Part 11

MR. FLORA (Illinois): Of what value would a compensation law be to the workman in the State of Illinois particularly, where we have no employers' liability law, if the gate were left open for the insurance company or the mutual benefit company, or if the employer could bring in the old common law doctrine of contributory negligence, assumption of risk, and so forth? What would prevent the employer or the insurance company, if we did not repeal those laws, from bringing those in and keeping the workingman out of his compensation under a compensation law? I would like to know what protection the working people would have in that case.

I find also that too many labor representatives are too much imbued with the idea of protecting the other side. I believe in letting the other fellow take care of his own side. He is big enough to do it.

MR. PARKS (Massachusetts): If they had a workman's compensation act in Illinois the workmen would draw whatever the compensation act said they should draw.

MR. FLORA: Cannot they bring in the law of contributory negligence?

MR. PARKS: No; not under the workmen's compensation act; you are entitled to so much, if an injury occurs, without regard to the liability.

As to Mr. Flora's statement that there are too many labor representatives who want to look out for the other side, I find that you get more for the workmen by showing a little consideration for the other side than by being radical.

MR. RANNEY (Illinois): In answer to Mr. Flora's question, I attended the National Manufacturers' Association meeting in New York and talked with about fifty or seventy-five large employers of labor, and there was not one of them that was in favor of a fair employers' liability law. But what they want to know is definitely what this is going to cost them. If they have got to be liable for every accident, they have got to know not only the expense under the compensation act, but the additional expense under an action at common law, which is an unknown quantity. I know that large employers in general are in favor of a fair compensation act, but I do not think they are in favor of double liability, because they will never know where they are. The laboring man quite properly wants to have a fair compensation act and wants a fair amount, but if he elects to go to common law, he should take that chance. Otherwise he will get a fair compensation without any legal action whatever.

MR. INGALLS: Would a liberal rate be more preferable to the employers than a double liability?

MR. RANNEY: I think it would.

MR. INGALLS: Of course, if you can fix the rates all right it might go a long way toward covering the proposition.

MR. RANNEY: I am not speaking for any employer, but I think that if a bill is adopted that is fair to both parties, that the employer should have some protection on that side. I am simply voicing what Mr. Mitchell said yesterday, that he was not in favor of the English act, which gives double liability.

MR. MITCHELL: I am not in favor of double liability, but I am in favor of the alternative.

MR. RANNEY: I do not think the employers would have any objection to an alternative, but they would not be in favor of a double liability where they might have to fight the case in court and then in the event of their winning the suit the workman could come in under the compensation act and get compensation. That does not seem to me to be fair.

DR. MCCARTHY: Do you want the election before or after the accident?

MR. MITCHELL: After.

DR. MCCARTHY: If the employers' liability acts that have been passed were any good, or could be amended in any way to stop litigation, we would not be here. England tried for nearly a hundred years to modify the employers' liability act. The only thing we are here for is to knock out the everlasting cost of litigation, and the most perfect act that we can get will be the one that will knock out this expensive litigation. If a man is entitled to elect after he gets hurt there is going to be an awful confused state of affairs and the tendency, I believe, will be to increase litigation, because the temptation will be constantly before that man through the attorneys coming to him to go into litigation.

MR. MITCHELL: In England there are less suits under the English employers' liability law than there were three or four years ago, and every year shows a less number. On the other hand, there are a great number under the compensation act. That demonstrates that in England, even with the double liability, the men are not suing under the employers' liability law.

DR. ALLPORT (Illinois): I can give you the figures on the employers' liability law and workmen's compensation act for 1908, and that may perhaps enlighten the Conference in regard to the exact status of the act at this time. Out of 2065 deaths in trade accidents in 1908, only 524 out of those cases were made the basis of proceedings, or not much more than one-fourth of them, in the county courts, and only 12 suits were brought for damages under the employers' liability law. In other words, only 12 of those 524 suits took advantage of the old Gladstone act to bring a suit for damages under the double liability.

PROF. F. S. DEIBLER: I think a great many of the suits that come up in England are suits to determine whether the accidents occurred in due course of employment.

CHAIRMAN MERCER: I have a letter from Mr. Gillette that does not exactly come under this heading, but I think you may be glad to hear it at this time. It reads as follows:

MINNEAPOLIS, MINN., June 9, 1910.

_Mr. H. V. Mercer, City._

DEAR SIR: Our study abroad developed a few things that stand out so clearly that I should like to have you know them before you go to Chicago. They are matters that ought to be carefully safeguarded in legislation of this kind.

