Part 8

The question of employers' liability and workmen's compensation, I believe, has been more deeply studied by organized labor than any other class of people, and I frequently have been associated with them in the preparation of their legislative measures in Indiana, and I believe that I can express their sentiments as being in favor of compensation.

I also believe that at this time they would be opposed to any system that would take from them their common law right to sue for damages, and they would probably favor a double law, such as they have in England. However, they might be induced to grant some concessions if the employers were to be reasonable, which I hope they will be. Thus far, however, there has been much opposition on the part of the employers, not only to measures for compensation, but to all safety measures.

I think the question of safety is the larger proposition. One thing the trade unions have done, they have trained up competent workmen, and if the employers would be careful in the selection of their employes, that would do much to protect life and limb.

In regard to this "workers' code," I know I speak the unanimous sentiment of the legislative forces of Indiana when I say that they do not intend the operation of an employers' liability law to include agricultural and domestic services, but that the question is whether the law can be constitutional without that. All classifications must be based upon some reason. It might be that this could be evaded, and the law could be drawn generally with a proviso excluding certain persons from its operation. Then no one could raise the constitutional question perhaps. The person within the operation of the law could not raise it because he would be affected, and the person excluded could not raise it because he would not be affected by it.

It occurs to me that perhaps the rates of compensation named here are not quite adequate. Injured workmen, for instance, receive 60 per cent. during only five years. Thus the workingman not only gives 40 per cent. of his wages, but he gives it all after five years. I believe that the industry should bear the expense. As it stands, it makes the workingmen, who are usually young or middle-aged men, from 20 to 45 years of age on an average, and who have a long expectancy, contribute the largest share. As to whether or not we could constitutionally deny the workingman his right of action against a negligent employer I seriously doubt if that could be done, for why should the rule be different if the injury is caused by the employer and it falls upon the workingman, than when it falls upon a stranger? All persons should be liable for their carelessness and their negligence, and it occurs to me that there is not a reasonable basis for that classification. Negligence is a personal proposition with the employer, and for that reason, I think, there should be a right of action against the employer. Compensation is a matter of industry and occupation, and has no reference at all to carelessness or negligence, and for that reason the industry should bear the ordinary hazard, but the employer should bear that which is caused by his own negligence.

This bill, as I have read it hurriedly, makes no provisions for the important feature of the certainty of securing compensation. It provides that these payments shall be strung out for a period of five years. How are we to know that the employers will remain solvent for five years? There should be some security for those payments if they are not made in a lump sum.

It occurs to me also that this notice is a little bit strict. Ordinarily an employer knows when an injury occurs. The law in most of our States compels the employers to report, and yet if the injured person fails to report within a very limited time, his right of recovery is barred. That notice should be sent, provided the employer himself does not know of it, but if he himself has actual notice, then the employe's right to recovery should not be barred. In some one of the measures, I do not know which one now, it provides that there must be specific detail. That gives the employer the advantage of having the names of the witnesses and of all the details made by the employe, and it does not give the reciprocal advantage to the employe of getting a statement from the employer, when we all know that very often employers conceal witnesses and keep the correct statement of facts from the injured workman.

Concerning Section 6, regarding boards of arbitration and awards, some constitutional question might arise. I am not sure that such boards might be called administrative, but, at any rate, we have a constitutional provision in our State that says boards of conciliation may be created, but not with power to act unless the parties submit themselves voluntarily. I seriously doubt, therefore, if you can have compulsory arbitration under our constitution.

I would favor abolishing all of the common law defenses as to contributory negligence, assumed risk and so forth, with the hope of bringing the employers into a frame of mind to adopt this law, and to that end if you cannot get a constitutional law without it, the Legislature would have the right to prescribe a standard form of policy for liability insurance, and in that they might prescribe a form to insure the workmen.

I believe if we do not have compensation, that the liability insurance company should be made a party to actions for damages; that the amounts should go to the injured parties rather than to the employers, as is the case over in England. They have a provision there that the employers may adopt some system of their own with the approval of the public authorities.

