WORKMEN'S COMPENSATION AND INSURANCE Williams College DAVID A. WELLS PRIZE ESSAYS number 5 WORKMEN'S COMPENSATION AND INSURANCE /? BY DURAND HALSEY VAN DOREtt A.B., LL.B. ' ( DEC 7 -1918 I) PRINTED FOR THE DEPARTMENT OF POLITICAL SCIENCE OF WILLIAMS COLLEGE B Aoffat, yard and Compang, flew 1918 Copyright, 1918, by MOFFAT, YARD & COMPANY T TO MY FATHER AND MOTHER IN LOVE AND GRATITUDE FOREWORD The legislative tendency of to-day is unquestion- ably toward the rapid socialization of the state. In this movement, workmen's compensation laws and other statutory provisions for the insurance of the industrial hazard are playing an increasingly important part. By reason of the adoption of such measures, first in European countries, then in the colonial possessions of the great powers, and finally in the vast majority of the commonwealths which go to make up the United States of America, an impressive body of precedent and a wide divergence of views on matters of legislative policy have de- veloped, to the study of which writers on economic and social questions are yearly devoting greater attention. The present work is in answer to the demand for a brief critical presentation of the subject, as dis- tinguished from an exhaustive and non-committal treatise. It was written in successful competition for the 1917 award of the David Ames Wells prize of $500, offered annually to seniors of Williams vU viil FOREWORD College and graduates of not more than three years* standing, for the best essay on a subject in the field of political science assigned by a committee of the Faculty. The author is a graduate of the class of 1914. The essay method of treatment has been fol- lowed throughout, and matter of interest to the scholar and the legalist rather than the general reader is relegated to footnotes. Every effort has been made to keep the text free from inaccuracies. Perfection in this regard, how- ever, is hardly to be expected, especially in view of the mass of material through which the student of workmen's compensation is forced to wade, and the constant changes in the subject introduced by new legislation, court decisions, and administrative action. The most that the author dares to hope is that his unintentional transgressions will prove to have been few. My thanks are due to the members of the Faculty Committee on the Wells Prize Contest, consisting of President Harry A. Garfield, Prof. Walter W. McLaren, and Prof. Theodore Clark Smith, and particularly to Prof. McLaren for valuable sug- gestions and unfailing sympathy and assistance. D. H. V. D. Washington, July, 1918. CONTENTS CHAPTER PAGE FOEEWOED vii I UNDEELYING PEINCIPLES 8 II THE RISE OF WOEKMEN'S COMPENSATION . . . 20 III QUESTIONS OF CONSTITUTIONALITY 5& IV COMPENSATION LEGISLATION IN THE UNITED STATES 84 V INSUEANCE FEATUEES 134 VI How IT WOEKS IN NEW JEBSEY . . . .178 VTI THE ATTITUDE OF LABOE 239 VIII THE SOLDIERS' AND SAILOBS' INSUEANCE ACT 265 IX REQUISITES OF THE IDEAL LAW .... 296 BlBLIOGEAPHT 311 INDEX . WORKMEN'S COMPENSATION AND INSURANCE WORKMEN'S COMPENSATION AND INSURANCE CHAPTER I UNDERLYING PRINCIPLES A CAREFUL text-book writer has defined workmen's compensation acts as "enactments which embody the principle that the workman is entitled to compen- sation for injuries received. in the course of his employment." 1 Accepting this description as ade- quate for the purposes of an introductory chapter, we are led to ask : "Where and when did this prin- ciple first gain credence; and why was legislation necessary to engraft it on our law?" Until these questions are answered, an intelligent study of workmen's compensation as it exists to-day is im- possible. For centuries before the modern legislation with which we are to deal, the law had treated contracts iBoyd, Workmen's Compensation, p. 205. 3 4 WORKMEN'S COMPENSATION AND INSURANCE of employment as purely personal agreements (the interest of the public in them being overlooked) ; and controversies arising out of them had been dis- posed of by the courts with an eye chiefly to mulct- ing the party at fault for the benefit of the party injured. Especially has this been true of suits by the workman to recover damages from his employer for injuries suffered in the course of the employ- ment. The question put by the law in such cases has long been: "Was the injury due to the posi- tive fault or culpable negligence of the employer?" Unless this query were answered in the affirmative, damages or compensation for the injury could not be recovered, and the unfortunate workman was left to his fate. Such was the common law of negligence. It will readily be conceded that this narrow code, even if calculated to work substantial justice in the rare cases where the relation of master and servant was a purely personal and intimate one, is wholly unadapted to the conditions of modern industry, where factory labor is the rule and personal con- tact of employer and employed is the exception; yet it has been made even harsher and more anach- ronistic, in countries following the English law, by the importation of three peculiar doctrines. UNDERLYING PRINCIPLES 5 These are known as the contributory negligence rule, the fellow-servant rule, and the doctrine of assumption of risk. The contributory negligence rule is not peculiar to the law of master and servant, but is broadly applicable to all cases of accidental injury. Briefly, it is that if the party injured has by his negligence contributed to the risk which occasioned his injury, he cannot recover compensation for such injury in an action against the carrier, master, or other negligent party. Contributory negligence of the injured workman is a perfect defense for the employer in such suits. 2 The test of whether it exists in a particular case has been well formulated in a leading Indiana decision: "If the risk is so great and immediately threatening that a person of ordinary prudence, under all the circumstances, would not take it, contributory negligence is estab- lished. If the risk is not so great and immediately threatening but that a person of ordinary pru- dence, under all the circumstances, would take it, contributory negligence is not established." 3 The fellow-servant rule, or the "doctrine of com- mon employment," as the English call it, is said to 2 Burdick, Law of Torts (3d Ed.), p. 198. Davis Coal Co. v. Poland (1901), 158 Ind. 607, 62 N. E. 492. C WORKMEN'S COMPENSATION AND INSURANCE have originated in the case of Priestley v. Fowler 4 in 1837; though it has been pointed out that that case is authority for no such broad proposition. 5 But whatever its origin, it has taken a mighty hold on English law, and is the prevailing doctrine in jurisdictions where it has not been abolished by statute. 6 The general rule has been stated as fol- lows : "One who enters the service of another takes upon himself the ordinary risks of the negligent acts of his fellow-servants in the course of his em- ployment." 7 Such a proposition will be seen to be a natural outcome of the old theory that contracts of employment are personal contracts, under which the master assumes no responsibility except for his own personal acts or omissions ; but it is grotesquely inapplicable to modern industrial conditions, where the workman often never sees his real employer. It is true that the rule has been modified in some jurisdictions so as to give the workman a right of action against the employer in cases where the fel- 3 M. & W. 1, 49 R. R. 495 (1837). Burdick (supra), p. 202; also Pease, J. G., in 15 Columbia Law Review, at p. 509. But see Dawbarn, Employers' Liability and Workmen's Compensation (4th Ed.), at p. 2; and Boyd, Workmen's Compensation, at p. 26, for the conventional view of the origin of the fellow-servant rule. Burdick (supra), p. 203. Randall v. B. & O. Ry (1883), 109 U. S. 478, 483. UNDERLYING PRINCIPLES 7 low-servant's negligence can reasonably be imputed to the master on the theory that the former is so completely clothed with the powers and discretion which the master could exercise if present as to be the master's alter ego rather than a true fellow- servant. 8 But even so the rule serves to defeat recovery in that large class of cases where the fel- low-servant's negligence, though not imputable to the master personally, is clearly a risk inherent in the employment rather than a mere independent tort of the fellow-servant himself. Speaking of the rule, Augustine Birrell has said: "The doc- trine of common employment was only invented in 1837. Lord Abinger planted it, Baron Alder son watered it, and the devil gave it increase." 9 The doctrine of assumption of risk is related to the fellow-servant rule, and really embraces the lat- ter. "Under this principle every risk which an employment involves after the master has done everything he is bound to do for the purpose of securing the safety of his servants (including the employment of other servants) is assumed, as a s Bradbury, Workmen's Compensation and State Insurance Law (2d Ed.), p. 5. Quoted from The (London) Times of May 18, 1897, in an article on Workmen's Compensation and the Theory of Professional Risk, by F. P. Walton in 11 Columbia Law Review, pp. 36-50, at pp. 38-39. 8 WORKMEN'S COMPENSATION AND INSURANCE matter of law, by each of those servants." 10 And the broad proposition has been stated by another writer thus: "When a man enters another's em- ploy he does so with his eyes open, and with a knowledge of the risks incidental to it, including those due to the negligence of fellow-servants, and those he contracts to take, e. g., a miner or a sailor, whose occupations of their very nature are danger- ous." " The doctrine was first authoritatively laid down in 1842 by Chief Justice Shaw of Massa- chusetts, in a famous case. 12 It is true that, to offset the several defenses which the employer had to an action by the work- man for injury suffered in the course of his employ- ment, the common-law laid certain duties upon the employer, breach of which was considered neg- ligence or fault on his part. These duties were: (1) to employ suitable fellow-servants; (2) to es- tablish and promulgate proper rules; (3) to pro- vide a safe place to work; (4) to furnish safe ap- pliances; (5) to warn youthful and inexperienced servants of the dangers of the employment. But 10 Boyd, Workmen's Compensation, p. 5. "Dawbarn, Employers' Liability and Workmen's Compensation (4th Ed), p. 2. "Farwell v. Boston, etc., R. Co., 4 Met. (Mass.) 49; see also Boyd, Workmen's Compensation, at p. 26. UNDERLYING PRINCIPLES 9 these duties were far from nullifying the special de- fenses we have discussed. 13 Thus, though the mas- ter was under a duty to employ suitable fellow-serv- ants, he discharged himself of all responsibility by exercising reasonable care in their selection ; if, after such due care, an injury happened to a servant through the unfitness or negligence of a fellow- servant, the master was not liable therefor. It will be seen, then, that the common-law of England and the United States rested the em- ployers' liability to the workman for injuries to the latter in the course of his employment solely on principles of tort. The workman could re- cover compensation from the employer only when he could clearly establish that it was the latter's fault that the injury occurred; and the number of ways in which such responsibility could be shifted I have already indicated. When the accident was due to the inherent hazards of the employment, to the act of God, or where the blame could not be fixed, the employer was not liable. 14 This review of the state of the common-law in is Burdick, Law of Torts (3d Ed.), TP- 184-197; also Boyd, Work- men's Compensation, p. 2. i* Boyd, Workmen's Compensation, p. 6. These rules are especially unjust in view of modern impersonal relations between employer and employed. Commons and Andrews, Principles of Labor Legis- lation, pp. 357-358. 10 WORKMEN'S COMPENSATION AND INSURANCE England and America prior to the passage of the workmen's compensation acts puts us in a fair way to answer one of our questions: "Why was legis- lation necessary to engraft the principle of work- men's compensation on our law?" Simply because the common law and the modern acts proceed on a wholly different ethical, economic and legal basis. The legislator of to-day rejects the narrow view that the problem of industrial accidents is one wholly between the parties to the contract of em- ployment; and hints that its true solution is to be found in saddling on the industry, as one of the necessary incidents of conducting it, the expense of compensating its injured employees regardless of the varying degrees of negligence of the parties. Workmen's Compensation presumes a light in the injured laborer to compensation for injuries re- ceived in the course of his employment; but this right is no more personal to the laborer than is the duty to pay personal to the employer. In a given case, the workman's negligence may be inexcusable, the employer's conduct exemplary; but because in the long run it is better for the industry to bear the brunt of industrial accidents, because indi- vidual adjudication of such cases involves great ex- pense, delay, and uncertainty, the supporters of UNDERLYING PRINCIPLES 11 the modern legislation have insisted that the law shall make "the assumption, in all cases, that neither party was guilty of negligence and that the injury was the inevitable result of the occupation in which the employee was engaged." 15 The reader must not, however, assume that the principle of workmen's compensation, which has been thus broadly stated, operates to its fullest ex- tent in all those jurisdictions in which it has been adopted. Indeed, it has been pointed out that in none of the American states in which a modern act is in force, does the law cover all employments ; and in all there are limitations in the causes and results of injuries for which compensation will be granted. 16 Most statutes refuse compensation when the accident is due to the willful act of the employee ; 1T and some make the same rule in the case of intoxication. 18 But these and other excep- tions must not be taken to impeach the theory on which all these acts are based; which is that it is in 16 Bradbury, Workmen's Compensation and State Insurance Law (2d Ed.), p. 6. 18 W. C. Fisher in Quarterly Journal of Economics, vol. XXX, pp. 22-23. There is a marked tendency, however, to do away with these limitations. Rhodes, Workmen's Compensation, p. 135. IT Bradbury, Workmen's Compensation and State Insurance Law (2d Ed.), pp. 6-7. is Bradbury (supra), p. 7; see also New Jersey statute (P. L. 1911, p. 134) Section 2, paragraph 7. 12 WORKMEN'S COMPENSATION AND INSURANCE the interest of the state and its citizens, to have "the portion of the cost of furnishing products and services which is represented by the loss of time through disabilities caused by accidents arising out of the occupation, and by death from such acci- dents of persons engaged in the occupation," borne in the first instance by the employer and ultimately by the consuming public in the form of increased prices, rather than by the injured workmen them- selves. 19 ^ As has been shown, the distinction between the two legal systems is a fundamental one; the com- mon-law of negligence raising the question of com- parative fault, while the workmen's compensation acts waive that question entirely, and rest on the broad proposition that public policy requires that the industry bear the burden of the accidents inci- dental to it. But, clear as is the distinction in prin- ciple, the terms used to describe the two theories have been ambiguous and confusing. "Employers' Liability" is the antithesis of "Workmen's Com- pensation"; and the former should be used to de- note the common law system, either in its purity or modified in its details but not its principles by i> See Dawson, Miles Menander, on The Constitutionality of Work- men's Compensation and Compulsory Insurance Laws, in Case and Comment, voL 22, at p. 278 (September, 1915). UNDERLYING PRINCIPLES 13 "Employers' Liability laws," as distinct from the innovations of the statutes we are discussing. 20 Notwithstanding, the two terms have not infre- quently been used interchangeably. The courts themselves have taken notice of these inconsisten- cies, however, and in at least one instance have sug- gested a change to the more accurate term in de- scribing a statute. Another phrase which is often used and is apt to confuse the unwary is "State Insurance." By State Insurance Laws are meant simply those workmen's compensation laws, or statutes of even broader application, which follow the German plan of providing compensation for disabled workers by means of state-managed insurance funds, to which the employers (and sometimes the workmen them- selves) contribute in the form of premiums. This is a form of workmen's compensation apparently increasing in popularity, though meeting with the organized opposition of the private insurance com- panies. 21 Enough has been said to show that a new prophet 20 Bradbury, Workmen's Compensation and State Insurance Law (1st Ed.), at p. ix of the Introduction; Rhodes, Workmen's Compen- sation, p 3. See also Gregutis v. Waclark Wire Works, 91 Atl. (N. J.) 98, for judicial view of distinction. 21 See current comment in The Weekly Underwriter, published at 14 WORKMEN'S COMPENSATION AND INSURANCE has arisen in Israel; that the attitude of our fore- fathers towards labor, and more especially towards the problem of industrial accidents, is not the atti- tude of the rising generation. But a theory is not sound merely because it is new. How solid is the economic basis on which it rests ? To begin with, the supporters of the workmen's compensation principle insist that accidents are an inevitable incident of modern industry. In the long run, there will be a "more or less stable aggre- gate of loss and damage occasioned by industrial accidents ; and this loss or damage is as much a part of the cost of the commodity produced as destruc- tion of material, wear and tear on machinery, etc." 22 In reply to the contention that "the work- man can get relief by suing his employer," the ad- vocates of the new legislation point to the results of actual investigations, like that of the German Government commission of 1887, whose careful statistics show that out of every 100 serious acci- dents 43 are such as no care on the part of the em- ployer could have prevented. 23 In those 43 cases, 80 Maiden Lane, N. Y. The Workmen's Compensation Publicity Bu- reau at the same address is avowedly run in the interests of private insurance. 22 Frankel and Dawson, Workingmen's Insurance in Europe, p. 9. 23 11 Columbia Law Review, p. 40, n. 9. UNDERLYING PRINCIPLES 1* then, the law of negligence, even under the most liberal of employers' liability acts, would give no relief; and the burden would be thrown upon those least able to bear it the injured workmen them- selves. It need hardly be added that this means, in the last analysis, that the support of the disabled laborer and his dependents is thrust upon the gen- eral community in the form of charity. 24 Let us put aside for the moment whatever feeling of pity for the unfortunate workman and his family may be stirred in us by the situation thus presented, and consider it simply as an economic problem. In a given industry say that of mining for coal the risk is unusually great. This is not because of neg- ligence on the part of the employers, who, w r e will presume, have spent much money and put a great deal of thought into safety devices; but because mining is an inherently dangerous occupation. Every year a great number of serious accidents oc- cur; the injured miners, and the representatives of those who are killed, are constantly bringing actions against the mining companies. Sometimes big ver- dicts are recovered; but oftenest it is impossible to prove that the employers were negligent, and only the lawyers profit. The situation is pitiful; the 2* Frankel and Dawson, Workingmen's Insurance in Europe, p. 9. 16 WORKMEN'S COMPENSATION AND INSURANCE families of disabled workmen struggle on in dire poverty, or drift to the poor-farms, where they are a continuous expense to township and county. This picture represents more than a social injus- tice; it reveals an economic fallacy. That large proportion of accidents which are inseparable from the employment, yet for which the law permits no recovery against the employer, constitutes one of the normal incidents in the production of coal ; and a sane economic policy dictates the assumption of the expense of these accidents, not by the impov- erished workman, not by the public charity to which the workman eventually turns, but by the employers of that industry in the first instance, and eventually by the consumer of the coal in the form of increased prices for that commodity. It is for the consumer of the coal, in the final analysis, that the miner toils and subjects himself to danger; and since it is the consumer who has set the industry in motion, it is but right that when he comes to pay for the product of the miner's labor he shall include in the purchase-price enough to compensate the miner for the dangers he has undergone and the in- juries he has suffered. Yet for many years the mining communities, instead of the particular group UNDERLYING PRINCIPLES 17 which benefits by the production of the coal, have had to bear the burden of the accidents incidental to its production, in the form of the expense of litigation concerning these accidents, the care of the victims, and the many evils growing out of the re- sulting distress and pauperism. 25 Unsound in principle, the old law did not work out well in practice. In a few cases, injured work- men excited the sympathy of the jury and recovered scandalously large verdicts; but a vast majority of accidents went wholly uncompensated or were met with inadequate payments. 26 It has been esti- mated that the common-law remedy furnished com- pensation of any kind in not more than 12 per cent, of the cases of injuries to employees; and even in those few cases of recovery, the amount paid aver- aged scarcely one-fifth of what is deemed ade- quate. 27 In Germany, before the adoption of the compulsory insurance laws, the percentage of cases of accidents to employees in which compensation was awarded was even smaller, being barely ten per cent. 28 That these percentages do not repre- 25 See Dawson, Miles Menander, in Case and Comment, vol. 22, p. 278. 26 Frankel and Dawson, Workingmen's Insurance in Europe, p. 7. 27 Boyd, Workmen's Compensation, p. 54. 28 Ibid., p. 74 . 18 WORKMEN'S COMPENSATION AND INSURANCE sent the ratio of meritorious to undeserving cases, even approximately, goes without saying. Capitalists and large employers to-day have joined the labor element in welcoming the compen- sation principle. 29 Undoubtedly the aggregate yearly payments under the compensation laws are greater than formerly under the old slipshod sys- tem; but the terror of the "big verdict" is gone. Another abomination done away with by the acts is the necessity of paying expensive attorneys and claim agents to fight the claims an item often of greater magnitude than the whole amount paid as damages. 30 But whether employers are pleased or not, it is likely that they will have to submit to workmen's compensation laws, which, after long delay, have come like a whirlwind upon the United States, most of the states and territories having adopted the prin- ciple since 191 1. 31 And as the legislation, and the industries to which it applies, gradually undergo the changes necessary to the process of mutual adaptation, even the most stubborn of the oppo- 2 Senate Document No. 338, 62d Cong., 2d Sess., pp. 551, 1378. so Boyd, Workmen's Compensation, p. 60. i For texts of the laws passed up to the end of 1916, see Honnold, Workmen's Compensation, vol. 2. See also digests and other publi- cations of the Workmen's Compensation Publicity Bureau, 80 Maiden Lane, New York City. UNDERLYING PRINCIPLES 19 nents of the idea will be compelled grudgingly to admit, as did a successful and conservative banker friend of mine, that "after all, it's a better solution of the labor problem than the old one." CHAPTER II THE RISE OF WORKMEN'S COMPENSATION THE theory of workmen's compensation is such a newcomer to the United States that some study of its history, of how, why and where it came to be, is essential. To an account of the rise of the compen- sation principle, and a description of the form it has taken in foreign countries, and more especially in Germany and England, this chapter is devoted. Switzerland was the first country to declare that for accidents in certain employments the employer was to be liable without proof of fault ; * but the German Industrial Insurance Act of 1884 is con- ceded to have been the first modern compensation law, 2 and on the German system most subsequent ill Columbia Law Review, p. 36. See also Fourth Special Report of the Commissioner of Labor, edited by John Graham Brooks (1893), p. 354; and Frankel and Dawson, Workingmen's Insurance in Europe, p. 74. The Swiss law of 1881 "made factory proprietors liable without fault for accidental injuries to their employees," and included among such injuries "diseases caused by such poisonous substances as should be specified by the Federal Council." 65 Univ. of Penn. Law Review, 516-517 (April, 1917). 2 Bradbury, Workmen's Compensation and State Insurance Law (1st Ed., 1912), p. xii of Introduction. 20 THE RISE OF WORKMEN'S COMPENSATION 31 enactments have in some degree been patterned. 3 It must not be supposed, however, that in Germany or anywhere else the compensation principle came into being by spontaneous generation; its ultimate adoption was the culmination of a long series of legislative experiments along similar lines, which in turn were the result of gradual advances in the field of economic philosophy. The philosophic influences which have molded modern German labor legislation are especially im- portant. They are very much older than such legislation itself, going back at least to Hegel, Fichte and Sismondi, whose theories were the in- spiration respectively of Marx, Lasalle and Winkel- blech, the three Socialistic thinkers with whom the rise of the principle of compulsory workmen's in- surance is indissolubly associated. The theory of the duty of the state towards the working class, which Fichte, writing at the close of the eighteenth century, expounded with such eloquence, was taken up and expanded by Sismondi twenty years later; and it was the latter's disciple, Professor Winkel- blech (Karlo Mario), who first conceived the idea of state insurance in Germany. Another Socialist, Dr. Schaeffle, has been called the father of that 11 Columbia Law Review, p. 37. 22 WORKMEN'S COMPENSATION AND INSURANCE principle ; and it was unquestionably the sudden in- crease in the Socialistic vote after the Franco-Prus- sian War that led Bismarck to adopt the compul- sory insurance idea. 4 The Prussian Act of November 3, 1838, had con- tained the elements of an employers' liability law of narrow application. It provided, in substance, that railway companies should be liable to both em- ployees and passengers for injuries sustained from the operation of the trains ; but it also expressly per- mitted the companies to set up in defense either that the accident had been caused by the negligence of the injured party, or that it was due to an act of God. 5 The statute was indicative of a broader attitude towards accidents to employees than that characteristic of the common law of negligence and fault; but there was as yet no sign of acceptance of the compensation principle. Labor problems, however, continued to occupy the attention of German legislators. In 1854, cer- tain classes of employers in Prussia were compelled Fourth Special Report (see footnote 1), pp. 19-22, 27. Mr. Brooks, the author of the report, makes, in Chapter 1, a thorough examination into the philosophic basis of the compensation principle. See also Rhodes, Workmen's Compensation, pp. 41-45. Boyd, Workmen's Compensation, p. 26. Mr. Boyd has an excel- lent historical summary of German legislation in this book, on which the writer has freely drawn for information. THE RISE OF WORKMEN'S COMPENSATION 23 by statute to contribute one-half of the subscrip- tions to the fund of the sick associations formed according to local statutes; and Brunswick, Meck- lenburg and Saxony went even further in requiring that all employers should be members of some kind of mutual sick association. 6 The earlier Prussian laws, however, do not seem to have been very effec- tive; as, in 1876, when the law relating to friendly and active societies was passed, barely one-half of those employed in mines and other industries com- ing within the law were insured in the Sickness, Relief and Burial Societies provided for. 7 The employers' liability act of 1871, for united Germany, related only to mines, railways, and a few other industries, and made employers liable for death or accident proved to be directly or in- directly the fault of the employer. Assumption of risk and the fellow-servant rules were done away with by this statute, which, however, caused so much bitterness and involved so many delays in the ad- ministration of justice that it must be set down as a failure. 8 The voluntary insurance act of 1876, to which I Fourth Special Report (supra), p. 35; Boyd (supra), pp. 26-27. See also Willoughby, Workingmen's Insurance, pp. 33-34. i Boyd, Workmen's Compensation, p. 27. Ibid., pp. 28, 1180-1181. 24 WORKMEN'S COMPENSATION AND INSURANCE have already referred, also proved a failure, as a result of that industrial selfishness which is the bane of all such legislation. 9 The need of stronger measures, which in operation would not lay the bur- den on conscientious employers and exempt their less altruistic competitors, was pressing; and Bis- marck set himself to the solution of this problem with characteristic energy. The compulsory in- surance acts of 1883-1889, heralded by an Imperial message to the Reichstag on November 17, 1881, were the results of his labors. The scheme of these laws was novel and compre- hensive. By the Sick Insurance Act of June 15, 1883, insurance was made compulsory as to work- men of an earning capacity up to 2,000 marks a year in a large class of industries, and voluntary as to the exempted workmen, officials and servants. It was to be carried out by means of local associations, es- tablished by trade guilds, townships, factories, or other industrial units; these were mutual, self -ad- ministered organizations, to whose insurance funds workmen and employers contributed in a ratio of two to one. The relief to which the insured were entitled consisted in free medical attendance from the beginning of the illness, including medicines, Fourth Special Report (supra), p. 46. THE RISE OF WORKMEN'S COMPENSATION 25 bandages, etc., and a sick pay equal to one-half of the insured's wages for a limited period, first set at 13 weeks. In addition, special hospital treat- ment was provided for in particular cases, and burial money in the case of death. 10 Accident Insurance (as distinguished from Sick Insurance) was covered by the following enact- ments: (1) the "fundamental law," often re- ferred to as the first modern compensation act, of July 6, 1884, which applied to mines, quarries, ex- cavations, factories, and in general the handicrafts using machines and some underground building; (2) the "extension law," extending the principle of the former act to the transport trades within the country, including the post, telegraph, army and navy; (3) the "agricultural law" of May 5, 1886, for Agriculture and Forestry; (4) the "building law" of July 11, 1887, for building trades so far not insured; (5) the Marine Law of July 13, 1887, for Navigation. It will be seen that the general plan of this legis- lation was to provide a special set of rules adapted to each particular province of insurance. As re- vised in 1900, it consisted of four separate laws, ioBoyd, Workmen's Compensation, pp. 1175-1180; WiUoughby, "Workingmen's Insurance, p. 41. 