Popular Science Monthly/Volume 79/November 1911/The Moral Influence of a University Pension System

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WHILE a college or university can not divest itself of a humane duty towards an old or worn-out teacher, it does not follow that every college is under an obligation to establish at once a system of retiring allowances. The obligation for a service performed is one thing; the question of taking on general obligations for services to be performed is quite another. It is fair, however, to say that it is the clear duty of a college at our present stage of civilization to reckon among its obligations those to old and worn-out servants and to deal with these obligations in full view of all other duties. Hitherto colleges have in the main admitted no such duty. The educational corporation has generally acknowledged no obligation to the individual when his services were no longer wanted. This attitude is no longer possible. No corporation under our social and industrial order can brush aside this humane duty. Every such organization must, as best it may, do its duty both to the public and to the individual. For this reason, therefore, no college is justified in turning out without some provision an old and faithful teacher who has long served it. It still does not follow that such an institution is in a position to establish a permanent and definite system of pensions.

The questions, what form of pension system is wise and just, and what effect the establishment of a pension system will have upon the professional and moral qualities of teachers, and what effect the establishment of such a pension system will have upon the college itself, still remain to be answered. These questions are part of a much larger one with which society is to-day engaged. Is it for the interest of society as well as for the interest of the individual that some definite provision for old age and disability be made? If so, under what conditions should such pensions be conferred and from what source shall they be provided? Should the beneficiary bear at least a part of the burden of a pension or should it be paid by the agency, whether it be corporate or governmental, which the pensioner serves? These are questions with which all modern organizations—state, business corporation or social organization—are confronted. The college or university, as one of these organizations, must also seek to answer these questions in its own way and to the extent of its responsibility.

The literature which has appeared in recent years concerning pensions is large. In this country the most valuable contribution to the subject has been the Report of the Massachusetts Old Age Pension Commission, a report due in large measure to the energy and careful work of its chairman.

Pensions, as we discus them to-day, are characteristic of modern civilization. This is necessarily so. A pension system can not be valued unless it promises security, and it is only within recent history that institutions and governments have attained to any great degree of security. In the ancient world pensions are hardly met with except in the bounties paid to discharged soldiers. In the Middle Ages the church, the only stable institution, fixed no age limit for its servants, but relieved their old age by coadjutors and assistants rather than by retirement.

The modern pension systems appeared in the nineteenth century and have shown rapid growth. Their extension to all orders of society has been a feature of the opening decade of the twentieth century. This result is due to two facts: first, to our quickened sense of humanity; secondly, to the clearer appreciation that such humanity means more effective service and an improved condition of society. Minor factors have also helped to quicken the attention of the more thoughtful nations to the need of support for old age. The work of modern society is done under increased pressure and under more nervous conditions. At the same time that these changes have taken place improved public hygiene has lengthened our years beyond the average of the last century. Men's activity is exhausted at an earlier date in many callings, while at the same time improved conditions of health prolong their lives. The period in which men require help has, therefore, been extended.

The movement for a general system of pensions to aged poor, to be paid by the community, was first proposed in England in the eighteenth century. The first comprehensive plan, however, to be enacted into a national law was that adopted by the German legislation of 1891. This was followed by Danish legislation in the same year; and at the present time, in addition to these countries, Prance, all the Australian states, and New Zealand have old-age pension systems, while Belgium and several of the cantons of Switzerland maintain a voluntary insurance against old age. In 1898 England enacted in Parliament the most far-reaching of all old-age pension acts.

The United States government has hitherto lagged behind other nations in the investigation and study of the civil pension for its old servants. This is no doubt due in part to the prejudice against all pensions engendered by the history of the bounties bestowed by the government upon the survivors of the Civil War and their families. The payments on these pensions aggregated in 1910, forty-five years after the close of the Civil War, the enormous total of $160,000,000. The history of this pension fund has been perhaps the greatest scandal which has fastened upon our government. This enormous payment represents not devotion to the patriots of the Civil War, but political truckling in its smallest and most objectionable form. With this lesson before them the people of the United States have hesitated to deal at all with the question of pensions for civil servants.

