Part 9

I want to call the attention of the Conference to an abuse which we have here in Illinois, and which our Illinois Commission have probably looked up and understand. If they have not, they should. The Appellate Court here has the power to pass on findings of facts. There have been a great many personal injury cases reversed under this system of passing on findings of facts. This court was created in 1878, and given this power. Very few courts in the United States have it. I believe the United States Court does not claim to have that power. We desire that that power be taken away from them and that they have the right to pass on the law alone.

Another thing that should be given thorough consideration is the financial liability of the employer. I believe that where an employer insures through a liability insurance company, that that insurance, whatever it is, should be attached when damages are secured by an injured employe. We have cases here where employers have no financial standing, and the result is that they have defaulted in the payment of damages, although they have been protected themselves by means of liability insurance. The injured workman cannot secure that insurance through the courts. That is something that should be remedied.

(An informal discussion was then had as to a more specific program for the Saturday morning session. Chairman Mercer announced the following committee, of which the Chair, in accordance with Dr. Allport's motion, was _ex-officio_ member.)

_Program Committee_--Dr. W. H. Allport, Chicago; Prof. John H. Gray, Minneapolis, Minn.; A. T. Saunders, Clinton, Mass.

(Upon motion of Professor Gray an adjournment was then taken until 9.30 A. M., Saturday, June 11, 1910.)

THIRD SESSION, SATURDAY, JUNE 11, 1910, 9.30 A. M.

Chairman Mercer called the Conference to order at 9.30 o'clock, and announced that the Program Committee had submitted eight specific questions for discussion, the consideration of each question to be limited to twenty minutes, and the length of time of each speaker to five minutes.

The further discussion of the Workers' Compensation Code was then taken up as follows:

CHAIRMAN MERCER: The first question will be whether we want to cover all employments in this act, or simply the hazardous employments.

MR. DAWSON (New York): In opening this discussion I am going to pass the legal question, because if it is necessary to limit the bill to hazardous employments, there are not two sides to the question.

It would appear that it ought not to be necessary for us to repeat all of the baby experiments that have been made in other countries. In other words, having delayed nearly thirty years longer than Europe, why should we not begin where the European countries left off, instead of where they began. It may, however, be necessary for us to confine ourselves to certain classes of employment, but I do not think, personally, that those classes ought to be selected with strict reference to the question of their being hazardous. For instance, if it should transpire that the employers of domestic servants and the farmers are bitterly opposed to any system which will apply to them, it may be necessary to leave them out, but we ought, if possible, to cover all manufacturing establishments, all mercantile establishments and all transportation industries, and generally to proceed on broad lines.

There is a practical objection to confining this sort of thing to the really more hazardous employments. It is this: The rates for employers' liability insurance are already very high in those industries, and they will probably be doubled or possibly tripled or even quadrupled. It would be difficult to imagine anything which would render workmen's compensation more densely unpopular than to apply the principle exclusively to the more dangerous manufacturing industries of a particular State. On the other hand, an increase in the rate payable by a dry goods merchant, for instance, might not amount to an advance on the payroll of more than one-half of 1 per cent. or 1 per cent., and, therefore, might not seriously place the employer at a disadvantage in competition with employers of other States. That is not true where the hazards of the occupation are very serious. You then have the situation that every manufacturer affected may be able to establish that he cannot carry on his business at all in competition with these other manufacturers if he is thus burdened.

JAMES A. LOWELL (Massachusetts): This matter of how many trades shall be covered is a pretty serious one for Massachusetts, because I do not think a scheme in Massachusetts would work unless we covered practically all the trades. We have an employers' liability law in Massachusetts now which excepts agricultural employment, which is a small matter in Massachusetts, and domestic servants, and I should assume that those two exceptions would be made in any law which was passed, and incidentally that has been held to be a proper law. So I do not apprehend any difficulty on the constitutional part of it through leaving out those two classes of workers.

But in Massachusetts by far the greater part of the industry there is in manufacturing, the lighter trades, and, I think, in order to get a law which would be of much service in Massachusetts, we would have to cover practically all industries, so we are up against the proposition there that we cannot do much along the line that has been followed in New York.