The main argument of the employers at Minneapolis last year was that any increased liability would add a burden to the employers, and would cause the employes to become careless, and on investigation I find that perhaps there has been an increase in the number of accidents reported, which is due to the fact that the workmen report better when they are compensated, and that a larger number of industries have come in under the law. From the American Federation of Labor officers I find that their estimate is that the dangerous machinery that now runs at high speed is also the cause of the increased reports of non-serious accidents, and from an insurance company of Germany I find that accidents of a trivial nature have increased, while those of a fatal nature have decreased, and that the employers are penalized for their negligence. It seems to me that where there is a liability to penalize the employer for negligence it causes him to be more careful in protecting the lives of his workmen. And, it seems to me, in conclusion, that the right of the workingmen to receive damages should be maintained, but personally I think it should be used as little as possible.

WALLACE INGALLS (Wisconsin): The Chairman and I have discussed the various fundamental features or principles which underlie the question of compulsory compensation under our law, and you will pardon me for any criticism, if I make any, of the right to enact an out-and-out compulsory system in any of the States of the Union, but this bill involves exactly that principle. While it is not so worded plainly in the first section, yet it means the same thing, because in the first section you characterize occupations without limit as dangerous occupations. When you do that, you put those occupations within what is called the police power of the country, and when you do that, then, of course, you can enact laws bearing directly on the subject. I think we ought not to forget in the discussion of this question that the underlying principles of our Government are different from those of any of the other countries which have these systems that we have been talking about. When our Government was founded it was founded on individual rights. At that time individual rights were unknown in the other countries, and technically speaking in the other countries they have not now got individual rights, while we have them here. In fact, our Government is based on them.

One gentleman suggested that the employes did not wish to surrender their individual rights to go into the courts, which is the only place they have to go. I believe that is fundamental, and I think they would accord the same rights to the employer. But we must not lose sight of the fact that individual rights exist in this country, and that in the older countries, such as Germany and England, they do not have individual rights that you can insist upon and go into court upon.

We are discussing a very important question, we are discussing a question whereby we can arbitrarily decide what course shall be granted to an individual without his day in court, whether it is an employer or an employe; that they shall take a certain amount of money fixed by arbitration for an injury, or for death, or whatever it may be. That is a serious question. Now, you can, of course, take away these defenses of the employer; there is no question about that. I am in sympathy with it, but under our laws and our system of government, I do not believe that any of us want to embark upon any dangerous system of jurisprudence, and I do not believe we want to invade individual rights anywhere. In Wisconsin, after a careful discussion of what we could and what we could not do, we presented a plan whereby these defenses are practically destroyed and the other features of the bill are optional.

One phase of this subject has been the source of much discussion pro and con, and that is in regard to the matter of contribution. In Germany their system covers sickness, accidents, invalidity and old age, three different classes. There is no contribution for accidents proper. There is for old age and for sickness, and sickness includes the first thirteen weeks of the result of an accident. In England there is no contribution. Whoever will examine those two systems, and compare them, I think, will draw the conclusion that when you consider the subject of sickness and of invalidity, the question of mutuality must necessarily and naturally enter into it. But with purely accidental misfortunes, that is a different question, and to my mind the contribution has no place in it for this reason, if it is true that that should fall upon the industry, then it necessarily follows that the employe should not contribute.

The success of the German system, as I view it, is based upon the mutuality of sickness, invalidity and old age, all three being interdependent and interwoven under one scheme, and the mutuality being in that system. That is what makes it so perfect. It is really a self-operating principle, and it is based upon the only true and correct principle that ever will be arrived at in considering a scheme of that kind. We cannot do that at present. When our system broadens, and we get to the point where we handle sickness and invalidity, then the mutual feature of it will come in and will be very wholesome, but as far as we have gone now, it is not possible to handle it.

On the subject of litigation in continental countries under the liability laws, the statistics in England show that litigation has practically disappeared. They prefer to take the compensation. It is immediate and they get it at once, and they prefer that rather than going into long-drawn-out and expensive litigation. Of course, there is some litigation, but it is growing less and less continuously, and, as a matter of fact, most of the litigation there has been in connection with the construction of the law.