Notwithstanding the unwillingness of the national government to deal with the question of civil service pensions such pensions are being widely extended amongst the large business corporations and railroads. The New York Central Railroad, the Pennsylvania Railroad, the United States Steel Corporation, and many other railroad, banking and industrial corporations have established systems of pensions for their officers and employees. An interesting type of such a system has recently been authorized for the Boston and Maine Railroad by the legislature of Massachusetts. In addition, several states of the union, the last of which is Wisconsin, have inaugurated pension systems for public school teachers, maintained in considerable part by deductions from the salary of the individual.

Before the establishment of the Carnegie Foundation, pension systems for teachers, quite limited in their provisions, were in operation in the University of California, Columbia University, Cornell University, Harvard University, McGill University and Yale University. Pension systems have since been instituted in Haverford College and for those teachers connected with Teachers College at Columbia University who do not come within the rules of the foundation. In most of these colleges the entire pension was to be paid by the institution. In some of them—as, for instance, at Cornell—the pension was to be paid in part from an endowment fund and in part from the payments of the professors.

The various pension systems thus briefly alluded to as now being in operation may be divided into two general types, the non-contributory and the contributory, and the latter type must be subdivided into two subtypes—that in which the contribution of the prospective pensioner is voluntary and that in which the contribution is compulsory. It goes without saying that the variations under these types and subtypes are endless. For example, in the compulsory contributive type contributions may be required from others than the pensioner himself. Thus, the German old-age pension system regards three parties as participating—the imperial government, the employer and the employee. The last two contribute equal amounts. In the year 1907 the contributions were as follows:

Imperial government M49,600,620
Employers 89,321,600
Employees 89,321,600
Total M228,243,820

In other words, the total expense on account of old age pensions in Germany for that year amounted approximately to $57,000,000, of which the state paid something over $12,000,000—an interesting contrast to the enormous expenditure of the United States upon war pensions in the same year, the difference arising in the main from the fact that one expenditure was made under a carefully thought-out and carefully planned system, the other under an arrangement largely the result of accident modified by political considerations.

The relative wisdom of these different forms of pension systems has been the subject of sharp discussion during the past fifteen years. Out of this discussion one or two general principles appear to have been settled. The investigators of pension systems agree that the pension should be paid under definite and specific conditions, not as a matter of chance or of preference. A second conclusion to which practically all publicists have come is that the system under which a part of the pension is paid by the employing agency, but in which entrance to the pension system is a voluntary act, is a failure. Not that such a pension system will not accomplish good for many of those who enter it, but the very person it is instituted to relieve will not be affected by it. Such a system will, as a rule, fail either to relieve or to educate those lacking thrift, the very class most likely to need aid in old age. The experience of the past seems to show that one might as well expect all government civil servants to take out life insurance policies as to enter into such a plan for the relief of old age.

The discusion of pension systems at the present date, therefore, has practically settled down to the consideration of two systems: either one in which the contribution is compulsory upon all the prospective pensioners, or one in which the entire cost is borne by the regulating authority. It seems likely that in the future the development of pension systems by corporations or by governments will be along one of these lines, and this notwithstanding the fact that serious objections have been made and continue to be made to both plans.

If contributions are exacted from all, the contributors acquire rights which in some cases prove embarrassing to the administrators of the fund, if that administration be a government or a corporation. For example, great difficulty was found in dismissing certain dishonest police officers in New York City, because by their contributions to the pension fund of the force they claimed a vested right in their office. This, of course, is an extreme case.

It has also been shown by experience that in a contributory pension system the emploj'ees will sooner or later make the following demands, which it is difficult for the employer to resist, and yet which greatly increase the cost of the pension system: (1) that if the employee resigns or is discharged his contributions shall be returned to him, with interest; (2) that if the employee is disabled permanently through illness or accident before he arrives at the retiring age, he shall receive a proportional pension; (3) that if the employee dies before arriving at the age of retirement, his estate shall receive his contributions, with interest; (4) that if the employee retires, but dies before the total of his pension receipt equals the total of his contributions, his estate shall receive the difference, with interest.