The experience in England under the employers' liability law has been that the premium on insurance in mines is twice what it cost under their former laws. In hazardous risks, as Mr. Dawson has said, the rates are from three to four times higher, and in those lighter trades it is very much greater than that; it is six or eight times more than it was under the old laws, and the chances are that if we adopted a law in Massachusetts with anything like the scale there is in England, it would be six or seven or eight times as much for insurance as it is at the present time. So that is a very practical difficulty which we have to face in Massachusetts.

As I said before, in order to have a law there that is to be of any value, you must practically cover all of the trades, and the only way you can do that, as far as I can see, is that you would have to have your scale of compensation under the law very low. I do not think that that would work out badly in Massachusetts, because most of the injuries which will be found in the factories will be minor injuries. There are not a great many very serious injuries in the cotton factories as compared with the mining and bridge-building industries, but there are a great many small injuries. If you put on some kind of a scale which would be relatively quite small, the result, it seems to me, would be that the workmen, as a whole, would be very much better off than they are now. As it is now, one man out of every twenty, we will say, or possibly one out of fifteen, will get a fairly good-sized amount, and all the other fourteen will not get anything. Putting it on a moderate scale in the cotton factories would give everybody something; probably not as much as we would like to give them, or as we perhaps should give them, but, I believe, the result would be much better than the present situation. For that reason on the point we are now discussing, I believe the thing for Massachusetts to do is to try and get some kind of a law which will cover practically all industries.

CHARLES A. SUMNER (Missouri): I naturally would like to see the bill cover all industries, but the legal question arises, and unless we can get around it, as this tentative bill seems to succeed in doing, I do not know what we would do down in Missouri. Missouri is largely an agricultural State, and the Legislature is in the control very largely of the farmers and the representatives of the smaller cities in the agricultural districts. We have the initiative and referendum, however, and it occurred to me, in listening to the discussion here, that if it were the opinion of this Conference that it would be better to attempt to get a bill adopted which would include all trades, that it would be worth trying in Missouri, where the initiative and referendum are in existence. I believe that if a proper bill were put to the people direct, it would very likely get the support of the people in Missouri, particularly if it was a bill that the best judgment of this Conference had evolved. I believe, however, that we would prefer to have the bill include all trades.

CHAIRMAN MERCER: Mr. Sumner, the farmers may have a considerable influence in the Legislature, but so have the other interests, and legislation is very largely a matter of trade anyway, when you get into the majorities. Don't you think that would work itself out all right and take care of the farmers?

MR. SUMNER: As I understand politics in Missouri, the farmers there are strong partisans, and unless you can get your bill adopted by one party or the other, as a party measure, which I think would be very improbable down there, because our parties are very largely in the control of the corporate interests of the large cities, they would have something to say about the bills and the farmers' representatives would simply go with the party. Still, with the initiative and referendum the people and the labor unions down there are not relying very much on the Legislature any more.

CHAIRMAN MERCER: If either party, or if both labor and capital wanted this proposition, then they would vote for it?

MR. SUMNER: Yes.

CHAIRMAN MERCER: So if the employers and employes should agree on what was a proper bill in your State, you would not have any special difficulty, after all, would you?

MR. SUMNER: No, probably not. I should add that we have discussed this matter at the City Club in Kansas City, and the employers are just as much opposed to the present system as the employes. I was told by a State Senator last week that he has a bill now drawn up to be introduced at the next session of the Legislature, but I apprehend that the bill will not be acceptable to us.

PROF. SEAGER (New York): It seems to me in this matter that we are between the devil and the deep sea. If we begin this legislation by taking in all trades, we have got to scale down our schedule of compensation. We have got to recognize the validity of the argument, that you cannot put too heavy a burden upon competitive industries in one State when they have not the same burden in other States. That means a low scale of compensation. That means it would be very hard to get wage-earners behind our proposal, and for those reasons I anticipate that the political obstacle to getting a bill passed that contains an adequate scale of compensation and applies to all industries is going to be serious in most of the States.

