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GIFT OF 
 
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feTrue Sitoa. j Washington 
 
 with regard to the 
 
 ite Managed Workmen's Com- 
 pensation Fund. 
 
 By G. H. Driggers, Secretary 
 Idaho Employers' Protective Service Bureau 
 
 THE MARKET WORLD 
 
 80 Wall Street, New York 
 
he Truth About Washington's 
 State Managed Workmen's 
 Compensation Fund. 
 
 \n Address Before the Committees on Labor and 
 Capital of the Montana State Legislature at 
 Helena, February 6, I9I3. 
 
 Mr. Chairman, Gentlemen of the Committees, and Gentlemen: 
 
 k THANK you for the privilege of appearing before you for 
 the purpose of discussing Workmen's Compensation, and 
 laws relating thereto. I trust that you will bear with me 
 this evening for the reason that, on account of the work 
 ve been doing for the past six weeks, and the enormous stress 
 under which I have been working, I am well nigh worn out. The 
 work to which I refer has been that of making an analytical and 
 critical study of Workmen's Compensation and the laws relating 
 thereto, and particularly the Workmen's Compensation Law of the 
 State of Washington, and of making a thorough investigation of 
 the practical operation of the Washington Act as it has been 
 administered since October 1, 1911, in the State of Washington. 
 I have been devoting especial attention to the Washington Act 
 for the reason that three of the bills now pending before your 
 Legislature are based upon the Washington idea. 
 
 In order that you may understand my viewpoint, I trust you 
 will excuse the references that I shall make to myself in the 
 course of my discussion of this subject.: Jfl-.tjife'^irst placfejXwas 
 born in poverty and have been reared '"in me 'School 'of Hard 
 Knocks am a self-made man. I ^a*ke].t6is a{a^e^*t:\^ot > . < the 
 reason that I want the representatives of laobr on this 'committee 
 to fully understand that I know all of your problems of life, know 
 
 416801 
 
2 
 
 the motives that actuate you in your daily affairs, and sympathize 
 with you in your efforts to better your condition and elevate your 
 station in life. 
 
 At this point, I shall relate you a bit of my personal experi- 
 ence by way of illustration of the problems that you now have 
 under consideration. As a boy, I owned my own horse, and re- 
 sorted to horse-trading as a means of financial gain; and believe 
 that I acquired a fair quantity of what is ordinarily called "com- 
 mon horse sense." I might say right here that the proper exer- 
 cise of "common horse sense" is all that is necessary to enable 
 you to arrive at a proper solution of the question that we now 
 have under consideration. Some of you have doubtless swapped 
 horses and will appreciate the statements that I am about to 
 make. There are three methods of swapping horses: First, swap- 
 ping unsight and unseen-^second, swapping as they stand; third, 
 swapping on a try-out, i. e., swapping after you have seen the 
 other fellow's horse in action. I have swapped horses hundreds 
 of times, and usually made money by the transactions; but I 
 always relied upon the third method mentioned. I have seen many 
 men swap horse's upon the first and second propositions men- 
 tioned. In a trade of that kind, I always noticed that some one 
 got "stung." You can readily see that this would be the case. 
 Now, gentlemen, it appears to me that the proposition before 
 you relative to this Workmen's Compensation matter is analogous 
 to the proposition in a horse trade, and that, in a large measure, 
 all of the propositions before you are stated in a form analogous 
 to my horse trading propositions numbers one and two. 
 
 We have been riding and driving this old reliable Employers' 
 Common Law Liability horse for a great many years. It is now 
 said that this old family horse is well now worn out. The whole 
 Montana family admits that this is true. We have concluded to make 
 a swap and find ourselves bantered for a trade from several 
 different sources. My clients do not swap horses in the middle of 
 the s*0te^ln. Tfcey :s$ttap* Worses only upon the third proposition 
 mentioned*, to "w*!*:, ^tcr'-tfaving seen the other fellow's horse in 
 ac]^on;t^ej*f.o^B*,"Whei5 this" pVoposition of swapping the old fam- 
 ily Horse," Emp*foyelV*Cbm*nrit> 1 n Law Liability, for this young colt 
 called Workmen's Compensation had been made, my clients en- 
 
3 
 
 gaged my services for the purpose of making an investigation, 
 i. e., making some personal observations of the other fellow's 
 horse in action. 
 
 In this matter, I represent the following Montana employers 
 and their employes. The employers and the employes of each 
 firm that I represent constitute a family all of whom are to be 
 seriously affected by, and are vitally interested in, the proposi- 
 tion under discussion. The Montana firms that I represent are 
 as follows, to wit: State Lumber Company, of Kalispell, Mon- 
 tana; Olson & Johnson Company, building contractors of Missoula, 
 Montana; the Great Falls Builders' Association, consisting of 
 seventy-five employers of Great Falls, Montana; Rynker-Winter 
 Company, Gagnon & Co., and Western Ornamental Plaster Com- 
 pany, of Billings, Montana. I have stated that I represent these 
 employers and their employes. I have made this statement in this 
 form because I have not heard a single speaker who has hereto- 
 fore appeared before this committee make the statement that he 
 represented any one other than the employer and his interest. I 
 have made my statement in this form for the reason that my 
 clients are deeply interested in the prosperity, happiness, content- 
 ment and general welfare of their employes; in fact, the general 
 welfare of the employes has always been the first consideration 
 of my clients; therefore, when these employers had retained my 
 services for the purpose of making this investigation, I was re- 
 quested to investigate this proposition most carefully from the 
 standpoint of our employes. Our employes were satisfied that I 
 should perform this duty for them, and they are willing to accept 
 my judgment with respect to this matter in the utmost good 
 faith. Under these circumstances, my interest in that great body 
 of employes engaged in the services of the above mentioned em- 
 ployers becomes paramount to every other interst that I may have 
 in this matter, and my discussion of this question will be mainly 
 from the standpoint of the general welfare of these employers. 
 
 There are two of these Workmen's Compensation colts offered 
 us in ex^wnge for our old, worn-out Employers' Common Law 
 Liability horse. One is named Washington Workmen's Compen- 
 sation Idea, and the other, the New Jersey Workmen's Compensa- 
 tion Idea. Each of three of these bills before the Legislature of 
 
4 
 
 Montana contains a proposition to exchange the Employers' Com- 
 mon Law Liability system of Montana for the Workmen's Com- 
 pensation Idea of Washington, a State-administered Workmen's 
 Compensation insurance scheme. One of the bills before the Mon- 
 tana Legislature contains the proposition to exchange your Com- 
 mon Law Employers' Liability system for the New Jersey Work- 
 men's Compensation Idea, a system wherein liability for Work- 
 men's Compensation is placed directly upon the employer. I shall 
 discuss these propositions in the order in which I have named 
 them. 
 
 What I have seen and heard since I have been in attendance 
 upon your committee hearings has convinced me that you are well 
 aware of the fact that the propositions before you constitute 
 the most important matter of legislation that you will ever have 
 to decide. I believe that you are fully convinced that this matter 
 is of the utmost importance, not alone to yourselves, but to your 
 children and your children's children, your neighbor, your neigh- 
 bor's children and your neighbor's children's children, to every 
 Montana employer, his children and his children's children, to 
 every Montana employe, his children and his children's children, 
 and to society at large of the great and prosperous State of Mon- 
 tana for all time to come. I am convinced that you fully realize 
 this fact because I have never seen a body of men gathered to- 
 gether for the purpose of discussing, considering and deciding any 
 matter who have devoted themselves more assiduously to the sub- 
 ject matter of the discussion than you have done. 
 
