When the fluctuating benefits were inaugurated the unions were without experience in the exercise of beneficiary functions. They could not calculate with any exactness the amount of the assessment necessary to provide benefits in fixed sum. They preferred, therefore, not to guarantee the payment of any amount. The character of the first death benefit in the Granite Cutters' Union illustrates the reluctance of the Union in assuming the responsibility of guaranteeing fixed benefits. In 1877 they adopted a benefit of fifty dollars, but also provided for an additional voluntary benefit to be raised by an assessment of fifty cents. After a few years the entire system was replaced by provision for the payment of a fixed funeral benefit.
The fluctuating benefit was very unsatisfactory, inasmuch as the insured member could not be certain as to what amount he would receive, and this uncertainty was aggravated by the voluntary character of the association. Even where participation was compulsory the fluctuations in the number of members were much greater than at present.
As soon as the unions became sufficiently strong, financially and numerically, and had acquired experience in the management of the benefit, they, with few exceptions, guaranteed to their members a benefit of fixed amount. A fixed payment of one hundred dollars was guaranteed by the Iron Molders in 1879 on the death of a member, and in 1882 the voluntary organization known as the Beneficial Association, which had maintained the system of special assessments, was disbanded.[[90]] The advantage of paying a benefit of fixed amount, as demonstrated by the experience of Local Union No. 87 of Brooklyn, led to the adoption of this system by the Cigar Makers' International Union, in September, 1880.[[91]]
The majority of American trade unions have inaugurated their death benefits since 1880,[[92]] and hence have escaped the experimental period of benefits based upon the fluctuating principle. Learning from the experience of the older unions, they have in most cases paid from the beginning death benefits of fixed amount. The benefit is a definite sum in all the unions except the Watch Case Engravers' Association and the Saw Smiths' Union, which in their constitutions of 1901 and 1902 respectively provide for the payment of a benefit upon a fluctuating basis.[[93]] This must be attributed to the fact that the unions are not sufficiently strong to guarantee the payment of a definite amount.
Under the fluctuating system the sum paid was often larger than the amount at which the benefit was later fixed. When, in 1880, the Cigar Makers adopted a death benefit of twenty-five dollars, their membership had increased to 4400, making possible, by a per capita assessment of ten cents, the payment of four hundred and forty-four dollars upon the death of each member. The assessment of twenty-five cents levied by the Glass Bottle Blowers for each death benefit upon a membership of 2423 in 1891 yielded a greater sum than the definite amount adopted one year later. The amount paid under the fluctuating system in the Iron Molders was also larger than the fixed amount later guaranteed by the International Union.
In another respect the early death benefits and insurance systems were alike. Participation in the more important and successful death systems was voluntary. Membership in the Iron Molders' Beneficial Association, created to pay death benefits, was, for example, entirely optional.[[94]] The first constitution of the Granite Cutters provided for an additional voluntary benefit.[[95]] In both of the above named unions the voluntary idea was short-lived. In January, 1879, the Iron Molders provided for the payment of a death benefit for all members of the craft.[[96]] By 1884 the Granite Cutters had abolished the voluntary death benefit and paid it to all members.[[97]]
Thus, both the death benefit and the insurance systems in American trade unions had their origin in the movement for mutual insurance which was so widespread in the United States immediately after the Civil War. Only in the railway brotherhoods did the plan result in any considerable increase in membership. In the other unions the insurance systems were replaced by the establishment of benefits, and these were usually smaller in amount than the insurance systems had contemplated.[[98]]
The tendency in those unions which have longest maintained the death benefit has been to increase the amount of the benefit and to grade the amount according to the length of membership. The policy of the unions in these respects has, however, varied considerably. In some cases there has been an increase in the minimum amount paid, together with provision for the payment of larger sums to members who have been longer in good standing. In other unions, such as the Iron Molders and the Pattern Makers, the regular benefit remains as originally established, but a larger sum is paid to older members. Only a few of the older organizations retain the uniform benefit. The most notable of these are the Typographical Union, the Glass Bottle Blowers, and the Hatters.
The grading of the death benefit serves two purposes. In the first place, the funds are protected. If the benefit were uniform and large, persons in bad health would be tempted to join the union in order to secure protection for their families. The grading of the benefit is accordingly a crude but fairly effective device against a danger which presents itself as soon as the amount becomes large enough to be attractive to "bad risks." A more important reason, perhaps, for the grading of the benefit is the desire to make it a more effective agency in attracting and holding members. If continuous membership carries with it constantly increasing insurance, the lapses in membership lessen.