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value of the policy at his death ; that inability to continue
premium payments during the first five policy years would i
mean immediate and total cancellation of his policy.

On January 9, 1937, the first payday in the year, a new



204



SURVEY MIDMONTHLYi 1



economic factor came into John's life. When John received
his pay envelope for that week, he found that his $25 was
shy 2^ cents. ( )n tlic ciui-lopr was a statement to the effect
that the boss had to deduct one percent of John's pay for
"Sen i.il Security Taxes." As far as John could make out,
thiN payment to the government would somehow be used
to pay him some money in his old age, if he kept on working
and lived to be sixty-five.

I'Hr a few months John didn't bother much about this
deduction. Although the loss of 25 cents cash money
sijiiee/.ed him a bit, he just didn't go to that weekly Bank
Nite at the Palace, and made out all right. Then the boys
in the shop began to discuss this newfangled social security:
what it was ; how much each had to chip in ; what the boss
had to pay; what they would each get when they were
sixty-live and no longer able to hold their jobs against the
pressure of younger men with sharper eyes and steadier
hands. John decided he'd find out a little bit more about it
so, one lunch hour, he went uptown to the office of the
! Security Board.

Here he was handed several pamphlets in simple English
which told him just what his government proposed to do
with his weekly 25 cent ante in the huge national jackpot.
John took these home and gave up Burns and Allen to
study them. After an hour or so, a look of pleased but in-
credulous amazement spread over John's face. He had just
,li>cm ered one outstanding fact which the boys in the shop
had never mentioned : that his government was not only
providing some income for his old age but also acting as his
life insurance company and giving him a better break for
his money than any insurance company salesman had ever
jffered him.

Unwilling to trust his own judgment, John dropped in at
the Social Security Board office again. A short but mutually
stimulating and pleasant interview took place:



John :









fohn:



Does this Social Security thing mean what I take it
to mean that if I die before I'm sixty-five, my fam-
ily will get 3 J / 2 percent of what I've earned up to
the time of my death?

Yes, if the amount of the payment due your family
is $500 or more. If it's less than $500, and you
don't leave a will, the board may have to pay the
money to the person who's entitled to it under the
laws of the state in which you've been living. This
might be your wife or child; it might be a creditor.
We can't tell you in advance.

Well, look here, then. I'm making about $1300 a
year. The way I work this thing out, if I had died at
the end of 1937, my family would have been in a posi-
tion to receive $45.50; and each year after 1937 the
amount of money they'd be entitled to would in-
crease by 3'/j percent of what I've earned during the
year. Is that right?

Yes, provided your wages are earned in practically
any trade of occupation except agricultural labor,
domestic service, government work and a few other
jobs that aren't covered by the act.

tohn: That's what I figured. Now let me ask you another
one. If I keep on making $1300 a year for the



next six years, I will have earned a total of $7800.
If I died then, and left a will, the government would
be ready to pay my family just over $270. Right?

Answer: Yes.

John: Then, you can really say that I've got a life insur-
ance policy with the government, which I got with-
out medical examination, and which grows each year
that I earn money in those trades you've told me
about; so that, if I could earn, say, $1300 a year
for the next forty years, I would have total earn-
ings of $52,000 when I get to be sixty-five; and at
that date the government would have my life in-
sured for $ l /2 percent of $52,000, or let's see
$1720. Does that check with you?

Answer: Right. And what's more, Mr. Pryblzka: if you
earn $52,000 by the time you're sixty-five, the gov-
ernment to all intents and purposes sets up a credit
of $1720 to your personal account. They start to
pay you off at the rate of $52.91 a month, or about
$635 a year. This money will come to you monthly as
long as you live, even though you may reach 100.
But if you were to pass out of the picture before
the government had paid you a total of at least $1720,
the unpaid balance would go to your estate.

John: Then why should I keep up my $250 industrial in-
surance policy?