 After having heard a number of these discussions, I had thought 
 that there was little left to be said on the subject; however, as I 
 have stated before, the failure of the speakers who preceded me 
 to analyze this proposition fully from the standpoint of the wel- 
 fare of the employe makes it desirable that you should have placed 
 before you all of the facts bearing upon this question from this 
 standpoint by one who is in possession of first-hand information 
 as to the practical operation of the Washington Workmen's Com- 
 pensation Act. A discussion of this question from this angle 
 by one who possesses these facts is rendered most desirable be- 
 cause of the fact that these three propositions to exchange your 
 Montana Common Law Employers' Liability system for the Wash- 
 
5 
 
 ington Workmen's Compensation Idea comes from certain repre- 
 sentatives of organized labor of the State of Montana, and it may 
 be that those who are making these propositions do not fully 
 appreciate the true meaning of the same. I believe that those 
 who have made these propositions have done so with the very best 
 intentions. I should not impugn their purposes and intentions, 
 but I do believe that they are honestly mistaken in the conclusions 
 that they have reached. I shall state the facts and submit the 
 proof that leads me to conclude that these men do not fully under- 
 stand the facts from which they have drawn their conclusions. If 
 the proof that I shall submit should convince you that a mistake 
 has been made and that a graver mistake is about to be made, 
 the representatives of labor of this State are sufficiently intelli- 
 gent, and have sufficient courage of conviction to withdraw the 
 propositions that they have made, and that they will then be 
 willing to meet the employers of the State of Montana on mutual 
 ground and agree upon a proposition that will work even-handed 
 justice to every employe and every employer and society at large 
 in this State. 
 
 In beginning my discussion of the relative merits and de- 
 merits of the propositions before us, I for myself personally, for 
 my clients, and for their employes shall admit that our old Com- 
 mon Law Employers' Liability system, under which the employe 
 is permitted to recover damages of his employer on account of 
 personal injuries sustained in the course of the employe's work, 
 on the ground that the injury was sustained solely by reason of 
 the negligence of tKe employer, is no longer suited to the indus- 
 trial conditions of this State; and that we need a good, safe, sane, 
 common sense, workable Workmen's Compensation law. The dis- 
 astrous circumstances that have fallen under the observation of 
 each and every one of us make it unnecessary for me to submit 
 you any proof of this assertion. You have often seen, and I have 
 often seen, this system work disaster, both to the employer and 
 the employe; disaster entailed upon the employer by reason of 
 the recovery of enormous verdicts, in rare cases, by injured em- 
 ployes whose injuries may have, or may not have,* entitled them 
 to the amount of the award by the jury; disaster entailed upon 
 the employe in numerous cases, by reason of the granting of the 
 
6 
 
 defendant's motion for non-suit, or by reason of the direction of 
 a verdict by the court in favor of the defendant at the conclusion 
 of the plaintiff's case, on the ground that the jury for which the 
 employe sought to recover damages was sustained by reason of 
 the negligence of a fellow servant, by reason of the employe's 
 own negligence, or by reason of the ordinary risk inherent in the 
 work being performed at the time of the injury assumption of 
 risk. These 'disasters to employes, occasioned by; reason of the 
 foregoing defenses of the employer in such cases, have been so 
 grave as to causs these defenses to become known as "the unholy 
 trinity." These disasters are the cause of our conviction that 
 the good of all parties concerned demands that this system be 
 supplanted by a Workmen's Compensation system which is said 
 to be more humane and more equitable. 
 
 Now, let us define Workmen's Compensation. What is this 
 popular new principle known as Workmen's Compensation, the 
 sound of which is such sweet music in the public ear, and the 
 advocacy of which has become such a luscious morsel in the 
 mouths of idealists, paternalists, humanitarians and politicians, 
 and the adoption of which some parties would lead us 
 to believe will mark the dawning of the millennium. Pure 
 Workmen's Compensation is accident insurance in the hazardous 
 industries, provided by the employer in such industries for the 
 benefit of his employes engaged therein who may be accidentally 
 injured in the course of their employment. This means that each 
 employer shall pay a definite and certain amount of compensation 
 to each of his employes, or their dependents in the event of em- 
 ploye's death, who may be accidentally injured in the course of 
 his employment, regardless of whose negligence or fault caused 
 the injury. This proposition is somewhat surprising, but this is 
 not all that this proposition means. It also means that the 
 employer's defenses, heretofore referred to as "the holy trinity," 
 (1) that the injury was caused by the negligence of a fellow ser- 
 vant; (2) that the employe's own negligence caused the injury; 
 (3) and that the employe assumed the ordinary risk inherent in 
 the business, are to be abolished. This proposition is startling. 
 If adopted, it will be a radical departure from the established 
 principles, theories and practices of past centuries in this country; 
 
\ 
 
 therefore, wisdom dictates that we proceed cautiously and pru- 
 dently, lest in our effort to remedy existing evil conditions, we 
 should stumble into a pitfall wherein our condition may be many 
 times more deplorable than that from which we sought to escape. 
 
 Our national government and our State governments have been 
 founded upon the great American principle of individualism. The 
 American citizen has been taught, and has believed, that every 
 man was justly entitled to all of the fruits of his honest toil; 
 that so long as he labored honestly and did no wrong, he should 
 reap the full harvest of his efforts; that, if he committed a 
 wrong, he and he alone, should recompense the injured party for 
 the damage sustained, and as a corollary to this principle, we 
 find another equally important principle of our Americanism, i. e., 
 that so long as a man did no wrong in the conduct of his business, 
 he should be entitled to conduct that business in his own way. 
 
 The Murphy, Cutts and O'Shea bills contain principles and 
 propose the establishment of practices in direct contravention of 
 the principles and practices just mentioned. The principles con- 
 tained in these three bills, when applied in actual practice, con- 
 stitute a most effective first step on the way to completing State 
 control and operation of industries a condition for which no 
 Commonwealth of this country is prepared. 
 
 It is true, as we have already admitted, that our present indus- 
 trial condition makes it desirable for us to accept and adopt a 
 new system of handling industrial accidents. Then good judg- 
 ment dictates that we adopt that system in such a form that it 
 will do least violence to o.ur American principles in the process 
 of transition from the old to the new order of things. No one will 
 deny the fact that, if the ultimate result of the application of the 
 principles of and the practices contemplated by these three bills 
 reasonably tends to lead to State control and operation of indus- 
 tries, their adoption would do the greatest violence to our estab- 
 lished ideals of government; and for this reason, should b 
 shunned, provided there is any other means of accomplishing th 
 desired result. 
 
 There is, in my opinion and in the opinion of the great major- 
 ity of the able men who have studied this question, another more 
 effective means whereby the objects sought to be obtained may 
 
8 
 
 be accomplished in the most effective manner, and yet do little 
 violence to the aforesaid established American ideals. 
 
 In view of these things, you must now fully realize that the 
 matter under discussion is one of such magnitude that its proper 
 solution should require statesmanship of no less calibre than the 
 foundation of our government required; otherwise, we may all live 
 to regret the day in which we accepted this new doctrine and 
 attempted to formulate and establish a system for its practice. 
 Yes, we may live to hear our children curse our stupidity, in the 
 event that any mistake is made in solving this problem. 
 
 Having admitted the desirability and the wisdom of a radical 
 change with respect to this matter, we then find these questions 
 only in issue, to wit: 
 
 1. The FORM of the remedial law itself whether it should be 
 compulsory or elective. 
 
 2. The PLAN of its administration whether it should be 
 administered directly by the employer himself, or by a political 
 board or commission and their subordinates. The form of the law 
 and the plan of its administration should be such as to do the 
 least violence to the time-honored principles of our government, 
 and yet accomplish the desired end. The bills before your Legis- 
 lature indicate that there are at least two radically different 
 forms and plans of such radical legislation, i. e., the form and 
 plan of the Minor Bill, which is based upon the New Jersey idea, 
 and the form and plan of the three bills that I am discussing, 
 and that are based on the Washington idea and are designed to 
 establish State insurance of Workmen.'s Compensation. 
 