First, the cost. Even after the act is most carefully drawn and the compensations are restricted to the utmost, the cost is bound, in my opinion, to be two or three times as great as under the present system. This means, of course, that the compensations must not exceed one-half wages in any event, and the death benefits must be limited as well as compensations for total disability. The payments to children must be graded according to the number, with an outside limit and there must be a waiting period without compensation at any rate not less than two weeks, and I think thirty days before benefits begin, and these benefits must not be retroactive in case the disability extends beyond the two weeks or the thirty days. In other words, every economy must be inserted and even then I believe the cost will be increased from two to two and one-half times.

Then the doctor question wants to be carefully considered. France is having a serious time over the doctor question. It is the curse of their system, and they are also experiencing great difficulty with the matter in Germany and England. If the English law had been left the way Mr. Chamberlain intended it, so that an independent doctor could have been called in at the request of _either_ instead of both parties, it would have saved them all kinds of trouble.

Then there is another matter that ought to be carefully considered, and that is the matter of discrimination against agent or employe physically imperfect. The situation in England to-day is beginning to force a physical examination of employes. Mr. Holmes of the Hosiery Workers' Federation stated to me that in his opinion there were 150,000 English workmen who could not obtain employment by reason of excessive age or physical imperfections.

They are having a lot of difficulty in Germany over various questions arising out of their law. Over 17 per cent. of the claims get into litigation. This looks rather discouraging to us. Of course this arises largely from the fact that this litigation costs the workmen nothing.

I should like to write a few hundred pages on this subject, but I haven't time.

You might be interested to know that while in England the risks are practically all insured in private companies, the cost to the employer is less in England than it is in Germany, France or Austria. In France about 25 per cent. of the risks are not insured, and of the remainder about 60 per cent. are carried in private insurance, and 40 per cent. in mutual companies. The conditions and character of the workmen are so different over there from those existing in America that it is pretty hard to estimate the comparative costs if one of the foreign acts was transmitted to this country. Beside that the rates of wages are very much lower, although of course the benefits, being based on the wage rate, are nearly in proportion.

The above estimate of cost of two and one-half times our existing cost is based on a contribution of 20 per cent. by the workmen. It looks as if the thing would have to resolve itself into a matter of some form of mutual insurance, both employer and employe contributing to the cost, or with a waiting period or else a longer waiting period, and a fund provided by the employers to take care of the accidents, the employes providing a fund to take care of sickness and temporary disabilities during the waiting period.

I am now having my notes written up, and will soon have a table of the comparative costs in England, Germany, Belgium, Austria and France, and possibly Denmark and Sweden.

Yours very truly,

GEORGE M. GILLETTE.

CHAIRMAN MERCER: I have not heard yet from Mr. McEwen. He is the labor commissioner, and I was in hopes that we would have a letter from him as well as this letter from Mr. Gillette.

The next question is the proposition of compensation; that is, whether you will have a limited sum or a pension plan, or what you will have.

WILLIAM H. MOULTON (Michigan): In the iron and copper mining region of Michigan for a great many years we have had a plan of payments to which the men and the employers have contributed equally. These payments have been made monthly to the men during disability, and in any event they should not be made at any longer intervals than once a month. These sums have continued for a year, and in case of death, a death benefit has been paid from this fund.

The mining companies are very much interested in this compensation law. This is evidenced by the voluntary action of the harvester company and the United States Steel and some of our other independent companies. The Cleveland-Cliffs Iron Company, which I represent, have been contributing in this way for a great many years at all of our mines. We employ now perhaps 3000 or 4000 men, and another thing which is of advantage to them is this: We found it was a common custom when a man was killed in a mine for the men to stop work until the day of the funeral, no matter whether our boats were lying idle waiting for cargoes or not. I think you will all agree with me that we generally get what we pay for, and if we expect a man to do something for us we expect to pay for it. Our proposition to the men was this: They stopped work out of sympathy for this man who had been killed. We suggested to them that it would be more an act of sympathy to follow out this plan, that they should continue at work until the day of the funeral and we would pay them for all the time they worked, and then if they took a half-day off for the funeral we would pay them for that half-day just as though they worked, but that this amount of money should be a contribution from them to the family of the man who had been killed. The last amount that I remember that was paid in that way was $298 which that family received in addition to the benefit fund. Our company also is paying to the widow and orphans the sum of $12 a month to the widow and $1 a month for each additional child under the age of 16 years, for a period of five years or until the widow remarries. This is done with the idea that by the time the children have reached the age of 21 they can support the family.