This same question will undoubtedly be asked by millions
of workers as it becomes more widely understood that the
federal social security act provides the wage earners of the
country with a steadily increasing death benefit ; in short,
that the federal government has become the largest life in-
surance company in the world. As of March 18, 1938 some
38 million people had applied to the Social Security Board
for account numbers. Assuming that 10 percent of these
were duplicates, it seems safe to state that the act today
protects some 35 million individual wage earners against
the hazards of penniless death and old age, and without the
expensive methods used by private companies. If we assume
that these 35 million now registered with the board have
earned an average of $1100 per capita since January 1,
1937, the government may be said to have on its books a
total of some $1,340,000,000 of "insurance in force" or
"amount at risk," to make the analogy with life insurance
more complete. In fact, the government has torn a page
from the companies' books, and is applying to the admin-
istration of the act the basic principle of private low cost
group insurance the use of the employer as a premium
collector.

Probably no great shrinkage in industrial insurance sales
will be noticed until four or five years have passed, as it
will take that long for a worker in John's income bracket to
build up a governmental equity equal to the protection
afforded by a $250 industrial policy.

But so soon as the implications and guarantees of Title
II of the social security act are generally brought home to
the wage earning population of the country, and when the
tax on covered workers reaches 3 percent of their pay, just
so soon may we expect to see the twilight of the industrial
life insurance business.



Sixty-fifth National Conference of Social Work, Seattle, Wash., June 26-July 2.

IUNE 1938



205



were taken into the courts, they would be likely to hold
that it is contrary to public policy.

The nearest approach to a decision on the subject is per-
haps a Minnesota case considered in 1934 by the Supreme
Court of that state. A husband, Christensen, had himself
vasectomized for the protection of his wife who, it was
thought, would be injured by another pregnancy. The oper-
ation was unsuccessful ; sometime later the wife was deliv-
ered of a healthy baby. The husband thereupon sued his
surgeon, Thornby, for damages because of the anxiety ex-
perienced by both himself and wife during pregnancy, and
for the costs of medical and hospital care entailed by the
birth of the child.

As a defense, the surgeon set up the somewhat surprising
plea that the performance of a sterilization operation on
a healthy man was contrary to public policy and therefore
illegal; and that a contract based on an illegal action could
not be made the ground for such a damage suit.

The court found against the plaintiff on general grounds
but among other things said :

Aside from the statutes in the few states that have pro-
hibited it, we find no judicial or legislative announcement of
public policy against the practice of sterilization. Plaintiff was
married, and presumably would remain married, to his present
wife, who had been competently advised of the danger of fur-
ther pregnancy. Rather than subjecting the wife to a major
operation for sterilization it was entirely justifiable for them
to take the simpler and less dangerous alternative and have
the husband sterilized. . . . We therefore hold that under the
circumstances of this case the contract to perform sterilization
was not void as against public policy nor was the performance
of the operation illegal on that account.

Dr. Justin Miller, now on the court of appeals in the
District of Columbia, studied this point some years ago,
as dean of the college of law of the University of Southern
California. He concluded that barring Connecticut, Kansas



and Utah, already mentioned as having legislated on the
subject, "the general rule of tort law would seem to apply
and the consent of the party to submit to the operation
should be a complete shield against civil liability on the
part of the operating physician, provided the operation was
performed without negligence." He further concluded that
such an operation could not be considered an offense under
the criminal law unless malice could be shown to exist.
"Where the state has nothing but a mayhem statute which
follows the common law concept, it is very doubtful if the
modern operations for sterilization could be considered
criminal."

This view was upheld when the matter came directly be-
fore the California court in 1936, through the well-
advertised Ann Cooper Hewitt case. This girl, at the age of
20, had been sterilized by two surgeons in private practice,
her mother signing the consent. When she became of age
and could manage her own affairs, she filed a complaint
against the surgeons, charging that they had committed
mayhem against her. The judge of the superior court, who
heard the case, dismissed it on the ground that ( 1 ) there
was no law against sterilization in California and (2) that,
the girl being a minor at the time the operation was per-
formed, the mother had a right to consent to any legal
operation on her daughter's behalf. No crime had been
committed, under the circumstances, and the court refused
to send the case to the jury, dismissing the defendants in-
stead. The state, which was prosecuting this as a criminal
offense, appealed in turn to the state court of appeals and
to the state supreme court, each of which upheld the judg-
ment of the trial court.