 As I have already stated, I shall discuss the desirability of the 
 adoption of the form and plan of the Minor Bill, after having 
 analyzed and criticised the form and plan of the three bills de- 
 signed to establish State-administered insurance of Workmen's 
 Compensation. 
 
 It is your sworn duty to select that form and plan of a law 
 which the facts fairly prove will do the greatest good to the 
 greatest number of the citizens of the State of Montana. I believe 
 that you have the honesty of purpose and the courage of convic- 
 tion to do your sworn duty. In my opinion, the best interest of 
 the employer, the employe and society at large may be 
 
9 
 
 served by your selection of that form and plan which may be 
 most easily, most readily and most generally acceptable to those 
 most vitally interested in this matter the employer and the em- 
 ploye. That form and plan is most certainly the form and plan, as 
 I have stated, that does the least violence to our established ideals 
 of government and yet accomplishes the desired ends. Remember 
 that you may successfully lead, but you canont successfully drive, 
 the average independent American citizen. You know that, and I 
 know, that; therefore, you should beware of such an open, appar- 
 ent and notorious pitfall in your honest effort to elevate your 
 own condition in life. Let your good judgment be guided by ex- 
 perience. Let your conclusion be based upon the facts with respect 
 to this matter, disclosed by experience up to date. 
 
 Now, let us see what those material facts are. Those facts 
 must have been obtained from the experience in the practical 
 operation of the Washington Workmen's Compensation Act since 
 October 1, 1911. I have spent much time and energy in gathering 
 these facts for your benefit, in order that you might be enabled to 
 draw an intelligent conclusion in the selection of the form and 
 plan of the bill that you will recommend. 
 
 In the first place, I find that the Washington Act is compul- 
 sory, rather than elective in form. The Washington Act has been 
 defined as compulsory, mutual, monopolistic, State-administered 
 insurance of Workmen's Compensation. Insurance is guaranteed 
 protection against loss, upon certain conditions and within definite 
 limitations. The Washington Act guarantees nothing. It neither 
 insures anybody or anything; therefore, it is not insurance. The 
 Washington Act is a sterile attempt to establish hybrid, State- 
 administered life insurance and Workmen's Compensation scheme. 
 
 In the second place, I find that the Washington Act appropri- 
 ates A's property to pay B's losses under the Act, without due 
 process of law. This may be a sound principle, but it is not ac- 
 ceptable to the average independent American citizen. It may be 
 that, in the exercise of its police power, the State may appropriate 
 my property to pay your losses under certain conditions, but I do 
 not believe that the conditions under this discussion are so inter- 
 woven with the public welfare that this principle should be applied 
 in this case. 
 
10 
 
 In the third place, I find that the Washington Act, by compul- 
 sion, deprives every interested party of his right to a trial of 
 his cause by a jury of his peers. This proposition is monstrous! 
 The Constitution of the United States, and of every State in this 
 Union, guarantees that this right shall ever remain inviolate. 
 
 In the fourth place, I find by reading the schedule of compen- 
 sation provided by the Washington Act, that the amount of the 
 various awards bear no relation to the loss of earning capacity 
 of the injured party. A skilled mechanic who has earned $200 
 per month, is entitled to no greater compensation than the section 
 hand who has earned only $40 per month. In event of the death 
 of these two employes, each of their widows would become en- 
 titled to receive the same amount of compensation $20 per 
 month. This is only one fair example of the extremely inequit- 
 able and inhumane provisions of this Act as to compensation pro- 
 vided in the schedule of benefits under this law. Your three bills 
 that I am discussing contemplate the adoption of this schedule of 
 compensation. You must not delude yourselves by believing that 
 such an inequitable and inhumane schedule of benefits will be 
 satisfactory to injured employes and their dependents for any very 
 considerable length of time. 
 
 It is a further fact that the whole of this schedule of benefits 
 has proven to be wholly unsatisfactory to the employes of the 
 State of Washington. As proof of this assertion, I have but 
 to refer you to the First Annual Report of the Industrial Insur- 
 ance Department of the State of Washington, page 297, et seq., 
 where you will find numerous recommendations as to amendments 
 made by the Industrial Insurance Commissioners of that State. 
 I have been informed, and believe the fact to be that these recom- 
 mendations for amendments are the result of the pressure that 
 has been brought to bear upon this commission by organized 
 labor throughout the State of Washington. 
 
 In the fifth place, I find that, for the various reasons stated, 
 grave and serious doubt exists as to the constitutionality of the 
 Washington Act, which doubt entails an enormous burden and in- 
 justice upon the employer. Not only is the careful employer's 
 property appropriated to pay the losses sustained on the works 
 and in the plants of the negligent and careless employers, but in 
 
11 
 
 addition to the amount appropriated from such careful employer, 
 the serious doubt as to the constitutionality of the Act itself, and 
 the extreme uncertainty of the permanency of the law compels 
 every prudent employer to expend an additional amount, nearly 
 equal to the amount appropriated from him by the State, in the 
 purchase of an employers' liability policy of a casualty company. 
 
 The law itself is so framed that in event of its repeal at any 
 subsequent session of the Legislature of the State of Washington, 
 or in event of its being declared unconstitutional by any court, 
 a stupendous amount of litigation over personal injury damages 
 on account of injuries sustained during the period of the operation 
 of the law will follow immediately. In numerous instances the 
 volume of this litigation will be such that employers may be com- 
 pelled to resort to bankruptcy courts in order to discharge their 
 liabilities on this account, unless they have exercised the good 
 judgment and foresight of providing themselves with such protec- 
 tion against such liability. 
 
 The injustice of this situation is most clearly demonstrated 
 in the case of competing contractors who put in bids on large con- 
 tracts for construction work within the State of Washington. The 
 prudent man feels the necessity of adding the cost of such an 
 employer's liability policy to the amount of his bid; and in addi- 
 tion to the amount that he has figured that the State of Wash- 
 ington will compel him to contribute to the Accident Fund in his 
 class. His competitor may not be financially responsible, or may 
 not be a prudent business man, and may, therefore, eliminate this 
 item of cost, and thereby secure the contract which should have 
 been awarded to the careful, prudent and financially responsible 
 contractor. This is only one fair example selected from a list of 
 hundreds of such cases of inequity and injustice that a jackpot 
 State insurance scheme operates to produce. 
 
 From these findings of fact with respect to the form of the 
 Washington Act, I have been forced to draw the following con- 
 clusions, to wit: 
 
 1. I am of the opinion that it is extremely doubtful whether 
 the Supreme Court of the United States will hold this law, or 
 any modified form thereof, to be constitutional. In this opinion, I 
 agree with a great majority of the ablest lawyers of this country, 
 
12 
 
 Judge Laffey, who is Chief Counsel for the Du Pont Powder 
 Company, is one of these lawyers with whom I agree. At this 
 t?me, Judge Laffey and his associates are defending an action 
 brought by the State of Washington against the Du Pont Powder 
 Company for the collection of approximately $9,000 on account of 
 levied assessments, penalties and contributions to the Powder 
 Mill Class of the Industrial Accident Fund, made necessary by 
 reason of losses arising out of a disaster that occurred in another 
 company's plant. 
 