AMOS T. SAUNDERS (Massachusetts): It seems to me as though the reading of this first section might defeat its true purpose. I understand it is based upon the theory that constitutionally we can impose certain remedies upon certain industries, because they are immediately dangerous. It is very obvious from the reading of this first section, following out that theory of law, that the man who drafted it had endeavored to say that every industry is a partly dangerous industry. Under this bill the servant girl in my kitchen who cuts her finger when she is cutting bread for breakfast, is entitled to recovery. It strikes me when you say everything is partly dangerous that you have landed about where you would have landed if you had not said that anything was particularly dangerous. That is, if I should attempt to say that every man in this room was a "Tom fool," as a comparison between the men in this room, I have not said anything, but when you say every industry in which there is an accident (and there is an accident in every industry) is a partly dangerous industry, and by saying that attempt to legislate concerning it because it is dangerous, we have simply piled up a number of words which, when the courts get to the construction of the bill they must disregard entirely.

On the proposition that in England a man may sue, and, failing to recover, may get his compensation under the compensation act, it has been suggested that that will work no harm, and I judge it was sought to convey the idea that the result would be the same in this country. I believe, however, that when you say that you lose sight of one thing, and that is that in England it is practically impossible for an employe to get what a lawyer in this country who is trying cases for the plaintiff would call a decent verdict. The verdicts from the English juries are very materially smaller than the verdicts from American juries. Therefore, when the English employe comes to compare what he can get under the compensation act with what he can get under a verdict from a jury, he is satisfied with a very much smaller amount than the American would be. One of the chief reasons for the compensation act is to prevent the waste of money in expensive litigation. The employe only receives perhaps 17 to 25 per cent. of the money which the employer pays out, and the rest of it, so far as the employer and employe is concerned, is wasted. Therefore, if we should provide a system which would allow the employes all the remedies they now have, and then, if they should fail in their suits, allow them to secure their compensation under the compensation act, will we not be increasing litigation and, therefore, be providing a means to hinder the effect of this very act? In other words, would you not be doing away with the prevention of this tremendous waste in litigation?

There has been considerable discussion as to a choice of remedies. I know in the Massachusetts Legislature, before the Judiciary Committee, the first question that was raised at the hearing this year and the year before was whether the employe should not be obliged to choose before his injury, so that he could make a wholly disinterested choice between the laws, and not be affected by his particular injury; that his choice should be between the system of compensation or the system of liability. No one has suggested a really workable method, but in Massachusetts, and, I think, in New England in its entirety, most of the actions which are brought by employes against employers are to-day brought to a very large extent under statutory remedies and not under the common law. I will assume that we will all agree that anything which the State has given to an employe by statute can be taken away by statute under the constitution, and it has seemed to me as though we could at least do this: That in providing a compensation act we could provide it as a substitute for our statutory act, and that would leave the employe his common law remedy and his compensation remedy. The fact that the common law remedy is not used now, from a lawyer's standpoint, at least, would force the employer and the employe, if he was going to bring an action, into a more or less unfamiliar proceeding under the old common law, and as between an unfamiliar common law procedure and a perfectly plain compensation act, it would seem that the natural course for both the employe and the employer would be to take the certain compensation act.

I think the question which troubles Massachusetts more than anything else has been touched upon very little here to-day, and that is the effect upon interstate competitive industries. We can pass a law in each State which will apply to specially hazardous risks which are not competitive between the States, and while it might be inconvenient, and it may cause a great deal of trouble to start in with, the effect eventually is not an injury to any particular industry or any particular set of people, because if it is not a competitive industry the employer very quickly contributes the extra burden upon the public. But when you strike the competitive industries between States, when Massachusetts or any other State does pass a compensation act, we do not know what it will do until it is tried, and it may be a serious burden upon the manufacturers. We are in danger of placing that particular industry in such a position that it cannot compete with industries in surrounding States. It seems to me, therefore, that the vital question for this National Conference to discuss, and the one which would be the most effective and beneficial to all the different States, is what shall we do with our competitive industries. If we can all secure, approximately at the same time, at the end of a few years, and place upon the statute books of the various States practically the same scheme, then, even though it is not a perfect scheme, even though it should prove to be a burden upon the industry, that industry is not going to suffer, but the people who sell the various manufactured products will distribute that burden among themselves. That, it seems to me, is the practical question which should be discussed. I should like to have this National Conference discuss what we can do with those industries which are spread out over the country and which are competitive. I believe we must find some general solution of that problem before there can be successful compensation acts in any of the States.

