Welfare Before the Welfare State

--During the 18th and early 19th centuries, accepting government aid or private charity was stigmatized.

(Eh. Come again?)

That’s right. Government assistance, dear LFT reader, was considered taboo.

And that was well before the government started to militarize its police force, blow up people all over the world and spy on its own citizens.

Imagine that.

Mutual aid, on the other hand, didn’t carry the same humiliation.

Why? Because it was a voluntary, cooperative and… yes, mutual… way to give and receive help within a community.

“A mutual aid society,” Jassmin Poyaoan writes on the Resilience blog, “is an organization formed to provide mutual aid, benefit, and/or insurance among its members.

“Some of the first mutual aid societies in the U.S.,” Poyaoan goes on, “were formed out of necessity by groups with limited access to mainstream services and support.”

In 1787, for example, the Free African Society was formed to provide help to newly freed blacks. Later, in the late 19th to early 20th centuries, immigrants created mutual aid societies to serve as social support groups, “extending financial support to each member during illness and unemployment,” says Poyaoan, “as well as emotional support during times of loss.”

These mutual aid societies became so popular that, by 1909 in New York City, Joshua Fulton writes in Mises Daily, “40 percent of families earning less than $1,000 a year, little more than the ‘living wage,’ had members who were in mutual-aid societies.”

In fact, these societies had grown large enough that mutual aid nearly completely dominated the health insurance industry. ‘Lodge doctors’ were employed by many of the societies for those who could not afford or access conventional medical care. In the South, where African Americans were routinely denied care by conventional doctors, this was crucial.

“A large number of African-American societies,” Fulton goes on, “also created their own hospitals. In the early 20th century, it was not a given that African-Americans would be admitted into many hospitals. If they were, they frequently had to face such indignities as being forced to bring their own eating utensils, sheets, and toothbrushes and to pay for a black nurse if none was on staff. When the Knights and Daughters of Tabor in Mississippi, a black fraternal society with a reach across only a few counties, opened Taborian Hospital in 1942, membership nearly doubled in three years to 47,000.”

More than hospitals, these societies built orphanages, job exchanges, homes for the elderly, and created scholarship programs.

--Unlike bureaucrats who think they can fix everything by simply throwing money at it, mutual aid societies also taught the values and virtues of hard work, leadership, independence and self-reliance.

“In the early part of the twentieth century,” Paul Mastin writes in The Quarterly Journal of Austrian Economics, “fraternal orders advocating values such as self-reliance were an integral part of American society.”

The societies dedicated themselves to advancing mutualism, self-reliance, business training, thrift, leadership skills, self-government, self-control, and good moral character.

And, “If self-reliance and thrift were fraternal watchwords,” author David Beito writes on the Heritage Foundation’s blog, “so too was individualism.

“These values, which can fit under the rubric of social capital, reflected a kind of fraternal consensus that cut across such seemingly intractable divisions as race, sex, and income.”

Best part: Unlike Trump and Sanders supporters, who bicker like they’re part of rival high school football teams, the societies saw the foolishness in allowing politics to get in the way of their humanity.

“Nonpartisanship was another component of the fraternal value consensus,” says Beito.

“The Ladies of the Maccabees was typical in its rule that the organization be ‘non-sectarian’ and ‘non-political.’ Societies favored nonpartisanship to achieve harmony and to widen the applicant pool.

“It was standard practice for aspiring Republican and Democratic politicians to join all the leading lodges in their community. Individuals who were bitter rivals politically could co-exist under a common fraternal banner. The Loyal Order of Moose was not unique when it signed up prominent politicians from both parties — William Jennings Bryan, Theodore Roosevelt, and Champ Clark.

“Although the Ladies of the Maccabees required that members eschew politics, this rule did not preclude support for feminist causes. Many of its leaders played prominent roles in suffrage and temperance organizations, such as Woman’s Christian Temperance Union, the National American Woman Suffrage Association, and the League of Women Voters.”

Yes, it is possible for adults to… wait for it… act like adults, work together and help one another. Even if they disagree. (Gasp!)

Alas, the societies began to fall apart when the government’s great tentacles began to grow. First, in the 1910s, when the medical profession, with the government’s help, blacklisted any doctor who signed contracts with lodges.

“By 1914,” Beito writes, “Dr. Robert Allen in the Journal of the American Medical Association could state, with slight exaggeration, that ‘there is scarcely a city in the country in which medical societies have not issued edicts against members who accept contracts for lodge practice.’

“Some societies, such as the Security Benefit Association, responded to this pressure by building self-contained hospitals. They too, however, often ran afoul of medical society pressure as well as a federal tax code that discriminated in favor of third-party insurance.”

Forcing Americans into conventional hospitals was the first of many blows to mutual aid societies. The final blow, though, came with the rise of the Welfare State.

“The first three decades of the 20th century,” says Beito, “brought a rapid and unprecedented expansion in the government’s social welfare role. The two leading sources of growth were mothers’ pensions and workers’ compensation. In 1910, no state had either program; by 1931, both were nearly universal. During the 1920s, the number of individuals on the mothers’ pension rolls almost doubled.

“Certainly, there were more than a few leaders of fraternal societies who predicted that this rising welfare state would eventually undermine mutual aid.

“As the magazine of the Fraternal Order of Eagles put in 1915, ‘the State is doing or planning to do for the wage-earner what our Order was a pioneer in doing eighteen years ago. All this is lessening the popular appeal of our beneficial features. With that appeal weakened or gone, we shall have lost a strong argument for joining the Order; for no fraternity can depend entirely on its recreational features to attract members.’

“The shift from mutual aid and self-help to the welfare state,” Beito goes on, “was not just a simple bookkeeping transfer of service provisions from one set of institutions to another.

“As many of the leaders of fraternal societies had feared, much was lost in an exchange that transcended monetary calculations. The old relationships of voluntary reciprocity and autonomy have slowly given way to paternalistic dependency.

“Instead of mutual aid, the dominant social-welfare arrangements of Americans have increasingly become characterized by impersonal bureaucracies controlled by outsiders.”

And look at us now!

[Ed. note: Not to worry. Soft versions of these mutual aid societies are already beginning to crop up again. In the digital age, it’s easier than ever to create societies where individuals are able to help individuals flourish. And this trend will only continue until, hopefully just as rapidly, it’s the Welfare State that takes a beating this time. In fact, there are already even ways for you to “do good by doing good” today: Click here to see how.]

Until tomorrow,

Chris Campbell
Managing editor, Laissez Faire Today

P.S. Have something to say? Say it! Chris@lfb.org.

Chris Campbell

Written By Chris Campbell

Chris Campbell is the Managing editor of Laissez Faire Today. Before joining Agora Financial, he was a researcher and contributor to SilverDoctors.com.