 These contributions have been demanded of the Du Pont Powder 
 Company, notwithstanding the fact that this disaster occurred by 
 reason of no negligence -or fault on the part of the Du Pont 
 Powder Company, and notwithstanding the fact that the injured 
 employes and the dependents of those who lost their lives in this 
 disaster have not received the compensation provided by law. You 
 will remember that I have already stated that the Washington 
 Act does not insure anything or anybody. The Du Pont Powder 
 Company is also defending an action brought against it on ac- 
 count of personal injury damages sustained by one of its em- 
 ployes who was injured in the course of his employement that 
 came within the scope of the compensation law. 
 
 I am associated with the attorneys for the defendant in the 
 case of F. E. Hinkley vs. the Phoenix Lumber Company. This is 
 an action brought directly in the Federal Court by an injured 
 employe who sustained injuries in the course of his employment 
 that came within the scope of the Washington Act. Hinkley 
 refused to accept compensation from the State and brought this 
 action on the ground that, for the reason that I have stated, the 
 Washington Act is unconstitutional. There are a great many 
 other cases of the same kind now pending in the various courts 
 of the State of Washington. Employers are being sued by their 
 employes; employers are being sued by the State; and employes 
 are suing the State. While the facts stated make a serious situ- 
 ation, yet, in my opinion, the trouble has only barely begun. This 
 is a deplorable condition. 
 
 In view of the above stated facts and conditions, I do not 
 believe that you will seriously contend that the form of the Wash- 
 ington Act, or any modified form thereof, would not do great 
 
13 
 
 violence to the time-honored principles, theories and practices of 
 our government. I do not believe that you will contend that a 
 proposition to establish such a deplorable state of affairs in the 
 State of Montana should be easily, readily and generally accept- 
 able to employers, employes and 'society at large of this State. 
 
 2. Lest we may have overlooked some of the material facts 
 in this case, it may be edifying to refer back to the Report of the 
 Commission appointed by Hon. M. E. Hay, ex-Governor of the 
 State of Washington, for the purpose of investigating this prob- 
 lem, and see what illuminating facts that report discloses. I sub- 
 mit the report itself, and you will observe that it consists of 
 only five pages in this small pamphlet. That a law of this kind 
 should have been enacted, when based upon such a meager and 
 inadequate report, that shows upon its face utter lack of industry 
 and intelligence in its preparation, is an enormous crime when 
 we consider its manifold ramifications and its far-reaching effects 
 upon employes, employers and society at large. 
 
 This report is absolutely devoid of any adequate statement of 
 the material facts upon which this law is based. But this report 
 is pregnant with numerous misstatements of alleged facts that 
 have been shown to be false by experience under the practical 
 operation of the law. I will refer to two instances only, for the 
 reason that these two propositions constitute the justification for 
 the apporpriation from the General Fund of the State of Washing- 
 on the sum of $150,000 to pay the expenses of the administration 
 of this Act, which appropriation has proven to be grossly inade- 
 quate. This commission justified this proposition upon the follow- 
 ing alleged facts, to wit: 
 
 1. That the practical operation of this Act would reduce ex- 
 penses to the State and the several counties of the State by 
 eliminating litigation over personal injury damages, to the ex- 
 tent of at least $100,000. 
 
 2. That the practical operation of this Act would relieve the 
 various counties of the State from an enormous financial burden, 
 entailed by reason of caring for Injured workmen, their widows 
 and children who became public charges on account of injuries 
 sustained by these workmen in the course of their employment. 
 
 The fact is that this Act does not operate, and may not be 
 expected to operate to reduce the above mentioned court expenses. 
 
14 
 
 The fact is that employes injured in the course of their employ- 
 ment within the scope of this law, have been cast upon the various 
 counties of the State of Washington in much greater numbers 
 during the operation of this law .than before its adoption. 
 
 These things being true, there is no reasonable justification for 
 the appropriation of one single dollar of the taxpayers' money for 
 the purpose of administering this Act. The consumer and tax- 
 payer, by reason of the practical operation of this Act, pays an 
 increased price for the manufactured product that he buys, or 
 for the services that are rendered him, and also pays the expenses 
 of the administration of the Act itself, by taxation upon his 
 property. There is neither equity nor^ justice in such a proposition, 
 nor may we reasonably expect the citizens, consumers and tax- 
 payers of any State to be content to permit the continuance of 
 such a scheme for any very considerable length of time. In fact, 
 this element has already manifested itself. 
 
 3. This class of legislation should be permanent. Your bill 
 should be so drawn that the practical operation thereof will ac- 
 complish great good. Let me repeat. Your bill should be drawn 
 in such terms that it will be most easily, most readily and most 
 generally acceptable to the employer, the employe and the citizen- 
 ship of your -State; for, if it is not so drawn, then it must fall, 
 either by reason of being declared unconstitutional by the Supreme 
 Court of your State, or of the United States, or by reason of its 
 repeal by some subsequent session of your Legislature. And the 
 fall of a law of this kind, by reason of the happening of either 
 cf the events that I have mentioned, would be a State-wide calam- 
 ity. Now, you must agree with me that the above stated facts, 
 and the conclusions drawn therefrom, are sufficient to force any 
 reasonable, prudent man to concede this point, that your law 
 should be elective, rather than compulsory in form elective both 
 as to employer and employe, if the desired purposes and objects 
 of this class of remedial legislation is to become an accomplished 
 fact. 
 
 The plan of administration of the Washington Act, and the 
 plan of administration presented in the three bills that you have 
 under consideration and that I am discussing, presents some facts 
 that seem even more monstrous than the facts relating to the 
 
15 
 
 form of the Washington Act. Let us see what these facts are: 
 1. I find that the Industrial Insurance Commission, charged 
 with the administration of the Washington Act, consists of a po- 
 litical commission of three members; that the subordinates, num- 
 bering more than one hundred persons, are political appointees; 
 that the members of this commission, as well as their subordinates, 
 obtained their respective positions as a reward for political service 
 rendered, or to be rendered, without regard to competency and 
 experience in the particular work to be performed. The number 
 of these subordinates may seem large; however, the fact is that 
 the present number should be multiplied by ten, if the Act is to 
 be administered in an efficient, economical and satisfactory 
 manner. 
 
 You are an intelligent body of men; therefore, I do not need 
 to call your attention to the danger to society at large of such a 
 political organization administering such a big business that is so 
 full of political opportunities. The least misuse of the power 
 conferred upon this commission and its subordinates, under this 
 Act, might easily wreck any Commonwealth of this country. In 
 this connection, I want to add that neither the Washington Act 
 nor the bills that I am discussing provide any adequate rules of 
 limitation upon the conduct of such a political organization. 
 
 2. The history of the Washington Act shows that it was fath- 
 ered by a ring of politicians, for the purpose of catching the votes 
 of the Labor Party of the State of Washington. It was born of 
 a political scheme, rather than humane intentions and purposes. 
 I have yet to see any good thing emanate from such a source. 
 This attempt to build a political machine upon this business propo- 
 sition has been the downfall of one political party, and will result 
 in the disruption and destruction of any political party that may 
 attempt such an abortion. 
 
 Hundreds of the citizens of the State of Washington frankly 
 tell men that this Act has been administered largely along politi- 
 cal lines, even during the short time that it has been in force. 
 This charge is very significant, and should constitute a grave 
 warning to you. Under such conditions as I have already detailed 
 to you, neither employer, employe nor society at large may reason- 
 ably expect fair, equitable and honest treatment. 
 
16 
 
 3. Let us further examine the political phases of this proposi- 
 tion, particularly from the standpoint of the employer. I have 
 been informed that before the passage of the Washington Act, a 
 delegation of business men went to'Olympia, Washington, and 
 interviewed the politicians who were then advocating the passage 
 of the bill relative to the cost of the compensation provided in the 
 schedules of this law. I understand that these politicians told 
 this delegation of business men that the cost in Class 10 (lumber- 
 ing, milling, etc.), according to the statistics at hand, should not 
 exceed the sum of $1.50 per $100 of the payroll in this class, which 
 cost was the same as the casualty companies were then charging 
 in this class for employers' liability policies. This satisfied these 
 employers. 
 