EDWIN R. WRIGHT (Illinois): There is one question I should like to have some light on from the members of the various Commissions here. There has been a good deal of discussion upon the elective or compulsory systems of arbitration, and also upon the question of the double or single liability, and I do not know of any better place to ask the question than right here.

The American Federation of Labor sent out a letter bearing on the subject, and I was rather astonished to find the number of different lines of industry which the president of the American Federation of Labor and the officers wished to include in a compulsory law. I asked President Gompers the reason, and the matter over, and after hearing the discussion here to-day, he told me that he favored a compulsory measure. In thinking the injured person fails to report within a very limited time, his it presented a question to my mind as to why President Gompers was influenced in asking for a compulsory measure. After Mr. Buchanan and Mr. Mitchell and others spoke on the question, it seemed to me that this would be a point which we could discuss here with a great deal of advantage to ourselves. In England they have a double system. A man can go back after failing in the courts and receive his compensation, and the question that arose in my mind immediately was, what would he receive, and the answer to that is something like this: He would receive $3000, of which the attorney would immediately take $1000. Then if there was $1000 left after the court costs were paid, he would get that $1000, but the court costs might be $2000 or $3000. Then where would the double compensation be?

In referring to the matter this morning, I suggested that it might be a matter of compromise as to whether there would be a single compensation or a double compensation, and I would like to ask some of the attorneys here what it costs to go through the Supreme Court, and if it is not the custom if a damage suit results in $4000 or $5000 damages to usually go through the Supreme Court and possibly come back to some of the lower courts and then go back to the Supreme Court again, and what that costs, and if it costs anything like $2000, what is going to be left of the double liability? What does the workman get?

I went over the English tables and I found that a man really received more if he took his compensation than if he went through the courts, and that when he got greater compensation after going through the courts, he had to pay the court costs and his attorney. There was not very much left for him.

MR. MITCHELL: The court in England fixes the attorney's compensation at a very low amount.

MR. WRIGHT: But it does not here, and the court costs here amount to a great deal more than they do in England, so that you must make a comparison between the court costs in England and the court costs in America, aside from the delay in the courts, before you will fully understand the question. If a double liability is of any advantage to the employe, I want that double liability. If it is not going to be of any material advantage to the employe, and will merely pile up the expense account would not it be better to pile up the expense account in the first place, and have that go to the employe as an automatic proposition? I am not arguing on one side or the other, but I would like to know what the workingman is going to get when the thing is settled.

I might go a little bit farther. We were shown some charts here this afternoon as to what the workmen receive in an ordinary accident. Those charts bore out exactly the statement I made this morning. The charts this afternoon show that the workman receives on an average something like $400, when he received anything. Now, is that right? Is the life of a workman only worth $400 on an average? Is that all the compensation he gets? It costs about $150 to bury a man and that leaves $250, and besides that you have the other expenses coming in. I am beginning to doubt whether the life of an able-bodied workman is worth anything at all.

G. A. RANNEY (Illinois): I do not think the workman gets anything under the double compensation, but he takes the risk of a suit, and, I think, if he elects to take that risk, he should bear the loss if he loses.

MR. INGALLS: I quite agree with Mr. Wright upon the practicability of the double liability. My observation is that the double liability is quite unimportant as a practical matter, because when you get into court it is the delay that is the most troublesome thing. The real expense in court is not so exorbitant. The charges of a lawyer to handle the case exceed the actual court charges many times. Even taking away the double liability will practically affect the workingman very little. Of course, there may be isolated cases where he ought to have that right, and where it ought to be preserved to him, but in drafting a general scheme, it has seemed to us necessary to preserve the double liability unless the employe agreed to waive it, if he could waive it.

MR. BUCHANAN: In my opinion there would be very few cases of expensive litigation in the courts if we had a proper compensation law in this country. It has worked out that way in Great Britain, and from information I have I know that the trade unions there are discouraging action in the courts unless it is a clear case of wilful negligence on the part of the employer.