26 WORKMEN'S COMPENSATION AND INSURANCE relating to (1) Industry; (2) Agriculture and For- estry; (3) Building; (4) Navigation. The scheme is carried out, much as in the case of the sickness insurance, "under the guarantee of the Empire, on the mutual system, hy the employers united in trade associations, which may embrace all the sev- eral branches of industry in certain districts or in the whole empire." 1 1 The provisions of the law relating to Industry are of primary interest in our study, and will first be briefly considered. The Act is made applicable to employers and officials whose incomes are not above 2,000 marks per annum, as well as to workers in mines, quarries, factories, etc.; and a number of other classes may be included by the peculiar law of the particular German state or may voluntarily join the insur- ance. Workmen and employers contribute to the fund, which is used for the payment of compensa- tion as in the case of the Sickness insurance. From the beginning of the fourteenth week after the occurrence of an accident incurred in the course of the employment (when the sickness insurance would expire) the injured workman, if totally dis- abled, is given free medical attendance and a pen- sion equal to two-thirds of his yearly earnings; if "Boyd (supra), pp. 1182-1183. THE RISE OF WORKMEN'S COMPENSATION 27 only partially disabled, the pension is only par- tial. 12 Burial money and a pension for the family in the case of death are also provided for; and the normal payments mentioned above are likely to be increased to a full pension or given in a lump sum if the total disability takes the form of absolute helplessness, or the injury was caused intentionally by the employer. 13 Some other points of the plan are worthy of notice. For example, during the first thirteen weeks of disability, known as the waiting period, the employer was liable for the injured man's sup- port in case the sick associations failed to provide for him ; though this has now been altered. 14 From the decision of the trade association on the validity of a claim under the act, there was an appeal, orig- inally to the imperial bureau, and, after 1901, to a special arbitration court. 15 And since the trade associations have a decided interest in diminishing the number of accidents, the law confers on them the important privilege of prescribing safety regu- 12 Fourth Special Report (supra), pp. 90-91; Willoughby (supra), p. 60; Dawson, Social Insurance in Germany, p. 113. isBoyd (supra), pp. 1184^1185; Willoughby (supra), p. 60. i*Boyd (supra), p. 1185. is Ibid. Mr. Brooks, in the Fourth Special Report (supra), writ- ing in 1893, says that one-sixth of the decisions of the trade asso- ciations were appealed to the imperial bureau (at p. 93). 28 WORKMEN'S COMPENSATION AND INSURANCE lations, infringements of which they may punish by higher assessments on employers or fines on work- men. 16 The Agricultural Insurance Law, which applies to Forestry as well, differs somewhat from the In- dustrial Insurance Law in its methods of operation. The agricultural trade associations are organized by territorial districts, made to coincide with com- munal or provincial boundaries. These bodies, at their assemblies, levy contributions for the insur- ance fund, on the basis of taxes; and the compen- sation paid, except in the cases of skilled workmen or managing officials, is based on the average rate of wage for agricultural laborers, rather than actual earning power. Furthermore, during the "wait- ing-time," the parish, instead of the employer, is required to make preliminary provision for the in- jured laborer. Under the Building Trades Accident Insurance Law and the Marine Accident Insurance Law the compensation is administered by "insurance insti- tutions" established as appendages to the several associations. In the case of small marine enter- prises, a special "Insurance Institution" is provided, to which masters of small craft employing regu- 10 Fourth Special Report (supra), p. 95. THE RISE OF WORKMEN'S COMPENSATION 29 larly not more than two wage- workers are subject; the compensations being raised by premiums and contributed to by the larger parish unions. 17 Another form of state insurance provided for in Germany, and important in this connection because it forms one of the chief branches of the consolidat- ing act of 1911, is Invalidity and Old Age Insur- ance. It was first established by a statute approved on June 22, 1889, 18 and was replaced ten years later, after about eight and one-half years of actual operation, by the act of July 13, 1899. Persons working for wages in any branch of trade, manag- ing officials such as foremen and engineers, clerks, apprentices, teachers and tutors, and some other employees, are compelled to insure; masters em- ploying only one or two workmen, employees with yearly earnings in excess of 2,000 marks and less than 3,000, and those who work only occasionally or for maintenance, are allowed to join the insur- ance voluntarily. The object of the law is to give the insured a legal claim to a pension for invalidity or old age. Its benefits may be invoked by every insured person who is permanently disabled, irre- 17 Boyd, Workmen's Compensation, p. 1193. is Fourth Special Report (supra), p. 116; Willoughby (supra), p. 36; Dawson, Social Insurance in Germany, p. 19. 30 WORKMEN'S COMPENSATION AND INSURANCE spective of age; and without proof of disability by insured persons who have completed their seven- tieth year. Contributions to the fund are furnished by the Empire, the employers and the employed, jointly. Pensions are administered by special In- surance Institutions, which are corporations whose responsibility is guaranteed by the state. 19 The amounts are considerably smaller than the compen- sation provided for by the accident insurance laws, but there is a good explanation of this in the fact that gradual decline in bodily vigor is an inevitable occurrence against which every prudent man is bound to provide, while sudden industrial accidents upset all calculations. 20 The three great branches of state insurance which we have described Sickness, Accident, and In- validity were consolidated into the German Workmen's Insurance Code by the act of July 19, 1911. This statute is essentially a codification, and carries out the scheme of the individual acts even to the retention of separate administrative bodies to conduct the three branches. "Survivors' Insur- ance" to protect widows and orphans is a new fea- ture; so is the introduction of a series of govern- ment offices to supervise the insurance organ- it Boyd (supra), p. 1200. "Ibid., p. 1203. THE RISE OF WORKMEN'S COMPENSATION 31 izations; but in the main the changes have been in the nature of a harmonizing and extension of the provisions of the former acts rather than the in- troduction of new matter. The act represents the existing law in the Empire on the subject; and it may be mentioned, as characteristic of German thoroughness and genius for detail, that a trans- lation of its provisions fills nearly 300 pages of fine print in a generous American law-book. 21 The German Compulsory State Insurance Law has been called "the boldest experiment in social legislation ever attempted." It represents the most complete development yet attained along the line of Workingmen's Insurance, and has served as a model for legislation in several American states. In the writer's opinion, it comes nearer to the ideal law than any in force elsewhere. But state insur- ance is too near state socialism to meet with uni- 21 Pages 1227-1500 in Mr. Boyd's treatise. An excellent review of the statistics available just before the outbreak of the Great War, with deductions therefrom as to the desirability of the German sys- tem, is to be found in The Market World and Chronicle, vol. 93, pp. 814-819 (June 27, 1914). The author of the article comes to the conclusion that German Industrial Insurance is not actuarially solvent owing to insufficient provision for reserves; and also com- ments on the "pension hysteria" resulting from the too liberal awards made prior to 1908. Neither of these criticisms, in the opinion of the present writer, condemns the state insurance project, though indi- cating possible improvements in details. 39 WORKMEN'S COMPENSATION AND INSURANCE versal acceptance. Though it cannot but be recog- nized that the principle of workmen's compensation of liability of the employer for injuries to the employee without regard to comparative negligence can only be made thoroughly practical in opera- tion by the use of some system of insurance, many commonwealths have preferred to leave this prob- lem to be worked out by voluntary associations. Compensation laws in these jurisdictions affirm the principle of the right of the injured workman to some indemnity from the employer, prescribe the amounts to be paid and the method of administra- tion, but are silent as to how employers and work- men shall contrive that the compensation shall al- ways be forthcoming without undue shock to the financial stability of the industry. The typical statute of this nature, and one which, like the Ger- man law, has served as a model for many American acts, is that now in operation in England. In England, as in Germany, the development of the workmen's compensation principle was grad- ual. The fellow-servant rule, though well estab- lished after Priestley v. Fowler, 22 had not been popularly supposed to extend to cases where the fellow-workman was of a higher rank and prac- 223 M. & W. 1 (1837). DEC 7- 1918 THE RISE OF WORKMEN'S COMPENSATION 33 tically acting in the place of the master. But in Wilson v. Merry, in 1868, the House of Lords pushed the doctrine to its utmost limits. In that case the plaintiff's son, a miner, was killed by an explosion of fire-damp which had accumulated ow- ing to defects in a staging which had been erected by the defendant's superintendent, a competent man. In holding that the plaintiff could not re- cover, Lord Cr an worth said: "Workmen do not cease to be fellow-workmen because they are not all equal in point of station or authority." 23 After this case, the imperative necessity of some statutory modification of the common-law became apparent. A rule so narrow would prevent re- covery in most cases of servants of corporations, since the negligence would almost of necessity be that of another servant of the corporate entity. And it was really to undo the mischief caused by the sweeping language used in Wilson v. Merry that the Employers' Liability Act of 1880 was passed. 24 The Act of 1880, like the subsequent broader statute of 1897, was the work of Joseph Chamber- as L. R. 1 H. L. (Scotch) 326 (1868). At p. 334. 24 Dawbarn, Employers' Liability and Workmen's Compensation (4th Ed.), p. 5. 34 WORKMEN'S COMPENSATION AND INSURANCE lain. 25 Framed, as it was, with an eye to securing the political support of both manufacturers and workmen, it is in no sense a radical measure. It creates no new cause of action, but leaves the work- man to sue for damages as before ; and in such a suit the employer is permitted to set up the same de- fenses as at common-law, except that the accident was due to the negligence of a fellow- servant. This abolition of the "defense of common employment," or (as we have termed it) the fellow-servant rule, is the one outstanding feature of the whole piece of legislation. 28 The Employers' Liability Act unquestionably brought about an improvement in the labor sit- uation in England. But it had the inherent weak- nesses of a measure of narrow application. To be- gin with, it covered only a limited range of employments, and these were arbitrarily selected. Against purely collateral negligence of a workman in the same grade of employment, it did not pro- 25 For the source of this and other historical data with regard to the development of the Workmen's Compensation principle in Eng- land, see the comprehensive work of Mr. Dawbarn (supra), and an. excellent article by J. G. Pease in 15 Columbia Law Review 509- 523 (June, 1915) entitled "An English Workman's Remedies for Injuries Received in the Course of His Employment, at Common-law and by Statute." Tillyard, Industrial Law, p. 104. THE RISE OF WORKMEN'S COMPENSATION 35 tect. And the causes of injury to which the Act applied were specified with too great precision; a workman with a meritorious cause of action was apt to fail through mere inability to bring himself within the strict provisions of the act. 27 These de- fects, and the growing popular demand for some simple scheme by which the workman's claims could be settled without resort to prolonged and expensive litigation, led to the government's definitely com- mitting itself to workmen's compensation in 1897. The new law bound employers in a wide range of industries to pay to such of their workmen as should be injured by an accident arising out of and in the course of the employment, compensation upon a scale fixed by the act. Disputes as to the amount of compensation payable were to be sub- mitted to arbitration, with a right of appeal to the higher courts. The language of the act was simple and direct; but that very unlawyer-like simplicity was the cause of much confusion, and the reports are full of cases in which the legal significance of apparently lucid phrases is discussed at length. 28 Several amending acts followed the passage of the Act of 1897, and finally, in 1906, it was re- 27 Pease (see footnote 25), pp. 514-515. 28 Pease (supra), p. 516. 36 WORKMEN'S COMPENSATION AND INSURANCE pealed, and its main provisions reenacted with va- rious amendments extending its benefits to classes of workmen not covered by the preceding statutes. It will be well worth while to consider briefly the main provisions of this act of 1906, which has been so widely discussed and so frequently copied. To begin with, the Act makes the right to com- pensation a statutory incident of the contract of service ; in a sense, it puts the master in the position of an insurer against accident, though payment of premiums and other indicia of insurance are lack- ing. The master's negligence is wholly imma- terial. 29 For practical purposes, the statute is divided into three parts : ( 1 ) the Act itself, which deals mainly with the question of liability for compensation; (2) Schedule I, which prescribes how the compensation is to be assessed and disposed of; and (3) Schedule II, dealing with the procedure to be adopted. 30 The first of these topics is of infinitely the greatest importance for the purposes of our study. A very wide range of employments is covered by the Act. Any person who has entered into or works under a contract of service or apprentice- 2 Pease (supra), p. 517. oDawbarn (supra), pp. 85-86. THE RISE OF WORKMEN'S COMPENSATION 37 ship, express or implied, either by way of manual labor, or any sort of labor attended with a remuner- ation of less than 250 a year, is entitled to claim its benefits; save that a few groups, such as the police, some casual workers, and workers who hap- pen to be members of the employer's family, are excluded from its operation. 31 Compensation, nor- mally in the form of a weekly sum during the pe- riod of total or partial incapacity, is required to be paid whenever "personal injury" by accident aris- ing out of and in the course of the employment is caused to a workman. 32 In the case of death from such an accident, the workman's dependents are en- titled to a sum proportioned to his earnings, but not in excess of 300. 33 The master's liability to pay compensation under the Act of 1906 arises whenever the claimant, a "workman" within the meaning of the Act, has suf- fered injury "by accident arising out of and in the course of" his employment. Clearly, then, the in- jury, to be one under this statute, must : ( 1 ) be by an accident; (2) arise out of the employment; (3) si Pease (supra); also Boyd, Workmen's Compensation, p. 1131. "Workman" is denned by Section XIII of the Act, which limits the word as indicated above; special limitations on the application of the Act are also to be found in Sections VII and IX. 32 Section I, subdivision 1 of the Act of 1906 (6 Ed. 7, ch. 58). 83 Pease (supra), p. 516. 38 WORKMEN'S COMPENSATION AND INSURANCE arise in the course of the employment. And if any one of these tests is not met, the claimant fails to establish his right to compensation. These phrases were the subject of much argument and speculation in the infancy of the act, but their meaning is now pretty definitely settled. 84 The word "accident" has been construed with great liberality by the English . courts. The defi- nition most generally accepted is that of Lord Macnaghten in Fenton v. Thorley & Company,, Ltd., 35 to the effect that "accident" is used (in the act of 1897) "in the ordinary and popular sense of the word as denoting an unlooked-for mishap or an untoward event which is not expected or de- signed." It follows that mishaps caused by the negligence of the injured man, as well as those for which no one can be held responsible, may consti- tute injury by accident; and so it was held in the Thorley case. Even where the injury is designedly caused by some person other than the injured man, it is an accident as to the victim, who neither de- signed nor expected it; and such was the opinion of the House of Lords in the case of Trim Joint District School v. Kelly, 36 where the death of a < Pease (supra), p. 517. 6 (1903) Appeals Cases 443, at p. 448. (1914) A. C. 667. THE RISE OF WORKMEN'S COMPENSATION 39 schoolmaster caused by deliberate and intentional violence on the part of his pupils was held an "acci- dent." But an accident must be something fortui- tious, some mishap occurring at a definite time and place; so injuries to the health resulting from ordi- nary wear and tear of work, or a gradual under- mining of the constitution due to the nature of a man's occupation, do not come within the category of accident. 37 The Act of 1906, however, is not confined to the field of "accidental injury" as that phrase has been interpreted by the courts. Section VIII extends its benefits to cases of death or disablement by cer- tain specified industrial diseases, to which workers in particular processes are peculiarly liable. In the Schedule attached to the Act these industrial dis- eases are specified as anthrax, lead, mercury, phos- phorus and arsenic poisoning and their sequelae, and ankylostomiasis ; but the power given by subsection (c) to the Secretary of State to extend this list has been repeatedly exercised. 38 The arbitrary specification of these diseases as "accidental" causes of injury does not prevent a claimant suffering from a disease not specified from suing on the 3" Pease (supra), p. 518. asDawbarn (supra), pp. 225-259; 65 Univ. of Penn. Law Review, 535-526 (April, 1917). 40 WORKMEN'S COMPENSATION AND INSURANCE theory that his injury was in fact due to the "acci- dent" of his having been subjected to infection by that particular disease, as was successfully done be- fore the passage of the section in the case of anthrax and some other diseases. 39 "Arising out of and in the course of the employ- ment" has also been given a very liberal construc- tion by the British courts. As has been pointed out by a keen observer, the first half of the phrase ex- presses the only essential element. A just concep- tion of the underlying principles of workmen's com- pensation requires that the employer be held liable only for the results of accidents arising "out of" the employment; but there is no reason why com- pensation should be restricted to cases of injury sustained strictly "in the course of" the same. 40 As a result, this part of the phrase has been practically nullified by the broad construction put upon it by the English courts. Thus, the "course of the em- ployment" has been construed to include riding to and from work in the master's conveyance, 41 or in a public conveyance by understanding with him, 42 sHiggins v. Campbell & Harrison (1904), 1 K. B. 328. 4030 Quarterly Journal of Economics, p. 30. 41 Mole v. Wadsworth, 6 Butterworth's Workmen's Compensation Cases 129. 42 Holmes v. Great Northern By. Co., 2 Workmen's Compensation Cases 19. THE RISE OF WORKMEN'S COMPENSATION 41 waiting at the station for a train, 43 eating noon luncheon on the employer's premises, 44 going for pay even outside of regular working hours, 45 even going for a Sunday visit to one's wife, 46 and in one remarkable case going to a public-house for a glass of beer. 47 In short, a man has been held to be in the course of his employment "not only while he is actually at work, but while he is at any place where he was required to be by the terms of his employ- ment, before or after his actual working time and during cessation of work for a necessary purpose, or even in legitimate intervals of leisure." 48 And he may still be acting "in the course of" his employ- ment if, in an emergency, he goes outside his proper work, and to protect his master's interest does some- thing wholly without the scope of that employ- ment. Whether an accident arises "out of" the employ- ment, however, may be a perplexing and is always an important question. The essence of the re- striction is that the accident must have some rela- tion to the employment. But its application is at- 43 Cremins v. Guest, 1 B. W. C. C. 160, 1 K. B. 469. 44 Blovelt v. Sawyer, 6 W. C. C. 16. 45 Lowry v. Sheffield Coal Co., 1 B. W. C. C. I. *6 Richardson v. Morris, 7 B. W. C. C. 130. 47 Martin v. Lovibond & Sons, 7 B. W. C. C. 243. Pease (supra), p. 519. 43 WORKMEN'S COMPENSATION AND INSURANCE tended with considerable difficulty. Where the accident is caused directly by what the workman is employed to do, by the condition of the machinery or premises, the situation is clear enough; but where some outside agency, such as an assault, sun- stroke, lightning, the negligence of a party not con- nected with the employment, brings about the in- jury, the courts are often much puzzled. "The proper test to apply in these cases," says Mr. J. G. Pease in a recent article, "is whether the nature of the employment or the place where it is carried on involves more than ordinary risk of accidents of this kind." 49 Accordingly, it was held that where a cashier was murdered by robbers, his death was due to a risk arising out of the employment, since the generally known fact that he carried large sums about him involved him in more than ordinary risk of attack. 50 So, where a workman stationed on a high scaffold- ing was struck by lightning, a recovery was per- mitted on the ground that the nature of his employ- ment exposed him to more than ordinary danger from the elements. 51 And a foreman of a furni- Ibid., p. 520. BoNisbet v. Rayne & Burn (1910), 2 K. B. 6R9. 5i Andrew v. Falesworth Industrial Society, Ltd. (1904), 2 K. B. 32. THE RISE OF WORKMEN'S COMPENSATION 43 ture-moving concern who was assaulted by a man who wished to hire a van and was told they were all out, was held to have suffered an injury "arising out of and in the course of" his employment. 52 But where an engine-driver left his engine and crossed a siding for his own purposes, and on the return was killed by a wagon being shunted, the accident did not arise "out of and in the course of" his employment, according to an interesting case. 53 Again, a mine-collier left his special stall to ascer- tain the time, and was killed by a fall of the roof on his way back ; the court found here that he had not gone to see the time in the interests of his employers, and so the injury did not arise "out of" the employ- ment. 54 Nor can an assault by fellow-workmen in- duced by mere personal animosity be said to arise out of the employment, and it was so held. 55 The extremely liberal construction of the courts has, as we have seen, made possible a recovery of compensation by the injured employee in a large proportion of cases. But the Act has left to the master the defense that the accident resulted from 62Weekes v. Stead & Co. (1914), 7 B. W. C, C. 398. 63 Reed v. Gt. Western Ry., Stone's Insurance Cases, no. 2058, (1909) A. C. 31. B* Warren v. Headley's Colliery Co., Stone's Insurance Cases, no* 2065. BO Fitzgerald v. Clarke & Son (1908), 2 K. B. 32. 44 WORKMEN'S COMPENSATION AND INSURANCE the "serious and willful misconduct" of the work- man. 56 Unnecessary and deliberate disobedience of orders is usually held to be within this provi- sion, 57 the judicial interpretation of which has been exceedingly fair and reasonable. Such an act as that of a boy in running in front of an express train out of pure bravado, B7a or of a miner in deliberately walking along a main haulage road on which a train of coal trams was in motion, instead of taking refuge in a manhole, 58 will defeat recovery under the Act ; but mere disobedience of a trifling regula- tion is not "unnecessary and deliberate" so as to constitute serious and willful misconduct. 59 Possible complications arising out of the practice of sub-contracting are provided against by Section IV of the Act. A workman is entitled always to be compensated by his own master ; but in cases where a third party as principal has contracted with that master to have the latter perform the whole or part of work undertaken by the principal, and injuries to the workman occur during the prosecution of such work in the course of and for the purpose of the B6 Section I, paragraph 2. BTDawbarn (supra), p. 142. B7a Ibid. 8 John v. Albion Coal Co., 18 T. L. R. 27 (1901 Y. B Johnson v. Marshall, (1906) A. C. 409; M'William v. Ry. Co., 7 B. W. C. C. 875. THE RISE OF WORKMEN'S COMPENSATION 45 principal's trade or business, happening on or in or about the premises where he had undertaken to ex- ecute the work, or which were otherwise under his control or management in these cases, the work- man is entitled to recover against the principal. A man is not liable when in his private life, or for any- thing apart from his trade or business, he contracts with another to have work done for himself; his responsibility is limited to the instances enumerated. It is, of course, in cases where his immediate em- ployer, the sub-contractor, is financially weak, that the workman will most often elect to claim compen- sation from the principal. 60 A final point to be noted in connection with the Act of 1906 is the choice of remedies which a work- man under some circumstances has. The Em- ployers' Liability Act of 1880 was not repealed by either of the subsequent more radical measures; so if a factory laborer to-day is injured by reason of a defect in the condition of the plant or machinery due to the personal negligence of the employer, he may (1) bring an action at common-law; (2) sue under the Employers' Liability Act; or (3) apply for compensation under the Workmen's Compensation Act. By taking the last course, he avoids the dan- <>Dawbarn (supra), pp. 174-185. 46 WORKMEN'S COMPENSATION AND INSURANCE ger of being met by common-law defenses; but as the Act limits the compensation according to arbi- trary schedules, he may recover less than might be awarded by a jury, which can take personal suffer- ing, medical expenses, etc., into consideration. On the other hand, if the workman is permanently in- capacitated, the weekly stipend he could claim un- der the Act might be more desirable than the lump sum a jury would award. There can be no double recovery, of both damages and compensation. Though in the National Insurance Act of 1911, which contains provisions for Health Insurance, Unemployed Insurance, and general outdoor re- lief, 61 England has adopted some of the features of the comprehensive German scheme, she stands com- mitted, so far, to the more familiar form of Work- men's Compensation as the answer to the problem of industrial accidents. This is natural in a coun- try of conservative traditions; the abandonment of the common-law criteria of negligence was a great concession, and it was not to be expected that the British mind would regard with favor what has frequently been characterized as a leap into the dark. What workingmen's insurance there is in Boyd, Workmen's Compensation, p. 1172. THE RISE OF WORKMEN'S COMPENSATION 47 England and it is by no means inconsiderable is carried on by private companies and mutual "friendly societies" which are very jealous of gov- ernmental interference. 62 As the English and German acts are typical of the two most prevalent legislative methods of coping with the problem of injuries to workmen, and as they are the prototypes, in whole or in part, of most of the workmen's compensation laws of this country, we will dispose of the systems of other European nations rather summarily. In Austria, the German plan of compulsory insurance has been taken over almost bodily. 63 In France, a compro- mise measure 64 was enacted in 1898, which makes the employer absolutely liable, as in England, but provides for a system of voluntary insurance. Nor- way has a compulsory accident insurance law dating from 1894 ; 65 Sweden and Denmark, workmen's 2 Frankel & Dawson, Workingmen's Insurance in Europe, p. 44; also Willoughby, Workingmen's Insurance, p. 233. The first em- ployers' liability insurance company was founded in 1881 in England, in response to a demand for protection against the heavy liabilities imposed by the act of 1880. Economic World, vol. 99, p. 310 (March 3, 1917). Frankel & Dawson (supra), p. 115 et seq.; Willoughby (supra),, p. 88. e* Frankel & Dawson (supra), p. 64 et seq. s Bulletin No. 126, U. S. Bureau of Labor Statistics, pp. 132, 135,. 163; Frankel & Dawson (supra), p. 48. 48 WORKMEN'S COMPENSATION AND INSURANCE compensation acts of the English type. 66 Belgium holds employers liable for accidental injuries to employees, unless the former insure in companies approved by the state. 67 Holland has gone the whole way in compelling employers to insure, though not necessarily in the state fund provided. 68 In Italy, a compulsory insurance law was adopted in 1898; but, like the Dutch act, it allows employers considerable latitude with respect to the sort of in- surance carried. 69 The compensation principle has also been adopted in some form in Finland (1895), Spain (1900), Greece (1901), Luxembourg (1902), Russia (1903), Hungary (1907), Bulgaria (1908), Liechtenstein (1910), Serbia (1910), Montenegro (1911), Switzerland (1912), Portu- gal (1913), and some other European states. 70 Outside of Europe, workmen's compensation has taken a decided hold on the scattered members of the British empire. In New Zealand, the Trans- vaal, Cape of Good Hope, at least four of the Aus- Frankel & Dawson (supra), pp. 51, 54-57; Bulletin No. 126 (supra), p. 163. ' Frankel & Dawson (supra), pp. 61-62. s Ibid., p. 58. Ibid., pp. 81-89. TO Bulletin No. 90, U. S. Bureau of Labor (September, 1910), pp. 723-748; Prof. Wambaugh's article in 25 Harvard Law Review 129 (December, 1911), refers to the above, at p. 132, note 3; see also Frankel & Dawson, Workingmen's Insurance in Europe, p. 19. THE RISE OF WORKMEN'S COMPENSATION 49 tralian provinces, and in Newfoundland, British Columbia, Manitoba, Nova Scotia, Alberta, Quebec and Ontario, acts chiefly patterned on the English law are in force; while Japan, Peru, Mexico and Venezuela have instituted the system. 71 Yet so slow were the American states in accepting the theory that, after the passage of the Quebec act of 1909, a Canadian writer found it necessary to go back to first principles in explaining it to the read- ers of an American law review. 72 Yet dissatisfaction with the workings of the com- mon-law of negligence in the United States has long been widespread. More than sixty years ago, the Georgia legislature passed an act modifying the fellow-servant rule in its application to railways ; 73 and similar statutes, in one case taking the extreme form of abolition of the rule, 74 have been adopted in other states. The Federal government, which had long denied its injured employees any redress save what could be procured through the uncertain me- dium of the Court of Claims and special bills, made provision for compensation in the case of injury or 71 Bulletin No. 126 (supra), p. 132; Frankel & Dawson (supra), p. 3; Bulletin No. 90 (supra) ; see also 5 American Economic Review 177. 