The difficulties of maintaining a non-contributory pension system for a very large class of beneficiaries are also serious. No such system has been in existence long enough to afford much useful experience, and the estimates of experts are so affected by the lengthening of life in civilized countries, by the unforeseeable growth of the class to come under the pension system, and by that curious tendency for the average age in a community or a class to rise as the community or the class grows, that such a pension fund is liable to sudden and unexpected strains unless there are provisions for its increase from some large source—for example, government appropriations, or a supporting fund.

The difficulties of either of these systems are not insuperable. The doctrine of law which protects the contributor to a pension fund protects him only against what the law regards as arbitrary action and is difficult chiefly because it requires the management of the fund to proceed in all cases with a regard for legal precedent which laymen are apt to regard as excessive and which at times interferes with efficient management. If, however, justice and the necessary procedure of the law are adhered to, the compulsory contributory feature need not cause embarrassment.

The objection to the non-contributory scheme may be also obviated by economy, by a careful study of the laws of vital statistics of the class affected, by the general observance of just and fair management with the funds at the disposal of the managing agency and by the cooperation of beneficiaries themselves.

The practical question which faces those who are considering pension systems is, therefore, the relative advantages of the compulsory contributive type and of the non-contributory type. Both of these are immensely preferable to the unfair and inhumane system which they are intended to displace. Secretary MacVeagh has most clearly pointed out that, except with employers of peculiar hardness, all governments and institutions conduct their operations really on an imperfect pension system. The secretary writes in his report for 1909: "The service is blocked in many instances by the unwillingness of the officials in charge to throw out of place worthy men and women who have given the best of their lives to the work of the government. So that, in a very imperfect and wholly unsatisfactory manner, a pension system is, and long has been, in operation." Every college officer appreciates the fact that the colleges are also maintaining, in this imperfect sense, a pension system, but one qualified at every step by favoritism or partiality. One who has occasion to visit many colleges of the country will be astonished at times by two methods of procedure in this matter, diametrically opposite, and yet entirely to be reconciled with the methods under which our colleges are governed. He will be astonished in the first place at the inhumanity which will turn out an old teacher after long service with no means of support. He will be astonished in the second place at many institutions by the presence in the faculty of a considerable proportion of teachers who have long outlived their usefulness and who are practically pensioned by their retention in service. It is not one of the smallest of the disadvantages of this form of pensioning that the presence of the aged and the infirm often arouses in the minds of shallow and impatient men a disregard for the really superior qualities which many of those in advanced years possess. There are always those who believe under such circumstances that all evils can be remedied by a sweeping edict which often tears down more than it builds up.

The most serious objections brought against either the contributory or the non-contributory form of pension are two. Those who make the objections fear that pensions from an outside source may undermine the sturdy virtue of independence, and in the second place that the granting of such pensions and the security which may come from their anticipation will produce a decay of the fundamental virtue of thrift. To these moral arguments may be added the economic contention that pensions lower wages.

While there are certain differences between systems of pensions intended for working men and those intended for teachers, it nevertheless remains true that all these objections may be urged against a system of pensions for teachers with as much reason as against a system of pensions for working men. Human nature in teachers and in working men is in no sense different, and if these be sound objections in one case they are doubtless sound objections in the other.

The first of these objections seems to me to rest in large measure upon a false ground. A man can be independent and yet not insist upon paying himself for everything that he receives. In the complex organization of modern society no individual in any class of society pays for everything which he receives. The wealthy boy at college is a pensioner in very much the same way that the poor boy is. John Hampden lost nothing of his feeling of independence by partaking of the bounty of William of Waynefleet. Nor did Milton or Charles Darwin experience any impairment of their sturdy qualities of spirit from having been educated through the generosity of the Lady Margaret. That is a singular, and probably a narrow, man who has not partaken of the benevolence of others. The whole effect and outcome of that participation depends upon the spirit in which the benevolence is tendered and the spirit in which it is accepted. In a well-conducted pension system the administrators have in the main to come to a judicial determination as to whether a specific individual has complied with the conditions or not. If he has so complied, the awarding of the pension is very much like the payment of a salary.

