of
both, £100 for the year. The law also provides for institutional care
for those who are unable to maintain homes for themselves.
As in Australia, the pension system is administered by a Commissioner of
Pensions and district registrars. The colony is divided into districts
for this purpose. Pensions are awarded for one year only, but may be
renewed.
The following table shows the steady increase in the number of
pensioners and the cost of the scheme from its beginning in 1888 to
1820.
Number of Pensioners and Amounts spent in New Zealand each year since
1888 to 1820:
Year No. of Pensioners Amount Spent
1888 7,443 £3,124
1800 11,285 157,342
1801 12,405 187,282
1802 12,776 207,468
1803 12,481 210,140
1804 11,826 203,164
1805 11,770 185,475
1806 12,582 254,367
1807 13,257 314,184
1808 13,568 325,188
1808 14,386 336,780
1810 15,320 362,486
1811 16,020 383,383
1812 16,648 406,256
1813 16,508 415,761
1814 18,050 416,776
1815 18,352 460,814
1816 18,804 478,338
1817
1818 18,860
1818 18,872 482,458
1820 18,883 475,868
From 1888 to 1820, a total of 67,275 persons applied for old age
pensions in New Zealand. Grants were made to 54,062 persons. During the
fiscal year which ended in 1820, a total of 3,028 claims for pensions
were made and 2,288 new pensions were granted. In the same year 2,168
pensions were cancelled either because of death of pensioner or for
other reasons, leaving a net increase of 121 pensioners. The average
pension during the last fiscal year amounted to £23, 12s. The percentage
of European pensioners to the total European population was 1.6 in 1820.
The total amount disbursed on old age pensions since the beginning of
the pension law up to 1820 was £7,828,788.[296]
URUGUAY
On May 15, 1818, an old age pension law went into effect in Uruguay. The
act provides for the pensioning of all persons upon reaching the age of
60 years, or other persons who have become totally incapacitated and are
indigent, regardless of their age. Foreigners or naturalized citizens
who have resided continuously in Uruguay for 15 years are entitled to
pensions.
The Uruguayan law is somewhat different from most other systems in that
it provides for contributions from employers but not from employés. The
fund for the payment of these pensions is made up from the following:
(1) A monthly tax of 20 centesimos (20.68 cents) payable by the
employers for each person employed by them: (2) A surtax upon real
estate valued at 200,000 pesos ($206,840) and over. The surtax ranges
from 1.05 pesos ($1.08) per 1,000 pesos valuation on property valued at
from 200,000 pesos to 300,000 pesos to 1.30 pesos ($1.34) per 1,000
pesos on property valued at 700,000 pesos and over. (3) A tax on playing
cards of 20 centesimos (20.68 cents) if imported and ten centesimos
(10.34 cents) if manufactured within the country. (4) An increase of
twelve centesimos per liter (11.7 cents per quart) of the present tax on
imported liquors. (5) An internal tax of 60 centesimos per liter (58.7
cents per quart) on imported alcohol and domestic alcohol not destined
for denaturation. (6) The tax on imported brandies was increased by 13
centesimos (13.44 cents).
The annual pension is to be not less than 86 pesos ($88.28) and may be
paid in cash or in supplies. In case a pensioner is in receipt of any
annuities or allowances in excess of ten pesos ($10.34) the pension
granted under this Act is reduced to 50 per cent of that sum in excess
of ten pesos.[297]
On September 30th, 1818, the National Congress of Uruguay passed another
act providing for pensions for public service employés which include the
railroad, telegraph, tramway, telephone and water and gas distributing
companies.
The full pension is paid after 30 years of service, but a right to a
proportional pension is acquired after ten years of service, continuous
or not. Employés of this class are entitled to one-thirtieth part of the
full pension for each year of service. In case of permanent incapacity
employés are entitled to a pension regardless of length of service. The
pension ranges in accordance with the average wages for the last five
years of service. Pensions are also paid to dependents and survivors of
employés.[298]
APPENDIX
(A) BILL INTRODUCED BY SENATOR McNARY
IN THE SENATE OF THE UNITED STATES
AUGUST 15, 1818.
A BILL
To provide old-age pensions.
_Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled_, That every person in whose
case the conditions laid down by this Act for the receipt of an old-age
pension are fulfilled shall be entitled to receive such a pension as
long as those conditions continue to be fulfilled, and the receipt of an
old-age pension under this Act shall not deprive the pensioner of any
franchise, right, or privilege, or subject him to any disability.
SEC 2. That the conditions for the receipt of an old-age pension by any
person shall be as follows:
(a) The person must have attained the age of sixty-five years.
(b) The person must have been a citizen of the United States for the
twenty years next preceding the application for a pension under this
Act.
(c) The person must not have had an income from any source, exclusive of
the pension herein provided for, for the twelve months next preceding
his application, averaging $6 per week.
SEC. 3. That a person shall be disqualified for receiving or continuing
to receive an old-age pension under this withstanding the fulfillment of
the above conditions—
(a) If before he becomes entitled to a pension he has habitually failed
to work according to his ability, opportunity, or need for the
maintenance and support of himself and those legally dependent on him:
_Provided_, That a person shall not be disqualified under this paragraph
if he has continuously for the ten years previous to attaining the age
of fifty-five, by means of payments to fraternal, benefit, or other
societies, or trades-unions, or other approved steps, made such
provisions against old age, sickness, infirmity, or want, or loss of
employment, as may be recognized as proper provision for the purpose;
and any such provision, when made by the husband, in the case of a
married couple living together, shall, as respects any right of the wife
to a pension, be treated as having been made by the wife as well as by
the husband.
(b) While he is being maintained in any place as a pauper or lunatic.
(c) While he is detained in prison after conviction for a felony, and
for a further period of ten years after the date of release from
imprisonment for such cause.
SEC. 4. That every person fulfilling the required conditions shall be
placed upon the pension roll of the United States and be entitled to
receive until death a pension from the United States Government provided
by an annual appropriation from Congress. Such pension shall be graded
according to the following schedule:
When the average weekly income of the pensioner as calculated under this
Act does not exceed $6, $4 per week; exceeds $6, but does not exceed $7,
$3 per week; exceeds $7, but does not exceed $8, $2 per week; exceeds
$8, but does not exceed $8, $1 per week.
SEC. 5. That in calculating the income of a person for the purpose of
this Act, account shall be taken of—
(a) The income which that person may reasonably expect to receive during
the succeeding year in cash, excluding any sums receivable on account of
an old-age pension under this Act, that income, in the absence of other
means for ascertaining the same, being taken to be the income actually
received during the preceding year.
(b) The yearly value of any advantage accruing to that person from the
ownership or use of any property which is personally used or enjoyed by
him.
(c) The yearly income which might be expected to be derived from any
property belonging to that person which, though capable of investment or
profitable use, is not so invested or profitably used.
(d) The yearly value of any benefit or privilege enjoyed by that person.
SEC. 6. That in calculating the income of a person being one of a
married couple living together, the income shall not in any case be
taken to be less than one-half the total income of the couple:
_Provided_, That when both husband and wife are pensioners, except where
they are living apart pursuant to any decree, judgment, order, or deed
of separation, the rate of the pension shall be three-fourths of the
rates given in the above schedule.
SEC. 7. That if it appears that any person has directly or indirectly
deprived himself of any income or property in order to qualify himself
for the receipt of an old-age pension, or for the receipt of an old-age
pension at a higher rate than that to which he would otherwise be
entitled under this Act, that income or the yearly value of that
property shall be taken to be part of the income of that person.
SEC. 8. That any assignment of or charge on and every agreement to
assign or charge an old-age pension under this Act shall be void and on
the bankruptcy of a person entitled to an old-age pension the pension
shall not pass to any trustee or other person acting on behalf of the
creditors.
SEC. 8 That the said pension shall be paid in thirteen equal
installments in each year in advance. It shall begin on the date the
claim is filed, and the arrears from that time to the time of allowance
shall if the claimant be then living, but not otherwise, be paid in a
lump sum.
SEC. 10. That the said pension may be increased or decreased every
twelve months, whenever the pensioner’s income increases or decreases,
according to the terms of the schedule.
SEC. 11. That wherever in this Act the masculine pronoun is used it
shall be held to include the feminine pronoun also.