72 11 Columbia Law Review 36. 73 Georgia Acts of 1855-1856, p. 155. 7* Colorado Session Laws 1901, chapter 67. 50 WORKMEN'S COMPENSATION AND INSURANCE death of certain persons in the Life- Saving Service in 1882; and after 1900 various branches of the mail service and some navy employees were included in this beneficent scheme. 75 But even after the opening of the twentieth cen- tury, progress toward the solution of the problem of compensation for industrial accidents was slow. Every one perceived the evils of the existing situa- tion and admitted that the success of workmen's compensation in Europe warranted its adoption here; but there was no agreement as to which European model to follow. 76 In 1902 a very lim- ited provision was made by a Maryland statute for compulsory cooperative insurance in a few employ- ments; but this was declared unconstitutional be- cause of its improper delegation of judicial func- tions. 77 In 1903-4 a Massachusetts committee on relations between employer and employee sub- mitted to the legislature a compensation bill adapted from the English act of 1897; but no action was taken in the matter. 78 Similar committees in Illinois and other states in the next two or three "Journal of Political Economy, voL XXIII, pp. 807-808. See article by Willard C. Fisher in American Economic Review, vol. 5, at p. 993. TT Prof. Wambaugh's article (see footnote 70), at p. 132, note 4. Fisher (see footnote 76), p. 293, note. THE RISE OF WORKMEN'S COMPENSATION 51 years studied the subject, reported, and vanished from the pages of history without having achieved any substantial results. The Federal Employers' Liability Act of 1906 need only be mentioned here. Its purpose was the regulation of the redress of injuries to railroad em- ployees; but it was a true employers' liability law, and in no sense a workmen's compensation statute. It was declared unconstitutional as embracing intra- state matters, with which Congress had no power to deal ; 79 and a new act, framed with a view to avoid- ing the constitutional defects of the original statute, was passed in 1908. This latter law "establishes the liability of interstate railway employers for their negligence resulting in injury to their em- ployees, abolishing the defense of fellow-service, and modifying the defenses of contributory negli- gence and assumption of risks, and stands as the sum of present achievement in its territory." The act was amended in 1910. It is, as we have seen, an employers' liability rather than a work- 7 Howard v. 111. Cent. R. Co. (First Employers' Liability Cases), 207 U. S. 463. so Journal of Political Economy, vol. XXIII, p. 815. See article on The Federal Employers' Liability Act by William W. Thornton, in Case and Comment, vol. 22, pp. 323-329, for an excellent outline of the Act by an expert. Mr. Thornton's book Federal Employers' Liability and Safety Appliance Acts is the standard work on the subject. 62 WORKMEN'S COMPENSATION AND INSURANCE men's compensation act; so we shall not need to scrutinize it further. In 1908 the United States also passed what has been termed a workmen's compensation act, 81 though the fact that it applied only to employees of the enacting power and excluded injuries due to the negligence or misconduct of the workman has been said to deprive it of that character. 82 The purpose of the Act was to afford protection to "government employees engaged in hazardous occupations." It provided for the payment of full wages during dis- ability, a feature which has been criticized as tend- ing to encourage malingering; 83 and had other seri- ous defects. Nevertheless, it marked a distinct ad- vance, from the point of view of economic theory, over any previous American statute. It has now been superseded by the new Federal Workmen's Compensation Act of September, 1916, wherein the amount of compensation payable during disability is reduced to two-thirds of monthly pay, and there is added the salutary provision that a partially dis- abled employee must accept suitable employment or forfeit his claims under the Act. 84 35 U. S. Stat. at Large, 556. szWambaugh (see footnote 70), p. 132, note 4. 3 Journal of Political Economy, vol. XXIII, p. 811. * Public, No. 267, 64th Cong. (H. R. 15316). Approved Septem- ber 7, 1916. THE RISE OF WORKMEN'S COMPENSATION 5? In 1909, the agitation in the states first took effec- tive shape. That year saw the first special state commissions of inquiry, in Minnesota, Wisconsin and New York ; and also the impressive Workmen's Compensation conference in Atlantic City, from the twenty-ninth to the thirty-first of July. 85 In 1909, too, Montana passed a compensation law applying to miners only, 86 which was after- wards declared unconstitutional on rather narrow grounds. 87 Another statute adopted in this year was that entitled Chapter 31 of the Consolidated Laws of New York, under the head of "Labor Law Employers' Liability," which, as amended in 1910 and 1915, constitutes an elective compensation law which has proved almost a dead letter. 88 In 1910 New York passed a compulsory com- pensation law applying to certain hazardous occu- pations. Its fate it was declared unconstitutional by the Court of Appeals has been discussed at length elsewhere. It was in 1911 that the avalanche of workmen's compensation laws began. That year is memor- 86 Fisher (see footnote 76), p. 223, note. s Bradbury, Workmen's Compensation and State Insurance Law (2d Ed.), p. 9. 87 Cunningham v. Northwestern Improvement Co., 44 Mont. 108, 119 Pac. 554. ss Bradbury (supra), p. 10. 54 WORKMEN'S COMPENSATION AND INSURANCE able for two decisions against the constitutionality of such acts those of Montana and New York but it is even more remarkable for the adoption of the compensation principle by California, Illinois, Kansas, Massachusetts, Nevada, New Hampshire, New Jersey, Ohio, Washington and Wisconsin. During the following year Arizona, Maryland, Michigan and Rhode Island saw the light; and in 1913 New York passed a valid compensation act, together with Connecticut, Iowa, Minnesota, Ne- braska, Oregon, Texas and West Virginia. In 1914 Kentucky and Louisiana joined the ranks; the Kentucky act, however, being later declared unconstitutional and superseded by a new one. During the year 1915, compensation laws were adopted for the first time in Alaska, Colorado, Hawaii, Indiana, Maine, Montana, Oklahoma, Pennsylvania, Porto Rico, Vermont and Wyoming. Kentucky finally passed a valid statute in 1916; and during the legislative sessions of 1917 Dela- ware, Idaho, New Mexico, South Dakota and Utah were added to the list of compensation states. As these pages go to press, word comes that the Vir- ginia legislature of 1918 has seen the light, and passed a compensation act over the governor's veto. These statistics represent merely the initial passage THE RISE OF WORKMEN'S COMPENSATION 55 of such laws in the thirty-eight states and three ter- ritories in which they are now in force; in addition, there have been countless amending acts and sup- plementary measures. 89 In closing this long historical chapter, the writer wishes to emphasize that workmen's compensation has come to stay. In no jurisdiction where it has been adopted has it been abandoned ; 90 and if this record is maintained, we shall have good reason to hope that the goal of industrial peace will even- tually cease to be a mere glittering abstraction, and become a tangible reality. sSee the Digests of Workmen's Compensation laws published by the Workmen's Compensation Publicity Bureau; also Bulletins No. 126 and 185 of the U. S-. Bureau of Labor Statistics. For an account of the Virginia act of 1918, see The Weekly Underwriter, vol. XCVIII, p. 392 (March 23, 1918). o American Economic Review, vol. 5, pp. 222-223; Bulletin No. 126, U. S. Bureau of Labor Statistics, p. 29. CHAPTER III QUESTIONS OF CONSTITUTIONALITY PERHAPS the most original contribution of the United States to the science of government is the conception of our written Constitution as the su- preme law of the land, to which even the national legislature, chosen by the free suffrage of the peo- ple, must bow. As a natural result of this broad proposition, the courts have assumed the power, which they have exercised without serious challenge for over a century, of declaring void legislative measures in conflict with the Constitution. 1 And this power has been exercised, not only by the Fed- eral courts, but also by the courts of the States with reference to statutory enactments of their own leg- islatures, the validity of which they have ventured to test by both State and Federal Constitutions. 2 iMarbury v. Madison, 1 Cranch 137, 1 Curtis 368 (1803). 2 Ives v. South Buffalo Ry. Co., 201 N. Y. 271, 94 N. E. 431 (1911). That it is not altogether clear whether the court in the Ives case actually passed upon the Federal question, though it assumed to test the New York statute by both Federal and State constitutions, see Political Science Quarterly, vol. XXXII, pp. 546-547 (December, 1917). 56 QUESTIONS OF CONSTITUTIONALITY 57 Because of this peculiarity of the American sys- tem of government, the advocates of workmen's compensation in the United States have been con- fronted with a special difficulty wholly unlike any with which Europeans have had to cope. They have had not only to construct legislation which the Solons at the capital would consent to pass, but they have found that they must also convince the courts that it does not infringe any of the sacred Consti- tutional guarantees. This enforced testing of labor legislation by the principles of the fundamental law has not been alto- gether a bad thing. In the heat of party warfare, under the spell of ill-considered enthusiasms, the glittering desirability of the end to be attained by proposed legislation often blinds the majority to the incidental invasions of minority rights which the method employed entails. It is the part of pru- dence, perhaps, to leave to the sober afterthought of the courts the ultimate solution of the problem of constitutionality to which legislators have so often applied themselves after such imperfect delib- eration. But the complaint has been made, and with much reason, that the attitude of the courts with regard to constitutional questions arising out of workmen's 58 WORKMEN'S COMPENSATION AND INSURANCE compensation has been obstructive and reactionary. One of the chief objections of the courts to the workmen's compensation principle has been that it makes the employer liable without proof of fault on his part. But liability without fault is not a new thing in our law. As has been pointed out by an eminent legal authority, trover, trespass, slander and libel, all ancient parts of our legal system, re- quire no moral obliquity; and there are examples of civil disabilities placed on men who are wholly blameless. 3 The very law of master and servant itself furnishes an illustration in the shape of the general liability of the master for the torts of the servant, whether authorized or ratified by him or not, which are done in the course of the servant's employment and the master's business. 4 The lia- bility in the latter case is to a third party, and the responsibility is said to arise out of the peculiar rela- tion created by the contract of employment; but it seems no more a violation of principle to hold the employer a warrantor of the safety of the employ- ment to the servant, than to make him generally responsible to all third parties for that servant's unauthorized wrongful acts. 25 Harvard Law Rev. 134 (Dec. 1911). 'Burdick, Law of Torts (3d Ed.), p. 155. QUESTIONS OF CONSTITUTIONALITY 59 Some of our courts, however, have taken a dif- ferent view. The first judicial pronouncement against the constitutionality of a state workmen's compensation act (if we except the unreported de- cision of a lower court of Maryland in 1902, from which no appeal was taken) 5 was that of the New York Court of Appeals in Ives v. South Buffalo Ry. Co. 6 The Ives case has had a profound effect on all subsequent legislation in the United States, and has caused the advocates of workmen's com- pensation in many jurisdictions to frame their acts on a very different plan. 7 The act which was overthrown by the Ives case was chapter 674 of New York laws of 1910, which went into effect on June 25 of that year. It provided that employers, in certain occupations which were designated as especially hazardous, should be liable to pay compensation based upon wages in case persons in their service engaged in manual or mechanical labor should suffer in the course of the employment a bodily injury by an ac- cident arising out of the employment and in whole or in part caused by a necessary risk of the occupa- e Bradbury, Workmen's Compensation and State Insurance Law (2d Ed.), p. 9. 201 N. Y. 271, 94 N. E. 431 (1911). v Bradbury (supra), p. 10. 60 WORKMEN'S COMPENSATION AND INSURANCE tion or by negligence of the employer or of any of his employees ; an exception being made in cases of injuries caused in whole or in part by the serious or willful misconduct of the injured workman. 8 A provision of the Act which can hardly be com- mended, in view of the radical change about to be effected in the preexisting law, was that it should take effect in less than ten weeks ; this is in strong contrast to the policy of foreign workmen's com- pensation laws, many of which allowed a year or more for the necessary re-adjustment of men's ideas. 9 The New York statute was declared by the court in the Ives case to be in conflict with both the Fed- eral and state constitutions. The Fourteenth Amendment of the former, and Article I, section 6 of the latter, forbidding the taking of private property without due process of law, were vio- lated, the judges said, by an act imposing upon an employer who had not been guilty of any fault, the obligation to pay compensation for injuries 825 Harvard Law Rev. 135 here there is an excellent summary of the Act. See also article on The Constitutionality of Workmen's Compensation and Compulsory Insurance Laws, in Case and Com- ment (Sept. 1915), pp. 275-260; and a discussion of The Workmen's Compensation Cases in Political Science Quarterly, vol. XXXII, pp. 542-569 (December, 1917). 25 Harvard Law Review 136. QUESTIONS OF CONSTITUTIONALITY 61 occurring by reason of a danger which was in- herent in and inseparable from a particular em- ployment. 911 It would be difficult to exaggerate the sensa- tion caused by this decision. Labor rose as a body in protest, and sober citizens who had been re- garded as pillars of the existing order railed against our "reactionary" courts. Recall of judi- cial decisions, till then a distrusted political nostrum, became a party issue. Socialists and financiers, laymen and sober legal reasoners, 10 joined in denunciation of the New York Court of Appeals. One of the worst features of the situation, from the point of view of the courts' defenders, was the radical divergence of views which soon appeared among the different state tribunals. Only a few months after the decision in the Ives case, the Su- preme Court of the state of Washington upheld a workmen's compensation act essentially similar to the discarded New York statute, in the oft-quoted case of State ex rel. Davis-Smith Co. v. Clausen. 11 9a But see footnote 2. 10 Such as Prof. Wambaugh. See his article in 25 Harvard Law Rev. 129-139, to which reference has already been made. See also note on Ives case in 11 Columbia Law Rev. 475-476. 1U17 Pac. 1101 (Sept. 1911). 62 WORKMEN'S COMPENSATION AND INSURANCE In the opinion, much stress was laid on the police power, which was held to justify such legislation, the court quoting 12 from Noble State Bank v. Has- kell 13 as follows : "It may be said in a general way that the police power extends to all the great public needs. It may be put forth in aid of what is sanc- tioned by usage, or held by the prevailing morality or strong and preponderant opinion to be greatly and immediately necessary to the public welfare." In referring to the Ives case, the Washington court said: 14 "The principle embodied in the statutes is, however, the same, and it must be conceded that the case is direct authority against the position we have here taken. We shall offer no criticism of the opinion. We will only say that notwithstanding the decision comes from the highest court of the first state of the Union, and is supported by a most per- suasive argument, we have not been able to yield our consent to the view there taken." The New York act had been compulsory, while the Massachusetts compensation law of 1911 was not; so the decision of the Supreme Judicial Court of the latter state in The Opinion of the Justices, 209 Mass. 607, cannot be deemed a disaffirmance of 12 At page 1110. "219 U. S. 104 (1910). "At page 1120 of Clausen case. 63 the doctrine of the Ives case. In fact, the court expressly distinguished that case, 15 and rested its decision on the ground that, in view of the non- compulsory nature of the statute under considera- tion, there was nothing that could be construed as violating the constitutional prohibition against the taking of private property without due process of law. 16 Nevertheless, there was a not unnatural popular notion that the court was hedging as a result of the clamor caused by the Ives case; and this impression was strengthened by the fact that the Act upheld, though not nominally compulsory, was so severe on the employer in taking away his common-law defenses as to be practically so. 17 The case of Cunningham v. Northwestern Im- provement Co., 18 in which the Montana Miners' Compensation Law was held invalid, has been ad- verted to in a previous chapter. The difficulty which the Montana court had with the statute was that it submitted the employer to a double liability, as it failed to protect him after payment of compen- sation under the Act from an action at law for the IB At page 610 of the opinion. I 6 At page 612 of the opinion. See article by James A. Lowell on "Assumption of Risk and the Workmen's Compensation Act" in Massachusetts Law Quarterly, voL 1, no. 2 (February, 1916), at p. 49. 18119 Pac. 554 (1911), especially pp. 565-566. ^4 WORKMEN'S COMPENSATION AND INSURANCE same injury. This was felt to be a denial of equal protection of the laws. It will be seen that this de- cision did not squarely condemn the principle of workmen's compensation, but merely one of the details of administration; in fact, the court ex- pressly stated that the passage of such an act was a proper exercise of the police power, was not in- valid as class legislation, and did not deprive the employer of "due process of law" in spite of the fact that it substituted a special proceeding to ascer- tain the amount of compensation for a trial by jury. The decision was of the helpful, constructive sort, and a credit to the tribunal which rendered it. Though the case destroyed the specific act, the un- prejudiced student must admit that the reasons for such action were especially strong; and the pro- gressive views which Mr. Justice Smith advanced in his able opinion showed the legislature the way to the excellent statute which Montana now possesses. Out of this mass of conflicting decisions one prop- osition came to be clearly derivable: a workmen's compensation law, if compulsory, is in danger of being declared unconstitutional by the courts; but an act which is elective in nature is not open to any of the constitutional objections yet advanced. Legislatures burning with enthusiasm for the prin- QUESTIONS OF CONSTITUTIONALITY 65 ciple, but prudently desirous of avoiding any clash with the judiciary, began casting about for some method of dodging the issue of compulsion while yet creating a compensation system practically binding on all parties to contracts of employment. The ingenious scheme adopted in New Jersey is the first to merit attention. By Section II of an act passed in 191 1, 19 a system of workmen's com- pensation patterned on the English statute was in- troduced; but Section I contains an alternative modification of the common-law, abolishing the fellow-servant rule, assumption of risks, etc., but retaining the privilege of suit for injuries. The "alternative," however, is scarcely more than a nominal one; for every contract of hiring is pre- sumed to be made with reference to the provisions of Section II "unless there be as part of such con- tract an express statement in writing, prior to any accident, either in the contract itself or by written notice from either party to the other, that the pro- visions of Section II of this act are not intended to apply." It will be seen that, owing to this tricky presump- tion, the elective feature of the Act is greatly weak- ened. For not only are many employments en- is N. J. Laws 1911, c. 95. 66 WORKMEN'S COMPENSATION AND INSURANCE tered into so informally that the "express statement in writing" would never be thought of, but it is safe to say that any employer who requested pro- spective employees to sign such a statement would arouse so much hostility and suspicion that he would soon be glad enough to abandon the practice. Yet the New Jersey statute was held, and I think rightly, to be constitutional. 20 There was "no coercion," said the court ; and, short of coercion, no form of inducement to parties to accept a compen- sation act seems to be invalid. In over twenty states, varieties of "elective compensation," follow- ing more or less closely the New Jersey plan of "presumptive acceptance," have been adopted. 21 Whether attributable to the caution with which the state legislatures proceeded, or to a change of heart on the part of the courts, the fact remains that for three years after the Ives and Cunning- ham cases no judicial decrees of invalidity were pro- nounced against workmen's compensation acts. 20 Sexton v. Newark District Telegraph Co., 86 AtL (N. J.) 451, especially page 455, where it is said: "No coercion was exercised by the legislature upon either party to the contract of hiring. It is left entirely optional with them whether they will stand upon the 1st or ?d sections of the act." 2 See Digests published by the Workmen's Compensation Publicity Bureau ; also texts of the acts. QUESTIONS OF CONSTITUTIONALITY 67 The Illinois Supreme Court broke this record in Courter v. Simpson Construction Co., 22 decided in October, 1914. In that case, however, the consti- tutionality of the whole act was not attacked, but merely that of paragraph (f) of section 19, which provided for a review of the decisions of the indus- trial board by the Supreme Court of the state. The justices found that this was in conflict with section 2 of Article 6 of the state Constitution, which gives the Supreme Court original jurisdiction only "in cases relating to the revenue, in mandamus, and habeas corpus"; and as the effect of the objection- able provision in the statute was to give the court original jurisdiction on certiorari, that portion was declared unconstitutional without affecting any of the other sections. The decision will therefore be seen to be on a very narrow ground ; and as it did not seriously affect the workings of the Act, but merely threw upon the Circuit Courts the duty of review- ing the findings of the industrial board which the legislature had sought to thrust on the higher tri- bunal, the result reached by the Illinois judges is not likely to arouse severe criticism. Kentucky has now a valid compensation law in 32 264 III. 488, especially pp. 493-494. 68 WORKMEN'S COMPENSATION AND INSURANCE Laws 1916, c. 33, whose constitutionality was up- held in Greene v. Caldwell; 23 but thorny roads had to be traversed before this desirable goal was at- tained. In Kentucky State Journal Co. v. Work- men's Compensation Board, 24 decided late in 1914, the Court of Appeals of the Blue Grass State had found Laws 1914, c. 73, in conflict with section 54 of the state constitution, prohibiting the legislature from limiting the amount to be recovered for in- juries resulting in death, or for injuries to persons. A petition for re-hearing was denied. 25 Subse- quent to this Kentucky decision, the courts of that state were at pains to re-affirm all the old common- law doctrines applicable to industrial accidents. 26 In justice to the court, however, it must be ad- mitted that the arbitrary nature of the fundamental law of Kentucky left a conscientious tribunal prac- tically no option. As Judge Dorsey said : 27 "Whether the constitutional restrictions herein above discussed are wise or unwise, this court is bound to obey them." The real fault was in the 28186 S. W. (Ky.) 648 (1916). 24170 S. W. (Ky.) 1166. 25 172 S. W. (Ky.) 674. 2180 S. W. (Ky.) 79 ( fellow-servant ) ; 180 S. W. (Ky.) 86 (as- sumption of risks); 180 S. W. (Ky.) 55 (duty of master to furnish safe appliances). 27 At page 1171 of the case (170 S. W. 1166). QUESTIONS OF CONSTITUTIONALITY 69- legislature, which should have made the Act op- tional, thus avoiding constitutional objections, as was finally done in the statute of 1916; or, if it were insistent on the more radical measure, should have delayed its passage until an amendment to permit of compulsory workmen's compensation laws could have been adopted by the people; a course which has been successfully pursued in California (1911) , Ohio (1912), New York (1913), and Pennsylvania (1915). 28 The Texas Workmen's Compensation Law was for some time in a state of suspended animation, two intermediate appellate tribunals having given con- flicting decisions on the question of its validity. In the first of these cases, Memphis Cotton Oil Co. v. Tolbert, 29 the Court of Civil Appeals of Amarillo County held the act not violative of equal protection of the laws or due process under the Fourteenth Amendment of the Federal Constitution, and also expressly declared the statute to be within the police power and not contrary to public policy. It was suggested, but not decided, that the sections author- izing the creation and regulation of the Texas Em- ployers' Liability Association might violate the pro- 28 See Digests of Workmen's Compensation Aid Bureau. 2171 S. W. (Tex.) 309 (December, 1914). 70 WORKMEN'S COMPENSATION AND INSURANCE vision of the State Constitution relating to private corporations; but the court intimated that in such a case the objectionable sections might be elim- inated without affecting the rest of the Act. In absolute contradiction to the Tolbert case was Middleton v. Texas Power and Light Co., 30 decided about a month later by the Austin County Court of Civil Appeals. The court said: 31 "We have reached the conclusion that so much of the statute here involved as undertakes to deprive an employee of what otherwise would be his cause of action against his employer is unconstitutional and void. . . . Our reason for holding that the provision of the statute referred to is unconstitutional is based upon the fact that it leaves it optional as to the em- ployer, and makes it compulsory as to the employee, when the employer has elected to avail himself of the benefits of the statute." Due process of law and equal protection of the laws were both denied, the court found; and it pointed out that "it is be- yond the domain of legislative power to confer upon any person authority to say what particular law, or which of two particular laws, shall govern his rights .and the rights of his employee as between them." " oi78 S. W. (Tex.) 956 (January, 1915). At page 957 of the opinion. At page 959 of the case. QUESTIONS OF CONSTITUTIONALITY 71 This decision presented a new and interesting phase of the constitutional question. The court did not object to the statute because it was compulsory in fact, the decision in State ex rel. Davis-Smith Co. v. Clausen 33 was expressly distinguished on the ground that the act upheld in that case was com- pulsory as to both employers and employees. 34 It was because the law was binding on one class the employees and voluntary as to the other the em- ployers that it was overthrown. By one section, certain common-law defenses of the employer are abolished in personal injury suits; by another, em- ployees of those employers who subscribe to the Act lose any right of action arising out of injury re- ceived in' the course of the employment, and they are forced to look solely to specified insurance asso- ciations or companies for compensation. In other words, the employer can elect whether he shall come under the Act and pay premiums to the Insurance fund, or stay outside and be deprived of certain common-law defenses ; but the employee has no elec- tion and is bound by the decision of his master in the matter. Whether the distinction really constitutes a seri- ous defect may well be doubted. The employee in as 117 Pac. (Wash.) 1101. * At page 960 of the case. 72 WORKMEN'S COMPENSATION AND INSURANCE either case is given a claim to compensation consid- erably more substantial than that which he pos- sessed at common-law. The mere fact that the em- ployer is left to decide whether he shall submit to being sued for injuries to his workmen without set- ting up his special defenses, or agree to insure in accordance with the provisions of the Act, does not impress any great hardship on the employee. The latter is not deprived of his remedy, though the na- ture of it is altered. The one-sidedness of the arrangement is more apparent than real. It is a mere technical defect, which the court, in the light of the powerful presumption in favor of the valid- ity of acts of the legislature, might well have over- looked. To this view the highest court of Texas finally came in reversing the Middleton case on appeal; 35 though the particular line of argument adopted, with its resort to the fiction of an implied waiver, may be open to criticism. The court said: "The effect of the Act upon the rights of em- ployees cannot be properly weighed or determined without a due consideration of its aim and policy in their interest. Its theory, as it concerns them, is that the plan of compensation it provides for their injuries suffered in the course of their employment so 185 S. W. (Tex.) 556. QUESTIONS OF CONSTITUTIONALITY 73 is more advantageous than a suit for damages. In the latter, the employee is compelled to assume the burden of establishing that his injury was caused by the employer's negligence or the negligence of a servant for which the employer is responsible. His suit fails if it is subject to any of the common law defenses, that is, if his own negligence was the proximate cause of the injury, or if the injury was due to a risk he assumed, or the negligence of a fel- low-servant. By the Act a fixed compensation is payable to him upon the mere happening of any injury in the course of the employment, or to his beneficiaries in the event of his death from the in- jury, without reference to any negligence on the part of the employer or his servants, and without regard to defenses available to the employer at common law. "With this as the evident spirit and design of the Act in the employee's interest, his entering the serv- ice of an employer who in his business pursuit is governed by the Act, or his remaining, after notice duly given, in the service of an employer who has adopted its plan of compensation and become sub- ject to it, is made to operate as a waiver of any cause of action against the employer on account of any injury suffered in the course of the employment, ex- 74 WORKMEN'S COMPENSATION AND INSURANCE cept for exemplary damages in behalf of a surviving husband, wife, or heirs, as already noted. "Does this deprive the employee of any vested right or property right? It is clear that it takes from him no property right. . . . That which is withdrawn from the employee is merely his right of action against the employer, as determined by the rules of the common law, in the event of his future injury. . . . There cannot be a vested right, or a property right, in a mere rule of law." Though often discussed, the right of the legisla- ture to abridge or abolish the master's special de- fenses to an action by the servant for injuries re- ceived in the course of his employment, has been denied in none of the cases involving the constitu- tionality of workmen's compensation acts. Prob- ably this is because the United States Supreme Court expressly sanctioned such an alteration of the common law in the Second Employers' Liability Cases, 30 in which the constitutionality of the Fed- eral Employers' Liability Act of 1908 was upheld. In the course of the opinion, Mr. Justice Van Devanter refuted the opponents of the Act in these memorable words: "Of the objection to these changes, it is enough 38 223 U. S. 1, 50. QUESTIONS OF CONSTITUTIONALITY 75 to observe : First. 