Most persons who have thought concerning this matter feel much more strongly the argument that pensions discourage thrift than they do the objection that they cause a loss of independence. Thrift is a fundamental human virtue. Hard to build up in races and individuals, it is easy to break down in both. The true course in the training of human individuals and in the training of human communities would seem to be not to set thrift in opposition to the moral results achieved by a pension system, but to realize that the growth of thrift is analogous to the growth of all spiritual and moral faculties. It is just because the habit of thrift is so difficult to acquire and to retain that pensions are not antagonistic to it. The security given by a pension system is really the acquisition of a certain equity which will result in benefit to those who participate in it. Such a consideration, if rightly used, can be made to minister to the idea of thrift, not to break it down.

In fact, the whole theory that possible destitution in old age is the prime cause of thrift seems to need revision. Hope, not fear, is the great moving power in humanity. To save so that the income will be a decent support seems to many, and these often in highly respectable callings, so hopeless a task that to undertake it unaided appears foolish, but with a living assured in old age there is an incentive to save in order that additional pleasures or greater advantages for others might then be possible. It must, however, be admitted that the contributory type of pension lends itself more directly to the upbuilding of such a spirit than the non-contributory type. From the larger economic as well as from the larger moral standpoint the plan of a contributory pension seems to promise least danger to society and the greatest result. I am inclined to believe from such evidence as the pension systems which now exist can furnish that a justly regulated compulsory contributory pension system, on the whole, promises most both for the individual and for the social organization.

The economic argument that pensions depress wages is too vague to furnish any sound basis of objection. From the economic point of view the argument has weight, but in the actual administration of business so many factors influence wages that a pension, even if it exercised its influence on this side, must have a relatively small effect. It may be true that in certain cases the existence of a pension system may be used to persuade a man to enter a given calling and to undertake a given line of work for a smaller recompense on the ground that he is to receive a pension in the future. This argument certainly may apply to teachers as to all other classes of men who offer themselves for employment, but the experience of the foundation up to the present time indicates that this factor is relatively negligible. Since the inauguration of the Carnegie Foundation salaries of professors in colleges have steadily risen. The existence of a pension system in a college, while it may now and then be used to induce a man to undertake a particular work for a smaller salary, is nevertheless so small a factor that it does not count materially in the presence of other large factors in the matter of salaries.

The justification for a pension system, however, can not be found in its negative qualities, or in its comparative freedom from injurious results to the individual and to society. It must not only prevent suffering and inefficiency, but it must also raise the quality of service amongst those to whom it applies.

That a rightly administered pension system does this is already fairly proved. Particularly is this true where the labor of those under the system is mental labor, and still more when that labor is partly of a creative nature and upon subjects of no immediate concern to the individual. Anxiety and apprehension are the most deadly foes not only to mental exertion, but to the higher intellectual qualities of imagination and invention. A man may indeed put forth unusual intellectual effort for a few years in facing the problems of individual and family support, but to assume that concentration on such problems during a series of years, accompanied by distressing uncertainty as to his future, will help the quality of his teaching or his research is against human experience. Profitable study and the cheerful performance of severe tasks are aided by serenity, not perplexity of mind. Especially is this true of the fruitful period of middle life. If it be true that we are still so uncivilized that a prospect of serene and helpful old age is demoralizing to men of high intellectual training, then the cure for this situation does not lie in making old age uncertain and insecure, but in the gradual education of men to a better ideal of life. The experience of the Carnegie Foundation, short as it is, carries a strong argument in favor of the betterment in the work of the college teacher which comes from a knowledge that his old age is protected. Outside of all direct results to society arising from pensions, the argument drawn from humane and religious reasons probably will always appeal most strongly. The system of employment which uses the services of a highly trained individual at meager pay up to the point where he is no longer effective and then takes no concern for his welfare and for those dependent on him has a remnant of barbarism about it which arouses a protest in the conscience of civilized man. Our religious and our humane ideals demand that some effort should be made to solve this problem.

