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The Independent Institute

Poor Before Welfare

Despite the impressive research by Marvin Olasky, Carolyn Weaver, and other scholars on the role played by voluntary institutions in the history of American social welfare, old attitudes still retain a powerful hold. A case in point is an article in U.S. News & World Report entitled the “Myths of Charity.” The authors conclude that it “is highly doubtful that charities could pick up all or even most of the slack from the $76 billion to $450 billion in spending cuts now being proposed by Democrats and Republicans in Washington.” Citing examples from history, they imply that Americans have never relied (and thus can never rely) on private-sector charities to do the job of the welfare state.

It is indeed true that when measured in dollar amounts, the combined efforts of traditional charities at the turn of the last century, such as the Salvation Army, were small when compared to those of the modern welfare state. The chief problem with such an approach is that it entirely misses the point. It fails to come to grips, for example, with the fact that before the rise of the welfare state, Americans of all classes shared a deep aversion to dependence on either private organized charity or governmental relief. Indeed, there was a great stigma in the folk culture attached to any form of what might be called hierarchical relief (relief in which those who control the purse strings are higher on the socio-economic scale than the recipients).

While most Americans at the time conceded that such agencies performed necessary and positive functions, even the poorest of the poor regarded them as a last resort and then only a temporary one. As a result, the size of the dependent population remained infinitesimal by today’s standards. According to a study by the U.S. Census in 1905, only 1 out of every 150 Americans (excluding prisoners) resided in a public or private institution of any kind, including almshouses, asylums, orphanages, and hospitals.

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

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

These arrangements might be called reciprocal relief, in which donors and recipients tended to come from the same, or nearly the same, walks of life; today’s recipient could be tomorrow’s donor, and vice versa.

Apart from informal giving by neighbors and friends, and assistance provided through church congregations, the major sources of reciprocal relief were fraternal societies such as the Knights of Pythias, Sons of Italy, Polish National Alliance, and Independent Order of Odd Fellows. The activities of these societies dwarfed those of organized charity and governmental poor-relief bureaucracies. In 1920, for example, there were over 10,000 fraternal orders in the United States with roughly 100,000 separate lodges. That year, about 18 million Americans (most of them wage earners) were members—roughly 30 per cent of all adults over age twenry. By way of contrast, about 10 per cent of workers at the time belonged to labor unions.

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

By 1910, they increasingly included treatment by a doctor in their menu of services. The favored method was for a lodge to contract with a general practitioner to treat members on a per-person flat-charge basis. Two of the most prominent organizations to rely on this system, known at the time as “lodge practice,” were the Foresters and the Fraternal Order of Eagles. The cost of this service was very low. The Foresters charged two dollars a year for a doctor’s care; the Eagles charged one dollar. In the case of the Eagles, coverage extended to the immediate family of the member and included home visits.

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

Among the least known but most fascinating examples were the fraternal hospitals among blacks. Departing from the general pattern of the decline of fraternal societies as the century wore on, many of these hospitals dated from the 1930s and 1940s. An example was the hospital of the Knights and Daughters of Tabor in Mississippi, which between 1942 and 1964 cared for over 135,000 patients, many of them sharecroppers. As late as 1964, total dues of $30 per year entitled members to major and minor surgery. Like most black hospitals, it was a low-tech enterprise which would probably run afoul of current certification standards. Given the great poverty of the members, however, it represented a major achievement. The recollections of patients indicate that the staff often showed a missionary zeal which made up for many technical shortcomings.

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

In the 1930s, fraternal societies entered a period of decline from which they never recovered. While lodge membership rebounded somewhat in the 1940s, it did not return to its pre-Depression highs. (There have been notable exceptions. Moose International currently has a record membership of one million and operates a thriving orphanage and school.) Historians have pointed to several possible explanations, including the rise of commercial insurance among the working class and the lure of competing forms of entertainment, such as the radio and movies.

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

Another probable cause, although there is a paucity of hard evidence on cause and effect, is the rise of the welfare/regulatory state.

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

For what it is worth, more than a few leaders of fraternal societies posited a relationship between these two trends. As the magazine of the Fraternal Order of Eagles put it in 1915, “the State is doing or planning to do for the wage-earners what our Order was a pioneer in doing 18 years ago. All this is lessening the popular appeal of our beneficial features. With that appeal weakened or gone, we shall have lost a strong argument for joining the Order; for no fraternity can depend entirely on its recreational features to attract members.”

In contrast to their modern counterparts, opinion leaders in the social-welfare field at the turn of the century often displayed a keen appreciation for the impact of mutual aid and self-help. In 1913, for example, Edward T. Devine, a prominent social worker, reminded his colleagues that millions of poor people were able not only to survive but even to progress without recourse to organized charities and government aid:

We who are in engaged in relief work are apt to get very distorted impressions about the importance, in the social economy of the funds which we are distributing or of the social schemes which we are promoting . . . [I]f there were no resources in times of exceptional distress except the provision which people would voluntarily make on their own account and the informal neighborly help which people would give to one another . . . most of the misfortunes would still be provided for, and, very probably, the death rate, the sickness rate, the orphan rate, and the rate of physical and nervous exhaustion might be very little, if any higher, than at the present time.

But once the fraternal societies were pushed to the margins of social welfare, Americans began to become dependent on the vagaries of hierarchical organizations controlled by government.

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

David T. Beito is a Research Fellow at The Independent Institute, Professor of History at the University of Alabama, and co-editor of the book, The Voluntary City: Choice, Community and Civil Society.