'A person has no property, no vested interest, in any rule of the common law. That is only one of the forms of municipal law, and is no more sacred than any other. Rights of prop- erty which have been created by the common law cannot be taken away without due process ; but the law itself, as a rule of conduct, may be changed at the will ... of the Legislature, unless prevented by constitutional limitations. Indeed, the great office of statutes is to remedy defects in the com- mon law as they are developed, and to adapt it to the changes of time and circumstances.' Munn v. Illinois, 94 U. S. 113, 134; (citing also other cases). Second. The natural tendency of the changes de- scribed is to impel the carriers to avoid or prevent the negligent acts or omissions which are made the basis of the rights of recovery which the statute creates and defines ; and as whatever makes for that end tends to promote the safety of the employees and to advance the commerce in which they are engaged, we entertain no doubt that in making these changes Congress acted within the limits of the dis- cretion confided to it by the Constitution." But the act passed on in the case just quoted was only an employers' liability statute; and authorita- tive utterances of our highest tribunal with respect 76 WORKMEN'S COMPENSATION AND INSURANCE to the constitutionality of workmen's compensation laws were long delayed. In Jeffrey Manufactur- ing Company v. Blagg, 3T in 1914, the Supreme Court held an Ohio compensation law valid; but that act was elective, and the case really only de- cided that the limitation of employers who would lose the defense of contributory negligence if they did not come under the act to those with five or more employees, was not an arbitrary and unreason- able classification. It was said in the opinion : 38 "This is not a statute which simply declares that the defense of contributory negligence shall be available to employers having less than five work- men, and unavailable to employers having five or more in their service. This provision is part of a general plan to raise funds to pay death and injury losses by assessing those establishments which em- ploy five and more persons and which voluntarily take advantage of the law. Those remaining out and who might come in because of the number em- ployed are deprived of certain defenses which the law might abolish as to all if it were seen fit to do so." So it will be seen that the Blagg case goes little further than the Second Employers' Liability ** 235 U. S. 571 (1914). 88 At page 578 of the case. QUESTIONS OF CONSTITUTIONALITY 77 Cases ; in addition to upholding the abolition of com- mon-law defenses, it merely declares that a purely elective compensation act is not in violation of the fundamental law. In January, 1916, however, in the case of North- ern Pacific Railway Co. v. Meese, 39 a compulsory compensation law finally received the sanction of the United States Supreme Court. The Washing- ton act, in making compensation the exclusive rem- edy for injuries sustained at a certain plant, was held not to violate the equal protection clause of the Fourteenth Amendment. In closing this review of the important cases deal- ing with the constitutionality of workmen's com- pensation laws, it is fitting that the decisions in which the principle was finally vindicated in New York State, the scene of its early vicissitudes, should be referred to. The opinion of Mr. Justice Miller, of the New York Court of Appeals, in Jensen v. Southern Pacific Company, 40 which upheld the validity of the present New York act, is so illu- minating, and so thoroughly in accord with the 3239 U. S. 614 (January, 1916). 40 215 N. Y. 514, 528 (July, 1915) ; reversed 244 U. S. 205, but not on broad constitutional grounds, only the attempted extension of the act to admiralty matters within the federal jurisdiction being con- demned. 78 WORKMEN'S COMPENSATION AND INSURANCE spirit of modern labor legislation, that I have ven- tured to quote from it at sufficient length to illus- trate the line of reasoning adopted : "This subject should be viewed in the light of modern conditions, not those under which the com- mon-law doctrines were developed. With the change in industrial conditions, an opinion has grad- ually developed, which almost universally favors a more just and economical system of providing compensation for accidental injuries to employees as a substitute for wasteful and protracted damage suits, usually unjust in their results either to the employer or the employee, and sometimes to both. Surely it is competent for the state in the promotion of the general welfare to require both employer and employee to yield something toward the estab- lishment of a principle and plan of compensation for their mutual protection and advantage. Any plan devised by the wit of man may in exceptional cases work unjustly, but the act is to be judged by its general plan and scope and the general good to be promoted by it. Fortunately the courts have not attempted to define the limits of the police power. Its elasticity makes progress possible un- der a written constitution guaranteeing individual rights. The question is often one of degree. The QUESTIONS OF CONSTITUTIONALITY 7 act now before us seems to be fundamentally fair to both employer and employee. Of course, I do not speak of details, which may or may not be open to criticism, but which, granting the validity of the underlying principle, are plainly within the prov- ince of the legislature. It is not open to the ob- jections found to be fatal to the act considered in the Ives case. It is plainly justified by the amend- ment to our own State constitution and the decisions of the United States Supreme Court, notably in the Noble State Bank case, make it reasonably certain that it will be found by that court not to be violative of the Constitution of the United States." The confidence of Mr. Justice Miller that the highest tribunal in the land would find the New York act, in its main outlines, not violative of the fundamental Constitutional guarantees was justi- fied by the decision in New York Central R. R. Co. v. White. 41 The Jensen case itself, however, was reversed by the Supreme Court, on the ground that the extension of the provisions of the compensation act of New York to foreign vessels entering her ports, interfered with the powers of Congress over interstate and maritime affairs. The general valid- 41243 U. S. 188, affirming 216 N. Y. 653. See the Consitutional Review, vol. II, p. 27 (January, 1918). 80 WORKMEN'S COMPENSATION AND INSURANCE ity of the act, however, as settled by the White case, was conceded. 42 There may well be doubt as to whether the de- cisions upholding the constitutionality of the pres- ent New York statute are reconcilable with the Ives case. As a recent writer has pointed out, the dif- ference between the acts construed only accounts in part for the difference in the result; the difficulty as to the Fourteenth Amendment of the Federal Constitution is equally present in both cases. 43 But whether the Court of Appeals has receded from its original position or not, the fact remains that New York now has a valid compensation law, and one which, with its insurance provisions and more equal distribution of burdens, is better than its pred- ecessor. 44 On the same day that the New York statute was upheld in the White case (March 6, 1917) the Su- *2 Southern Pacific Company v. Jensen, 244 U. S. 205. To over- come the effect of the decision so far as the admiralty feature is con- cerned, an act of Congress has been passed saving to claimants their rights under state compensation laws in admiralty cases. Pub., No. 82, 65th Congress. Bench and Bar, vol. 10, p. 397 (January, 1916). Prof. Powell, in an interesting article, has intimated that the Jensen case more properly turned on the application of the Federal, and the Ives case on the State constitution. Journal of Political Economy, vol. XXXII, pp. 549-550 (December, 1917). *See article by Miles M. Dawson in Case and Comment, vol. 22, pp. 275-280 (September, 1915) ; also address by John Mitchell before QUESTIONS OF CONSTITUTIONALITY 81 preme Court of the United States handed down opinions sustaining the acts of Iowa and Washing- ton. The Iowa decision 45 does not consider major issues ; 46 but the result reached in Mountain Tim- ber Co. v. Washington, 47 a five to four pronounce- ment in favor of the compensation law of the latter state, is of the deepest interest. The industries of the state of Washington are divided, by its compensation act, into classes, on the basis of their hazardous character; and each em- ployer in each class is subjected to compulsory assessments for a state fund, out of which is paid compensation for all injuries occurring to em- ployees in that class of establishments. The rates of assessment vary with the degrees of hazard in the different groups of industries; and reclassify- ing and readjustment of rates are provided for. The chief difficulty which the court had with this statute was with regard to the reasonableness of the method adopted to impose the cost of the industrial the American Association for Labor Legislation, reprinted in the American Labor Legislation Review, vol. 5, pp. 15-19 (March, 1915), in which Mr. Mitchell praises the success of the New York act, which he says pleases both employer and employee. 45 Hawkins v. Bleakly, 243 U. S. 210. Political Science Quarterly, vol. XXXII, pp. 553-554 (December, 1917). *7 243 U. S. 219. 82 WORKMEN'S COMPENSATION AND INSURANCE injuries on the employers; but Mr. Justice Pitney repelled the suggestion that the losses in any given class might be so heavy that the assessments re- quired from employers in that class would leave no sufficient margin for reasonable profits, by remark- ing that any industry in which the "human wastage" was so great might be prohibited alto- gether. This, as has been pointed out, is "a signifi- cant rebuke to one of the arguments by which the common law of assumption of risks used to be sup- ported the argument that if employers rather than employees were compelled to assume the risk, busi- ness could not be carried on." 48 The decision is the final vindication before the highest tribunal of the land of the compulsory state insurance idea as ap- plied to the field of industrial accidents. It opens the way for the free expansion of the principle in the legislation of the United States. Questions of constitutionality are not now of as vital interest as they were a few years ago. The Prof. Thomas Reed Powell, in Quarterly Journal of Economics, vol. XXXII, pp. 561-562 (December, 1917). The reasoning of the court in the Mountain Timber case was a little devious; thus, the act was said to be in part an "occupation tax*' on certain forms of in- dustry, in part a plan for industrial pensions, and valid as a proper exercise of the taxing power as well as a reasonable regulation of industry. The four dissenting judges did not indicate their ground of disagreement. See The Constitutional Review, voL II, p. 28 (Jan- uary, 1918). QUESTIONS OF CONSTITUTIONALITY 83 increasing acquiescence of all classes of men in the wisdom of providing for the victims of industrial accidents by means of some form of insurance has had a profound effect on the judicial attitude to- wards the subject. So, whether the bill prepared by the legislature creates a state insurance fund, or merely fixes the liability of the employer, leaving the various actuarial problems to be worked out by private companies, the courts have shown an in- creasing readiness to accept the proposed solution of a difficult branch of the labor problem at its own valuation. And if it be true, as has been asserted, that "no state or country has ever reverted to the liability system after having made trial of the prin- ciple of compensation," 49 judicial interference, where it occurs, is likely to have no more profound effect than to put a temporary check on an en- thusiasm that will not be restrained, to delay for a brief space the advance of inevitable progress. 4 Journal of Political Economy, voL XXIII, p. 821 (October, 1915). CHAPTER IV COMPENSATION LEGISLATION IN THE UNITED STATES IN an essay of this scope and character, an ex- haustive review of the manifold provisions of the workmen's compensation acts now in force in thirty- eight states and three territories would be inappro- priate. Concise digests, easily available to the stu- dent, are infinitely preferable for reference work; nor could we hope to present the vast mass of ma- terial in a form at all comprehensible without adopt- ing the tabular digest method. In the present chapter, therefore, the writer has merely under- taken to compare important and typical features of laws in force in different jurisdictions, with a view to giving the reader a good general idea of the form and extent of such legislation in this country, and indicating the points of difference which have given rise to the major problems of the subject. For clearness' sake, the discussion in each of the follow- ing sections has been limited to the topic given, 84 COMPENSATION LEGISLATION 85 though, of course, the divisions are arbitrary and the subjects inter-related. (1) Employments Covered. The New Jersey Act automatically extends to a larger group of em- ployments than the compensation law of any other state. 1 All private employments are covered, ex- cept casual ones ; and all public employments except elective officials and those receiving a salary of more than $1,200 a year. The Act is unique in that it extends to domestic and farm labor, branches of service to which legislatures have been reluctant to apply the workmen's compensation principle. The Federal Compensation Law alone is of broader ap- plication, covering all civil employees of the United States Government. 1 * The provisions of the various state statutes in this connection are of two general kinds. One group consists of the laws which have been framed with the old theory, the theory that lay back of the i In making this statement the author has taken into consideration the semi-compulsory nature of the New Jersey act, which applies automatically to all employments covered, though the presumption of acceptance may be overcome by notice in writing to the contrary. Many states permit all labor contracts to be made under the pro- visions of the compensation law if the parties so agree in writing, though the statutes apply automatically to none or only a limited class. See, e. g., Michigan Public Acts 1912 (1st Extra Session), No. 10, Pt. I, sees. 5, 7; Idaho Laws 1917, c. 81, sees. 2-3. ia Blanchard, Liability and Compensation Insurance, p. 108. 86 WORKMEN'S COMPENSATION AND INSURANCE original New York act, in mind namely, that men engaged in extra-hazardous occupations are en- titled to special favor, and that they should be com- pensated as a matter of right for injuries sustained in the course of their work, while employees sub- jected to no unusual hazard should be left to the ordinary legal remedies. The other group of laws discards this theory, and gives to the compensation principle a general application, though excepting certain limited classes of employments for reasons of policy or convenience. The author has argued to no purpose if he has not already convinced the reader that the narrow view taken by the framers of the first group of statutes is an erroneous one. Mere degree of haz- ard in the employment should not be the criterion of whether a workman actually disabled should be re- lieved or not ; reasons couched in social necessity and profound economic principle demand that work- men's compensation be extended to all phases of industrial life. Nevertheless, a surprising number of states cling to the old discredited theory. In New York the legislature has undertaken the tre- mendous task of enumerating the hazardous em- ployments in which it feels compensation should be permitted, and has already discovered 44 distinct COMPENSATION LEGISLATION 87 groups of such occupations. 2 The Kansas law- makers are content with a more general description of dangerous occupations, and have so denomi- nated all employments (in which 5 or more are en- gaged) carried on "in or about a railway, factory, mine or quarry, electric, building or engineering work, laundry, natural gas plant, county and muni- cipal work, and all employments wherein a process requiring the use of any dangerous explosive or inflammable materials is carried on, which is con- ducted for the purpose of business, trade or gain." 3 The opposite extreme is reached in Alaska, where compensation is provided for only in employments connected with mining operations in which 5 or more are engaged. 4 The immense possibilities of litigation under statutes like those we have just discussed will at once occur to the reader. The line of distinction be- tween affiliated groups of industries is often ill- defined, and cases are almost certain to arise in any jurisdiction which has sought to enumerate the "ex- tra-hazardous" industries, in which an employee in- 2 N. Y. Laws 1913, c. 816, sec. 2, as amended by Laws 1916, c. 622, and Laws 1917, c. 705. Kan. Gen. Stat. 1915, sees. 5900-5903, as amended by Kan. Laws 1917, c. 226. * Alaska Laws 1915, c. 71, sees. 1, 38-39. 88 WORKMEN'S COMPENSATION AND INSURANCE jured in a similar, perhaps more dangerous, line of work, seeks to bring himself under the act. An- other weakness is that any enumeration is bound to be incomplete, since new industries spring up al- most overnight; and the legislatures will be kept busy revising the lists. Moreover, the very theory on which these acts are based is bound to be trans- gressed. For example, the Kansas act, in enumer- ating hazardous occupations, includes all those car- ried on in a "factory," whereas it is a matter of common knowledge that the factories in certain lines of business where little machinery is used, are among the least dangerous working-places in the entire industrial field. By far the larger number of workmen's compen- sation states, however, have followed the more lib- eral policy of including all employments except those expressly excluded. The New Jersey act, as we have seen, is the most sweeping in this respect ; although Massachusetts, which includes all private employments in the usual course of trade or busi- ness of the employer, except on vessels engaged in foreign or interstate commerce, and also includes public employments under the commonwealth, and elsewhere where the municipality, county, or other employer consents, runs New Jersey a close second COMPENSATION LEGISLATION 89 in liberality. 5 The compensation law of Michigan does not apply automatically, but requires an act of election on the part of the employer; otherwise this statute would have the palm for covering the widest range of employments, all public, except as officials, and all private, except casual or not in the usual course of trade, business, etc., of the em- ployer, being included. 6 An almost universal tendency to treat certain occupations as outside the proper scope of a work- men's compensation act is observable. Chief among these exclusions, and the cause of much wrangling, are two classes of employment com- monly grouped together farm labor and domestic service. Among others, the statutes of Idaho, Iowa, Minnesota, South Dakota, Texas and Utah refuse compensation to the farmhand and the house- hold servant. 7 The reasons for such exclusion seem 6 Mass. Acts 1911, c. 751, Pt. V, sec. 2, as amended b7 Acts 1913, c. 568, and Acts 1914, c. 708; also Acts 1913, c. 807. MicE. Pub. Acts 1912 (1st Extra Session), No. 10, Pt I, sees. 5, 7. t Idaho Laws 1917, c. 81, sees. 2-3; Iowa Code, 1913 Supplement, sec. 2477 m (a), m 16 (a) (b), as amended by Laws 1917, c. 418, 270; Minn. Gen. Stat 1913, sees. 8202, 8230d, g, as amended by Laws 1915, c. 193, 209; So. Dak. Laws 1917, c. 376, sees. 8, 16, 55b; Tex. Laws 1913, c. 179, Pt. I, sec. 2, Pt. IV, sec. 1, as amended by Laws 1917, c. 103; Utah Laws 1917, c. 100, sees. 51-52. The exemption of agricultural and other groups of employments from the compen- sation acts is probably due in large measure to politics. Rhodes t Workmen's Compensation, p. 136. 90 WORKMEN'S COMPENSATION AND INSURANCE to be that labor of this sort is ordinarily migratory and uncertain; that the employer is commonly a small householder or farmer with limited means and hence seldom in a position to pay out large sums in compensation; that the close personal relationship existing between such classes of servants and their masters makes it possible to apply with little diffi- culty the common-law tests of comparative fault in short, reasons of convenience. In reply it may be said that the difficulty owing to the comparative poverty of the employer may be solved by making him carry insurance, the premiums of which would be small in proportion to the smallness of the risk and the brevity of the term of the employment ; that there is no difference in principle between an injury received in running a threshing-machine and one sustained in operating a loom both ought to be compensated; and that the argument rising from the personal relationship of employer and employee is inapplicable to large-scale farming, and, often, to pretentious domestic establishments. Casual employments, or those not in the ordinary course of the trade or business of the employer, are excluded from practically all American compensa- tion acts. 8 The writer has elsewhere stated his 8 See e. g., Del. Laws 1917, c. 233, par. 3193qq, sec. 136; N. J. Laws COMPENSATION LEGISLATION 91 reasons for maintaining that such employees are entitled to as much consideration as those whose work is of a more permanent or regular nature. The fact remains, however, that the opposite view has commended itself to nearly all American legis- latures. 9 Some states have deemed it advisable to avoid conflicts with the Federal workmen's compensation act by excluding from the operation of the local statutes employees on railroads, or vessels in inter- state or foreign commerce. 10 More commonly, however, the method followed to avoid jurisdic- tional complications is to declare the state law in- operative in cases to which the Federal law ex- tends. 11 In addition to the more general classes of ex- cluded employments which we have discussed, the idiosyncrasies of law-makers, or the peculiar condi- 1911, c. 95, par. 23; Minn. Gen. Stat. 1913, sec. 8202, as amended by Laws 1915, c. 193; Utah Laws 1917, c. 100, sec. 51 (2). Nevada seems to be an exception. Nev. Laws 1913, c. Ill, sees. 1, 43, as amended by Laws 1915, c. 190. 10 See, e.g., Mass. Acts 1911, c. 751, Pt. V, sec. 2, as amended by Acts 1913, c. 568, and Acts 1914, c. 708; Minn. Gen. Stat. 1913, sec. 8202, as amended by Laws 1915, c. 193; Tex. Laws 1913, c. 179, Pt. I, sec. 2, as amended by Laws 1917, c. 103. "See, e.g., Del. Laws 1917, c. 233, par. 3193ww, sec. 142; Idaho Laws 1917, c. 81, sec. 109; New Mex. Laws 1917, c. 83, sec. 11; So. Dak. Laws 1917, c. 376, sec. 17. 93 WORKMEN'S COMPENSATION AND INSURANCE tions in certain states, have given rise to a number of anomalous exclusions, which have found favor only in a few jurisdictions. The Iowa law, for example, excludes employees "engaged in clerical work only," and, by an amendment of 1917, per- sons receiving benefits from any "firemen's pension fund" or "policemen's pension fund." 12 Workers for charitable organizations are excluded in some states, 13 outworkers 14 and members of the employ- er's family living in his house 15 in others. A very common provision is that employers with less than a certain number of workmen variously fixed at three, four or five are not bound by the compensa- tion law, though they may elect to come under its provisions. 16 For reasons which we have already outlined, these distinctions based obviously on the employer's conjectural ability to pay seem to us unsound. Where public employments are covered by the 12 Iowa Code, 1913 Supplement, sec. 2477 m (a), m 16 (b), as amended by Laws 1917, c. 270, 418. is See, e. g., Idaho Laws 1917, c. 81, sec. 3. "See, e.g., Del. Laws 1917, c. 233, par. 3193qq, sec. 136; Idaho Laws 1917, c. 81, sec. 3; Conn. Laws 1913, c. 138, sec. 43, as amended by Laws 1915, c. 288. IB See, e. g., Idaho Laws 1917, c. 81, sec. 3. "See, e.g., Rhode Island Laws 1912, c. 831, sec. 3; Utah Laws 1917, c. 100, sec. 51; Tex. Laws 1913, c. 179, sec. 2, as amended by Laws 1917, c. 103. COMPENSATION LEGISLATION 93 compensation acts and this is true in most states the policy has generally been to exclude elective officials, and very often those receiving more than a certain sum as yearly salary. 17 The writer is at a loss to determine what has actuated the first of these distinctions, unless it be a vague fear that compensation acts might become involved in poli- tics, or some intricate theory that there is no real wage loss in such cases. The reason for the exclu- sion of the high-salaried man is less obscure, as such an one is deemed to be so high on the social scale, and to have had such opportunities to save and to insure himself, that there are not such strong rea- sons of public policy for protecting him as in the case of the indigent workman. Even conceding this, however, it is hard to see any occasion for mak- ing a distinction on such purely artificial grounds, especially as the public should be a model employer. The writer would like to be able to say that the trend of recent legislation has been distinctly away from the narrow type of workmen's compensation act, and towards a more and more extensive appli- cation of the theory of professional risk; but such a statement would hardly be borne out by the facts. Five states adopted compensation laws for the first IT See, e. g., N. J. Laws 1913, c. 145; Utah Laws 1917, c. 100, sec. 51. 94 WORKMEN'S COMPENSATION AND INSURANCE time in 1917 Delaware, Idaho, New Mexico, South Dakota and Utah. 18 Of these, New Mexico followed the antiquated scheme of covering only enumerated extra-hazardous employments; New Mexico and Utah extended compensation pro- visions to private employments only when four, and Delaware when five, or more were employed; all five states excepted casual employees; while farm labor and domestic service were expressly excluded by Delaware, Idaho, New Mexico and South Da- kota. Outworkers are excepted in Delaware and Idaho; and the last-named state also excludes em- ployees of charitable organizations and members of the employer's family dwelling in his house. Delaware makes no provision for public employ- ments; South Dakota covers them subject to sub- stantially the same restrictions as in the case of private occupations; Idaho and Utah grant com- pensation to all public servants except elective of- ficials and those whose salary exceeds $2,400 a "year. (2) Injuries covered. The phrase used in the English act "injury by accident arising out of and in the course of the employment" has been adopted in most of the American states. That it iDeL Laws 1917, c. 233; Idaho Laws 1917, c. 81; New Mex. Laws 1917, c. 83; So. Dak. Laws 1917, c. 376; Utah Laws 1917, c. 100. COMPENSATION LEGISLATION 95 is open to serious criticism as a description of the policy of the acts, has been intimated in an earlier chapter; but "the full expression has been inter- preted so generously in British and American courts that it permits awards for nearly or quite all disabilities, which can be traced to the employment of the disabled." 19 For instance, awards have been given for death by the unintended acts of another employer's servant, 20 death of an ice-driver by light- ning while seeking shelter under a tree, 21 and injury due to a fellow-employee's disobedience of a fore- man's orders. 22 But the general subject has been covered already in our consideration of the British Act; and it will be more useful here to discuss special features, such as the provision made by American acts in the case of injuries due to indus- trial disease. So liberal has been the judicial interpretation of the terms "injury" and "personal injury," that where they are used without further qualification they will generally be construed to include both i Willard C. Fisher in Quarterly Journal of Economics, vol. XXX, p. 32 (November, 1915). 20 Bryant v. Fissel, 86 A& (N. J.) 458. i State ex rel. People's Coal and Ice Co. v. District Court of Ramsay County, 153 N. W. 119. 22 Scott v. Payn Bros., 89 Atl. (N. J.) 927. 96 WORKMEN'S COMPENSATION AND INSURANCE disease and aggravation of existing disease. 23 But the requirement of accidental origin has limited the cases in which compensation can be recovered for disease arising out of the employment to those in which the contraction of it can be traced to a par- ticular mishap ; and there are many specific restric- tions in the various statutes. Thus, in Hawaii, disease is expressly excluded unless it results from injury; and similar provisions are found in Indiana, Iowa, Delaware, Utah, South Dakota, and most of the states except those which, like Kansas, Michi- gan, Minnesota, Massachusetts, and New Jersey, are silent on the subject. 24 Special provisions as 23 Fisher (see footnote 19), at pages 46-47. But a disease which is idiopathic *. e., develops gradually or at least imperceptibly and, while it may be attributable to external conditions, is also in part dependent on conditions inherent in the individual cannot be re- garded as an injury by accident; there is also very strong authority against compensating for purely occupational diseases even when the act makes no reference to a necessity of accidental origin. Kiser, Workmen's Compensation Acts, pp. 65-67. 2* Hawaii Acts 1915, No. 221, section 60d; Indiana Laws 1915, c. 106, sec. 76d; Iowa Code, 1913 Supplement, sec. 2477-m 16 (g); Del. Laws 1917, c. 233, par. 3193ss, sec. 138 (c) ; Utah Laws 1917, c. 100, sec. 52 (5); So. Dak. Laws 1917, c. 376, sec. 55d. Kan. Gen. Stat. 1915, Chapter 61, Article 6, as amended by Laws 1917, c. 226; Mich. Pub. Acts 1912 (First Extra Session), No. 10, as amended by Pub. Acts 1913, Nos. 50, 79, 156, 259, and Pub. Acts 1915, Nos. 104, 153, 170, 171, and Pub. Acts 1917, Nos. 41, 206, 235, 249; Minn. Laws 1913, c. 467, as amended by Laws 1915, c. 193, 209, and Laws 1917, c. 302, 351; Mass. Acts 1911, c. 751, amended in accordance with Acts 1912, COMPENSATION LEGISLATION 97 to injury resulting in hernia are found in Idaho, New Mexico, Texas, and some other states. 25 Montana excludes disease entirely, except hernia. 26 In a few states, the policy of compensating cases of disease resulting from injury of an accidental nature has been affirmatively declared; but Cali- fornia alone frankly includes occupational dis- ease. 27 It will be seen that the legislatures have shown little eagerness to extend the compensation prin- ciple along these lines. The most liberal of the statutes (outside of that of California) are merely declaratory in this respect of the common law, which includes within the definition of "ac- cidental injury" disease and infection naturally resulting therefrom. From the point of view of social justice this is most unfortunate. An em- ployee in a paint factory is much more likely to c. 172, 571, Acts 1913, c. 48, 445, 448, 568, 696, 746, Acts 1914, c. 338, 708, Acts 1915, c. 123, 275, 314, Acts 1917, c. 198, 249, 269, 297; N. J. Laws 1911, c. 95, as amended by Laws 1913, c. 174, Laws 1914, c. 244. 