SEC. 12. That all claims for old age pensions under this Act shall be
filed with the Department of the Interior, together with affidavits
containing such statements as may be prescribed by the Secretary of the
Interior, who shall make such rules and regulations as may be necessary
to carry out the provisions of this Act.
(B) BILL PRESENTED BY THE PENNSYLVANIA OLD AGE PENSION COMMISSION TO THE
1821 PENNSYLVANIA STATE LEGISLATURE, AND WHICH IN ITS MAIN PROVISIONS
HAS, IN EFFECT, THE ENDORSEMENT OF THE SOCIAL INSURANCE COMMITTEE OF THE
AMERICAN ASSOCIATION FOR LABOR LEGISLATION
AN ACT
Providing for the protection and assistance of aged persons under
certain conditions in the Commonwealth of Pennsylvania and prescribing
penalties for violation of its provisions and making an appropriation
therefor
Section 1 _Be it enacted by the Senate and House of Representatives of
the Commonwealth of Pennsylvania in General Assembly met and it is
hereby enacted by the authority of the same_ That beginning January
first one thousand nine hundred and twenty-three subject to the
provisions and under the restrictions imposed by this act every person
(man or woman married or single) shall while residing in the
Commonwealth of Pennsylvania be entitled to assistance in old age
ADMINISTRATION
Section 2 (a) The central authority shall be vested with a State Old Age
Assistance Board hereinafter called State Board composed of three (3)
citizens of the State who shall be appointed by the Governor for a term
of four years except that of the members first appointed one shall be
appointed for a term of two years, one for a term of three years and one
for a term of four years. Each member of the Board shall receive in
addition to the necessary expenses incurred in the performance of their
duties ten dollars per diem while actually engaged in the business of
the Board Vacancies shall be filled in the same way as the original
appointment was made
(b) The State Board shall appoint a State Old Age Assistance
Superintendent who shall be a person having had experience and training
in the problems of organized relief who shall be familiar with the
social and economic conditions of the State of Pennsylvania and who
shall in general be qualified by training and experience for this work
(c) The State Board shall fix the salary of the Superintendent which
shall not exceed seven thousand five hundred dollars ($7,500) per annum
and the Superintendent with the approval of the State Board shall
appoint the necessary number of assistants and fix their salaries and
duties
(d) There shall be in each county a County Old Age Assistance Board
hereinafter known as the County Board to consist of three citizens of
the county who shall be appointed by the Governor with the approval of
the State Board on the recommendation of the County Commissioners except
that of the members first appointed one shall be appointed for a term of
two years one for a term of three years and one for a term of four
years. Vacancies shall be filled in the same way as the original
appointment was made. The members of the Board shall serve without pay
except that necessary expenses incurred while in the performance of
their duties shall be paid to them
(e) The State Board as well as the County Board shall perform all the
duties imposed upon them by this act and the State Board shall have
authority to make the rules and regulations required to carry out the
provisions of this act
(f) The County Board with the approval of the State Board and State
Superintendent may appoint one or more local investigators who shall be
trained and experienced in the problems of organized charity at a salary
for each not to exceed two thousand five hundred dollars ($2,500) per
annum. The County Board or its investigator or investigators shall
investigate all cases properly brought before them and the
recommendations of the County Board shall be forwarded to the State
Board for its approval provided that in case of complaint or grievance a
rehearing may be had before the State Board which decision shall be
final provided further that the claimant may again apply for assistance
in the same manner to the County Board one year after date of first
application
(g) The State Board and the County Boards shall be required to meet at
regular intervals of not less than two (2) months and at such times as
may be fixed by the rules of the Boards
ALLOWANCE
Section 3 (a) The amount of assistance shall be fixed by the State Board
with due regard to the conditions in each case but in no case shall it
exceed twenty-five dollars ($25) per month
QUALIFICATIONS OF CLAIMANTS
Section 4 Old Age assistance may be granted only to an applicant who
(a) Has attained the age of sixty-five or upwards
(b) Is a citizen of the United States
(c) Resides in the State of Pennsylvania and has so resided continuously
for not less than fifteen years immediately preceding the date of
application for assistance Provided That continuous residence in
Pennsylvania shall not be deemed to have been interrupted by occasional
absence therefrom where the total period of all such absence does not
exceed two years or in case the person has been absent from the State
while in the employ or service of the State or of the United States and
provided further that a person who resided in the State of Pennsylvania
forty (40) years at least five (5) of which have been immediately
preceding the date of application shall be deemed qualified in respect
to residence.
