A considerable increase in the average amount of the death benefit may be noticed for all the groups. This is explained, however, by the discontinuance of new admissions after January 1, 1897, which operated to gradually raise the average age at death and also the average length of service at death, upon which the amount of the death benefit depends. Thus in 1894 there were 39 deaths of members under 35 and in 1903 only 4 such deaths. The average death benefit in case of such early death was naturally very small. Thus in 1896 these 35 families received only $1,855, or only $53 per family, while 31 families of members dying at the age of 50 or over received $4,426, or $143 per family.

NUMBER AND AVERAGE OF LUMP-SUM BENEFITS PAID TO FAMILIES OF DECEASED MEMBERS BY THE ADRIATIC MUTUAL BENEFIT SOCIETY, 1890 TO 1903, AND BY THE MEDITERRANEAN MUTUAL BENEFIT SOCIETY, 1890 TO 1901, BY BRANCH OF THE [Source: The annual reports of the societies.]

SERVICE.

Adriatic society: 1890..

Num- Aver- Num- Aver- Num- Aver- Num- Aver- Num- Aver

ber. age. ber. age. ber. age. ber. age. ber. age.

1891.

1892.

1893.

1894.

1895.

1896.

1897.

1898.

1899.

1900.

1901.

1902.

1903.

Mediterranean society:

1890..

1891.

1892.

1893..

1894.

1895.

1896.

1897.

1898.

1899.

1900.

1901.

Until 1905, in case of death of pensioners, the family of the deceased was not entitled to the continuous pension, but only to a lump sum. The minimum of such lump-sum benefit was, according to the constitution of 1902, four times the monthly benefit of the pensioner. As the following table indicates, the average amount of this benefit varied since 1893 between $36 and $73. It did not represent, therefore, more than a funeral benefit and a small sum to tide over the first difficulties of the situation. By the law of 1905, embodied in the society's constitution of 1907, the widows of pensioners receiving their pensions since 1905 were granted the continuation of the pension. Data concerning the application of this paragraph are not available.

NUMBER AND AVERAGE OF LUMP-SUM BENEFITS PAID TO FAMILIES OF DECEASED PENSIONERS BY THE ADRIATIC AND BY THE MEDITERRANEAN MUTUAL BENEFIT SOCIETIES, 1890 TO 1903.

FINANCES. The general review of the finances of the three mutual benefit societies for the period of 18 years since their first reorganization in 1890 very plainly shows their financial weakness. The reorganized funds started on January 1, 1890, with a surplus fund of $1,863,702, accumulated in the preceding period when their retirement benefits were rather small. But as the average age of the members increased and the number of retirement benefits grew the annual surplus decreased, and by 1892 was changed to a large and growing deficit. Thus between 1892 and 1905 more than two-thirds of the assets of the mutual benefit societies had dwindled away. Only the material increase in rates in 1906 had evidently saved these funds from financial difficulties. The causes for this appear more clearly in the following tables, which give the financial reports for the years 1902 to 1907:

FINANCES OF THE MUTUAL BENEFIT SOCIETIES, 1890 TO 1907
[Source: The annual reports of the societies.]

The sources of revenue of the mutual benefit societies, as of the pension funds, consist of the following main sources: Contributions of the members, contributions of the railroads, regular sources of revenue established by the constitution, and interest and profits from investment. As appears from the following tables, the members' contributions in 1906 constituted about one-fourth (25.2 per cent) of the total, the direct contributions from the railroads over one-half (51.7 per cent), the indirect contributions, including the reimbursements for accident compensation, nearly one-fifth (18.3 per cent), and the income from interest and investments was very small, only 3.7 per cent, because of the low reserve. In view of the rapid decline of the reserve, the necessity for increasing the current revenues of the funds was keenly felt. The lower level of the wages of those employees who held membership in these societies, as compared with that of the members of the pension funds, previously described, precluded the possibility of increasing the members' contributions, and the railroads were therefore forced by law to increase their share. On October 21, 1902, these contributions were increased from 3 per cent of the salaries paid to 4.2 per cent, and on January 1, 1906, further increased to 8.15 per cent, i. e., nearly doubled. As a result the total contributions of the railroads more than doubled between 1902 and 1906, notwithstanding the decline in the membership. In 1902 these direct contributions of the railroads represented only 26.6 per cent, or a little over one-fourth of the total income, as against 51.7 per cent in 1906. The study of the table giving the expenditures by main items explains the reason for these difficulties. Pensions represented the main item, though officially designated by the name of continuous benefits, and though they were given only for retirement because of invalidity, and not for old age alone. The total expenditures for retirement pensions did not show such a rapid increase as in the case of the pension funds, but they were still

increasing in 1906, being in that year 7 per cent greater than in 1902. Thus, notwithstanding the existence of these mutual benefit societies for over 35 years, and the discontinuance of new admissions since 1897, the societies have not yet reached the state of equilibrium where the granting of new pensions would be entirely offset by the discontinuance of old ones. As was shown in one of the preceding tables, the number of current pensions was still increasing in 1907, and so was the average amount of pensions because of the increase in wages. While the latest increase of the railroad contributions from 4.2 per cent to 8.15 per cent of the salaries did overbalance the deficit and produce a slight surplus, the mutual benefit societies were not yet put upon a sound financial basis thereby. For with the continued increase of pensioners and the decrease of active members, producing a fall in the revenues, the small surplus was likely to be again converted into a deficit in the near future. If a technical balance of the mutual benefit societies were struck, it would show that the members. through their long membership had acquired rights for invalidity pensions, thus creating a large actuarial liability with practically no reserve to cover it. At the same time a new source of liabilities was created by the provision of the law of 1905 establishing pensions for widows of members dying after July 1, 1905, and for widows of pensioners who had received their pensions after that date.

In the earlier years the expenditures for pensions for widows were on account of old pensions granted before January 1, 1890, to widows of members of the old Alta Italia Mutual Benefit Society, merged partly with the Adriatic and partly with the Mediterranean Society. But since 1905 the number and cost of widows' pensions show an increase.

If it were not for the entire change of the pension system the cost. of widows' pensions would rapidly have assumed large proportions.

INCOME AND EXPENDITURES OF THE MUTUAL BENEFIT SOCIETIES, 1902 TO 1907. [Source: The annual reports of the societies.]

a For first six months only.

This total is $4,190 less than the total shown on page 1988; the figures are given as shown in the

original report.

INCOME AND EXPENDITURES OF THE MUTUAL BENEFIT SOCIETIES, 1902 TO 1907

a For first six months only.

This total is $4,190 less than the total shown on page 1988; the figures are given as shown in the original report.

PROVIDENT INSTITUTE OF THE STATE RAILROAD.

The financial organization of the provident institute resulting from the consolidation of the three separate provident institutes of the railroad operating companies was very much different from that of the older institutions, and the reasons for these differences are important, having been forced by the impossibility to construct a true actuarial basis for the activity of a pension and benefit institution on those older lines. It will be necessary, therefore, to give the details of these differences in the financial organization.

As was stated in a preceding section, the provident institute combined the functions of both a pension fund and a mutual benefit society, or, in other words, old-age and invalidity insurance with sickness insurance and medical aid. The element of mutuality, while not altogether eliminated, was very considerably reduced, the main activity taking the form of compulsory accumulation of individual accounts, to be converted under certain conditions either into annuities or lump-sum benefits.

The membership in this institution was compulsory for all permanent employees of the railroads who entered the service after December 31, 1896, except that for employees appointed at an age over 45 years such membership was optional. The institute was divided into two sections, the first being limited to employees receiving monthly or annual salaries and the second to those receiving daily