 These politicains either did not know what the cost would be, 
 or they misrepresented the fact to these employers. When seven 
 monthly calls of assessments had been made on employers in 
 Class 10 (lumbering, milling, etc.), the flat cost amounted to the 
 sum of $1.46 per $100 of the payroll in this class. That was in 
 May, 1912, several months prior to election time. The administra- 
 tion forces were vitally interested in the result of that election. 
 Accidents were being reported in large numbers in this class. The 
 administration forces could clearly see that the cost in this class 
 must necessarily greatly exceed the amount that these politicians 
 had said that it should be. Something had to be done to save 
 the day. Should the fact become generally known that the cost in 
 this class would be $2.50 per $100 of the payroll, and still leave a 
 deficit in that fund, the political party then in power was doomed; 
 therefore, further calls in this class were passed; settlments were 
 deferred as far as possible. Necessary reserves were not made to 
 mature accruing liabilities. The Industrial Insurance Commission 
 books were closed on September 30, 1912, and the commission's 
 report shows that at that time the fund in Class 10 contained 
 only $590, and the flat cost had amounted to $1.46 per $100 of the 
 payroll in that class, notwithstanding the fact as to the methods 
 employed to make a "good showing." 
 
 Necessarily, the condition in this class was such that, imme- 
 diately after election, it was imperative that the commission make 
 several calls of assessments in this class, in quick succession, for 
 
17 
 
 
 
 the purpose of retiring liabilities that accrued and should have 
 properly been returned under the business for the year ending 
 September 30, 1912. This fact was a rude surprise to every em- 
 ployer within that class, as well as to many other employers who 
 were not interested in that class. The political party in power 
 during the first year of the administration of this Act was also 
 charged with the investment of the reserves segregated from 
 the Accident Fund. 
 
 It is a strange coinicidence that the sum of $80,500 one-third 
 of the total reserves made and invested from this Accident Fund 
 went into bonds of the cities and school districts of the Yakima 
 Valley, the scene of the hottest political battle in the State. 
 
 One of the leading business men of the State of Washington, 
 who is the manager of the biggest business in that State, has 
 estimated that on September 30, 1912, there was in fact an enor- 
 mous deficit, amounting to approximately $300,000, in the fund of 
 Class 10. We should not lay these faults at the doors of the men 
 charged with the administration of this law. The fault lies with 
 the plan of administration of the law that makes this "probable" 
 condition at all "possible." 
 
 4. Notwithstanding the political activities of the party then 
 in power, represented by ex-Governor Hay, that party met its 
 Waterloo at the last general election in the State of Washington, 
 held in November, 1912. That administration has been succeeded 
 by a Democratic administration. "To the victors belong the spoils." 
 Mr. Hugh C. Todd, who is the Democratic State chairman, and 
 ether Democrats in influential positions, have issued an ultimatum 
 wherein it is stated that a clean sweep of all administration offi- 
 cers and their subordinates is to be the rule. All of those who 
 have any knowledge of the Washington Workmen's Compensation 
 Act, or who have any experience in its administration, will be let 
 out automatically. Their positions will be filled, no doubt, by 
 inexperienced officials and subordinates. 
 
 Should your competitor and neighbor establish his business 
 Mpon the above stated basis, what would you think of his business 
 sagacity and judgment? Would you therefore conclude that the 
 best thing for you to do would be to adopt his system because 
 both of you were engaged in the same class of business, in the 
 
18 
 
 same locality, and were subject to the same trade conditions ? 
 Would you do so on any consideration whatsoever? I believe 
 not, for the reason that no prudent man would expect efficient, 
 economical and satisfactory service under such a system. 
 
 5. Let us see who contributed to the defeat of the political 
 party that fathered the Washington Workmen's Compensation 
 Act, and under whose administration it was put into operation. In 
 a lengthy article published in the Seattle "Post-Intelligencer" on 
 January 14, 1913, ex-Governor Hay admitted, over his own signa- 
 ture, that he was advised of one instance in which fifteen big 
 employers of the State gave $500 each for the purpose of defeat- 
 ing him on account of the egregious blunder that he had made in 
 connection with the Washington Workmen's Compensation Act. 
 If these fifteen employers mentioned by ex-Governor Hay are 
 known to have taken such an interest in this matter, what were 
 the other dissatisfied employers doing? And those other dissatis- 
 fied employers constitute quite an army. There is a difference 
 between "telling the truth" and "telling the WHOLE truth." Why 
 did not Mr. Hay make a full confession and tell us about the united 
 opposition of several of the large labor organizations in the State 
 of Washington, and state the amounts expended by them in his 
 Jefeat? Should he have done so, he would have stated the propo- 
 sition fairly, so that the whole world might have known what the 
 true attitude of both employers and employes in the State of 
 Washington is with respect to the form of the Washington Act 
 and the plan of its administration. 
 
 You will remember that in the beginning I stated that my 
 treatment of this subject would be largely from the standpoint 
 of the employer. The Washington Act works great injustice to 
 the employe, one element of which injustice I have already illus- 
 trated. The compensation awards are improperly and indequately 
 arranged, i. e., the law promises sure and speedy relief, but in- 
 jured persons have to wait sixty to ninety days, and longer, for 
 any relief at all. 
 
 At the time of the injury, when relief is imperative, the claim- 
 ant receives only long technical reports to be filled out and for- 
 warded to the commission. The commission handles the investi- 
 gation and awards by correspondence. The employer, employe 
 
19 
 
 and surgeon must do the work while the commission boasts of its 
 small percentage of expense for the administration of the law. 
 The following is the prescribed routine before claims are honored 
 for settlement: 
 
 1. Workmen's Claim for Compensation (Form 22). 
 . 2. Employers' Report of Accident (Form 21). 
 ] 3. Report of Attending Physician (Form 23). 
 
 4. Report of Witnesses, if any (Form 28). 
 
 1. Scrutiny of Claims by (a) Claim Agent, 
 and (b) Chief Medical Advisor. 
 
 2. Procuring of Form 27 or Form 36. 
 
 3. Summary and Estimate of Claim. 
 
 4. Submission to Commission. 
 
 1. Adjudication by Commission. 
 , 2. Issuing of Voucher by Claim Agent. 
 
 3. Checking on Minutes. 
 
 4. Return of Voucher and Issuance of Cash Warrant. 
 
 The prosecution of a claim by an injured employe, or his de- 
 pendents, under this system, is almost as tedious a matter as 
 the prosecution of a soldier's pension claim before the United 
 States Pension Office. The prosecution of a claim before such an 
 Industrial Accident Commission would be like taking a course in a 
 correspondence school. 
 
 Fearing that some of you may still be in doubt as to whether 
 or not the Washington Act is in fact wholly unsatisfactory to 
 every intelligent employe, I desire to read a statement printed in 
 the "Evening Telegram," published in Portland, Oregon, on Janu- 
 ary 14, 1913, which statement is signed by thirty-one business 
 agents and delegates to the Building Trades Council of Portland, 
 Oregon, which business agents and delegates represented thirty- 
 one of the largest labor unions in the State of Oregon in an indig- 
 nation meeting caled for the purpose of protesting against the 
 passage of a Workmen's Compenstaion bill based upon the Wash- 
 ington Act, said bill being a duplicate of one of the three bills 
 before the Montana Legislature, which bills we now have under 
 discussion. 
 