The general trend therefore is toward maintaining the
legality of sterilizations in private practice. As sterilization
becomes continually more widespread and better known,
the likelihood of any court declaring it illegal probably
decreases.



The Twilight of Industrial Life Insurance



. By LEE K. FRANKEL, Jr.
Washington, D. C.



JOHN PRYBLZKA is today twenty-five years old. He
earns $25 a week as a machinist. On this wage he must
feed, clothe and house himself, his wife, and his three-
year-old son. He buys an occasional drink, visits an occa-
sional movie, and sets aside a small part of his wages to
provide for a decent burial.

For his "nickel-a-week" or industrial life insurance, John
forks out 25 cents a week to an insurance collector, in
exchange for which he is given a closely printed certificate.
This promises to pay "somebody" about $250 in the event
of John's death within a specified period of years always
provided that John's premiums have been paid in full up
to the time of his demise. In most cases, industrial policies
offer no clue as to the identity of the payee, leaving this
entirely to the discretion of the insurance company. Mrs.
John may get the money; on the other hand, the under-
taker, or any creditor who can prove that he incurred
expenses incident to John's death or last illness, stands an
equal chance of collecting.

John is totally unable to budget a quarterly or semi-
annual insurance premium. Hence he is one of the millions



paying from one and one half to three times the cost of
so-called "ordinary" or "straight-life" insurance, sold in
units of $1000 or more, and with premiums payable an-
nually, semi-annually, or quarterly. The extra cost of this
debatable protection is usually justified by the companies
on the grounds of the high cost of premium collection and
the greater risk involved in insuring the "working-man"
sector of the insurable population. Whether or not these
assumptions are warranted is not pertinent to this discus-
sion. In any event, John is paying through the nose for some j
degree of assurance that his earthly remains will not lie in
Potter's field. As of December 31, 1936 there were 68
million industrial policies in force, totaling $19,400,000,000.

John, a typical industrial policyholder, may or may not I
have realized that he couldn't borrow a red cent of his own '
money from the company until he had paid premiums for-j,
five years ; that his wife might or might not receive the face -J
value of the policy at his death ; that inability to continue
premium payments during the first five policy years would:
mean immediate and total cancellation of his policy.

On January 9, 1937, the first payday in the year, a new.'



204



SURVEY MIDMONTHLYf



economic factor came into John's life. When John received
his pay envelope for that week, he found that his $25 was
sh\ _'^ iniN. ( )n the envelope was a statement to the effect
that the boss had to deduct one percent of John's pay for
I Security Taxes. 1 ' As far as John could make out,
this payment to the government would somehow be used
to pay him some money in his old age, if he kept on working
and lived to be sixty-five.

For a few months John didn't bother much about this
deduction. Although the loss of 25 cents cash money
sqiu-c/ed him a bit, he just didn't go to that weekly Bank
Nile at the Palace, and made out all right. Then the boys
in the shop began to discuss this newfangled social security:
what it was; how much each had to chip in; what the boss
tad to pay; what they would each get when they were
sixty-five and no longer able to hold their jobs against the
)ressure of younger men with sharper eyes and steadier
lands. John decided he'd find out a little bit more about it
so, one lunch hour, he went uptown to the office of the
Social Security Board.

Here he was handed several pamphlets in simple English
which told him just what his government proposed to do
with his weekly 25 cent ante in the huge national jackpot.
fohn took these home and gave up Burns and Allen to
study them. After an hour or so, a look of pleased but in-
credulous amazement spread over John's face. He had just
red one outstanding fact which the boys in the shop
lad never mentioned : that his government was not only
>roviding some income for his old age but also acting as his
ife insurance company and giving him a better break for
lis money than any insurance company salesman had ever
)ffered him.