25 Idaho Laws 1917, c. 81, sec. 22; New Mex. Laws 1917, c. 83, sec. 17; Tex. Laws 1913, c. 179, sec. 12b (as added by Laws 1917, c. 103); tc. 26 Mont. Laws 1915, c. 96, sees. 6q, 16, 16j. 27 See, e. g., Tex. Laws 1913, c. 179, Pt. IV, sec. 1, as amended by Laws 1917, c. 103; N. Y. Consol. Laws, c. 67, sec. 3 (7). Cal. Laws 1917, c. 586, sec. 3 (4). 98 WORKMEN'S COMPENSATION AND INSURANCE contract a case of lead poisoning than to be disabled by a fall; the disease is as serious or more so than the accident; it arises out of and in the course of his employment; it results in a loss of earning power; and yet he will receive no compensation under American laws. The danger of contracting an occupational disease is just as much a risk of the employment in which a workman is engaged, as a tangible physical injury; it is accidental in the broad sense that in most cases it cannot be foreseen ; and if the theory of professional risk is sound, the industry should bear the burden of compensating the victims as well of the diseases as of the accidents for which it is responsible. Courts and special tribunals, of a progressive cast, have in a few instances rendered decisions which may be construed as awarding compensation for occupational diseases accidentally contracted, on the theory that these really constitute accidental injuries; 28 but the weight of judicial opinion, and, 28 See The Labor Gazette, vol. 1, p. 53 (February, 1916), com- menting on a decision of the Department of Labor of this sort; also In re Doherty (1915) 222 Mass. 98, 109 N. E. 887. The eventual coverage of occupational diseases by compensation acts, "either by express legislation or by construction of the law, may be regarded as only a logical development." Rhodes, Workmen's Compensation, p. 137. COMPENSATION LEGISLATION 99 it must be admitted, of sound judicial opinion, is against thus distorting the language of the stat- utes. 29 If the great reform of adding occupational disease to the subjects of compensation is to be ac- complished, our legislatures must follow the lead of England and other progressive nations in enacting it into law. Though most of our states have been satisfied with the borrowed formula of "personal injuries arising out of and in the course of the employment," a few have added to or amended it in describing the class of injuries covered. Thus, in Arizona the injury must also be due to a necessary risk of the employment or to the failure of the employer or any of his employees to exercise due care or comply with any law. 30 In Colorado, the workman must have been performing service arising out of and in the course of the employment when injured to be entitled to compensation. 31 The Oregon act in- sists that the injury shall be by violent or external means; while in Washington only personal injuries sustained while upon the premises or at the plant 2 Honnold, Workmen's Compensation, pp. 536-544; Kiser, Work- men's Compensation Acts, p. 69. so Ariz. Rev. Stat. 1913, p. 1054, sec. 2. si Colo. Laws 1915, c. 179, sec. 8. 100 WORKMEN'S COMPENSATION AND INSURANCE of the employer, or in the course of the employ- ment away from the plant, will sustain a claim. 32 In Wisconsin, compensation will be paid only to those workmen who were engaged at the time of the injury in performing service growing out of and incidental to the employment. 33 It will be seen that most of these variations on the old theme add little to it ; their presence in the statutes is no doubt due to attempts on the part of inexpert draftsmen to make their meaning unmistakably clear. (3) Forfeiture for misconduct. Under almost all of the American statutes, some sort of miscon- duct on the part of the injured employee will pre- vent him from recovering compensation. The two instances in which awards are most commonly de- nied are: (1) where the employee's intoxication was a proximate and efficient cause of the injury; (2) where the injury was self-inflicted. In addi- tion, "willful misconduct," consisting in disobedi- ence of orders, failure to use safety appliances, de- liberate breach of statutory regulations, and culpable negligence, is sometimes made a cause of forfeiture. A rather unusual form of restriction is the pro- 82 Ore. Laws 1913, sec. 21; Remington and Ballinger's Ann. Codes and Stat. Wash., sec. 6604-5. as Wis. Laws 1913, c. 599, sec. 2394-3. COMPENSATION LEGISLATION 101 vision in the Colorado statute that injuries inten- tionally inflicted by self or another are not subject to compensation. 34 The reason for excepting the latter class of cases from the operation of the act is by no means clear, for injuries intentionally in- flicted by another often arise out of and are due to risks peculiar to an employment. For example, a "bouncer" in a cafe who threatens to eject an ob- streperous customer, and is thereupon assaulted by the latter, sustains injuries arising out of and in the course of his employment in the fullest sense of the word. Perhaps the Colorado statute would deny such an one compensation on the ground that he has a remedy in damages against the assaulting party; but the worthlessness of this claim in the typical case is the best reason for permitting a recovery of compensation from the employer whose business is of such a character as to subject his workmen to risk of assault by irresponsible third parties. A more reasonable provision is that of the Okla- homa statute, which denies compensation where the injury is caused by intention to injure self or an- other. 35 Self-inflicted injuries are clearly outside 34 Colo. Laws 1915, c. 179, sec. 8. SB Okla. Laws 1915, c. 246, Art. II, sec. 1. 102 WORKMEN'S COMPENSATION AND INSURANCE the scope of the workmen's compensation principle, for they are quite exceptional and in no wise re- sults of a risk of the employment. In most cases, too, injuries to the employee caused by his intention to injure another cannot be said to arise out of the employment. There may be instances in which this is not true ; but public policy would seem to forbid the award of compensation in such cases on the ground that it would amount to condoning an as- sault. However that may be, the provisions of the Oklahoma statute are substantially duplicated in the acts in force in Alaska, Delaware, Hawaii, Idaho, New York, Texas, and a number of other jurisdictions. 36 Statutes excluding injuries "in- tentionally self-inflicted," "by deliberate intention," and so forth, but making no mention of those sus- tained by reason of intention to injure another, have been adopted in Louisiana, Maryland, Minne- sota, New Jersey, New Mexico, and other states. 37 The vague phrase "serious and willful miscon- Alaska Laws 1915, c. 71, sec. 4; Del. Laws 1917, c. 233, par. 3193jj, sec. 129; Hawaii Acts 1915, No. 221, sees. 1, 3; Idaho Laws 1917, c. 81, sec. 5; N. Y. Consol. Laws, c. 67, sec. 10; Tex. Laws 1913, c. 179, Pt IV, sec. 7, as amended by Laws 1917, c. 103; etc. *La. Sess. Acts 1914, No. 20, sec. 28, as amended by Sess. Acts 1916, No. 243; Md. Acts 1914, c. 800, sec. 46, as amended by Acts 1916, c. 597; Minn. Gen. Stat. 1913, c. 84A, sec. 8203; N. J. Laws 1911, c. 95, par. 7; New Mex. Laws 1917, c. 83, sec. 8; etc. COMPENSATION LEGISLATION 103 duct" is used in Massachusetts ; 3S and "willful misconduct" elsewhere. 39 Where injuries are due to breach of statutory safety regulations, or neglect to use guards or safety devices furnished by em- ployers, compensation is sometimes denied. 40 Del- aware refuses to extend the protection of the law to cases where the accident was owing to "reckless- ness." 41 In California, if the employee's injury is caused by his serious and willful misconduct, the compensation otherwise recoverable by him is re- duced one-half, subject to certain restrictions. 42 The intoxicated workman has few friends, as is illustrated by provisions with regard to the forfeit- ure of his claims in practically all of the compensa- tion states. 43 Some of the laws have particularized, providing that only drunkenness "while on duty" shall prevent recovery. 44 The provision in the ss Mass. Acts 1911, c. 751, Pt. II, sec. 2. 9 Mich. Acts 1912 (First Extra Session), Part II, sec, 2; So. Dak. Laws 1917, c. 376, sec. 7; etc. *o See, e.g., La. Sess. Acts 1914, No. 20, sec. 28, as amended by Sess. Acts 1916, No. 243; Okla. Laws 1915, c. 246, Art. II, sec. 1. 4i Del. Laws 1917, c. 233, par. 3193jj, sec. 129. 42Cal. Laws 1917, c. 586, sec. 6 (a) (4). 43 See, e. g., Del. Laws 1917, c. 233, par. 3193jj, sec. 129; Kan. Laws 1911, c. 218, sec. 1, as amended by Laws 1917, c. 226; Minn. Gen. Stat. 1913, c. 84A, sec. 8203; New Mex. Laws 1917, c. 83, sec. 8; Tex. Laws 1913, c. 179, Pt. IV, sec. 1, as amended by Laws 1917, c. 103. 4* See, e.g., N. Y. Consol. Laws, c. 67, sec. 10; R. I. Laws 1912, c. 831, Art. II, sec. 2. 104 WORKMEN'S COMPENSATION AND INSURANCE Maine statute is a curious one ; it makes intoxication "without the employer's knowledge" a bar to ob- taining awards under the act. 45 Why the knowl- edge of the employer should affect his liability it is difficult to understand, though his consent might conceivably estop him from setting up his work- man's intoxication as a defense to the latter's claim. 46 The inconsistency of American compensation laws with regard to the classes of injuries covered leaves much to be desired. But uniformity in this respect, though a "consummation devoutly to be wished," is not of the first importance. The essen- tial thing is substantial justice to the parties con- cerned ; and it is encouraging to note that the con- ditions of forfeiture, though so diverse in char- acter, are not, on the whole, unreasonable or un- 45 Me. Laws 1915, c. 295, sec. 8. 46 " if the employer knew or in the exercise of ordinary care might have known" that the employee was intoxicated or in the habit of becoming so while on duty, he cannot set up the defense of the latter's intoxication, according to the act. This sort of estoppel is a curious survival of the doctrine of negligence and comparative fault; though the employee was in the wrong, the negligence of the em- ployer in not informing himself of his servant's dissolute habits, gives the latter an opportunity to secure his compensation neverthe- less. This is out of the spirit of modern compensation legislation, and also of the provision for forfeiture on account of drunkenness, which should be absolute to be effective. Perhaps the Maine legis- lature is trying to discourage the employment of drinking men. COMPENSATION LEGISLATION 105 fair. 47 Furthermore, they have been very gener- ously construed in almost all jurisdictions. 48 (4) The Compulsory Principle. Very few of the American compensation acts are compulsory in their operation with regard to private employments. Legislators have been afraid of raising the ghost of the Ives case ; in part, too, they have been guided by a not unpraiseworthy and very natural conserva- tism. They have felt that they were forcing an experiment upon the commonwealth, and that timid employers and skeptical employees should be per- mitted to withdraw and see how it worked out. Nevertheless, a conviction of the soundness of the principle seems to have taken hold on these eminent gentlemen; and they have somewhat inconsistently made it so hard for the employer if he does not ac- cept the act that he is virtually left with no choice in the matter. A typical statute of this nature is that in force in Massachusetts. According to Section 1 of Part I, employers who do not accept the act are deprived of the defenses of contributory negligence, negligence of a fellow-servant and assumption of risk. This ** See Willard C. Fisher in Quarterly Journal of Economics, vol. XXX, p. 42 (November, 1915). 48 Ibid., p. 43. 106 WORKMEN'S COMPENSATION AND INSURANCE provision was clearly intended, as one writer has quaintly said, "to force employers to take advan- tage of" the provisions of the act. 49 Whatever may be thought of the insertion of such a rule in ' 'elec- tive" statutes, its popularity as a means of gently coercing the employer is attested by its adoption in a majority of the compensation states. 50 More- over, in New Jersey, a similar result is reached where there is no mutual assent of employer and employee to the compensation features of the act. 51 A most effective method of foisting compensation on the parties, willynilly, without tedhnical "com- pulsion," is the "presumption of acceptance." This ingenious scheme was first tried out in New Jersey, and has had many imitators. It consists in con- clusively presuming that the employer or employee or both have consented to be bound by the provisions concerning compensation in the absence of written or other notice to the contrary. About half of the compensation states presume the acceptance of both employer and employee unless one or both gives no- tice to the opposite effect ; and a considerable num- * James A. Lowell in Massachusetts Law Quarterly, vol. I, p. 49 (February, 1916). so See, e. g. t Del Laws 1917, c. 233, pars. 3193d (sec. 97), 3193f (sec. 99); Pub. Acts Mich. 1912, No. 10, Pt. I, sees. 1, 2; etc., etc. BI N. J. Laws 1911, c. 95, pars. 1-3, 5, 8-9; as amended by Laws 1913, c. 174, and Laws 1914, c. 244. COMPENSATION LEGISLATION 107 her of other jurisdictions, while requiring an affirm- ative act on the part of the employer to constitute an election, presume that the employee has accepted unless he files notice to the contrary. 52 There are a few states which have tempted Provi- dence in the shape of an indignant judiciary by passing compulsory compensation or insurance laws. Such are Maryland, Idaho, Utah, Ohio, and a few other progressive jurisdictions; the new United States compensation law is also compulsory within its field. 53 Now that the bogey of unconsti- tutionally is fast losing the terrors it possessed in the childhood of the compensation principle, we may look for general acceptance of compulsory statutes; and the trend of opinion seems clearly in that direction. 54 52 For typical statutes presuming the acceptance by the parties, see New Mex. Laws 1917, c. 83, sec. 4; Iowa Code, 1913 Supplement, sec. 2577 m (c-4), 2477 m 2; etc. For statutes presuming election by employee where employer has elected, see Cal. Laws 1917, c. 586, sec. 70 (a), (b) ; Tex. Laws 1913, c. 179, Pt. I, sec. 3 a (as added by Laws 1917, c. 103). 53 Md. Laws 1914, c. 800, sees. 14-15 ; Idaho Laws 1917, c. 81, sec. 4; Utah Laws 1917, c. 100, sec. 52 A; Ohio Gen. Code, sees. 1465- 1469; Act No. 267, 64th Cong, (approved Sept. 7, 1916), sec. 1. 54 See Williams, Lewis C., in Case and Comment, vol. 22, p. 29G (September, 1915). The elective type still prevails, however; about two-thirds of all American compensation laws being elective. Rhodes, Workmen's Compensation, page 133. Mr. Blanchard finds elective clauses which are no more than "a trick to evade the consti- tutional question . . . subversive of good legislative practice" and 108 WORKMEN'S COMPENSATION AND INSURANCE (5) Nature of Awards. The introduction of workmen's compensation into this country was too hasty and precipitate to permit of the immediate preparation of the necessary statistical material on which to base economically sound schedules of awards. 55 Nor was the experience of Europe of much value in this respect; for in Germany the in- surance plan is backed by an absolute government, so that it cannot fairly be compared with the sys- tem which it would be possible to establish in our states; and both in Germany and other European countries widespread confusion results from the variety of methods employed in publishing and studying accident statistics. 56 The consequence has been a very great and unscientific diversity among the provisions of our state laws. Some idea of the lack of unanimity among our states in this respect may be gathered from a perusal of the provisions of typical statutes. For total dis- ability, for instance, Rhode Island employers must pay their injured workmen 50% of weekly wages "an argument in favor of constitutional amendment." Blanchard, Liability and Compensation Insurance, pp. 107-108. 66 Rubinow, I. M., in Quarterly Publications of the American Sta- tistical Association, vol. XIV, new series No. 109, at page 358 (March, 1915). 6 Rubinow (supra), page 361; Bradbury, Workmen's Compensa- tion (2d ed.), pages 65-66. COMPENSATION LEGISLATION 109 for a period of 500 weeks, if the disability lasts so long; but the weekly payments are subject to a maximum of $10 and a minimum of $4. 57 Where total disability is permanent, California grants com- pensation at 65% of weekly earnings for 240 weeks, thereafter at 40% for life. 58 In Kansas, a work- man thus incapacitated receives 60% of wages for a maximum period of 8 years, weekly payments not to exceed $15 or be less than $6. 59 Still other states set the percentages at 55%, 66%%, etc.; while the period during which compensation is to be paid, and the gross amounts which it must not exceed, vary within wide limits. A particularly vicious provision is that in force in a few states, notably Kansas, New Jersey and Texas, restricting compensation in certain cases of permanent partial disability, such as loss of an arm, an eye, the hearing of both ears, etc., in ac- cordance with a fixed schedule. 60 Thus, a New Jersey employee who loses his hand, is paid 50% of daily wages during 150 weeks; a Kansas worker who is made completely deaf, obtains 50% of aver- 57 R. I. Laws 1912, c. 831, sees. 10-12. 58 Cal. Laws 1917, c. 586, sec. 9. 6 Kan. Gen. Stat. 1915, sec. 5905, as amended by Laws 1917, c. 226. eo Ibid.; N. J. Laws 1911, c. 95, sec. 11 (c) ; Tex. Laws 1913, c. 179, sees. 11, 12, as amended by Laws 1917, c. 103. 110 WORKMEN'S COMPENSATION AND INSURANCE age weekly wages during 100 weeks; and so forth. The absurdity of this crude method of ascertaining and compensating wage loss causes a smile; but it really presents a serious problem. It is so easy to dodge responsibility for accurate computations by bringing all classes of toilers within a blanket pro- vision, and the simplicity and comparative inex- pensiveness in operation of such a statute makes so strong an appeal to the economical mind, that there is real danger of the plan finding favor with super- ficial thinkers. Reflection, however, quickly dis- closes its faults. A very grave injustice results, for example, when a clerk receives the same com- pensation for the loss of a left arm as a carpenter. The former finds his earning power only slightly im- paired ; the latter must abandon the trade to which he has been trained and seek an entirely new field of endeavor. Again, a musician and a stoker both become deaf due to accidental injury arising out of and in the course of the employment. One sees his entire means of livelihood swept away ; the other may continue in his occupation. Any graduated scale of awards must take into account the different degrees of injury temporary partial disability, temporary total disability, perma- COMPENSATION LEGISLATION 111 nent partial disability, permanent total disability^ and death. Where a workman is slightly incapaci- tated for a limited time, by an accident of his em- ployment, enlightened public policy dictates that his wage loss should be made up to him in part, great care being exercised to avoid awards so lavish as to encourage malingering. Such cases, however, are the least pressing, and most of the compensation acts are generous enough in this regard. It is when we come to injuries which, while partial, are perma- nent, and total disability, either temporary or per- manent, that the problems arise. Wage loss here is serious, and affects not only the workman and his family, but the whole community, which is at the same time deprived of his services and in danger of being saddled with his support. The search for a common principle to govern these cases leads to the following conclusions : ( 1 ) In death cases the question of prime importance is the number of dependents of the deceased and the extent of their dependency. If there are no de- pendents, there seems no social necessity for com- pensation other than that needed to cover medical treatment and burial; but where the deceased was the chief or sole support of a family, it is impera- 112 WORKMEN'S COMPENSATION AND INSURANCE tive both from the point of view of common human- ity and that of community interest that the surviv- ing dependents receive substantial assistance during the continuance of dependency. 60 * (2) In all cases of injury not resulting in death, awards should be so graduated as to take into consideration both loss of earning power and the number of dependents of the person thus incapacitated. Especially is this true where permanent total disability results. The failure to apply this double standard is one of the chief defects in American compensation legislation, most of our statutes confining their consideration to wage loss alone. (3) The percentage of weekly wages on which computations are based should be more elastic to accommodate itself to varying cir- cumstances. Thus, an unmarried employee tem- porarily disabled might be entitled to receive only 50% of weekly wages, with a proper minimum, while his comrade with a large family should be granted 75%. Workmen's compensation is pri- marily a social problem, and uniformity of awards should not be adhered to blindly, when such action would result in semi-starvation in one family, and comparative superfluity in another. For the nor- mal case, however, 66%% of weekly wages may be *o*24 Journal of Political Economy, pp. 951-952 (December, 1916). COMPENSATION LEGISLATION 113 said to be a fair percentage; 50% is too low, and more might encourage malingering. 601 * The principles outlined above, however, have been slow in impressing themselves on the minds of our legislators. Only a few states gauge the percent- age of weekly wages payable as compensation by the number of dependents of the employee; 61 many jurisdictions have provided that in the case of death no more than a certain gross sum ($3,500 in Kan- sas; 62 $4,000 in Utah; 63 etc.) shall be paid to sur- viving relatives, instead of making awards co-ex- tensive with the continuance of dependency; and the provisions limiting the maximum weekly amount which may be disbursed to one injured workman un- der the law (in some states as low as $10) 64 stand in the way of any liberal application of the compen- sation principle. ob Blanchard, Liability and Compensation Insurance, pp. 127-128. 61 And this only in death cases. The New York provisions are especially interesting. See N. Y. Consol. Laws, c. 67, sec. 16, as amended by Laws 1916, c. 622. 62 Kan. Gen. Stat. 1915, sec. 5905, as amended by Laws 1917, c. 226. es Utah Laws 1917, c. 100, sec. 76. **E. g., N. J. Laws 1911, c. 95, par. 12. Limitations of compensa- tion payments by a maximum weekly amount are unsound in prin- ciple; and the tendency is to remove them altogether. Rhodes, Work- men's Compensation, p. 147. The practice of limiting either the aggregate amount of such payments or the number of weeks during which payment should be made, should be "condemned without re- serve." Blanchard, Liability and Compensation Insurance, p. 128. 114 WORKMEN'S COMPENSATION AND INSURANCE One feature common to nearly all American com- pensation acts is worthy of hearty commendation. This is the practice of making awards in small periodical payments instead of in a lump sum. In this the compensation system differs from, and has great practical advantages over, the common law; for the small periodical payments put less strain on the employer and his insurance carrier, are better for the workmen in that they offer less temptation to squandering and furnish a modest but sufficient subsistence over an extended period, and are to the advantage of the community in that there is less likelihood of their being diverted from their pur- pose of obviating the social problem of poverty, to investment and speculation. The rule is not iron- bound, however, and most states permit commuta- tion of periodical payments to a lump sum in cases where under special circumstances this course seems advisable. 65 (6) The Waiting Period. Most of the Ameri- can compensation laws provide for an interval of time between the commencement of the disability and the beginning of payments, set variously at B E. g., Mass. Acts 1911, c. 751, sec. 22, as amended by Acts 1914, c. 708; Cal. Laws 1917, c. 586, sec. 28; Ohio Acts 1913, sec. 40, as amended by Acts 1917, House BUI 506. COMPENSATION LEGISLATION 115 from one to three weeks. 66 The purpose of such a provision is twofold to relieve the administration of the act from the burden and confusion of pay- ments for trifling injuries, and to lessen the tempta- tion to malingering on the part of the employee. But workmen cannot see the reason for the waiting period ; 67 and where a laborer is very poorly paid and living from hand to mouth, it may be a real in- justice to make him wait for his compensation. Waiting periods may be said to be of two kinds : those which merely postpone compensation, which at the expiration of the period (if the employee is still disabled) is computed from the date of injury; and those which constitute a real gap for which no compensation is recoverable. The latter type is very objectionable, to my mind; but it is easily the more common in this country, being found in the statutes of most of the compensation states. 68 The other kind of waiting period, which merely post- eTex. Laws 1913, c. 179, Pt. I, sec. 6, as amended by Laws 1917, <:. 103 (one week) ; Cal. Laws 1917, c. 586, sec. 9 (b) (1) (ten days) ; Iowa Code, 1913 Supplement, sec. 2477-m 9 (g), as amended by Laws 1917, c. 270 (two weeks) ; New Mex. Laws 1917, c. 83, sec. 18 (three weeks). 67 American Labor Legislation Review, voL V, at page 76 (March, 1915). E. g., Minn. Gen. Stat. 1913, sec. 8211, as amended by Laws 1915, c. 209, and Laws 1917, c. 302; New Mex. Laws 1917, c. 83, sec. 18; etc., etc. 116 WORKMEN'S COMPENSATION AND INSURANCE pones awards for the probationary time until the injury is established as serious enough to merit com- pensation, and which may be defended as tending to simplify the administration of the acts, has been established in several states. 69 In Washington, Oregon and Porto Rico there is no waiting pe- riod. 70 The tendency as illustrated by recent legislation seems to be towards adopting a standard waiting period of one week, rather than towards abolishing it altogether. 71 On the other hand, the New Mex- ico act of 1917 establishes a waiting period of three weeks the maximum in the United States. 72 The author's feeling is that this feature of com- pensation legislation should be done away with en- 6 The form which these statutes generally take is to have a wait- ing period for ordinary injuries, with the proviso that if the incapac- ity extends for more than a certain fixed period, compensation is payable from the date of injury. Some of the laws, with the periods beyond which incapacity must extend to render nugatory the waiting period, are: N. Y. Laws 1913, c. 816, sec. 12, as amended by Laws 1917, c. 705 (49 days); So. Dak. Laws 1917, c. 376, sec. 24 b (8 weeks); Mich. Pub. Acts, First Extra Session, 1912, No. 10, Pt. II, sec. 3 (8 weeks) ; R. I. Laws 1912, c. 831, Art. II, sec. 4, as amended by Laws 1917, c. 1534 (4 weeks). 'o Remington and Ballinger's Ann. Codes and Stats. Wash., sees. 6604-^5 d (but no compensation is payable unless loss of earning power exceeds 5%) ; Oregon Laws 1913, c. 112 (as amended by Laws 1915, c. 271), sec. 21 b, c, d; Porto Rico Acts 1916, No. 19. 71 This is the conclusion reached by Dr. Rubinow in an article in 26 Journal of PoL Economy, p. 273 (March, 1918). 72 New Mex. Laws 1917, c. 83, sec. 18. COMPENSATION LEGISLATION 117 tirely, or, if retained, should be set at three days or some similarly low mark. 73 (7) Medical and Surgical Aid. Compensation awards are intended to take the place in some de- gree of wages, and to defray the ordinary expenses of the injured workman and his family during the enforced hiatus in his productive activity. It is obvious, however, that this fails entirely to cover one class of very necessary expenditures the medi- cal and surgical treatment, the hospital charges, and the countless incidental calls on the purse, which the injury entails. To very poor workmen, and families living on a margin, "doctors' bills" come as a crushing blow, and the utter impossibility of pay- ing them out of the pittance reserved for the abso- lute essentials of every-day life, is manifest. Espe- cially is this true in states where "waiting periods" immediately follow the injury, and no compensa- tion is forthcoming at the very time when the in- jured man most needs the costly attention and care of a physician. The neglect and consequent en- dangering of life and retarding of recovery which would be the inevitable outcome if no special pro- vision were made for these cases, present a serious 73 The waiting period under the Federal compensation law is 3 days. Act No. 267, 64th Cong. (1915-1916), sec. 2. Four days is the length advocated by a recent writer. McCanna, The New Era, p. 102. 118 WORKMEN'S COMPENSATION AND INSURANCE social problem ; for anything that tends to prolong the laborer's period of enforced idleness causes an additional drain on the resources of the commun- ity. To meet this condition, nearly all compensa- tion states have made some provision for medical and surgical aid for an injured employee. 74 In most jurisdictions, "reasonable" medical and surgical aid, including hospital treatment, the serv- ices of nurses, and such crutches, apparatus, and medical and surgical supplies as may be necessary, are required to be furnished by the employer or responsible insurance carrier. In almost all states, however, this generous scheme is subject to limita- tions, both as to time and amount. In Delaware only $25 may be spent for this purpose, and treat- ment must not extend over a period greater than two weeks. 75 New Jersey is scarcely more gener- ous, having the same restriction as to time, and a maximum disbursement of $50. 76 South Dakota ^*E.g., Iowa Code (1913 Supplement), sec. 2477-m 9 (b), as amended by Laws 1917, c. 270; Del. Laws 1917, c. 233, sec. 101; Utah Laws 1917, c. 100, sec. 86; Kan. Gen. Stat. 1915, sec. 5905, as amended by Laws 1917, c. 226; Vt. Laws 1915, c. 164, sec. 14, as amended by Laws 1917, c. 173. There is no provision for medical or surgical aid in Arizona, Washington, or Wyoming. Blanohard, Lia- bility and Compensation Insurance, p. 126. 76 Del. Laws 1917, c. 233. fN. J. Laws 1911, c. 95, par. 14, as amended by Laws 1913, c. 174, and Laws 1914, c. 244. COMPENSATION LEGISLATION 119 and Iowa set a maximum of four weeks and $100 ; 7T Kansas, 50 days and $150 ; 78 Utah has no time limitation and permits as much as $200 to be spent for this purpose. 79 Texas has wisely set no limit on the amount which may be expended, and while providing that in general the injured workman shall not be reimbursed for more than two weeks of treat- ment, allows some latitude where total disability re- sults. 80 California and Idaho are even more lib- eral, and, recognizing that each case must be de- cided on its own merits and in the light of its peculiar circumstances, provide for such treatment as is reasonably required for a reasonable time, with no further restrictions. 81 "One of the objects of compensation is the con- servation of human resources," remarks a recent writer; 82 and if this is conceded (as it must be) adequate provision for medical and surgical aid will be seen to be a very essential part of the great social scheme of which this modern legislation is the ex- 7T So. Dak. Laws 1917, c. 376, sec. 24 a; Iowa Code (1913 Supple- ment), sec. 2477-m 9 (b), as amended by Laws 1917, c. 270. 78 Kan. Gen. Stat. 1915, sec. 5905, as amended by Laws 1917, c. 226. " Utah Laws 1917, c. 100. 80 Tex. Laws 1913, c. 179, sees. 7a, 7b, 12e, 12f, as amended by Laws 1917, c. 103. *i Cal Laws 1917, c. 586, sees. 9 a, 10; Idaho Laws 1917, c. 81, sees. 16-17. s* Rhodes, Workmen's Compensation, page 144. 