 By way of explanation, I will say that the State of Washing- 
 ton is separated from the State of Oregon for a distance of more 
 than three hundred miles by the Columbia River only. Employes 
 
20 
 
 in the State of Oregon frequently go up into the State of Wash- 
 ington and work in the industries that come within the scope of 
 the Washington Act. These employes have friends and relatives 
 who reside in all parts of the State of Washington, and who earn 
 their daily bread selling their labor to employers whose busi- 
 nesses come within the scope of the Washington Act. No one 
 will deny the fact that the business agents and delegates who 
 signed the statement that I am about to read to you know very 
 nearly all about the practical operation of the Washington Act 
 from the standpoint of the employe. These business agents and 
 delegates say: 
 
 The employers, now, in the construction of large buildings in 
 Oregon, plank the floors as they go up, and if a man working 
 on the tenth or fifteenth floor falls, he only has a few feet to 
 drop. Did they do that before the present Employers' Liability 
 Law? They did not. Do they do so in Washington, where they 
 have this Act? They do not. On the Smith building, now being 
 constructed in Seattle, the same being over twenty stories high, 
 nothing above but blue sky and nothing below twenty-thirty- 
 forty stories except death on the hard ground, hundreds of feet 
 below, with only a narrow girder to walk or work on, and a 
 large crane swinging heavy steel girders over your head, which 
 the workman must catch and help put in place. This is all the 
 protection to life and limb that the Washington Workmen's 
 Compensation Law gives the poor iron workers. We do not 
 want this kind of compensation. We want protection for our- 
 selves, and we will keep our families. 
 
 Hundreds of other instances of this same character may be 
 cited in the hazardous trades in the State of Washington. 
 
 In Oregon as soon as a man is hurt, he is at once rushed to 
 the hospital and the best medical aid that can be obtained is fur- 
 nished. This the corporation pays for, regardless of whether or 
 not the man sues, as it is better to give the man humane and just 
 treatment, with a better chance of a settlement of claim out of 
 court. 
 
 From May 20, 1911, to September 30, 1912, there were 5,179 
 accidents, with 164 deaths reported in Oregon. This is a record 
 for fifteen months under our present law, as against the Com- 
 pensation Law in Washington, with 13,000 accidents in twelve 
 months, almost two-thirds more accidents in Washington under 
 Compensation than in Oregon under present law, or a total of 
 7,821 more accidents In Washington in one year than in Oregon 
 In fifteen months. 
 
 If there are any humanitarian principles in the proposed Com- 
 pensation Act, we have failed, up to this time, to find one lone 
 clause In said Compensation Act which looks humane to us. We 
 do not want cripples and parts of men to the difference of over 
 
21 
 
 7,821 per year, at any rate of compensation. Under the Washing- 
 ton Act, employers do not safeguard their employes, and therefore, 
 accidents are not lessened, but on the contrary, are increased 
 three-fold, because the employer can accomplish a considerable 
 more work and at a much less cost, by eliminating these pre- 
 cautionary measures, and he only pays a certain amount to the 
 Fund. If he kills or maims a few more workmen, why there will 
 be plenty of others to take their place, and the work goes on much 
 faster. What does such a Compensation Act mean to us? It 
 means to us who work under these conditions, loss of life, it 
 means broken backs, amputated arms and legs, and other in- 
 juries too numerous to mention; and what about our wives and 
 families? 
 
 I contend that this proof is clear, strong and convincing. I 
 contend that I need not submit any further proof to you, as rea- 
 sonable men, that the Washington Workmen's Compensation Act, 
 or any modified form thereof, will be wholly unsatisfactory to 
 both employers and employes. You should not delude yourselves 
 by believing that the plan of your three bills that I am discussing 
 all of which are based upon the Washington Act may operate 
 any more satisfactorily than does the Washington Act itself; 
 therefore, these three bills are wholly undesirable and deserve 
 the condemnation of each and every member of these committees. 
 
 In view of the facts that I have stated in connection with the 
 three propositions of exchanging the Employers' Common Law 
 Liability system of Montana for the Workmen's Compensation 
 idea of Washington, I am convinced that your are willing to con- 
 clude with me that such an exchange is wholly undesirable. But 
 what about the proposition of exchanging our worn-out Employ- 
 ers' Liability system for the New Jersey Workmen's Compensation 
 idea? 
 
 Is it even desirable that we should accept that proposition at 
 this time? That proposition is the only one left, after having 
 eliminated the three propositions heretofore named. In passing, 
 1 might mention the fact that the New Jersey Act was fathered 
 by President-elect Woodrow Wilson, of New Jersey. That Act 
 is the fruit of his long, patient study of this subject, and is his 
 best judgment with respect to this matter. 
 
 In order that you may appreciate the standard by which I 
 have measured the three propositions that I have discussed, and 
 fully understand the conclusions that I have reached with respect 
 
22 
 
 to them, I shall now state what I consider to be, and what every 
 author on this subject considers to be, the primary basic principles 
 of every Workmen's Compensation law that is in force, and that 
 is operating satisfactorily from the standpoint of employer, em- 
 ploye and society at large. These basic principles are as follows, 
 to wit: 
 
 First: That such a law should operate to do PROMPT, aver- 
 age justice. 
 
 Second: That it should operate to prevent accidents. 
 
 I will say that, as incidents to these propositions, the practical 
 application of these basic principles should accomplish the fol- 
 lowing very desirable objects, to wit: 
 
 1. Eliminate litigation over personal injury damages, and 
 thereby rid society of the "ambulance chaser," the "shyster" and 
 the contingent fee doctor all of whom are parasites. 
 
 2. Put PROMPTLY into the pockets of the injured employe, 
 or his dependents in the event of his death, reasonable compen- 
 sation for the loss sustained, without any diminution in transit. 
 
 3. Give the Injured employe immediate, efficient medical at- 
 tention as and when the same is needed. 
 
 4. Eliminate strife and dissension between the employer and 
 his employes, and cement a bond of good feeling between them. 
 
 5. Effectively eliminate State and county expenses in the 
 shape of court costs incident to this class of litigation, and county 
 expenses incident to the care of injured employes and their de- 
 pendents who have heretofore become public charges. These very 
 desirable objects have not been accomplished under the Washing- 
 ton Act, and we may not expect them to be accomplished under 
 any modified form and plan of the Washington Act, as has been 
 shown by the records of the courts and county hospitals of the 
 State of Washington for the period beginning October 1, 1911, 
 and ended January 1, 1913. 
 
 6. Effect the most efficient and the most economical admin- 
 istration of the law. 
 
 The facts that I have submitted constitute clear, strong and 
 convincing proof that State-administered insurance of Workmen's 
 Compensation as attempted under the Washington Act, and as is 
 contemplated in three of your bills, is an absolute failure in this 
 country. History shows that it has been a failure in every foreign 
 country that has adopted this system. It is a failure from an 
 economic, politic and social standpoint, because it is socially, 
 
23 
 
 politically, morally, economically and legally unsound in principle 
 and practice. 
 
 I have measured the Minor Bill, which is based upon the New 
 Jersey idea, by the same standard, and find that it contains full 
 measure according to the standard that I have outlined, except that 
 it is compulsory in form, instead of elective. It should be made 
 elective, both as to employers and employes. I, for myself per- 
 sonally and for my clients, insist that you make it elective in 
 form, if you conclude to recommend its adoption. Should you in 
 your wisdom conclude to recommend its adoption, you will be 
 following in the footsteps of the legislation of fourteen of our 
 sister States, wherein such laws have been passed and have be- 
 come effective. You will be following in the footsteps of the 
 commissions appointed by Governors of the States of New York, 
 Minnesota and Missouri all of which commissions, after an ex- 
 pensive and thorough investigation of this question, concluded 
 that the facts disclosed by the practical operation of the Work- 
 men's Compensation Law of the State of New Jersey proved be- 
 yond any reasonable doubt that the New Jersey idea is by far the 
 most desirable idea. 
 