We also endeavor to reduce accidents by frequent inspections of our mines and monthly reports, and periodical inspections also, and in case of any serious accident we have a committee who visits the scene of that accident, carefully inquires into the cause of it and makes a recommendation for the benefit of that mine and of all our other mines.

I am sure I am voicing the opinion of all the Lake Superior region of the iron and copper mines when I say that we are heartily in favor of some plan of compensation for the workmen of our country which shall be a liberal one.

MR. DAWSON (New York): Nearly every bill which has so far been framed has proceeded on the basis that it is necessary to limit the length of time for which the benefit is to be paid. That is to say, even though a workman has become totally and permanently disabled, the benefit is to be paid for three or four years, and then is to stop. This overcaution grows out of two things; one of them is that we are almost entirely thinking of this as a compensation scheme which the individual employer is going to pay for. It may be that our laws will be passed in that form; but, even if they are passed in that form, experience in every country in the world has demonstrated that almost all employers will be insured, and the loss will be paid by companies which can just as well continue payment so long as it is necessary for it to be continued, and charge premiums and set up reserves accordingly.

It is my personal opinion that we ought not to frame our laws on the basis that employers as a class are actually going to pay these compensations directly. We should frame them with a view to their being insured, and that, therefore, this will not be an intolerable burden upon any individual employer unless he makes a fool of himself by neglecting to insure.

The second reason is ignorance as to the cost. The additional cost when benefits are paid to the disabled as long as disability continues is extremely small. Relatively few persons who have been totally and permanently disabled are living after five years, but the need is greater than ever for those who are. In point of fact, it will add very little to the total cost to give the benefit throughout their disability. You may argue, on the other side, that because there are a few of them, we can as well cut them off; but a scheme that starts out to cure this evil--this economic flaw in our business system, and that, notwithstanding, turns loose a permanently disabled man after five years because he happens to be so unfortunate as still to live--is fundamentally shortsighted and should not be tolerated. I, therefore, earnestly urge those Commissions which have not yet prepared their bills, to make the benefit payable during the entire period of disability.

MR. MCCARTHY (Wisconsin): On certain minor injuries, would you say that was true?

MR. DAWSON: Not so true. My impression about minor injuries is that a careful study of the Austrian practice will be of great value. These benefits are not paid as an annuity at all unless the person is injured at least to the extent of 20 per cent. of his earning power. Smaller impairments are compensated by lump sums.

Again, in the matter of widows and orphans there is a whole lot of feeling that you must cut them off at the end of three or four or five years. There is no occasion for that, and every reason why it should not be done. The additional cost of paying during widowhood and minority is not heavy; and you should again, in my judgment, take into account that you are expecting this business to be insured and should encourage its being insured, and encourage the employer to run the risk himself. Of course, in a very large plant, it is quite possible for an employer to insure himself, because he can have an average experience to judge from, but I am not referring to the exceptional case.

JAMES A. LOWELL (Massachusetts): The practical difficulty which strikes me is this: In Massachusetts, and everywhere else, for that matter, we have a financial situation to face. I would say, and every man here would say, that it would be much better to have a pension for a person who needs to be pensioned; but we are brought up at once in the very beginning, and this thing comes right up and hits us in the face: How much is it going to cost? It is very well to say, as Mr. Dawson has said, that it won't cost much. Perhaps it won't, but the question is how much. It may be just the turning point in Massachusetts as to whether we can do it as a practical financial measure--to have a lump sum or a pension. I, personally, should be very much in favor of a pension. But there must be some way of ascertaining how much this pension is going to be. It appeals to me that as a practical measure in the beginning of this thing, that although we should like to be able to say to the man who is injured for life: "We will give you so much a month for the rest of your life"; that we cannot do it right off, because we do not know whether he will live five years or whether he will live twenty-five years. The difference between the amount which you will pay if he lives twenty-five and the amount you will pay if he lives five years may be just the difference between a possible scheme and an impossible scheme.

The employer's trouble about this thing is the uncertainty. The amount of it is not so great an objection. It is not that the employer would say, "Well, if I have to pay $5000 for such-and-such a case I cannot do it. I can pay $2000, but I cannot pay $5000." The trouble is he does not know whether he is to pay $2000 or $15,000. That is the difficulty. It strikes me in starting your system here you have got to find something that is certain. If there is to be a pension you have got to put a limit of time on it so that it may be definite.