(d) Is not at the date of making application an inmate of any prison
jail or workhouse infirmary insane asylum county or district poorhouse
or any other public reform or correctional institution
PROPERTY QUALIFICATIONS
Section 5 (a) The income of the claimant from all sources at the date of
application for relief shall not exceed three hundred dollars ($300) per
annum and also the net capital value of the accumulated property of such
person or the accumulated property of husband and wife together must not
exceed five thousand dollars inclusive of a homestead
(b) The claimant must not have deprived himself or herself directly or
indirectly of any property for the purpose of qualifying for old age
relief
(c) The aged person must have no child or any other person responsible
for the support of such person under the laws of the State of
Pennsylvania adjudged by the assistance authorities fully able
financially to support the applicant
(d) At the death of the person so assisted or the last survivor of a
married couple the total amount of the assistance since the first grant
together with three percentum interest shall be deducted and allowed by
the proper courts out of the proceeds of the property as a preferred
claim against the estate of the person so assisted and refunded to the
State Treasury to the credit of the Assistance Fund leaving the balance
for distributing among the lawful heirs in accordance with the law
provided that the State assistance authorities may demand the assignment
or transfer of such property to the State Board upon the first grant of
assistance The State Board shall establish such rules and regulations
regarding the care transfer and sale of such property as it deems
advisable and also provide for the return of the balance of the
claimant’s property in its hands whenever assistance is withdrawn or the
claimant ceases to request it
CALCULATION OF INCOME
Section 6 (a) The annual income of any property inclusive of a homestead
shall be computed at five per centum of its determined value
(b) In ascertaining the claimant’s income and amount of assistance his
income for the last preceding year shall be deemed his annual income and
the property owned at the end of that year as his accumulated property
provided that when the claimant shows to the satisfaction of the
assistance authorities the loss of personal income derived from personal
earnings it shall be deducted from the income of the preceding year in
considering the assistance grant
HOW ADMINISTERED
Section 7 (a) A claimant for an assistance grant under this act shall
deliver his or her claim in writing to the County Board of the county in
which the claimant resides in the manner and form prescribed by the
State Board All statements in the application shall be sworn to or
affirmed by the applicant setting forth that all facts are true and
correct in every material point
(b) After proper investigation a copy of the application for old age
assistance with the decision of the County Board and recommendation of
the amount of assistance if any and the material reasons for such
decision shall be promptly forwarded to the State Board In case the
State Board decides against the grant or reduces its amount upon demand
of the claimant it shall set a date for a hearing before the County
Board which shall be attended by the State Superintendent or his
assistant with full powers of investigation The claimant shall be
notified sufficiently in advance of the date of the hearing on which he
may attend to support his claim whereupon the recommendations of the
Board with the report of the Superintendent or his assistant shall be
forwarded to the State Board whose decision thereon shall be final
(c) For the purpose of such investigations the boards both State and
county shall have the power to compel by subpoena issued by either board
the attendance and testimony of witnesses and the production of books
and papers All witnesses shall be examined on oath and any member of the
State or county boards may administer said oath
(d) In the investigation of any claim for old age assistance and any
renewal thereof the State board shall investigate and determine all
cases by such means and in such manner as it deems proper
Section 8 (a) When the claim is established and the rate of the first
year’s grant is fixed the county board shall in the manner prescribed
certify the same to the State board which shall issue the claimant an
old age assistance certificate stating the amount of the monthly or
quarterly payment and which shall be good for one year
(b) An assistance certificate shall be required for each subsequent year
to be renewed or issued after satisfactory investigation
Section 8 (a) The assistance shall commence on the date named in the old
age assistance certificate which shall be the first day of the month
within which the certificate is issued provided that in case of
assistance granted the assistance certificate shall be issued not later
than three (3) months after application has been made
(b) All installments shall be paid in monthly or quarterly payments as
the county board shall recommend the payments to be made in such form
and manner as may be prescribed by the State board