 The Workmen's Compensation Law of the State of New Jersey 
 is not found wanting in any particular when measured by the 
 standard by which I have measured the Washington Act. It re- 
 moves the bone of contention between the employer and the 
 employe as to the amount to be paid in case of accidental inju 
 by fixing that amount by law. It places the liability for com- 
 pensation directly upon each individual employer, thereby increas- 
 ing the vigilance on his part to prevent accidents. If accidents 
 do not occur, the employer will not have to pay compensation. 
 Experience has shown that every employer's watchfulness to pre- 
 vent accidents is increased in direct proportion to his direct 
 liability. This fact is admitted by the Industrial Insurance Com- 
 mission of the State of Washington on page 299 of the commis- 
 sion's first annual report, where we find this recommendation for 
 amendment, to wit: "First Aid, 14 (A) That the employer in 
 whose plant an accident occurs shall be Habile for the treatment 
 cost of such injury in an amount not to exceed $100 the intent of 
 such provision being to supply an injured workman immediate and 
 
24 
 
 competent first-aid, and to operate in reducing preventable acci- 
 dents." 
 
 If a direct liability in the sum of $100 will operate to accom- 
 plish this result, what may we reasonably expect when the whole 
 liability for compensation is placed directly upon each individual 
 employer? I heard the one single employer who has addressed 
 these committees, and who has advocated a jackpot State insur- 
 ance scheme, say that accident prevention was a very secondary 
 consideration in this matter. I believe he is mistaken. Every 
 employer who has appeared before you has emphasized the point 
 of accident prevention. Every author who has written on this 
 subject has agreed that accident prevention is probably the very 
 most important point in this matter; and that it may be suc- 
 cessfully accomplished in one way only, i. e., by placing the whole 
 liability for compensation directly upon each individual empkyer. 
 
 If all of our legislators were proposing Workmen's Compensa- 
 tion laws that embodied this system, we should not have any 
 large bodies of intelligent, honest and courageous employes con- 
 vening in an indignation meeting for the purpose of remonstrating 
 against this class of proposed legislation. If the Washington 
 Act embodied the fundamental principles that I have named, you 
 would not hear me raising my voice in depicting the deplorable 
 conditions, pernicious practices and monstrous tragedies existing 
 and being enacted at this time in the State of Washington, under 
 the practical operation of her Workmen's Compensation Act. For 
 the system that I have outlined as desirable operates to do 
 prompt average justice and to prevent accidents; and fully accom- 
 plishes all of the enumerated incidents that I have heretofore 
 mentioned in connection with my statement of the fundamental 
 basic principles of every good Workmen's Compensation law. 
 
 When your Minor Bill has been made elective in form, it will 
 "operate in the same manner as the New Jersey Act, and accom- 
 plish all of the desirable objects and purposes of that act; there- 
 fore, it is the only proposition that you have submitted to you 
 that is desirable. 
 
 Every employer within the State of New Jersey whose opera- 
 tions come within the scope of this Act, with the exception of 
 three employers, has elected to accept the compensation provisions 
 
25 
 
 of that law. Every employer in that State who does not feel that 
 he is financially able to carry his own risk, purchases a Work- 
 men's Compensation policy of a reliable casualty company for the 
 benefit of his employes; retires his liabilities on account of Work- 
 men's Compensation from year to year, and does not have to 
 worry for fear that the Act may be declared unconstitutional 
 by any court, or that it may be repealed and thereby force him 
 into bankruptcy by reason of an enormous volume of personal 
 injury damage claims and suits. This accident insurance for the 
 benefit of his employes is procured at a reasonable cost, rated 
 upon the hazard of his risk, and its practical administration is 
 eminently satisfactory to all parties concerned. It is satisfactory 
 to the employer because its cost from year to year is definite. It 
 is satisfactory to the employe because he receives prompt, fair 
 and equitable compensation, based upon a reasonable percentage 
 of his loss of earning capacity. His compensation is absolutely 
 certain. In consideration for this treatment, and in consideration 
 for the abrogation of his employer's common law defenses, he is 
 satisfied and willing to accept approximately the sum of 50 per 
 centum or his loss of wages for the periods limited by law in the 
 various classes of injuries. 
 
 Let me emphasize the fact that the cost to the employer is 
 such that the employe must be willing to share a fair portion of 
 the burden if the employer is to be able to pay the compensation 
 and still continue to operate his business. If the burden should be 
 made so heavy that the employer cannot operate his business ex- 
 cept at a loss, then there will be no employment, and, therefore, 
 no necessity for compensation to injured employes. In this con- 
 nection, I might state that one large industry furnishing em- 
 ployment to several hundred men in the State of Washington 
 was offered for sale on account of the passage of the Washing- 
 ton Act; that an eastern buyer was secured who was willing to 
 buy the business at a figure representing the investment of ap- 
 proximately $500,000.00 and continue to operate the plant; but 
 that upon investigating labor laws, he discovered the Wash- 
 ington Workmen's Compensation Act and promptly refused to 
 negotiate further for the purchase of this business, or any other 
 business located in any of the States of the Northwest, saying 
 
26 
 
 that his reason for so doing was the fact that the northwestern 
 Sates are passing through a period of "fads and fancies" in labor 
 legislation, and that he and his associates would not come into 
 any of these States. The States of Montana and Idaho should 
 take advantage of this situation and enact, safe, sane, workable 
 Workmen's Compensation laws that will invite capital to develop 
 your wonderful resources, establish new industries, multiply 
 your payrolls and increase your prosperity. 
 
 The employer to whom I have heretofore referred, who ad- 
 dressed you and advocated the passage of a law, based upon 
 the Washington Act, and who foolishly stated that accident 
 prevention is a matter of little importance, also dragged an en- 
 tirely disinterested party and an entirely immaterial matter into 
 this discussion, i. e., the casualty company and its Employers' 
 Liability policy. In this connection, he made some misstatements 
 of facts that warrant me in making an explanation in order that 
 there may be no misunderstanding. I am unable to design his 
 purpose in so doing, unless, perhaps he did so for the purpose 
 of appealing to such low motives as Bias and Prejudice, which 
 motives are illusory and unreliable for the reason that judgment 
 based upon these motives is usually wrong. I am certain that 
 these motives will not be premitted by such intelligent men as 
 yourselves to enter into or form a part of the basis of your 
 judgment in this case. 
 
 Now, a Workmen's Compensation policy is practically the same 
 as the Workmen's Collective policy that has been written by 
 the casualty companies for a number of years. Whenever I 
 have seen the Accident Department of an industrial business ad- 
 ministered under a Workmen's Collective policy, I have noticed 
 that all of the desirable objects and purposes, contemplated in 
 your Workmen's Compensation laws, have been an accomplished 
 fact. Every employer who has procured such a policy for the 
 benefit of his employes and has operated his business thereunder, 
 will verify this statement. Workmen's collective policies and Work- 
 men's Compensation policies differ from Employers' Liability 
 policies as the day differs from the night. 
 
 I am now speaking from actual knowledge of these matters, 
 gained from several years' experience in the administration of 
 
27 
 
 the affairs of the accident departments for a number of large em- 
 ployers in Washington, Idaho and Montana. Workmen's Col- 
 lective policies, provided by the employer, for the benefit of his 
 employes and administered directly by the employer, or by my- 
 self as his Claim Agent or Attorney, have always produced hap- 
 piness, contentment and satisfaction amongst our employes; has 
 entirely eliminated lawsuits and antagonism between employe 
 and employer; and has cemented a bond of general good feeling 
 between these employes and their employers. 
 