If we were to pass a law for Massachusetts to-morrow, and contained in that law were those various pensions, we should not know anywhere near how we were coming out; and, I understand, and I will stand corrected on this if I am wrong, that they have not figured those accurately in either Germany or Austria or in England. The amount of the pensions which had to be paid was much greater than was calculated. If they had known at the start they were to pay this greater amount it would not have made so much difference because they could have arranged it, but they did not know it and, therefore, they are getting a higher amount put upon them than they thought they would, which is very unfortunate for a great many reasons.

MR. DAWSON: There are reliable tables by means of which adequate premiums and reserves for annuities to the disabled and to widows and orphans can be computed.

DR. ALLPORT: I have a copy here of the workmen's compensation act of 1906, the English act, and I think it might not be a bad idea to read you the provision in the English act covering this matter. Of course, the English act started out just as our act must start out if we start out on the basis of compensation. It must be based on a certain proportion of the wage of the individual. When we come to consider the matter of disability, the point that comes up is whether we shall pay a man for a total or permanent disability in a lump sum or whether we shall limit the time in which the payments shall be made. It seems to me as though that is purely an actuarial matter, and that it is something which will adjust itself if any law goes into effect. No employer in England carries his own insurance; it is all carried by some form of insurance, and so the insurance companies will have to work this matter out for themselves, and they are going to be able to do it. The better class of insurance companies have prospered under that class of insurance. The provision in the English law is, briefly, this: It provides for the payment of compensation for disability as long as the disability lasts, and in case of death it provides for payment to the children until they reach a workable age, and for the widow until she marries again. Then there is this provision:

"Where any weekly payment has been continued for not less than six months, the liability therefor may, on application by or on behalf of the employer, be redeemed by the payment of a lump sum of such an amount as, where the incapacity is permanent, would, if invested in the purchase of an immediate life annuity from the National Debt Commissioners through the post-office savings bank, purchase an annuity for the workman equal to 75 per cent. of the annual value of the weekly payment, and as in any other case may be settled by arbitration under this act, and such lump sum may be ordered by the committee or arbitrator or judge of the county court to be invested or otherwise applied for the benefit of the person entitled thereto."

These cases are put into the hands of the court and paid by the court and not by the attorneys, and it is left optional as to whether he will take a lump sum or an annuity.

DR. MCCARTHY: Some of the county judges over there with whom I talked told me that they were doing everything possible to keep the lump sums from being paid, because they believe that is a bad practice. There is no agitation over there that I could find in either Germany or England for limiting the time that a man should receive compensation. They understand over there that it has got to fall upon somebody in the end, and you must remember that in Germany and in England, to a large extent, this is done to keep away from the necessity of caring for the poor, and all that sort of thing. You go to any insurance company over there and say, "I have so many people working in my factory under such conditions; what are your rates?" and they will give you the rates and take care of an injured man for the rest of his life.

CHAIRMAN MERCER: It has seemed to me sometimes that it might be a good plan to provide for a lump sum settlement, subject to the approval of a court, in case a firm wanted to go out of business, or something of that kind. A corporation might want to dissolve, or the time of its charter might expire, and in that case what is it going to do?

MR. DAWSON: It would go to an insurance company and purchase an annuity to cover it.

CHAIRMAN MERCER: Suppose it is a big company that had been carrying its own risks?

DR. MCCARTHY: That is an actuarial matter. If it is a mutual company in Germany, there has to be a reserve kept by those companies to provide for the possibility of their going out of business.

CHAIRMAN MERCER: It seems to me we might now go to the question of whether we will administer our compensation law through the courts or through boards of arbitration. In New York I notice that they recommend staying under the courts in their present bill.

PROF. SEAGER: The characteristics of the two bills that have passed in New York were explained yesterday, and I will try to avoid repeating what was said at that time. When it comes to the details of the plan that the New York Commission recommended, and which the Legislature has adopted, the reasons why we did this rather than that are almost trivial, because they were always practical reasons of expediency. We have a Commission of fourteen members, and eight of them were members of the Legislature; one of them was a farmer; several of them were lawyers, and two of them were employers, so they represented in a very broad way the different interests of the State. It would have been quite impossible to get that Commission to agree on a plan that would include the farmers. It was difficult to get the employers to agree on our plan.