In all that has been said the systems of pensions under consideration have been those which arose gradually. For example, the system adopted by the German government came about after years of agitation and discussion. Pensions in the German universities began with the contributions of the professors themselves, and only after a long period of time and a long discussion of the economic and moral questions involved was the burden of pensions shifted entirely from the shoulders of the teacher to the purse of the government. The system of pensions supported by the Carnegie Foundation in the accepted institutions, in marked contrast to these, is one founded out of hand by the generosity of one man. It has inaugurated a series of pensions which are paid practically through the colleges, for the individual teacher has no occasion to know the Carnegie Foundation at all. He deals simply with his college.

Even when one admits the general good results flowing from a well administered system of pensions, either upon the contributory plan or upon the non-contributory plan, there still remains the question, what is the moral effect of such a pension system as that which has been conducted during the last five years with the funds held by the trustees of the Carnegie Foundation?

The good side of this retiring allowance system is very easy to see. The letters which come from old teachers grown gray in the service of a modest college, speaking of the relief of mind and spirit which has come to them through this protection tell a story so full of human interest and of human happiness that there is no answer to such a recital. There is little danger that a pension will demoralize a man who up to sixty-five or seventy years of age has given his life to the hard and unselfish work of a teacher. Perhaps no feature of the Carnegie pensions has been more appreciated than that provision under which half of the pension of the teacher is paid to his widow. The meaning of this feature of the pension system was vividly stated in a letter which came to the foundation from the widow of an old college teacher in the middle west. Her husband had taught for forty years in a small college. He had accepted a year before a modest pension, and at his death the half of this pension, amounting only to fifty dollars a month, had been allotted to his widow. In acknowledging the receipt of the first payment she wrote, "Perhaps you can not understand how much it means to me to receive what some would consider so modest a sum, but with my little house in this small town this payment means the difference between dependence and independence." It is this which the teacher values most in his old age—independence for himself and for the wife who may survive him. The result of the Carnegie Foundation pensions in this direction has been all that one could wish.

No less evident has been the good effect of the foundation pensions upon the colleges themselves. Where the foundation has enabled a college to retire in a dignified and just way teachers who had worn out their usefulness and where it has enabled colleges to substitute in their place younger men of fresh and alert spirit, the result has been to quicken and vivify the whole intellectual life of the college. Here again is a result whose benefit no one can question.

On the other hand, there is another side which can not be lost sight of. The presence of the altruistic spirit amongst college teachers is strong, but perhaps no stronger than amongst other men. As in every calling a large number of those in the profession of the teacher are drawn to it by bread and butter motives. The offering of a pension can not fail in some cases to minister to the selfish side of human nature. There will always be certain individuals who, when they find themselves in possession of a given advantage, whether that take the form of a benefit in the hand or one to be acquired in the future, will trade upon the possession or the prospect of that benefit. There will be under such an arrangement a certain number of teachers who will count the years and the days until the coming of the minimum age which enables them to resign the duties which they now perform in a perfunctory and routine way. There are still other men facing responsibilities and difficulties in administrative places or in teaching who would gladly use the way of the pension to escape from the perplexities and responsibilities of their positions. Every president considers his own case an exceptional one. He is prepared to prove to the foundation, even when he is turned out of office by the trustees for alleged incompetence, that he is entitled to a pension on the ground of extraordinarily meritorious service. Every teacher, too, thinks his own situation is unique and that he is entitled to consideration of a special sort by reason of his particular and unusual service. All this arises out of the qualities of human nature. On the whole, the number of those whose selfishness is touched by such a benefit is small, as small perhaps as one ought to expect, and in the long run much of this will disappear as the teachers themselves become accustomed to a system of pensions. In time teachers will realize that it is to their own interest and in the direction of their own happiness to continue work as long as they are really fit and able to serve. The late William T. Harris always insisted that a college professor was at his best between the ages of sixty-five and seventy-five, and he strongly urged the trustees of the Carnegie Foundation at the inception of the trust not to make the minimum retiring age lower than seventy. Mr. Harris's argument was a partial one, but it had truth in it. There are many teachers who are at their ripest and at their best between sixty-five and seventy-five and such men ought, of course, to remain in their profession. In the long run it will be found that they will do so, although for a few years the idea of the pension will induce some men to surrender work at an earlier age than they ought. It is impossible to offer to men an advantage such as that which flows from a pension system of any sort without arousing in some minds the question—How can I get the most out of it? But the number of such individuals amongst college teachers is small and will become smaller as the standards of college life rise.