Unwilling to trust his own judgment, John dropped in at
he Social Security Board office again. A short but mutually
timulating and pleasant interview took place:

Does this Social Security thing mean what I take it
to mean that if I die before I'm sixty-five, my fam-
ily will get 3'/ 3 percent of what I've earned up to
the time of my death?

insu-rr: Yes, if the amount of the payment due your family
is $500 or more. If it's less than $500, and you
don't leave a will, the board may have to pay the
money to the person who's entitled to it under the
laws of the state in which you've been living. This
might be your wife or child; it might be a creditor.
We can't tell you in advance.

lohn: Well, look here, then. I'm making about $1300 a
year. The way I work this thing out, if I had died at
the end of 1937, my family would have been in a posi-
tion to receive $45.50; and each year after 1937 the
amount of money they'd be entitled to would in-
crease by 3'/j percent of what I've earned during the
year. Is that right?

: Yes, provided your wages are earned in practically
any trade or occupation except agricultural labor,
domestic service, government work and a few other
jobs that aren't covered by the act.

John: That's what I figured. Now let me ask you another
one. If I keep on making $1300 a year for the



next six years, I will have earned a total of $7800.
If I died then, and left a will, the government would
be ready to pay my family just over $270. Right?

Answer: Yes.

John: Then, you can really say that I've got a life insur-
ance policy with the government, which I got with-
out medical examination, and which grows each year
that I earn money in those trades you've told me
about; so that, if I could earn, say, $1300 a year
for the next forty years, I would have total earn-
ings of $52,000 when I get to be sixty-five; and at
that date the government would have my life in-
sured for 3>^ percent of $52,000, or let's see
$1720. Does that check with you?

Answer: Right. And what's more, Mr. Pryblzka: if you
earn $52,000 by the time you're sixty-five, the gov-
ernment to all intents and purposes sets up a credit
of $1720 to your personal account. They start to
pay you off at the rate of $52.91 a month, or about
$635 a year. This money will come to you monthly as
long as you live, even though you may reach 100.
But if you were to pass out of the picture before
the government had paid you a total of at least $1720,
the unpaid balance would go to your estate.

John: Then why should I keep up my $250 industrial in-
surance policy?

This same question will undoubtedly be asked by millions
of workers as it becomes more widely understood that the
federal social security act provides the wage earners of the
country with a steadily increasing death benefit; in short,
that the federal government has become the largest life in-
surance company in the world. As of March 18, 1938 some
38 million people had applied to the Social Security Board
for account numbers. Assuming that 10 percent of these
were duplicates, it seems safe to state that the act today
protects some 35 million individual wage earners against
the hazards of penniless death and old age, and without the
expensive methods used by private companies. If we assume
that these 35 million now registered with the board have
earned an average of $1100 per capita since January 1,
1937, the government may be said to have on its books a
total of some $1,340,000,000 of "insurance in force" or
"amount at risk," to make the analogy with life insurance
more complete. In fact, the government has torn a page
from the companies' books, and is applying to the admin-
istration of the act the basic principle of private low cost
group insurance the use of the employer as a premium
collector.

Probably no great shrinkage in industrial insurance sales
will be noticed until four or five years have passed, as it
will take that long for a worker in John's income bracket to
build up a governmental equity equal to the protection
afforded by a $250 industrial policy.

But so soon as the implications and guarantees of Title
II of the social security act are generally brought home to
the wage earning population of the country, and when the
tax on covered workers reaches 3 percent of their pay, just
so soon may we expect to see the twilight of the industrial
life insurance business.



Sixty-fifth National Conference of Social Work, Seattle, Wash., June 26-July 2.



UNE 1938



205



The Common Welfare




Chief of the Red Gross

PRESIDENT Roosevelt's appointment of Norman H.
Davis to head the American Red Cross came just in
time to permit the annual convention, assembled in San
Francisco, to greet the new chairman, successor to the late

Admiral Gary T.
Grayson. Mr. Davis,
who has just turned
three score years, en-
tered public life in
1917, and has held
many important posi-
tions both at home and
abroad. Since 1932 he
has represented the
United States at every
notable conference on
international problems.
The new chairman is
no stranger to Red
Cross affairs with which he has long been in touch through
his own interest and his personal friendship for the three
men who preceded him in the office, Admiral Grayson,
Judge Payne and Henry P. Davison. Mr. Davis already
has shown that he knows that being chairman of the Ameri-
can Red Cross is no sinecure but a full time job.

