Friendly societies were the major source of sickness insurance in the United States and Canada before the great depression of the 1930s. Historically the chief cost of sickness had been loss of the family head’s earnings, and the friendly society’s sick benefit provided a partial replacement for this lost income. The Independent Order of Odd Fellows (IOOF) was the largest of the friendly societies. In 1921, its peak year of membership, it had 16,268 lodges and 1,898,567 Odd Fellows in fifty-six state and provincial jurisdictions. Other large friendly societies in that year included the Knights of Pythias (908,000 members), the...

This chapter provides background information in two stages. The first section discusses the market for sickness insurance during the years 1860-1929. This is followed by a description of the IOOF’S institutional history and organizational structure.

The market for sickness insurance arose from capitalist economic development during the nineteenth century. It originated in Great Britain and Western Europe and only reached the United States and Canada after a time lag. During the twentieth century, paradoxically, economic development caused the market for sickness insurance to stagnate. Other priorities came to the fore, and alternatives to market insurance were increasingly accessible.

With nineteenth-century...

The Odd Fellows were the IOOF’S clients for sickness insurance. The SGL’SCode of Lawsrequired each lodge to include a stipulated sick benefit in its price of membership. It allowed a non-beneficial class of membership, but only for veteran Odd Fellows who were over fifty years of age. Thus all but a handful of Odd Fellows were beneficial members.

This chapter describes the IOOF’S market for sickness insurance. The evidence shows that the IOOF’S clients were adult white men, most of them Anglo-Protestants. They came from all social classes, but predominantly from the ranks of better-paid workers and lower...

The IOOF made the stipulated sick benefit the cornerstone of its lodge-based program of benefits during the American civil war. Traditionally its lodges had aided sick members on a discretionary basis, according to need. In 1863, however, the SGL required that lodges provide in their bylaws for a fixed, stipulated amount. “The weekly benefit,” the SGL declared, was “secured to members as a right and not as a charity.” The “payment of a weekly benefit to sick members,” moreover, was “a distinguishing characteristic of the Order and one of its fundamental principles.”

In contrast, the sick benefit entered a long-term...

Conventional wisdom blames the IOOF’S financial practices for the decline of its sick benefit after 1890. Although a member’s sick claims increased with age, all members of a lodge paid the same dues and were eligible for the same amount of benefit. As critics of the system argue, this posed little problem during a lodge’s early years when its members were young and had below-average claim rates. As the members aged, however, their claim rates rose. When revenue from level dues became insufficient to cover claims, the lodge’s insurance provision collapsed (Gosden, 1961).

The literature makes little distinction between friendly...

The IOOF lessened its provisions for the sick benefit after 1890. The SGL made the benefit optional for grand encampments in 1896 and grand lodges in 1925. Thirty-eight per cent of the patriarchs had become non-beneficial members of their encampments by 1924, and one-third of the lodge members had become non-beneficial by 1929.

As chapter 4 demonstrated, these developments did not arise from financial weaknesses. The IOOF’S moral ideals and decentralized lodge system allowed it to administer its sick benefit efficiently. Rising-cost pressures influenced the declining trend for the benefit, but did not drive the lodges to financial cataclysm. The...

The cost pressures on the sick benefit rose as the IOOF’S members aged. But rather than changing their pricing practices, the Odd Fellows cut the value of the sick benefit. Neither internal weakness nor external pressure determined the IOOF’S course of action. The IOOF’S lodge system was financially sound, and competition from rival insurers was stable during the 1920s. Thus, it was a change in attitude that caused the decline of the sick benefit. In 1863 the SGL had described the sick benefit as “a distinguishing characteristic of the Order and one of its fundamental principles.” In 1925, in contrast,...

Between 1929 and 1960 the IOOF’S sick benefit continued to decline in a stagnate market. In this context, commercial group insurers displaced friendly societies as the principal source of disability insurance. The group insurers became dominant, however, by developing a new mass market rather than increasing their share of the traditional market that friendly societies were abandoning. Conversely, self-insurance was always the chief competition for the friendly society sick benefit.

During the years 1930-60 the IOOF continued its transition from a friendly society to a social organization like the Masons or Elks. By 1931 the IOOF’S provisions for the stipulated...