120 WORKMEN'S COMPENSATION AND INSURANCE pression. It is of the first importance that every injured employee should receive immediate and ef- ficient care; for if he does not, the community, the taxpayer, the consumer, in the end pay more, and the world is poorer by the labor which the unfortu- nate victim might have been enabled to resume. To the law-makers, therefore, we recommend the passage of the broadest sort of statutes, vesting authority in proper bodies to determine the reason- able expenditure necessary to bring the injured workman back to the highest possible efficiency, and to decree the payment of the same. Stingy allow- ances represent a penny-wise, pound-foolish policy, as indefensible on economic grounds as it is from the humanitarian standpoint. Another question of importance in this connec- tion is whether the selection of a physician should be left with the employer, the employee, or some other agency. A recent writer has urged with some elo- quence that the employee should exercise the choice in this matter, since his confidence in his physician may be an important element in hastening his recov- ery; though this same author concedes that the ju- dicial tendency, in the absence of express provision in the statutes, has been to leave with the employer the discretion in selecting the medical attendant, COMPENSATION LEGISLATION 121 subject to the limitation of reasonableness. 82 " Both plans have disadvantages. Where an impartial commission administers the statute, it would seem that that body might well be empowered to decide in this matter as in others. (8) Methods of Administration. The difficult problem of securing a competent body to administer the compensation laws has been met by the states in various ways. In New Jersey, the local Court of Common Pleas hears and determines disputes aris- ing under the act; from its decision there is an ap- peal to the state Supreme Court, but only on ques- tions of law. 83 This system has been severely criti- cized, and the adaptability of the law courts to such purposes questioned. In most states, such matters as are susceptible of agreement or arbitration will be composed, if possible, in that manner; but if co- operative means fail, a hearing before the state In- dustrial Commission or similar body is resorted to. The right to appeal to the highest court of the state is commonly granted. As litigation, with its inevitable delays and com- plications, was one of the chief and recognized de- fects of the common law system, one would natu- ezaMcCanna, The New Era, pp. 86-87. ss N. J. Laws 1911, c. 95, pars. 18, 20, as amended by Laws 1916, c. 54. 122 WORKMEN'S COMPENSATION AND INSURANCE rally expect to find legislators anxious to take com- pensation cases out of the courts ; and the failure to do so in several states is a disappointing feature. However, as has been pointed out by a recent writer, 84 laws which leave the settlement of compen- sation suits to the courts generally endeavor to elim- inate delay by providing that cases be decided summarily and with the least possible indulgence in legal technicalities. For example, in Minnesota disputed claims may be submitted by either party to a judge of the District Court, who hears the case and settles it in a summary manner, appeal from such judgment to the Supreme Court being permitted on questions of law only. 85 In New Jer- sey, if no agreement is filed within 21 days, the facts with regard to the claim are certified by the Workmen's Compensation Aid Bureau to the Judge of the Court of Common Pleas, who decides both law and facts; his decision is subject to re- view on questions of law by the Supreme Court. 88 New Mexico, however, utilizes the judicial machin- ery just as in ordinary civil cases, trial being had, on filing the claim, before the District Court, in case s* Rhodes, Workmen's Compensation, p. 181. SB Minn. Gen. Slat. 1913, sees. 8216, 8219, 8225, as amended by Laws 1915, c. 209. 8See footnote 83, tupra. COMPENSATION LEGISLATION 123 of non-payment of any claim of which notice has been given to the employer, either party being en- titled to demand a jury trial, and the final order being reviewable by the Supreme Court upon ap- peal or writ of error in the same manner as other cases. 87 The court system of administration has one dis- advantage which is fatal to its efficiency. It thrusts upon judges who are selected, and rightly selected, mainly because of their expert knowledge of the law, the practical working out of a system which involves few legal principles but requires for its proper handling a close familiarity with the indus- trial field and problems of labor. A magistrate who copes with the interpretation of contracts, the title to realty, the law of assault, every day, has neither time nor inclination to master the question of how far a glass-blower is disabled for profitable employment by the loss of his hearing, or what de- gree of dependency will justify the minimum award to dependents, especially when the compensation cases on the court docket are relatively few. An Industrial Accident Commissioner, or a special Board or other tribunal, endowed with special knowledge and devoting its entire time to compen- ST New Mex. Laws 1917, c. 83, sees. 13, 15, 24. 124 WORKMEN'S COMPENSATION AND INSURANCE sation work, would be immeasurably more efficient. This conclusion has evidently been pretty generally attained, as most states have provided for adminis- tration by such an individual or body. 88 Some of the typical statutory provisions may profitably be reviewed here. In Massachusetts, employer and employed may settle the claim by agreement, subject to the approval of the Indus- trial Accident Board ; in case of dispute either party may notify the Board, which must assign the case for hearing by a member thereof; and an appeal from the Board's order or decision may be taken within ten days after notice of filing. 89 In Iowa, the Industrial Commissioner may pass on agree- ments; or an arbitration committee appointed by the parties and the Commissioner may decide the 88 E. g., Mass. Acts 1911, c. 751, Pt. Ill, as amended by Acts 1912, c. 571, Acts 1913, c. 48, 448, 746, Acts 1914, c. 708, Acts 1915, c. 132, 275, Acts 1916, c. 72, Acts 1917, c. 297 (Industrial Accident Board); Cal. Laws 1917, c. 586, sec. 3 (1), also Laws 1913, c. 176, sees. 3-11 (Industrial Accident Commission); R. I. Laws 1912, c. 831, Art. VI, sec. 6, as added by Laws 1915, c. 1268 (commissioner of industrial statistics); Kan. Gen. Stat. 1915, sees. 5933-5937 (su- perintendent of insurance) ; Porto Rico Acts 1916, No. 19, sec. 10, as amended by 1917 act approved April 12, 1917 (Workmen's Relief Commission). For arguments in favor of administration by a com- mission or industrial accident board, see Blanchard, Liability and Compensation Insurance, pp. 136-137; McCanna, The New Era, p. 102. so See sees. 4-11 of Pt. Ill of Mass, act, as cited in footnote 88,, supra; also Mass. Acts 1915, c. 132. COMPENSATION LEGISLATION 125 claim, subject to review by the Commissioner, from whose determination appeals on certain specified grounds only are allowed. 90 In Utah, the Indus- trial Commission has full power to hear and deter- mine all questions pertaining to payment of com- pensation; if it denies a claim on a ground going to the basis of the claimant's right, appeal may be taken in 30 days to the District Court with privilege of jury trial; and a further appeal to the Supreme Court is provided for. 91 Idaho encourages settle- ment by agreement, subject to approval by the In- dustrial Accident Board; in case of dispute, either party may apply for appointment of an arbitra- tion committee to be composed of three members representing both parties and the Board, whose de- cision is subject to review by the full Board upon application for such within 30 days, or in case no award is made within 30 days; and from thence appeal is to the District Court on questions of law only. 92 It is probably not desirable that every compen- sation case should come up for a full hearing, even before a board or commission specially trained and o Iowa Code (1913 Supplement), sees. 2477-m 25-33, as amended by Laws 1917, c. 270. si Utah Laws 1917, c. 100, sec. 87. 92 Idaho Laws 1917, c. 81, sees. 49-^55, 57, 60. 126 WORKMENTS COMPENSATION AND INSURANCE dedicated to that sort of work. Such a proceeding partakes too strongly of the nature of a court trial, with its cumbrous machinery and inevitable delay. Where an agreement can be reached between the claimant and the employer, affidavits reciting that fact, and the circumstances of the accident, extent of the injury, etc., should be sent up to the admin- istrative board for approval; if satisfactory and strictly in accordance with law, the settlement out of court should be approved, and the incident ended. If ground for reversal appears on the face of the case, a hearing should be ordered and the question tried in a summary manner by the board, just as if a dispute were involved; for it is essential to the proper operation of workmen's compensation laws that employees be not permitted to sign away their legal rights thereunder, no matter how willing they may be to do so. The ideal law would also provide for an appeal to the highest or intermediate court of the state; but the policy adopted in many jurisdictions of con- sidering the findings of fact of the administrative board final, and confining appeals to questions of law, seems eminently sound. (9) Extraterritorial Effect. One of the minor problems, but a very practical one, with which those COMPENSATION LEGISLATION 12T charged with the administration of compensation laws have to deal, is that of extraterritorial effect. A typical case is this: the X Company, in New Jersey, employs B , a salesman, to can- vass that state and certain towns in Pennsylvania. The salesman sustains an injury arising out of and in the course of his employment in Pennsylvania. Under what law, if any, is he entitled to compensa- tion? The answer to this problem is that B would be compensated according to the law of New Jer- sey; for the contract of hiring was made there, and New Jersey is one of the jurisdictions applying the lex loci contractus, or law of the place where the contract was made, in such cases. 93 Pennsylvania has no jurisdiction of the employer or of the con- tract of employment in the supposititious case, but the injury was incurred within its boundaries; so it is conceivable that if the claim was originally made under the Pennsylvania act, compensation might be granted in that state, although a prior recovery of compensation in New Jersey would operate as a bar. 94 A great many compensation laws have no provi- 3 Rounsaville v. Central R. Co. (1915), 87 N. J. Law 371. Harvard Law Review, pp. 620-628 (February, 1918). 138 WORKMEN'S COMPENSATION AND INSURANCE sion at all for extraterritorial effect. 95 In the ab- sence of such the courts sometimes give full force and operation to the acts (in proper cases) outside the state of origin, as has been done by the highest tribunal in New York. 98 Where the legislature has undertaken to regulate the matter, it is generally provided that compensation may be had when the employee was hired in the state, even if the injury occurred beyond its boundaries. 97 Extraterritorial effect does not present a prob- lem of very great moment. It is important, of course, that some sure method of procuring com- pensation be provided in cases of possible conflict of jurisdiction; but as a practical matter judicial con- struction, in the absence of enabling legislation, has generally secured the plaintiff's rights. Double recoveries are rendered impossible by the holding of the courts that when an injured employee accepts compensation under the law of the state where the contract was made, he automatically waives any 5 Rhodes, Workmen's Compensation, page 151. Valentine v. Smith, 168 App. Div. 403, affirmed in 216 N. Y. 763. 7 E.g., Idaho Laws 1917, c. 81, sec. 62; Utah Laws 1917, c. 100, sec. 65; Texas Laws 1913, c. 179, Pt. I, sec. 19, as added by Laws 1917, c. 103; Nev. Laws 1913, c. Ill, sec. 41, as amended by Laws 1915, c. 190. But the Pennsylvania act does not apply to any acci- dent occurring outside of the Commonwealth, irrespective of the place where the contract of hiring was made. Pa. Laws 1915, Act No. 338, sec. 1. COMPENSATION LEGISLATION 129 other rights against his employer. 98 For the rare case where suit is brought to enforce the compensa- tion law of another state with regard to injuries received in the latter jurisdiction, provision is sel- dom made, though Idaho permits recovery in such cases when the claimant's rights can reasonably be determined and dealt with by the local Board and Courts." In almost all such cases, however, the more normal procedure of seeking justice in the state of hiring is feasible and should be encouraged. (10) Accident Prevention. It is true that the theory of workmen's compensation rests on the as- sumption that the expense of industrial accidents is part of the cost of the product; but it is a mistake to presume that passive acceptance of conditions is therefore included in the compensation program. Indeed, the opposite is the fact. So far from tak- ing the great number of accidents in modern in- dustry for granted, well-considered compensation laws make either direct provision for accident pre- vention through the rule-making power given to ad- Rhodes, Workmen's Compensation, page 152. But where one state is under the old employers' liability system, and the other has a compensation act, and where compulsory acts are involved, the law as to double recoveries is by no means as simple and equitable as Mr. Rhodes intimates. 31 Harvard Law Review 619-636 (February, 1918). * Idaho Laws 1917, c. 81, sec, 62. 130 WORKMEN'S COMPENSATION AND INSURANCE ministrative boards, or indirectly encourage the use of safety appliances. The very fact of compensa- tion itself is an encouragement to accident preven- tion ; for when employers are forced to assume the financial burden of the injuries springing from the accidents of industry, their enthusiasm for the elimination of such injuries is naturally increased. A few instances of explicit statutory provisions regarding accident prevention, taken at random from the mass of compensation laws, will serve to illustrate the methods employed to stimulate inter- est in the humanitarian side of this labor problem. In Delaware the Industrial Accident Board is charged with the duty of inquiring into causes and results of industrial accidents, and studying the most advanced methods of safeguarding against them. 100 In California, the employer must do everything reasonably necessary to protect life and the safety of employees; and the Industrial Acci- dent Commission is empowered to prescribe rules, establish standards, require use of safeguards, etc., for accident prevention, and impose penalties to enforce the same. 101 Massachusetts compels the Directors of the Employees' Insurance Association 100 Del. Laws 1917, c. 233, sec. 116. 101 CaL Laws 1917, c. 586, sees. 34r-35, also Laws 1913, c. 177, sec. 18. COMPENSATION LEGISLATION 131 to make and enforce reasonable regulations for the prevention of accidents on the premises of subscrib- ers ; and gives to the State Board of Labor and the Industrial Accident Board jointly, the right to adopt and enforce regulations for prevention both of accidents and industrial diseases. 102 Statistics available from several compensation states show that about 25% of industrial accidents are due to mechanical causes; and it has also been established that the severity of accidents mechan- ical in their origin is much greater than the severity of those due to the thoughtlessness and negligence of the worker. 103 The fresh impetus given to acci- dent prevention by the introduction of workmen's compensation resulted in a marked reduction of non-mechanical accidents, due to safety organiza- tion and educational methods. A great deal, how- ever, remains to be done in the shape of "mechan- ical safeguarding" ; and proper attention to the de- sign and location of buildings, the arrangement of transportation facilities, the means of access to safety points, proper lighting, and the guarding and replacement of dangerous machines, will con- 102 Mass. Acts 1911, c. 751, Pt. IV, sec. 18, also Laws 1913, c. 813. 103 Monthly Review of U. S. Bureau of Labor Statistics, vol. V, p. 112 (October, 1917). 132 WORKMEN'S COMPENSATION AND INSURANCE tribute greatly towards the elimination of purely mechanical hazards. 104 One of the most obvious methods of inducing an employer to bestir himself in accident preven- tion raising his insurance rates when he shows a reluctance to employ safety devices has been availed of surprisingly little in American compen- sation systems. Private insurance companies have achieved wonderful results by this simple means; yet in statute after statute legislators have clung to a rigid classification of rates according to industries, and have assessed the employer who lavishes time and money on safety appliances on the same basis as the one who grudges the irreduci- ble minimum of effort along that line. 105 It is true that the problem of finding an agency to which could be left with safety the delicate task of altering the standard rate of insurance in accord- ance with the insured's efforts along the line of acci- dent prevention, is a perplexing one. Private in- 104 Ibid., p. 113 . IOB Washington appeals to the pocket of the employer in a very- practical way by providing that if he does not obey a statute or order of the commission as to safety devices or regulations, he is subject to- a penalty of 50% of the compensation awarded, this amount to be paid into the accident fund. If the injured employee is responsible for the removal of a safeguard his compensation is reduced by 10%. Blanchard, Liability and Compensation Insurance, p. 139. COMPENSATION LEGISLATION 1SS surance adjusters and actuaries, however, exercise these functions to-day with distinct success; and it seems not unreasonable to suppose that a State Insurance Commissioner or Industrial Accident Board could be intrusted with this difficult work without much risk of unfair discrimination, and with a salutary effect on dangerous industrial con- ditions. CHAPTER V INSURANCE FEATURES THE success of any system of workmen's compensa- tion must rest, in the last analysis, on insurance. 1 The individual employer cannot afford to take the risk of being suddenly called on to pay large sums in the form of awards to injured workmen; such a demand, caused by an accident in which many are injured, and coming at a time when ready money is scarce, might conceivably bankrupt even a large concern. A somewhat similar situation existed, to be sure, in the days of common law employers' liability; but several factors tended then to make the need of insurance less pressing. For one thing, the question of liability was tried in a court of law, and the employer, better able to pay for expert legal advice than his opponent, and armed with his special defenses assumption of risk, contribute^ negligence, and fellow-servant rule was often able i See note by the present author on "State Insurance under Work- men's Compensation Acts" in 17 Columbia Law Review, pp. 75-78 (January, 1917) ; also Blanchard, Liability and Compensation Insur- nce, p. 207; and 9 Maine Law Review, p. 199 (May, 1916). 134 INSURANCE FEATURES 135 to evade responsibility entirely. Moreover, dam- ages, when awarded, being dependent on the whims of a jury, were such an uncertain quantity as to render insurance against them highly speculative, with the result that premiums were often prohibi- tive. Workmen's compensation laws have greatly re- duced the legal uncertainties inherent in the old sys- tem, and have left only the normal risk that of the occurrence of the injury itself for insurers to contend with. The shrewd employer of to-day, forced, as he is, to pay compensation practically without regard to the question of negligence, faces a problem somewhat like this: "My factory em- ploys so many hands; even with the utmost care, explosions and other accidents may occur, and may injure a great number of my men. Under such circumstances, the most conclusive proof that I have been blameless will avail me not at all, and I will be forced to pay compensation according to a defi- nite schedule to all my injured employees. Shall I take my chances, carry my own risk, or insure else- where?" It is safe to say that nine out of ten such employers would be in the market for insurance almost before they had finished formulating the above proposition. 136 WORKMEN'S COMPENSATION AND INSURANCE Heretofore we have assumed that it is optional with employers whether they shall insure or merely stand ready to pay compensation when the acci- dent occurs. But in a large and increasing number of jurisdictions, this option no longer remains. The requirements vary: thus, in New York, Utah, Maryland, Texas, and a number of other states, the employer is at liberty to choose between insur- ance in stock companies, mutual associations, or a state-managed fund or central association; and furthermore, in the three first-mentioned states sufficient proof of financial responsibility will be accepted in lieu of any of these. 2 In other juris- dictions, there is monopolistic or semi-monopolistic state insurance ; while still others maintain no state fund at all, but demand insurance by the employer nevertheless. 8 The danger of a workmen's compensation act with no provision whatsoever for insurance or secur- ity has already been indicated. Sudden large de- mands on the employer may ruin him; and as the workman's claim under such an act is a personal 2N. Y. ConsoL Laws, c. 67, sec. 50; Utah Laws 1917, c. 100, sec. 53; Md. Laws 1914, c. 800, sees. 14-15; Tex. Laws 1913, c. 179, Part III, Part IV, sec. 2, as amended by Tex. Laws 1917, c. 103. s See texts of laws, also Digests published by Workmen's Com- pensation Publicity Bureau. INSURANCE FEATURES 137 one against the employer, it follows that the lat- ter's financial collapse spells disaster for the injured man as well. Moreover, a state of affairs which of- fers such a temptation to speculation by employers on the probability of accidents is not conducive to the financial stability of the industrial world. The following statement by a leading English writer explains this and other weaknesses of the English or "straight compensation" system: "British law now recognizes, for practically the whole of the employed population, that the em- ployer is liable to compensate the employed for loss of earning power through accident incurred by rea- son of his employment and to compensate the de- pendents of a workman for the loss of his support if he dies as the result of an accident during his employment. Our law establishes employers' liability according to a certain schedule, and leaves it at that. For the rest, the employer has to face his tremendous task as best he can, and the work- man has to get his compensation out of the em- ployer if he can. The State may thus wash its hands of results, but certain results are inevitable. The employers find it necessary to insure them- selves against a great liability imposed upon them by the wisdom of the Legislature. They insure 138 WORKMEN'S COMPENSATION AND INSURANCE their workmen with various insurance companies, and the consequence is that in effect the injured workman, or the dependents of a deceased work- man, have to deal not with the employer liable under the law, but an insurance company which has un- derwritten the employer's liability. The insurance company, not being a philanthropic institution, is out to make profits upon the State-imposed liabil- ity. It makes those profits on the one hand by charging the employer as much as possible, and on the other hand by paying the workman as little as possible, selling its insurance in the dearest market and buying its workmen's claims in the cheapest, thus fulfilling the law, if not the prophets. There are only 2,000,000 Trade Unionists in the United Kingdom, and but a small proportion of our work- people are in a position to get advice as to how to proceed under the law. The average workman would as soon think of employing a solicitor as of flying to the moon, and the contest between the uninformed workman and the insurance company, expert in resisting claims, is absurdly unequal. Every year tens of thousands of claims are whittled down or inadequately settled for small, but tempt- ing, lump sums. Moreover, our law puts the onus upon the workman to show that he cannot earn INSURANCE FEATURES 139 wages, and the man or woman who loses an eye is hard put to it to get a penn'orth of compensa- tion. . . . "It appears to me that the German method of dealing with employers' liability is infinitely supe- rior to ours. Germany compels every employer to insure his workpeople at his own cost in a mutual insurance fund, the employer thus merging his risk with the other employers in his trade. What is the result; or rather, what are the results? First, the employer obtains his insurance at cost price, there being no insurance middleman to make a profit out of dire necessity. Second, the employee is as- sured of compensation, for the insurance institute is under the control of the Imperial Insurance Of- fice. Further, a specific injury, such as the loss of a hand or of an eye, is assured on a specific com- pensation. Third, and last, but not least, it be- comes the direct and the obvious interest of the em- ployers in each trade to keep down the mutual premiums, and they can only do that by making their mills and factories safer working places. If a trade hits on a new safety appliance, it means a lower insurance premium for the trade." 4 In the present stage of thought, the main thesis * Money, Insurance vs. Poverty, pp. 52-54. 140 WORKMEN'S COMPENSATION AND INSURANCE of the foregoing extract that "pure" workmen's compensation, without any provision for insurance, is fatally defective is regarded as axiomatic. In the few of our states which still cling to the old plan, there are increasing protests among the enlightened. But there is a real clash over the methods of insur- ing, the agitators being mostly divided between two camps the advocates of compulsory state insur- ance or compulsory insurance in mutual associa- tions under close governmental supervision on the one hand, and the representatives of the private in- surance companies who want competitive bidding for compensation business on the other. To the private insurance companies the matter is naturally one of immense importance, and an enormous amount of literature has been published and distributed in the hope of checking the tend- ency, if tendency there is, towards compulsory state insurance. The Workmen's Compensation Public- ity Bureau in New York City, supported by the insurance companies, has been the most active and efficient agency for the dissemination of their ideas on the subject; and the Workmen's Compensation Service Bureau, through its actuarial activities in a wide field, has furnished the stock companies with the weapons to fight state insurance, both in the INSURANCE FEATURES 141 forum and the arena of active competition. The monopolistic state insurance acts of Washington, Oregon, Nevada and Wyoming; the semi-monop- olistic laws in force in Ohio and West Virginia; and even the state funds maintained in competition with private insurance, which we find in New York, Idaho, Maryland, Michigan, Montana, Utah, and some other states, have been the target of fierce at- tacks. Every argument impugning the apparent state socialism of these laws, and many more based on the peculiar nature of the business, have been utilized by the stock companies and their ingenious advocates. 4 * On the other hand, state commissions and other presumably unbiased investigators have shown a strong tendency to favor state insurance above all other forms of security for awards. On the ques- tion of whether state funds should be monopolistic there is by no means the same agreement. In New Jersey, for instance, the Reports of the Employers' Liability Commission for 1914 and 1915 urge the introduction of compulsory insurance, but add that 4aThat the private insurance interests have strenuously and con- sistently opposed attempts to inaugurate state insurance, see Wilson, Workmen's Compensation and Employers' Liability Acts, p. 66; Clark, Constitutionality and Construction of Workmen's Compensa- tion Laws, p. 286. 142 WORKMEN'S COMPENSATION AND INSURANCE "the establishing of a State Fund would seem to be essential to ensure equitable rates on the part of the privately owned companies and associations, and to prevent the establishment of a monopoly, by agreement or otherwise, by these companies." The impression, indeed, seems to be widespread that competition, or potential competition, by the state in the field of workmen's compensation insurance, is chiefly useful in keeping other carriers on their good behavior. Those who hold this view, however, are to be reckoned among the supporters of state funds, and as answering the venomous strictures of out- raged private insurance with a point-blank refusal to tolerate the unrestricted domination of the great public field of compensation insurance by organiza- tions having a pecuniary interest in the mainte- nance of high premium rates and the disallowance of claims. A very real problem is presented by the insuffi- cient provision too often made for future liabilities of state funds, where they exist. One of the grav- est dangers lurking in the way of all experimenters in insurance is the tendency to collect small premi- ums to pay for current losses only, and not accum- ulate sufficient reserves to meet deferred claims. Politicians in state legislatures, afraid of offending INSURANCE FEATURES 143 the employing classes by exacting large payments, are especially likely to be victims of this fallacy; and there has been a regretable tendency to incor- porate these errors into the State insurance funds, many of which, from an actuarial standpoint, are said to have been insolvent from their inception. 5 To those who point the finger of scorn at these trans- gressions, the advocates of state-managed insurance can only say, that such faults are to be condoned in a system scarce out of its swaddling clothes ; that at least no serious catastrophe has yet occurred, and improvements are already perceptible; and that in time, and with the cooperation of those experienced actuaries who are as yet kicking against the pricks in a vain endeavor to avert the inevitable substi- tution of state for private insurance of compensa- tion awards, the last of the disquieting features of amateurish and speculative dealing with state funds will disappear, and the system become established on a sound and permanent business basis. One of the most frequently voiced objections to state insurance is that it puts into the hands of political officials what is essentially a matter of pure business administration. As one writer has e Bradbury, Workmen's Compensation and State Insurance Law (2d Ed.), pp. 63-64. 144 WORKMEN'S COMPENSATION AND INSURANCE phrased it: "Should insurance as a system, now closely supervised by the State, be taken away from present agencies of great skill the insurance com- panies of to-day and be remitted to our Ameri- can system of politics, partisanship, and pull?" 6 Similar expressions, showing a lamentably low opinion of the integrity and efficiency of American officialdom, occur in many publications on the sub- ject. 7 To establish their contention, these writers have cited a number of circumstances in which man- agement by officials has been notoriously incompe- tent. For example, it is said that state insurance never results in a proper differentiation of rates, as illustrated by the case of Norway, partly because officials are afraid that they would arouse suspicions of favoritism if they should attempt to discriminate between particular establishments, and partly be- cause the endeavor to attain a cheap administration compels them to dispense with the inspection force e See article by William H. Hotchkiss on "The Case against State Insurance" in The Outlook, vol. 103, pp. 487-490 (March 1, 1913). i For similar expressions of distrust, see address by F. Robertson Jones, delivered at the Temple University, Philadelphia, Pa., Dec. 15, 1915, on "Case against State-managed Insurance under Workmen's Compensation Laws," at p. 12; pamphlet on Advantages and Disad- vantages of Insurance in the New York State Insurance Fund (Feb. 1916), at p. 15; pamphlet by R. D. Steele, Shall the State Engage in the Insurance Business? (Dec. 1911). INSURANCE FEATURES 145 necessary to differentiate rates successfully. 