I know it was our opinion in New York that such a bill could not be passed through the Legislature. The only certainty of getting a bill through the Legislature was limiting it to extra-hazardous trades and to trades that were non-competitive. That policy of course has this disadvantage: There is some doubt as to whether a classification along those lines will be upheld as reasonable by the courts, and I confess that we have some anxiety as to whether the bill we have induced the Legislature to pass will be held to be constitutional on that account. On the other hand, along that line it is possible politically to make a beginning, and I am inclined to think that it would be easier, if we can, to get the thing started for extra-hazardous industries and then to extend our definition of hazardous industries and gradually take them all in as the public is convinced that it is a good policy and a great improvement over the Employers' Liability Law. That would be easier, I believe, than to work along the other line of trying to take in all the trades at the outset. Starting on that line would involve a very low schedule of compensation and then trying to advance our schedule of compensation to what we would feel was adequate.

CHAIRMAN MERCER: But how about the desirability of it in case you feel it could be done?

PROF. SEAGER: Oh, I assume that we all agree that that is what we want if we can get it.

CHARLES MCCARTHY (Wisconsin): In looking over the New York Bill, and after hearing the argument of Professor Seager, I cannot help saying something about this bugaboo of interstate competition. I have just returned from Germany and England, where I have been some months examining the workmen's compensation insurance scheme. You are now discussing the scope of the bill and I want to tell the delegates here that the idea here in America that we in Wisconsin cannot start this scheme because of competition from other States, has a parallel in the commissions in Europe.

Europe is about as big as the United States and you have all these countries competing, one with another. You have severe competition between Germany and England, and you find Germany not only bearing the burden of accident insurance, of sickness insurance and invalidity insurance, but the German manufacturer actually adds out of his own pocket to what he has been required by law to pay, sometimes to the extent of fifty or sixty per cent. more, in bringing about many improvements in the conditions of the workingmen, and I state here that that is one of the basic conditions of German prosperity. I want to put that on the record here because I want the manufacturers of America to send representatives to Europe, and they will find that what I am saying is true; that the reason why Germany is driving English-made goods out of the market is because this very burden that they talk about is an asset and not a liability.

Books have been written about this subject and I have had the honor of reading the advance sheets of the book by Dr. Frankel and Mr. Dawson, which has not yet been printed, but these books do not really show why Germany is beating England, notwithstanding this so-called "burden" upon the shoulders of the German manufacturer. Germany is passing from an agricultural country into a great manufacturing country. In doing so it is necessary for Germany to extend her manufactories out into the small towns. You all know what that means. Some of you from Massachusetts have seen the shoe factory leave Brockton to go out and get some cheaper help somewhere, and then it comes back to Boston, because in Boston they can get the skilled and intelligent help which must go into the product in order to make the community prosperous and to make the goods of that community sell.

When a German manufacturer goes to a small town he says to the workman: "You come out to my town and live there. You will have your accident insurance, your old age pension and your sickness insurance, and besides that I am going to get a house for you out there, and a little plot of land, and I am going down in my pocket and add something to that invalidity insurance, and I am going to do something for tuberculosis prevention, and I am going to have a sanitary factory, and when you come out there you can settle down and marry and raise your children, and when they grow up I am going to put them into an industrial school after they have left the public school at the age of fourteen, and they can go to that industrial school until they are eighteen."

Now all of these things go to make up an intelligent population in Germany, where the children grow up under the conditions of sanitation and education, and with the contentment that comes from the fact that a man knows he can settle down and marry and have children. The manufacturers in Germany realize that this is not a burden, but that it is the biggest asset they have in Germany. I wanted to point that out to you and have the delegates go back from here with the idea in their minds that there is more to be said upon this question of interstate competition than has been brought out as yet.

England is in a desperate condition because Germany is cutting into the markets of England throughout the world. England had to adopt her Workmen's Compensation Act, and she adopted a compensation plan that Mr. Dawson knows is excellent, and it costs about four times what it does in Germany. I want to get it on the record that there are no adequate figures or facts presented as yet as to the difference between the mutual organizations of Germany and the private insurance organizations of England. I do not know why that is, but Mr. Mitchell said yesterday that the private insurance companies similar to those of England might prevent accidents. I want to warn you before you go back, that there is the greatest difference in the world between the mutual organizations in Germany in the safety and conditions of the workingman's life, as compared with the third party insurance in England. I have never found in England a private company having any inspection whatsoever of dangerous industries. I visited many factories and went into every insurance company in London and asked them what they did to prevent accidents, and they were doing practically nothing. I went into the sawmills in Germany and in England and compared the safety devices side by side, and I want to tell you that where the manufacturers in Germany combine under the law as they are compelled to do, they deal with their men with a hundred times greater humanity than under the conditions in England.