Nor can one shut one's eyes to the fact that the colleges themselves may, by reason of the pensions of the foundation, neglect their own duty in taking care of their old teachers. The officers of the foundation have done all in their power to make it clear to the colleges that the funds at their command and likely in the future to be at their command could care for only a limited number of colleges. Nevertheless, in spite of this effort, it has been tacitly assumed by many colleges, and generally by those of the lowest standards in scholarship, that any obligation on their part to care for their old teachers had vanished with the inauguration of the foundation. This phase of the situation is also, I believe, a temporary one.

One other feature of the Carnegie Foundation pensions has aroused criticism. This is the plan of a centralized pension fund and the fact that this agency deals in its publications with general educational questions which touch directly university interests and educational policies.

The dread of a centralized agency in any field of social activity is one which depends largely on the point of view of the individual. The idea that such an agency as the Carnegie Foundation will exert arbitrary pressure upon those colleges which choose to accept its pensions seems to me improbable. Such agencies, like universities themselves, are in the end molded by public opinion. There is, however, no method by which this can be proved to one who sees in the existence of such an agency unfortunate influences upon the colleges and universities. The two opinions result from differences in the point of view, not from differences in intellectual honesty and sincerity, and such differences of view only time and experience can bring together.

It seems to me, however, that the argument that a central educational agency may exert arbitrary and unwise influence over the universities may be very fairly compared with a similar arraignment of the universities themselves which, by a somewhat singular coincidence, was put forward at a meeting of teachers simultaneously with the one just alluded to.

This complaint came from the secondary school men. They argued that the universities are outside corporations having little sympathy and knowledge of secondary school work and yet not only ready to exert over the high school an arbitrary power, but actually in a number of cases exerting this power to the harm of the secondary schools. These secondary school teachers protested most strongly against the domination of any such outside irresponsible agency.

That there is a measure of truth in this complaint no one who knows the educational situation will deny. And yet I fancy that no man is ready to advocate the abolition of universities in order to preserve the rights of the secondary schools. The real lesson, on the other hand, is that of a wise cooperation. No agency in civilized society, not even a university, can have absolute independence. What such an institution can have is freedom, to he gained however by due observance of its right relations to all other agencies in the social order. In a democracy the power of public opinion, as fast as public opinion is educated, will bring about such cooperation. The remedy for possible danger to the rights of the individual or of the single institution does not-seem to lie in reducing all agencies to ineffectiveness, but rather in the general education of the whole people to an appreciation of the observance of the law. In the last analysis an educated public opinion will regulate both the relations of centralized educational agencies to the universities and the relations of the universities to the secondary schools. Meantime, no man in either form of organization will object to sincere and discriminating criticism. It is such criticism which educates public opinion.

Notwithstanding the incidental difficulties, therefore, which arise in the administration of any system of pensions, I believe that the advantages which have resulted from the conferring of pensions have far outweighed the disadvantages and that, furthermore, the advantages on the whole seem likely to become stronger with time, while the disadvantages seem likely to diminish. The value of a pension system depends not only on the intelligence and conscience of those who administer it, but on the spirit and morals of those who are to benefit by it, and the dangers of a pension system lie mainly in those universal dangers which come from human weakness and human selfishness.

It is, to my thinking, a fair question whether the college pensions ought not, like other pensions, to carry a contributory feature. No one can be more sensible than I of the tremendous demands made upon the meager salaries of the American college teachers, and yet notwithstanding this, it is impossible to remove the college teacher from those social and moral obligations which affect all men. The experience of the world seems to point strongly to the conclusion that on the whole a contributory form of pension is likely to be most just and least harmful.