Relief Goes 'Round and 'Round

THE price of procrastination and of political muddling
in relief is becoming painfully apparent. Chicago and
Cleveland have been most in the news but the plight of
other cities is no less acute, and that of many more is peri-
lously close to crisis. Illinois had plenty of warning. Months
ago the Chicago Relief Administration served notice that
funds would be exhausted by May 15. Various citizen
groups pleaded and prodded for action by the authorities.
By the end of April relief requirements had exhausted the
entire city relief fund for 1938, $5,500,000. City officials
held that they were unable to levy new taxes. That left the
Chicago Relief Administration with only $1,912,132 in
state funds to meet the May requirement of $3,380,420 for
the case load of about 89,000 families. Instead of a blanket
cut in allowances Commissioner Leo Lyons decided to mail
checks alphabetically as long as the money lasted. Thus
some 55,000 families from A to N got checks for the fort-
night ending May 15 and 34,000 from N to Z got only
orders for surplus commodities. Presently it was announced
that all relief offices would close on May 18 unless legisla-
tive action intervened.

Meantime Mayor Kelly sought advice on "painless
taxes." Said Governor Horner, "I will let no one starve."

The upshot of all the backing and filling was the closing
of the Chicago relief stations and the assembling of the legis-
lature in special session on May 20. Urged by the gov-
ernor, the legislature voted $4,500,000 additional relief
funds for the state, to be available at the rate of $500,000
a month. Chicago's share will be about $329,000 a month



leaving a million a month to be scratched for. At this writ-
ing the legislature is still in session with the usual political
jockeying blocking any forthright approach to essential tax
reform. Thus far the legislature has only put a postage
stamp-sized plaster on a great open wound.

Relief in Ohio took the spotlight in early May when
Cleveland ran out of funds and consigned its 22,000 relief
families to surplus commodities, plus milk for children.
Dayton, Toledo and Columbus were in the same condition
with other cities not far behind.

With its relief stations manned only by staff volunteers,
Cleveland, since May 1, has been running on "stop-gap"
borrowings from general funds, $50,000 or so at a time.
"No one will starve," said Mayor Burton. On May 16
the legislature met in special session and the old urban-
rural fight promptly began again. In the face of the crisis
the legislature decided to "investigate" and sent a commis-
sion to Cleveland to study relief administration and munic-
ipal finance and to "check relief" as shown in 500 cases
picked at random from the files. Due to complete its work
by June 1, the commission was reported on May 27 as
asking for more time "to gather valuable data." Said Mayor
Burton, as the relief clients lined up with baby carriages
and toy wagons for their allotments of "surplus" potatoes,
oranges and what not, "We won't take another step. It's
the legislature's next move."

Rural domination of the Ohio legislature has persistently
prevented the cities from levying special taxes for relief
purposes on beverages and utilities for example. Whether
or not the present session will cut this knot and permit
the cities to tap new tax resources remains anyone's guess.

A Look at Youth

WITH a youth population of more than 450,000, Min-
nesota has well over 100,000 young people who are
totally unemployed and more than 20,000 who have never
had a day's work since leaving school, according to a survey
made for the state executive council under the direction of
Thomas Minehan, former instructor of sociology at the
University of Minnesota. The picture is a grim one.

The survey showed that of the total youth of the state
between the ages of fifteen and twenty-five, 34.7 percent
are in school, 46.8 have some type of employment, 18.8 per-
cent are unemployed and actively seeking work. The em-
ployed group includes many young people working only
for board and room, and others working as domestic or
farm laborers at less than $10 a month, in addition to
board and room.

Other facts revealed by the study were that 5 percent of rj
the families (roughly 20,000) have .one or both parents
over sixty-five; 13 percent (50,000) are one-parent fami-
lies, with the mother or father deceased or absent; 22 per-
cent (about 100,000) of the families in the state have a



Online LibrarySurvey AssociatesSurvey midmonthly : journal of social work (Volume 74) → online text (page 55 of 109)