I am sure of what I am saying and I am going on record. I want every manufacturer and employer to investigate what I am saying here. I say that you can get insurance by mutually organizing and having some provision in your bills for mutual organization of employers a great deal cheaper and with a great deal more regard for humane conditions than you can by the private proposition, unless you compel all insurance companies by some other statute to make inspections before they place their risk.

I also want this suggestion to appear on the record. Some sort of provision should be made so that the private insurance companies will not knock out the old men on poorer risks. When they started in England they did knock out some of the old men in the employments, but now that thing has been settled. It ought to be put here in statutory form, because when you get the third party in here between the manufacturers and the employes, you are getting people who do not put their hearts into the thing.

I know this will be a matter of controversy, but I want to offer it here. I want to tell you not to fear this bugaboo of interstate competition. Nobody wants to see the State of Wisconsin more prosperous than I do, and I am sure that if our Wisconsin manufacturers go forward and make that investment, they will put intelligence into the product and add a happiness to the people that will build up the State. If it were not so then the principle of tariff would be no good; if it were not so then China and Japan with cheap labor would have been beating us to-day; if it were not so slavery would have been the best thing for this country instead of the worst.

MR. DAWSON: An investigation as to the cost of insurance in the various countries of Europe will be undertaken by the United States Bureau of Labor, as requested by this Conference at its session at Washington.

CHAIRMAN MERCER: Gentlemen, is it not true that we have the best judgment of the great financial interests in this country to the effect that this interstate competition amounts to very little, and that that judgment is best evidenced by reason of the fact that nearly all of the big industries that are doing business both locally and throughout the United States are adopting a scheme that voluntarily places a greater burden upon their shoulders than the law has been providing?

MR. INGALLS (Wisconsin): We have in Racine a perfect illustration of that. A very large concern there not only adopted the accident but the pension system as well, so that we do not fear anything of that kind.

DOCTOR ALLPORT: It would seem to me that the question of whether we should attempt to adopt or recommend a tentative form of law or code of law in this matter is really a question of whether we have profited by the historical aspects of this subject. I think in a measure we are a little too much wedded to what people are wont to call the philosophy of individualism. Every State is passing laws of all kinds, and no State has any particular intention of following another State.

The historical aspect of this matter with reference to interstate competition and with reference to the selection of certain trades has already been threshed out abroad, to the satisfaction of the European governments, trades people and manufacturers, and it would not be a bad idea perhaps if for two or three minutes we consider the historical aspects of this subject, as applied to England and to Germany.

We all know the inception of this thing began in Germany, but they never formulated it until about 1883. Before that time, however, Gladstone in 1880 had been forced to make up some kind of a law for England which was passed in 1880 as the Employers' Liability Act. That was based on what is now known to be the crudest and most unsatisfactory of all principles--principles which are bound to be local and unsatisfactory and which do not cover the situation, and which give the workmen practically no remedy except before the court. That is the stage which this country has reached if it has reached any stage at all. Few of our States have reached a point where they have anything like a satisfactory Employers' Liability Act. That is the initial stage when the child first commences to walk. Germany went far beyond that. She saw the failure of the Gladstone Act, and went to the bottom of the matter by deciding to abolish entirely all matters of liability and put it altogether on another basis. Upon that basis European-Continental law has been modeled from that time to this; Germany always in advance but the other countries following as close as existing laws will permit.

In 1890 Germany adopted practically an absolute act, and every State on the European continent has now followed the lead of Germany. The question that has come to us historically and in an evolutionary manner, is whether we should follow the lead of European governments in this matter and do as they have done, adopt the lead of Germany, who ignored entirely the matter of interstate competition and passed a law placing every trade under the Workmen's Compensation Act, or whether we should undertake to work out this matter for ourselves in the crude indefinite way in which England has worked it out.

In England this matter of interstate competition came up. England worked for seventeen years under the Gladstone Employers' Liability Act, but finally Asquith and Chamberlain and a combination of the Liberal and Conservative parties, got together and formulated another act in 1897 which they called the first Workmen's Compensations. That act applied, as we attempt now to apply it in certain of our States, to certain limited trades and occupations.