8 Again, the claim is made that the almost autocratic power given to the officers in charge of a state in- surance fund results in a tendency on their part to distribute charitable relief or political favors at employers' expense. 9 On the other hand, the records of the casualty companies themselves have been far from clean. A former superintendent of insurance of New York State admits the "questionable practices which were formerly resorted to" by some of the corporations underwriting employers' liability insurance. The common law, however, with its encouragement of litigation by leaving to courts and juries the amount recoverable by an injured employee, is said by this writer to be chiefly responsible for the unpopularity of these companies an unpopularity so great that their mere inclusion as one of the four groups of carriers between which an employer might elect under the New York compensation act, caused a storm of protest. "Definite and certain compensa- tion for each kind of injury," we are told, will put an end to "the controversies which have been in- * See "A Resum of the Arguments against State Insurance," Re- vised and Reprinted Jan. 1914, by Workmen's Compensation Pub- licity Bureau, pp. 13-13. Ibid., p. 14. 146 WORKMEN'S COMPENSATION AND INSURANCE evitable" under the old system of employers' liabil- ity; and the casualty companies should be left at least "the bare right to struggle for existence a little while longer in competition with newer and, as some people claim, better forms of insurance." 10 A pitiful plea! The statements just quoted are those of an apolo- gist for the private companies, but they represent the views of that large group of insurance men who, besides being sufficiently confident of the efficiency of their system not to be afraid of fair competition by the State, are willing to concede the bracing effect on all carriers of a battle with state and mutual insurance. But the disparagement of state insurance and all inteference with what is called "the private concern of the casualty com- panies" is by no means silenced, and finds voice in a review of the workmen's compensation situation in 1916 by a prominent insurance man: "As a whole, the State funds have accomplished nothing to demonstrate their usefulness during the year. In some States these State funds have made decidedly bad records, and this is particularly true of States in which a State fund monopoly has been 10 Memorandum submitted to the Governor in the matter of the Senate Insurance Committee's Workmen's Compensation bill, May, 1913, by the Superintendent of Insurance (Hon. William T. Emmet). INSURANCE FEATURES 147 attempted. . . . The companies are undoubtedly harassed to an unreasonable extent in some direc- tions by what may be called 'too much govern- ment.' " " The detailed criticism of the State funds the reasons why insurance in them is less desirable for all parties concerned than insurance in the casualty companies, according to the advocates of the latter can only be touched upon here. One ingenious critic has suggested that a policy in the state fund in New York gives incomplete protection to the em- ployer, because it only insures against his liability under the compensation law, leaving all his other possible liabilities (which the writer proceeds to enumerate) uncovered; a contention which seems easily answered by stating that that is all such a pol- icy was intended to do, and that the casualty com- panies should be glad to have the residuary risk left them to insure ! 12 The old cry that "public service 11 See article in Financial section, New York Times, Dec. 31, 1916, by Walter G. Cowles, vice-president Travellers' Insurance Company, at p. 17. 12 The quotation is from P. Tecumseh Sherman's "Advantages and Disadvantages of Insurance in the New York State Insurance Fund" (Feb. 1916), pp. 5 et seq. My criticism of Mr. Sherman's argu- ments may be unfair if his real thesis is that for an equivalent in- vestment the stock companies give more complete protection than the state fund; but if the gist of his contention is that the state is at fault in not undertaking to insure against more risks, it is irrecon- 148 WORKMEN'S COMPENSATION AND INSURANCE is inferior to private service both in quality and convenience" is often reiterated, 13 and may be dis- missed with the remark that the United States Par- cels Post is a striking illustration to the contrary. An argument worthy of more consideration is that under state insurance a "flat" rate of premium, not adjusted to the risk of the particular establishment, is likely to be adopted; with the result that "the in- dividual employer is freed from any economic in- ducement to prevent accident, since his competi- tors must share with him pro rata any loss thereby incurred." 14 It is true that there is a tendency in state insurance acts, and in the administration of them, to follow the line of least resistance and treat all members of one trade class alike, regardless of the degree of zeal for accident prevention displayed. In extenuation it may be said that since the state by statute compels adherence to certain safety regu- lations, complete disregard of the employees' well- being even by the most conscienceless employer is cilable both with his bias toward private insurance and his specific arguments with regard to the dangers of permitting the state ta undertake to insure at all. i8J6td, p. 16. "See pamphlet by Edwin S. Lott, Treas., Kan. State Fed. of Labor, Aug. 26, 1916. n Letter from H. T. Hilfers, Sec'y., Essex Trades Council (N. J.), Aug. 25, 1916. is Letter from Rafael Alonzo, Gen. Sec'y., Federaci<5n Libre de los Trabajadores de Puerto Rico, Sept. 23, 1916. The English of the writer is curious: "A man disabled or despoiled of his means to earn his life should receive highest percentage of the wages that he was able to earn in his normal state to work. A 75 % is a fair per- centage." i6a The author, in the course of an interview with Frank Morrison, Secretary of the American Federation of Labor, on May 3, 1918, asked Mr. Morrison what wage percentage basis for compensation awards the Federation stood for. "We stand for all we can get," he replied; but, on being pressed, he admitted that 100% would probably be inadvisable, as encouraging malingering. Mr. Morri- son's attitude, if really portrayed by his hasty remark, is extreme and exceptional. i Letter from A. W. Bowman, Fargo Trades and Labor Assembly (No. Dak.), Sept. 21, 1916. Mr. Bowman's answer to my question as to rates: "I think 60% would be fair," may be coupled with his answer to another question as to how active labor organizations in North Dakota had been in compensation matters: "Two years ago THE ATTITUDE OF LABOR 253 To conclude, labor appears content that compen- sation awards shall be computed on a basis of two- thirds of normal wages ; and in the present writer's opinion, that percentage, which has already been adopted in several states, is an eminently fair and practical one. Less would cause suffering; more would encourage malingering. The "Waiting Period." It was feared by the framers of the early compensation acts in this coun- try that an immediate payment of compensation from the date of injury would result in a multitude of trivial claims ; and it was also felt that a certain period of time should be allowed to elapse between the accident and any disbursement, in order to de- termine the extent of the injury and the facts on which the employee's claim was predicated. Con- sequently the "waiting period" was devised, dur- ing which no compensation is payable, and varying under the American acts anywhere from three days to three weeks in length, though a two weeks' period has been adopted in most jurisdictions. Needless to say, this feature has been a target for attack by the labor unions. They have pointed out that there is no logical reason for an arbitrary we got the compensation through the Senate, but it was killed in the House," to indicate that his estimate was based on conjecture rather than experience. 254 WORKMEN'S COMPENSATION AND INSURANCE deprivation of compensation during a part of the period of disability; and they have enlarged also upon the hardship caused to very poor families whose income is suddenly cut off at a time when it is particularly needed. There is much justice in these criticisms. It is worthy of note, however, that labor unions are not unanimous in their demands for the aboli- tion of the waiting period, though there is general agreement that it should be as short as is compatible with its purposes. Where medical attention is to be given at the employer's expense for a limited period, it seems to be the view of labor leaders that a change should be effected, making such atten- tion co-extensive with the suffering. I subjoin a representative collection of opinions on the waiting period, indicating in each case the state in which the particular labor leader is active: Oklahoma: "The waiting period should at least be shortened, if not abolished, and the medical period lengthened." 17 Montana: "The waiting period is not satisfac- tory but I would not say without further expres- sions of opinions from those concerned in this move- Letter from Ollie S. Wilson, Sec'y.-Treas., Okla. State Fed. of Labor, October 18, 1916. THE ATTITUDE OF LABOR 255 ment whether it should be abolished entirely or not." 18 New York: "Chief defects of the law are long waiting periods and permitting old-line companies to participate in business." 19 New Jersey: "I am in favor that (sic) the wait- ing period should be abolished, and the worker should get compensation providing that he is sick a week or more." 20 Kansas: "A shorter waiting period." 21 California: "The waiting period should be re- duced from two weeks to one week." 22 Iowa: "I beg to advise you that the present ob- jections to the Iowa law is (sic) the time limit in which the injured employee is attended by the physi- cian. Also the waiting period of two weeks and the amount of the compensation." 23 Pennsylvania: "Motion that the time to begin paying compensation be one day instead of fourteen is Letter from O. M. Partelow, Sec'y., Silver Bow Trades and Labor Council (Montana), Oct. 17, 1916. 19 Letter from E. A. Bates, Sec'y.-Treas., N. Y. State Fed. of Labor, Aug. 31, 1916. 20 See footnote 14. 21 See footnote 13. 22 Letter from Paul Scharrenberg, Sec'y.-Treas., Cal. State Fed. of Labor, Aug. 25, 1916. 23 Letter from J. A. Canfield, Sec'y.-Treas., Iowa State Fed. of Labor, Aug. 21, 1916. 256 WORKMEN'S COMPENSATION AND INSURANCE days after accident. Amendment that the pay- ments begin from the time of the accident. Amend- ment carried. Motion as amended carried." 24 Kentucky: "There should be no waiting period, payment should begin at once." 25 Maryland: "Personally my idea would be to eliminate the waiting period." 26 Massachusetts: "Our waiting period was re- duced last year from fourteen days to ten days, and seems to be satisfactory except that we desire that when disability continues twenty-eight days, com- pensation should begin from date of accident." 27 Arizona: "The injured man should be paid for the time that he loses from the time that he is off duty on account of his injury, instead of losing the first two weeks of his time." 28 Minnesota: "Our recent convention also went on record for reducing the waiting period to seven days." 29 Employments Covered by Acts. As a question 24 Seefootnote 12 aSee footnote 11. 2See footnote 10. 2TSee footnote 9. 28 Letter from Thos. A. French, Sec'y.-Treas., Arizona State Fed. of Labor, Aug. 15, 1916. 2 Letter from George W. Lawson 5 Sec'y., Minn. State Fed. of Labor, Aug. 25, 1916. THE ATTITUDE OF LABOR 257 of pure theory, the logical necessity of the inclusion of all employments under an equitable workmen's compensation law is not even debatable. The early acts were confined in their operation to "hazardous employments"; but all employments involve some hazard, and it is only fair that there should be pro- tection in proportion to the danger. At one time it was suspected that the inclusion of all employ- ments within the purview of workmen's compensa- tion acts would be opposed by organized labor on selfish grounds; but that that suspicion was un- founded, and that the labor unions are in substantial accord in their demand for laws of the broadest application, is clear from the following quotations: Arkansas: "It seems to me that casual em- ployees should not be excluded from the be/iefits of a compensation act." 30 Maryland: "The law should be extended to cover all classes of employment and not merely the hazardous class to the wife and children of the de- pendent." 31 California : "I do believe that the compensation should be made compulsory for all employments." 32 so Letter from L. H. Moore, Sec'y.-Treas., Ark. State Fed, of Labor, Sept. 14, 1916. si See footnote 10. 32 See footnote 22. 258 WORKMEN'S COMPENSATION AND INSURANCE North Dakota: "I would favor all employ- ments under this law." 33 Montana : "As to the chief defects of the exist- ing law, they are too numerous to mention. . . . It does not cover aliens. It is not compulsory upon all." 34 One discordant note, however, comes from a labor leader in Oklahoma : "Would suggest . . . changes . . . for instance, excluding the employer with only two employees, the adding and making clear further industries. . . ." 35 It is submitted that excepting small employers from the operation of the acts in accordance with this suggestion would serve no useful purpose, and is contrary to the spirit of workmen's compensation as well as the current of intelligent labor opinion. The question of what employments should be cov- ered by the compensation acts has not been dis- cussed to any considerable extent in recent conven- tions of the American Federation of Labor. The liberal temper of that organization, however, so far as this subject is concerned, is indicated by the sup- port given to the movement (now happily success- ful) to assure the extension of compensation pro- as See footnote 16. at See footnote 17. s* See footnote 18. THE ATTITUDE OF LABOR 259 visions to workers engaged in loading vessels and services of a similar nature. 358 Occupational Diseases. Although certain occu- pational diseases have been included among the * 'accidents" for which compensation is due in Eng- land for many years, and their number is constantly being added to, 36 the compensation laws of the United States have been slow to recognize the in- disputable fact that the acquiring of certain diseases is as truly due to occupational hazard as the blow- ing off of a workman's arm by an explosion in a dynamite factory. Lead poisoning, for example, in the paint industry, is a danger to which the laborer is constantly exposed, and for which the industry should be made to pay. 37 Recently the American Federation of Labor has turned its attention to the question of occupational disease. To the list of the recommendations of the Committee on Education on Workmen's Compen- sation, the following has been added, and strongly asa Amer. Fed. of Labor, Proceedings, 37th Annual Convention, 1917, pp. 116, 311, 312. se The English Act (6 Edw. VII, c. 58), s. 8, subd. 6, also Schedule 3. The schedule enumerates compensable occupational diseases; the other provision permits additions to this list by the Secretary of State. *T Honnold, Workmen's Compensation, p. 542. See Adams v. Acme Works, 182 Mich. 157. ' 260 WORKMEN'S COMPENSATION AND INSURANCE urged upon the labor unions engaged in securing legislative reforms: "Compensation to be paid for death or illness from occupational diseases." 38 At the Pennsylvania Federation of Labor Conference, March 22, 1916, a "motion to include occupational disease in the Compensation Act amendment" was carried. 39 With the qualifications, therefore, already shown to be attached to labor's support of social insur- ance, the attitude of labor on the inclusion of occu- pational diseases among compensable injuries can be said to be distinctly favorable. Methods of Administration. A law which is not enforced is worse than no law at all, for it holds the whole administration of justice up to ridicule, and invites attacks upon the social system at other points. It is all-important, therefore, that the ad- ministration of so far-reaching a measure as a work- men's compensation act should be placed in the hands of officials trained for the work, conscientious and reliable in the highest degree, and properly re- sponsible for their actions. Is it better to leave the administration of the law to an insurance com- mission appointed by the Governor? to an elected ss Amer. Fed. of Labor, Proceedings, 25th Annual Convention, 1915, p. 96. 89 Report of Proceedings, p. 7. THE ATTITUDE OF LABOR 261 board? to a legislative commission? or to the courts? The question has been variously answered by the state legislatures. With the merits of the con- troversy we are not here concerned ; but the follow- ing expressions of opinion by labor leaders may prove of interest: Florida: "I think if a compensation law was left up to a commission to administer, that the com- mission should be composed of the most learned men possible, and that the commission should be com- posed of men from all walks of life, who are well- trained, or who have had much experience in deal- ing in justice. I think it would probably be best to have men educated for this particular work." 40 California : "I think the California law is fairly efficiently administered." 41 (An Industrial Acci- dent Commission is in control under the California Act.) Kentucky: Administration "by special commis- sion" is favored by an official of the Federation of Labor of this State. 42 Georgia: "This is another question that should be decided by conditions. In states with small pop- *o Letter from L. R. Campbell, Fla. State Fed. of Labor, Aug. 14 1916. 41 See footnote 22. 42 See footnote 11. 262 WORKMEN'S COMPENSATION AND INSURANCE illations and having no large industrial centers I think the courts could handle the matter in a very satisfactory manner. In other states, I am of the opinion the courts are so crowded with work now it would be impossible for them to undertake it and a special commission would prove more satisfac- tory." 43 New York: "We consider the act has been fairly and efficiently administered." 44 (The New York compensation law is under the superintend- ence of an Industrial Commission.) Iowa: "The law in this state has worked out fairly well, considering the short time it has been in operation." 45 ( Supervision by the Industrial Commission is the order of things in Iowa.) Oklahoma : "The method of administering is all right, to my mind, but the law of course restricts the industrial commission and from that they are unable to depart, hence the necessity for amendment." 46 Arizona: "The principal objection to the pres- ent law is the fact that there seems to be no way to force the employer to pay without going into court, This very sensible and thoughtful answer is from Robt. Fechner, Secretary of the Ga. State Fed. of Labor, under date of Aug. 30, 1916. <* See footnote 19. See footnote 23. *See footnote 17. THE ATTITUDE OF LABOR 263 and the injured worker, in most cases, has no money to go into court." 47 North Dakota: "I would favor commission." 48 The American Federation of Labor itself has set the seal of its official approval on commission ad- ministration, having adopted this resolution at its convention in 1915: "Administration of compensation laws in future to be under the supervision of state commissions appointed for that duty alone." 49 The relegating of compensation business to the courts is thus becoming more and more unpopular. It can be stated with confidence that organized labor is in full sympathy with the recognized tend- ency to place the administration of these laws in the hands of appointed commissions, with broad discretionary powers. Labor sentiment is shifting and uncertain, buli may fairly be counted on to follow the present ad- vantage of the workingman, as he himself sees it. Thus his interest in and his ardor for compensation reforms vary with the immediateness of the prob- lems they are intended to solve. In this chapter 47 See footnote 28. See footnote 38. ** See footnote 16. 264 WORKMEN'S COMPENSATION AND INSURANCE the author has simply sought to picture the attitude of labor at the present day, as to a few of the well- recognized issues which confront all students of the subject. It may well be that a few months from now the attention of trade-union leaders will be quite otherwise focussed, and their views on the very groundwork of the compensation principle have undergone radical changes. CHAPTER VIII THE SOLDIERS' AND SAILORS' INSURANCE ACT WITH the entrance of the United States into the Great War, the American nation suddenly found itself face to face with a prospect of probable deaths and disabling injuries among its citizens within a brief period, upon a scale hitherto undreamed-of. The closest parallel is the Civil War ; but the serious nature of that conflict was not suspected at the out- set, whereas in the Armageddon of to-day the strength and resources of the enemy are known to be enormous, and his determination great. Fully aware of the facts, therefore, the Administration, shortly after the declaration of war in April, 19 17> set itself with commendable energy to the task of de- vising means to prevent at least some of the antici- pated disastrous social consequences of the cata- clysm; and the Soldiers' and Sailors' Insurance Act of October 6, 1917, is the result. 1 The social problem presented by war risks is the same as that growing out of industrial hazards ; but i Public, No. 90, 65th Congress (approved Oct. 6, 1917). 265 266 WORKMEN'S COMPENSATION AND INSURANCE the appeal to a nation's sense of justice is more dra- matic in the former case. This accounts, in large part, for the universal acquiescence in the policy of compensating and insuring our fighting men ; an ac- quiescence unique in the history of compensation legislation. Even the private insurance companies have for the most part left off grumbling at the in- terference of the government in the insurance busi- ness, and have cooperated heartily in the adminis- tration of the new law. 2 No nation of modern times has ever taken lightly the duty it owes to the soldiers who fought to pre- serve it, and to their widows and other dependents. The common method of discharging this obligation, however, has been by a system little differentiated from poor-relief the system of pensions. Crip- pled or aged warriors, the families of men killed in battle, and sometimes even able-bodied young men who emerge from the service quite as competent to earn their living as before, have been the recipients of a somewhat hectic bounty. On the other hand, deserving claimants have often been overlooked. The pension system reached its climax of absurdity and inequity in the United States in the period fol- 2 See Weekly Underwriter, vol. XCVIII, no. 2, p. 34 (Jan. 12, 1918). The article, however, criticises some features of the act. THE SOLDIERS' AND SAILORS' INSURANCE ACT 267 lowing the Civil War, when pensions became the tool of political aspirants, were used to buy votes, to curry favor with patriotic constituents, and to sup- port distant relatives of long-dead veterans whose claims upon the public gratitude were of the slightest. The pension scandals were the inevitable result of a disorganized and haphazard method of admin- istering aid to those deemed to have deserved well of their country. No one, we suppose, will dissent from the proposition that where a man has incurred disability while fighting to protect his fellow-citi- zens, those fellow-citizens should see to it that his enforced non-productiveness does not result in any more misery to him than can possibly be avoided. Common justice and national egoism alike dictate a liberal policy of compensating the crippled hero, and of showing such signal gratitude for his services as to encourage others to serve as faithfully. It does not follow, however, that money bestowed in- discriminately in sporadic bursts .of enthusiasm effectively accomplishes these desired ends. As in the administration of all compensation schemes, two things are essential to success: first, that the amounts paid be proportionate to the disability, and to the number of dependents deprived of support; 268 WORKMEN'S COMPENSATION AND INSURANCE and, secondly, that the element of charity or gratu- ity be dissociated from the whole scheme, so that a self-respecting man can accept the money as his just due, as the liquidation of society's obligation to him. These fundamental principles have been fully recognized in the compensation provisions of the Act of October 6, 1917, and in the sections covering allotments and allowances to dependents. Fur- thermore, the Act introduces a scheme for voluntary insurance which should have a great effect in reduc- ing the poverty caused by the death or disability of men who are actually or potentially the supporters of families; and vocational training and rehabilita- tion of crippled soldiers are not overlooked. These and other features will be briefly outlined here. The Soldiers' and Sailors' Insurance Act (as we have termed it) is in the form of an amendment to the statute of September 2, 1914, creating the War Risk Insurance Bureau. It establishes a Division of Military and Naval Insurance in that Bureau, and charges it with the administration of all the pro- visions with which we are here concerned. The whole is organized under the Treasury Depart- ment ; and the scheme itself is said to have been the outcome of cooperation between the Treasury, the Committee on Labor of the Advisory Commission THE SOLDIERS' AND SAILORS' INSURANCE ACT 269 of the Council of National Defense, the Depart- ments of Commerce, Navy and Labor, an advisory committee of insurance representatives, and others. 3 Insofar as the voluntary insurance provisions are concerned, the moving cause may be said to have been the prohibitive rates charged by the insurance companies to men entering the active military or naval branches. 4 The first important subdivision of the compre- hensive scheme of the Act is the plan of family allot- ments and allowances. The United States does not intend that men in the military or naval service shall leave their wives and children to shift for them- selves ; nor does it propose that the amount of money received by the dependents of an enlisted man shall be limited by what he can spare from his soldier's pay, in cases where such provision would be grossly inadequate. Accordingly, it is provided : first, that a soldier or sailor with a wife or children must make an allotment to them of a fixed proportion of his pay ; and secondly, that the Government will add to this an allowance graded according to the number of dependents. Furthermore, where the enlisted man voluntarily allots part of his stipend to a pa- American Economic Review, vol. VII, p. 196 (March, 1918). * Ibid. 270 WORKMEN'S COMPENSATION AND INSURANCE rent, grandparent, brother or sister, the Govern- ment will, under certain restrictions, supplement such payment by a generous family allowance. Compulsory allotments to wife or children are in no case to be less than fifteen dollars, nor more than half pay; but with these restrictions they are always to be in an amount equal to the family allowances provided for. The latter, in "Class A" or the compulsory class, are as follows: if there be a wife but no child, $15; if there be a wife and one child, $25 ; if there be a wife and two children, $32.50, with $5 per month for each additional child; if there be no wife, but one child, $5 ; if there be no wife, but two children, $12.50; if there be no wife, but three children, $20 ; if there be no wife, but four children, $30, with $5 per month for each additional child. Family allowances are in no case to exceed $50 per month; and are to be paid by the United States upon written application to the Bureau by the enlisted man or by or on behalf of a prospec- tive beneficiary. 5 The status of a divorced wife is interesting in this connection. If she has not remarried, and ali- mony has been decreed her, she has all the rights of a lawful spouse so far as allotments and allow- 8 Sections 201. 204 and 205 of the Act THE SOLDIERS' AXD SAILORS' INSURANCE ACT 271 ances are concerned, except that payments must not exceed the amount decreed her as alimony or support, and if her former husband has a second wife or children she is only entitled to the differ- ence between allotments or allowances made ta them and half-pay or $50, respectively. The rule as to illegitimate children contains a similar limita- tion: allotments and allowances are not to exceed the amount the father is bound to pay under the judicial decree. 6 To the rule that, in "Class A" cases, the enlisted man is compelled to allot the stated proportion of his stipend, there are certain exceptions. Where a wife or former wife divorced consents to a waiver of payments, and there is evidence satisfactory to the Bureau of her ability to support herself and the children in her custody, the allotment may be dis- pensed with. In the absence of consent by the wife, moreover, exemption may be granted for good cause shown, upon conditions prescribed by such regulations as may be made. 7 Here, as in many places throughout the Act, broad discretionary powers will be seen to be lodged in the Bureau. 8 Sees. 201 and 205 of the Act i Sec. 201 of the Act. s This feature is commented on by W. F. Gephart in Amer. Eco- nomic Review, vol. VII, p. 197 (March, 1918). 372 WORKMEN'S COMPENSATION AND INSURANCE Voluntary allotments the enlisted man is privi- leged to make to any beneficiary out of any por- tion of his pay remaining after the compulsory allotment is deducted, but this power is subject to such conditions and limitations as may be imposed by the Secretaries of War and of the Navy, re- spectively. 9 Where such allotments are actually made by the enlisted man to persons wholly or partly dependent on him, and conform in amount to certain stated regulations, the United States will add to them family allowances according to the following schedule: for one parent, $10; for two parents, $20; for each grandchild, brother, sister, and additional parent, $5. This schedule is the same when the person paying the allotment is a woman in the military or naval service, as, for in- stance, a member of the Army or Navy Nurse Corps; and in such case there is also a schedule of family allowances for children: for one child, $5; for two children, $12.50; $20 for three; and $30 for four, with $5 per month additional for each addi- tional child. All this group of schedules consti- tutes "Class B" of the family allowances. 10 As has been stated, allowances in Class B are conditional upon the enlisted man's making volun- Sec. 202 of the Act. 10 Sees. 204 and 206 of the Act. THE SOLDIERS' AND SAILORS' INSURANCE ACT 273 tary allotments according to certain regulations (though for good cause shown, and under such rules as may be prescribed, exemption from these allotments as a condition precedent to payment of allowances may be granted). 