 A workmen's compensation policy, written by a casualty 
 company under a workmen's compensation law, may be expected 
 to accomplish the same result in a much higher degree. What 
 more could one desire? But let me reassert and emphasize the 
 fact that this condition cannot be produced through the medium 
 of State administered insurance of Workmen's Compensation, 
 under which system a political machine is thrust directly between 
 the employe and his employer. Let us not deceive ourselves 
 with respect to this important matter. 
 
 It is a fact that the New Jersey Act has operated so that in 
 less than one per cent of the cases wherein an injured employe 
 or his dependent is entitled to compensation does the case find 
 its way into the courts. The bone of contention between the em- 
 ployer and the employe has been removed, therefore, there is 
 little excuse for litigation. Formerly New Jersey employers did 
 the same as Montana employers, i. e., they purchased Employers' 
 Liability policies of the casualty companies. The Employers' Li- 
 ability policy is written exclusively in the interest of the employer. 
 
 The casualty companies are not to blame for this existing evil 
 condition, which we have already agreed should be abolished. The 
 fault is that of the law and the practice thereunder. Every 
 casualty company in America agrees with us that the fault lies 
 in the system, and they also agree with us that the system should 
 be changed by a law, the form and plan of which is fair and 
 equitable, and the practical operation of which will accomplish 
 the greatest good to the greatest number. 
 
 I was living in the State of Washington when this Act was 
 born. I have watched its wild, mad career ever since. I have 
 seen the pernicious practices that I have detailed yes, I have 
 
28 
 
 seen tragedies enacted under it. Let me illustrate: I know an 
 illiterate foreign employe who was injured last year while in 
 the course of his employment in an occupation that comes within 
 the scope of the Washington Act. Now, his case was an ordinary 
 case, and went the usual routine. He had little money and few 
 friends. His injury confined him to his room for a long time. 
 He immediately enrolled in the Washington Industrial Insurance 
 Commission's Correspondence School in his attempt to prosecute 
 his own claim for compensation. In passing, I might add that the 
 presentment and prosecution of such claims by educated and in- 
 telligent parties who may represent injured employes, has, for 
 some unknown reason, been frowned upon and an order issued 
 by this Commission forbidding this practice. 
 
 In this man's case, days passed by, weeks lapsed into months 
 long, long months. As the pangs of hunger gnawed at his vitals, 
 and as his body was racked by pain and suffering, in his agony 
 he began to meditate, and in these dreary hours of meditation, 
 he began to make a mental picture of the Washington Industrial 
 Insurance Commission's office. Being somewhat an artist, he 
 then took his pencil and transferred this mental picture, bit by 
 bit, to a piece of wrapping paper. The marvelous result is a 
 work of art. I named it, "One Way To Run A Big Business." 
 
 This sketch partically shows three sides of a typically pre- 
 tentious government building that is labeled the "'Washington 
 Industrial Insurance Office." The top of this building may also 
 be seen, and on the top we observe a large funnel leading into 
 this building, and this funnel is surrounded by an army of em- 
 ployers and taxpayers who are industriously shoveling cash into 
 this hopper. On the left may be seen an approaching army of 
 lean, inexperienced incoming politcial appointees to take up the 
 duties of the administration of the affairs of this office. On the 
 right, we behold the army of sleek, well-groomed, though dis- 
 consolate, retiring political appointees, whose fate has been de- 
 termined by the voters at the polls. In the foreground may be 
 seen an army of poor, pitiable cripples and orphans and widows 
 passing out from this mill. They, too, appear disappointed, down- 
 hearted, disconsolate and sad in a measure, that beggars descrip- 
 tion they are those who, after having written and written and 
 
29 
 
 written to the officials of this office, pleading for immediate re- 
 lief and prompt assistance, have gone in person, at great ex- 
 pense and inconvenience to themselves, to ascertain the cause 
 
 
 of delay, and if possible, to obtain the benefits to which they are 
 entitled under the law, or at least, hasten the rendition of the 
 commission's final judgment of award. 
 
 Now, this is a pathetic story, and the scene that I have de- 
 picted is a touching picture of actual life; but the real conclusion 
 of this story is reached when this poor, illiterate, though intel- 
 ligent and gifted foreigner, who had lost practically the entire 
 sight of one eye as the result of the injury mentioned, was event- 
 ually tendered a voucher in the sum of $35.75, intended to be 
 full and final payment of his claim, and was asked to sign an ac- 
 quittance to the State of Washington, ackowledging payment in 
 full for the injury sustained by him. 
 
 But that is not all, for, fortunately, he did not accept the 
 voucher and execute the release, but upon the counsel and ad- 
 
30 
 
 vice of a friend, made inquiry of this commission as to whether 
 he was not entitled to greater compensation for such an injury. 
 Considerable pressure has to be brought to bear upon this com- 
 mission, in order that this man might receive a fair amount of 
 compensation to which he was justly entitled without delay. The 
 sum finally agreed upon was that of $750.00. Now, that picture 
 represents the enactment of a monstrous tragedy, the like of 
 which is no doubt being enacted daily in the practical operation 
 of the Washington Ast, as administered by a political board, not 
 governed by adequate rules of limitation, and surrounded by con- 
 ditions that make it desirable to make a "good showing." 
 
 This is the case of Dominic Morelli vs. Industrial Insurance 
 Commission of the State of Washington. 
 
 Now, I have heard Mr. Donahue, the Labor Leader on this 
 floor, say that he, for himself and for his party, is willing to 
 concede practically everything in the matter of mere detail in 
 the Murphy Bill, which is a duplicate of the Washington Act, ex- 
 cept that the scale of awards has been increased by fifty per 
 centum, but that they will not concede the PRINCIPLE. That 
 is the exact position of every labor leader from the National 
 Federation of Labor leaders down. That principle is that of 
 idealism, paternalism and socialism engrafted upon a political 
 system unfit for its administration; and its adoption means wreck 
 and ruin. The rank and file of common labor entitled to benefits 
 under such an act, is not so much interested in the matter of tKe 
 principle as in the matter of the practice under whatever system 
 you may adopt. The common laborer is intensely interested in 
 this point, and is willing to concede the objectionable principle 
 and the pernicious practices entailed by its adoption, if he be given 
 a system, the administration of which results in prompt, fair 
 and equitable justice and forces his employer to be extremely 
 careful of the life and limb of his employes. I have submitted 
 the clearest, the strongest and the most convincing proof of this 
 fact. 
 
 In conclusion, I desire to state for myself personally, for my 
 clients who are employers, and for their employes, that we are 
 unalterably oposed to every plan of State administered insurance 
 of Workmen's Compensatidn on account of the deplorable facts 
 
31 
 
 that my investigation has disclosed with respect to the operation 
 of such laws, and for the reason that we firmly believe such 
 laws to be inimical to the general welfare of employers, employes 
 and society at large. For myself personally, for my clients and 
 for their employes, I shall say that we are heartily in favor of a 
 Workmen's Compensation law in substantially the form and plan 
 of the Workmen's Compensation Law of the State of New Jersey, 
 for the reason that such a law will be a desirable and permanent 
 piece of remedial legislation, and that its practical operation will 
 be an inestimable benefit to all parties concerned. In the interest 
 of the citizenship of the great and prosperous State of Montana, 
 I appeal to you at this time to let your verdict in this all-im- 
 portant matter be based upon good judgment. Recommend a safe, 
 sane, workable Workmen's Compensation bill that may become 
 a law, and it will stand as a memorial to your wise judgment. 
 
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