11 The regulations are: that the maximum monthly allotment so re- quired shall be half -pay; that the minimum, where no allotments are made to members of Class A, shall be $15 per month; that the minimum, where an allotment to a member of Class A is being made, shall be one-seventh of pay, but not less than $5 per month. The total monthly allowance paid to members of Class B, added to the enlisted man's allotment, is not to exceed the amount habitually contributed by him to their monthly support dur- ing the period of dependency but not more than a year immediately preceding his enlistment or the enactment of the Act. Where an allowance is paid to members of Class A, those in Class B can not receive more than the difference between that sum and $50. As between the two classes, allotments and family allowances are to be apportioned as pre- scribed by regulations. 12 A rather radical, but probably wise provision, is 11 Sec. 206 of the Act. 12 Sees. 206, 207 and 208 of the Act. 274 WORKMEN'S COMPENSATION AND INSURANCE made for those cases where allotments up to one- half of the enlisted man's pay have not been made. The Secretaries of War and of the Navy, respec- tively, are empowered to require, under such regu- lations as they may make, that any proportion of such one-half pay as is not allotted shall be depos- ited to the credit of the enlisted man, at 4 per cent interest, compounded semi-annually, and be held during such period of his service as may be pre- scribed. When payable the money is to be turned over to him if living, and in case of his death to such beneficiaries as he may have designated, or otherwise according to the laws of intestacy. 13 The purpose of this section is obviously to encourage thrift among the soldiers and sailors. It is an heroic method to apply, as it seems to be depriving the enlisted man of the free use of the money he has rightly earned, but it would doubtless be justi- fied by its social results. Like the provisions for compensation and insurance which we shall pres- ently discuss, this scheme is calculated to reduce that poverty and distress among soldiers and their families which has been in the past one of the most terrible consequences of war. 14 "Sec. 203 of the Act. "See article on "The Government and the Soldier's Family," by THE SOLDIERS' AND SAILORS' INSURANCE ACT 275 Compensation for death or disability is provided l)y Article III of the Act. From the point of view of our study, this is the most important of the vari- ous subdivisions of the general plan, and the anal- ogy to workmen's compensation is very close. The public in this case is the ultimate consumer who profits by the soldier's activities in his dangerous occupation; and so the public pays, in the form of taxes, the money necessary to assure compensation to the disabled and to the dependents of the slain, just as, under the normal workmen's compensation act, the ultimate financial responsibility is shoul- dered by the consumer in the form of increased cost of the article he buys. Death and disability "resulting from personal injury suffered or disease contracted in the line of duty" are made the subject of compensation to be paid by the United States; but where the victim's affliction was caused by his own willful misconduct, compensation is denied. The schedule of monthly payments, where death results from the injury, is as follows : for a widow, $25 ; for a widow and one child, $35; for a widow and two children, $47.50, Samuel McCune Lindsay, in Review of Reviews for April, 1918, for an excellent discussion of the system of allotments and allowances under the Act. See also article by Paul H. Douglas in 24 Journ. of Pol. Econ., pp. 461-483 (May, 1918). 976 WORKMEN'S COMPENSATION AND INSURANCE with $5 for each additional child up to two; for one child alone, $20 ; for two children, $30 ; for three children, $40, with $5 for each additional child up to two; for a widowed mother, $20, with the limita- tions that such payment, when added to the total amount payable to widow and children, shall not exceed $75, and that such payment can be made for the death of one child only and not made at all if such widowed mother is already in receipt of compensation for the death of her husband. 15 Payment of compensation to a widow or widowed mother under the schedule just described is until death or remarriage; payment to children is to cease on attainment of the age of eighteen years or marriage, unless the child is permanently helpless owing to idiocy, insanity or other cause. As be- tween a widow and children not in her custody, and as between children, the amount of the compensa- tion is to be apportioned as prescribed by regula- tions; "widow" as used in this section being defined not to include one who shall have married the de- ceased later than ten years after the time of injury. Where any compensation payable under this sec- tion is terminated by the happening of the contin- gency upon which it is limited, the amount to be " Sees. 300. 301 of the Act. THE SOLDIERS' AND SAILORS' INSURANCE ACT 277 paid to remaining beneficiaries, if any, is to be the same as would have been payable had they been the sole original beneficiaries. Where the deceased's death occurs after discharge or resignation from service, the United States is to pay not in excess of $100 for burial expenses and cost of transporta- tion of the body to his home. Finally, it should be noted that not only "enlisted men" but commis- sioned officers and female members of the Army and Navy Nurse Corps on active service, are en- titled to the benefits of this and the other sections of the Act dealing with compensation for death and disability. 16 The schedule of payments, in cases where total disability results from the injury, is as follows: if the injured man has neither wife nor child living, $30 per month ; if he has a wife but no child, $45 ; a wife and one child, $55 ; a wife and two children, $65; a wife and three or more children, $75; no wife but one child, $40, with $10 a month for each additional child up to two; if a widowed mother dependent on him for support, $10 in addition to the above amounts. Where the injured man is so helpless as to be in constant need of a nurse or at- tendant, such additional sum up to $20 a month 10 Ibid. -278 WORKMEN'S COMPENSATION AND INSURANCE shall be paid as the director shall deem reasonable; but if there has been a loss of both feet or both hands or both eyes, or the injured man has become totally blind or helplessly and permanently bed- ridden from causes occurring in the line of duty of the service of the United States, compensation is to be at the rate of $100 per month, without allow- ance for nurse or attendant. 17 Cases of partial disability are compensated by a percentage of the amount that would be payable for total disability, equal to the degree of the reduction in earning capacity resulting from the injury; but no compensation is to be paid for a reduction in earning power rated at less than ten per cent. In this connection, the Bureau is charged with the duty of making out a schedule of ratings of reductions in earning capacity from specific injuries or combina- tions of injuries of a permanent nature. Such rat- ings may be as high as 100 per cent; and are to be based as far as possible upon the average impair- ments of earning capacity resulting from similar in- juries in civil occupations and not upon tlie impair- ment of earning capacity in each individual case, so that, in the words of the Act, "there shall be no re- duction in the rate of compensation for individual "Sec. 302 (1) of the Act THE SOLDIERS' AND SAILORS' INSURANCE ACT 279 success in overcoming the handicap of a permanent injury." 18 This latter provision, apparently in- serted as a safeguard against malingering, also serves to emphasize the fact that compensation un- der this statute is to be claimed as a matter of right, and not as ill-disguised charity. In addition to the compensation which we have described, reasonable medical, surgical and hospital services are to be furnished by the United States to the injured person; and such artificial limbs, trusses, and similar appliances as the director may deem useful and reasonably necessary, will be pro- vided in proper cases. It is required, however, that every applicant for compensation shall submit him- self to physical examination whenever requested to do so by the authorities ; and failure to present him- self for or any attempt to obstruct such examination will be penalized by the suspension of awards. Ap- plicants must also submit to any reasonable medical or surgical treatment furnished by the Bureau at the Bureau's request ; and the consequences of un- reasonable failure so to do are not to be deemed to result from the injury for which compensation is awarded. 19 The class of cases in which it is expressly provided " Sec. 303 (2) of the Act. i Sees. 302, 303 of the Act 280 WORKMEN'S COMPENSATION AND INSURANCE that no compensation shall be payable, is large and is covered by several sections of the Act. Thus, for death inflicted (otherwise than by the enemy) as a lawful punishment for a crime or military of- fense, no award is made. 20 A dismissal or dishon- orable or bad conduct discharge bars recovery of compensation. 21 Where death in the service is not officially recorded in the department under which the deceased was serving, no award will be made; and this operates to bar payments for a period dur- ing which the man was reported "missing" and a family allowance was paid for him. 22 Where death or disability does not occur prior to or within one year after discharge or resignation from the service, no compensation is payable; except that, where a medical examination, made pursuant to regulations at the time of discharge or resignation or within a reasonable time not in excess of one year thereafter, results in the issuance of a certificate by the director to the effect that the injured person on discharge or resignation was suffering from injury likely to result in death or disability, compensation for death or disability actually so resulting will be paid. 23 A sort of statute of limitations is created by the 20 Sec. 308 of the Act 22 Sec. 307 of the Act *i Ibid. 28 Sec. 306 of the Act THE SOLDIERS' AND SAILORS' INSURANCE ACT 281 section of the Act providing that no awards will be made unless claim therefor is filed within five years from resignation or discharge from or death in the service, with the exception that, in the case of compensable death or disability occurring subse- quent to resignation or discharge, the five years is to run from the commencement of such disability or the occurrence of such death. The director, however, may extend these periods for not more than one year, in his discretion; and where the claimant is a minor or of unsound mind or phys- ically unable to make a claim, the five-year period dates from the termination of such disability. 24 Compensation is never to be paid for a term greater than two years prior to the claim, nor will increases be awarded to revert back more than one year prior thereto. 25 The power of the Bureau at any time to review awards, and to terminate, diminish, or increase them, or grant compensation where it has been refused or discontinued, is practically unlim- ited. 26 Certain other of the provisions of this part of the Act must be briefly stated. Compensation is not assignable, and is exempt from attachment, execu- 24 Sec. 309 of the Act 20 Sec. 305 of the Act. SB Sec. 310 of the Act 283 WORKMEN'S COMPENSATION AND INSURANCE tion and all taxation. 27 Awards will not be made while a person is in receipt of service or retirement pay, and existing laws providing for pensions, gra- tuities, or payments in the event of death, are to have no prospective operation. 28 Compensation under this Act for disability or death of women in the Army or Navy Nurse Corps is to be in lieu of payments under the Federal Workmen's Compen- sation Law. 29 Where injury or death of one en- titled to be a beneficiary under this Act is so caused as to create a liability in some party other than the United States or the enemy to answer in dam- ages therefor, the beneficiary must assign his claim to the United States, to be prosecuted or compro- mised by the director and the money placed to the credit of the compensation fund. 30 A pension for widows of veterans of former wars is provided. 30 * One feature on which we have not yet touched, despite its close relationship to the compensation provisions, is the section providing for vocational training and rehabilitation. Of all the many wise and fore-thoughted ideas embodied in the Soldiers' and Sailors' Insurance Act, this is perhaps the most remarkable. It states, in substance, that in cases . 311 of the Act. oSec. 313 of the Act zs Sec. 31-2 of the Act. soa Sec. 314 of the Act. 2 Ibid, THE SOLDIERS' AND SAILORS' INSURANCE ACT 283 of dismemberment, loss of sight or hearing, or other injury causing permanent disability, the injured person is to follow such course of " rehabilitation, reeducation, and vocational training as the United States may provide or procure to be provided." Where taking such a course prevents the injured man from earning his living meanwhile, he may be brought back into the military or naval service un- der a form of enlistment which entitles him to full pay as of the last month of his active service, and his family to corresponding allotments and allow- ances, in lieu of all other compensation. Where there is willful failure to follow the course pre- scribed or to enlist, compensation payments are to be suspended until such willful failure ceases, and no awards will be made for the intervening period. 3 1 At the present writing, Congress is being be- sieged with proposed amendments to this section, designed to place the administration of its pro- visions under the Federal Board for Vocational Ed- ucation or other body, or to insert some new require- ment, limitation or benefit. 32 By the time this book i Sec. 304 of the Act 82 As this goes to press, news comes of the passage of an act to place vocational rehabilitation under the Federal Board for Vo- cational Education. Public, No. 178, 65th Congress (approved June ,27, 1918). See comment in The Vocational Summary, vol. 1, No. 2 (June, 1918). 284 WORKMEN'S COMPENSATION AND INSURANCE emerges from the press substantial changes will un- doubtedly have been wrought in the administrative features of the scheme ; but it may be asserted with confidence that no less intelligent and humane plan will be substituted, if the public is given a fair chance to judge of the far-sightedness as well as beneficence of this bit of modern social legislation. The world is already so familiar with the exten- sive work being done in England in training the blind and other war cripples that the mere introduc- tion into this country of like salutary measures to deal with the problem of the disabled is no cause for surprise. We have, however, reason for self- congratulation in the promptness with which the unfortunate contingency was foreseen, and, above all, with the centralized control of relief and edu- cative measures which the Soldiers' and Sailors* Insurance Act has introduced. If the problem of rehabilitation were left to irresponsible private agencies, no matter how philanthropic and well- meaning, inequality and inefficiency would have been sure to follow. Moreover, the problem of the disabled of a war is a national problem, if there ever was one; and it is to the public interest that full con- trol over the administration of the measures under- taken for its solution should be lodged in the central THE SOLDIERS' AND SAILORS' INSURANCE ACT 285 government. As a people, we must work out our salvation together, shouldering alike the financial burdens and the responsibility for success. Some of the reasons for the need of vocational reeducation for disabled soldiers and sailors are outlined in a recent periodical. Such training is said to be required to insure the economic inde- pendence of these men; to conserve trade skill; to insure national rehabilitation; to avoid vocational regeneration, or lapse into a state of chronic de- pendence and lack of ambition ; to prevent exploita- tion of these unfortunates by the unscrupulous; to adjust the supply of labor to the demand ; to develop new vocational efficiency. 83 All these purposes are best promoted by a highly centralized administra- tion, which can determine the precise needs of indus- try for skilled labor, and then undertake to fill those needs by training the proper number of men to do the sort of work required. Centralization we will have under the wise provision of our Act, which leaves the problem, as it should be left, in the hands of the Federal Government. We have already described the provisions for allotments and allowances, compensation, and vo- cational education, contained in the Act with which 38 The Vocational Summary, vol. I, no. 1, p. 5 (May, 1918). 286 WORKMEN'S COMPENSATION AND INSURANCE this chapter deals. There remains the feature which has attracted the most widespread attention a scheme for voluntary insurance of men and women in the active military and naval service at f ordinary peace time rates, in an institution operated and financed by the Government. It is the most gi- gantic experiment in state insurance yet attempted, and one of the boldest; for the United States prac- tically carries the entire additional war risk by way of gift to those who are fighting its battles. Like all social legislation, the insurance scheme of our Act has two aspects: the philanthropic and the practical. It has been the custom of writers, rather unfortunately I believe, to harp upon the insolvency of War Risk Insurance, and to advance the doctrine that it is only right and proper for a nation in time of war to scorn the dictates of busi- ness judgment and heap benefits upon those who fight to preserve it, regardless of cost. 84 Whether or not it is ever desirable for governments to be so purely sentimental, it seems clear that the United States was actuated by more practical motives when it instituted the scheme of insurance for its war- s* See American Economic Review, vol. VII, p. 202 (March, 1918). Here Mr. Gephart seems to be invoking patriotism and philanthropy to excuse business defects. THE SOLDIERS' AND SAILORS' INSURANCE ACT 287 riors now under discussion. That scheme in opera- tion is a measure of justice to the dependents of those who die in the service; but justice, like hon- esty, is often also the best policy, and the United States does not stand to lose by the generous oppor- tunities it offers to its soldiers and sailors to insure themselves at low rates. It is true that the pre- miums collected will in all probability be wholly in- sufficient to defray the sums that must be paid out in claims and for overhead; but it should not be forgotten that the voluntary insurance offered by the United States is intended in large degree to be in lieu of pensions. If the completely disabled sol- dier, and the widow and dependents of him who died in service, can be removed from the pension lists by reason of the provision made in their behalf through insurance, an enormous financial burden will be lifted from the Government, enough to compensate at least in part for the losses it will incur in conduct- ing War Risk Insurance as a business. The in- sured at least pays premiums; the pensioner does not. In the long run the Government should be the gainer. If a grateful posterity, not satisfied with a system which will have made the families of veterans of the Great War secure from want, insists on pensioning them lavishly nevertheless, War Risk B88 WORKMEN'S COMPENSATION AND INSURANCE Insurance will have failed in its purpose of prevent- ing a repetition of the scandalous expenditure and irrational distribution of favors which have made the name of "pension" odious in our time; but this, like other economic problems projected into the future, must be left for its solution to the wisdom and sense of justice of the coming generation. We will have laid at least a sound foundation, according to our lights. The insurance provisions of our Act are con- tained in Sections 400 to 404, inclusive. It is first provided that in order to give to all commissioned officers and enlisted men and to female members of the Army and Navy Nurse Corps employed in active service "greater protection for themselves and their dependents than is provided in Article III" (the compensation article) , the United States, "upon application to the bureau and without med- ical examination" will grant insurance against death or total permanent disability in any multiple of $500, but not less than $1,000 or more than $10,000, upon payment of the prescribed premiums. 35 In- surance must be applied for within 120 days after enlistment or entrance into and employment in the active service and before discharge or resignation; *s Sec. 400 of the Act THE SOLDIERS' AND SAILORS' INSURANCE ACT 289 except that "those persons who are in the active war service at the time of the publication of the terms and conditions of such contract of insurance," and remain so, may apply at any time within 120 days thereafter. 36 Automatic coverage of a sort is provided for those persons in the service on or after April 6, 1917, who become or have become totally and permanently disabled or die within .120 days after publication as stated above, without having made the proper application. Such a person is deemed to have applied for and been granted insur- ance, and payments of $25 per month are to be made to him during life, or in case of death before receiving any or as many as two hundred and forty of such installments, to his wife from the time of his death and during her widowhood, or to his child, or widowed mother while they survive him. In no case, however, are more than two hundred and forty monthly installments to be paid. 87 The peculiar features of the war risk insurance policy are set forth with some particularity in Sec- tion 402 of the Act. The director, subject to the general supervision of the Secretary of the Treas- ury, is allowed wide latitude in settling the exact; terms and conditions of the contract. The insur- 6 Sec. 401 of the Act ** Ibid. 290 WORKMEN'S COMPENSATION AND INSURANCE ance is not assignable, nor subject to the claims of, the creditors either of the insured or the beneficiary. It is payable only to a spouse, child, grandchild* brother or sister, or to the insured during total and permanent disability. Ordinarily it will be paid iri two hundred and forty monthly installments; but provisions for maturity at certain ages, continuous installments during the life of the insured or the beneficiaries, for cash, loan, paid up and extended values, and other provisions proving reasonable and practicable, may be provided for in the contract, or from time to time by regulations. Where there is no surviving duly designated beneficiary within the permitted class, the money is to be distributed among such members of that class as would be en- titled to the deceased's personal property under the laws of intestacy ; and if no such person survive the insured, the latter's estate is to be credited with the amount of the reserve value of the insurance at the time of his death, calculated in the manner already; provided for. As we have already stated in these pages, the excess mortality and disability cost resulting from the hazards. of war is to be borne by the United States ; and the same is true of the expenses of ad- ministration. This result is assured by the iron- THE SOLDIERS' AND SAILORS' INSURANCE ACT 291 'bound provision that the premium rates charged are to be the net rates based upon the American Experience Table of Mortality and interest at three and one-half per cent. 38 One of the most bitterly criticized provisions of the whole Act is that which permits the continuance ;after the war of the policies taken out during the period of hostilities. Many who loyally support the Government's interference in private business as an emergency measure are bitter against what they deem to be the first step towards the perma- nent establishment of state-managed life insur- ance. 89 The much-debated Section provides, in a few words, that during the war, and thereafter un- til converted, policies shall be term insurance for successive terms of one year each; but, not less than five years after the end of the war, this insur- ance is to be converted, without medical examina- tion, into such form or forms as the insured may request and regulations may prescribe. These reg- ulations, moreover, must provide for the right to convert into ordinary life, twenty-payment life, endowment maturing at age sixty-two, and other as Sec. 403 of the Act. s 9 See, for instance, the outraged protest of Arthur Richmond Marsh, in The Economic World, New Series, vol. XV, p. 344 (Mar. 9, 1918). B93 WORKMEN'S COMPENSATION AND INSURANCE usual forms, and shall prescribe the time and method of payment of premiums ; but advance pay- paents are not to be required for periods of more [than one month each, and may be deducted from the pay or deposit of the insured or otherwise made at jhis election. 40 Enforcement by suit, in case of disagreement between the bureau and any beneficiary or bene- ficiaries as to a claim under one of these war risk insurance contracts, was provided for by Section 1405 of the Act as originally passed. This section [was repealed by a law of May 20, 1918, which sub- jstituted an amendment to Section 13 of the Act as originally passed, materially limiting the amount of compensation which attorneys and claim agents may receive. The new provision restricts the fee which may be charged for assisting a claimant in the preparation of his papers to three dollars ; and when the applicant and the bureau disagree on the amount payable, and suit is brought in the United States District Court, the former's attorney cannot claim more than 5% of the amount recovered. The asking or receiving of any other compensation in respect to the action by the attorney or claim *o Sec. 404 of the Act. THE SOLDIERS' AND SAILORS' INSURANCE ACT 293 agent is not only made unlawful, but those who secure or attempt to secure fees not prescribed are liable to a $500 fine or two years' imprisonment, or both. 40a Some of the controversies to which Soldiers' and Sailors' Insurance has already given rise have been adverted to. The fear often expressed, that the new scheme is the entering wedge of Government monopoly of the entire insurance business, may or may not be well founded ; but the great and obvious desirability of having the policy taken out in war time form the basis of a permanent provision for that future which service in the armed forces renders especially uncertain because of present or potential disabilities acquired, has very prop- erly overridden the objections of selfish con- servatism. It has been suggested that free cover- age of all up to a certain sum would not only have been in keeping with the liberal policy of the Gov- ernment, but would more surely render unnecessary a resort to pensions after the war, by taking care of the rare instance where a soldier or sailor refuses to insure himself. 41 The answer to this criticism is pensation law, 86 extraterritoriality and the courts, 128 first compensation law uncon- stitutional, 59-61 forfeiture for misconduct un- der act, 102 insurance provisions of act, 136 labor opinion on methods of administration, 262 labor opinion on waiting pe- riod, 255 state insurance fund, 141, 157, 158 New York Central Railroad Co. v. White, 79 New Zealand, compensation law enacted, 48 Noble State Bank v. Haskell, 62 North Dakota labor opinion on employments covered, 258 labor opinion on methods of administration, 263 labor opinion on schedule of awards, 252 Northern Pacific Ry. Co. v. Meese, 77 Norway, adopts compulsory in- surance, 47 Nova Scotia, compensation law enacted, 49 O Occupational disease (see D*- ease, Occupational) 330 INDEX Ohio compensation law upheld by the Supreme Court, 76 compulsory principle adopted, 107 insurance experience, 156-157 semi-monopolistic state insur- ance, 141 Oklahoma labor opinion on employments covered, 258 labor opinion on methods of administration, 262 labor opinion on waiting pe- riod, 254 Old age insurance (see Insur- ance) Ontario, compensation law en- acted, 49 Opinion of the Justices, 62, 63 Oregon injuries covered by act, 99 monopolistic state insurance, 139 no waiting period in act, 116 principle of mutuality in act, 163 "Out of and in the course of the employment" adopted in United States, 94 construed by American courts, 95 construed by English courts, 40-43 variations on phrase in some acts, 99, 100 Outworkers not covered by some compen- sation laws, 92, 94 would be covered by ideal law, 300 Pennsylvania labor opinion on occupational disease, 260 labor opinion on schedule of awards, 251 labor opinion on waiting pe- riod, 255, 256 Pensions defects of system of (see In- surance, Soldiers' and Sail- ors') to injured German workmen, 26, 27 Peru, compensation law en- acted, 49 Philosophic influences, in Ger- many, 21 Porto Rico labor opinion on schedule of awards, 252 no waiting period in act, 116 Portugal, compensation law en- acted, 48 Priestley v. Fowler, 6 Public Employments (see Em- ployments, Public) Q Quebec, compensation law en- acted, 49 Railroad employees excluded from benefits of some state acts, 91 Federal Employers' Liability Act, 1906, 51 INDEX 331 Rhode Island, awards under act, 108, 109 Russia, compensation law en- acted, 48 Safety regulations, German law, 27, 28 Second Employers' Liability Cases, 74, 75 Serbia, compensation law en- acted, 48 Soldiers' and Sailors' Insurance Act (see Insurance, Soldiers' and Sailors') South Dakota employments not covered by act, 94 farm and domestic labor not covered by act, 89 limited coverage of disease by act, 96 medical and surgical aid pro- visions, 118, 119 Spain, compensation law en- acted, 48 State ex rel. Davis Smith Co. v. Clausen, 61, 62 State Insurance (see Insurance, State) Sub-contractors (see England) Surgical aid (see Medical and surgical aid) Survivors' insurance, German law, 30 Sweden, compensation law, 47, 48 Switzerland compensation law enacted, 48 compensation principle first recognized, 20 Texas awards under act, 109 farm and domestic labor not covered by act, 89 forfeiture for misconduct un- der act, 102 insurance provisions of act, 136 medical and surgical aid pro- visions, 119 Transvaal, compensation law en- acted, 49 U United States adoption of compensation laws by states, 53-55 compensation for certain Fed- eral employees, 49-50 compulsory principle adopted in act, 107 dissatisfaction with common law rules, 49 early agitation for workmen's compensation, 50, 51, 53 Employers' Liability Act of 1906, 51 Federal Workmen's Compen- sation Acts, 1908, 1911, 52 Utah compulsory principle adopted in act, 107 employments not covered by act, 94 farm and domestic labor not covered by act, 89 insurance provisions of act, 136, 141 332 INDEX limited coverage of disease by act, 96 medical and surgical aid pro- visions, 119 method of administering act, 125 Venezuela, compensation law en- acted, 49 Vocational training (see Insur- ance, Soldiers' and Sailors') W Waiting period German law, 27 in American compensation laws, 114-117 in New Jersey, 198 labor opinions on, 253-256 none in some states, 115, 116 purpose, 115 two varieties, 115 under ideal law, 303-304 War Risk Insurance (see Insur- ance, Soldiers' and Sailors') Washington compensation law upheld, 61, 62 injuries covered by act, 99 monopolistic state insurance, 141 no waiting period in act, 116 Supreme Court upholds law r 77 Wisconsin commission of inquiry, 53 injuries covered by act, 100 insurance experience, 154 mutual insurance in, 163 West Virginia insurance difficulties, 156 semi-monopolistic state insur- ance, 141 Workmen's Compensation (see other titles) acquiescence of general public in, 18 definition, 3 distinguished from common law, 10-12 early agitation for, in United States, 50, 51, 53 economic basis, 14-17 Federal acts, 52 limitations in various states, 11 Workmen's Compensation Aid Bureau (see New Jersey) Workmen's Compensation Bu- reau (see New Jersey) Workmen's Compensation Pub- licity Bureau (see Insur- ance) Workmen's Compensation Serv- ice Bureau (see Insurance) Wyoming, monopolistic state in- surance, 141 A 000 698 399 3