GIFT 
 ! 39 1914 
 
 Workmen's Compensation 
 and Insurance 
 
 in 
 
 France, Holland and Switzerland 
 
 A Series of Letters 
 
 by 
 Harold G. Villard 
 
 Revised and Reprinted 
 January, J9J4 
 

Workmen's Compensation 
 and Insurance 
 
 in 
 
 France, Holland and Switzerland 
 
 A Series of Letters 
 
 t>7 
 Harold G. Villard 
 
 Revised and Reprinted 
 January, J9J4 
 
The following letters, written from various points in Europe, be- 
 tween July, 1912, and June, 1913, contain the results of studies of the 
 practical operations of the French, Dutch and Swiss workmen's in- 
 surance laws, besides a brief discussion of the recent Swiss legislation, 
 which is not yet in effect. No attempt is made at a complete analysis 
 of the various statutes discussed. For that information the reader 
 should consult the Reports and Bulletins of the United States Bureau 
 of Labor. 
 
 In this reprint a number of corrections and of additions to the statis- 
 tical data have been made. 
 
 HAROLD G. VILLARD. 
 
 205 West 57th Street, New York. 
 December, 1913. 
 
 678980 
 
CONTENTS. 
 
 French Accident Compensation Law: Page. 
 
 Experience thereunder Principles and Objects of the Law 
 
 Misconstruction Growing Abuses 7 
 
 Insurance thereunder Self, State, Co-operative and Corporate 
 Insurance State Insurance not in favor Showing of Pri- 
 vate Companies State Monopoly Idea 15 
 
 Principal Abuses thereunder Increased Cost Litigation over 
 
 and Pensions for Trifling Injuries Medical Abuses 23 
 
 French Sickness Insurance Law: 
 
 Voluntary Mutual Associations Government Subsidies Recent 
 
 Progress and Growing Importance Defects 33 
 
 French Old Age Pension Law: 
 
 Reasons for its Non-Success and Unpopularity 39 
 
 Dutch Accident Compensation Insurance Law: 
 
 How Compensation Insured Functions performed by the State 
 
 Extent of Abuses Some Defects ..." 42 
 
 State versus Private Insurance Higher Cost and Disadvan- 
 tages of Former Disappearance of Self Insurance, Eclipse 
 of Corporate Insurance and Rise of Mutual Insurance .... 48 
 Dutch Experience in Agricultural Accident Insurance: 
 
 Voluntary In Mutual Associations Favorable Experience ... 60 
 Recent Swiss Workmen's Insurance Legislation: 
 
 Good and Weak Points of the Measure Peculiar and Novel 
 Features, and Reasons therefor The Sickness Insurance 
 
 Law The Accident Insurance Law 63 
 
 Swiss Experience in Military Insurance: 
 
 An Instructive Ten Year Test of State Insurance Unfavorable 
 
 Experience 78 
 
FRANCE 
 
 Experience Under the Workmen's Accident Compensation Law.* Prin- 
 ciples and Objects of the Law. Misconstructions. Grow- 
 ing Abuses. 
 
 Following the example set by Germany in 1884, practically all the 
 leading industrial nations of Europe have, since then, passed laws af- 
 fecting the compulsory insurance of workmen against accidents arising 
 in the course of their employment. As is well known, this form of 
 legislation has all been based on the same general theory of partial 
 reparation and of a division of the loss arising from the accidents be- 
 tween masters and workmen. Instead of employers being liable, as 
 heretofore, only in cases where negligence could be imputed to them, 
 they are obliged to indemnify victims of accidents in all cases. On 
 the other hand, employees injured through no fault of their own re- 
 ceive, not full, but only partial, compensation, while those at fault 
 have their loss in earnings made partially good, instead of receiving no 
 redress from their patrons, as was the previous custom. 
 
 In every case, workmen are to forego full compensation, and in no 
 instance are employers to be mulcted to the full extent of their previ- 
 ous liability. To relieve the laborer from all loss or penalty in case 
 of accidents, one-half of all of which are usually due to his negligence, 
 would throw an unfair burden on the employer, and would tend to de- 
 moralize the workman by making him indifferent or careless. In order 
 to prevent the simulation of accidents, and to make the victims anxious 
 for their hurts to heal quickly, an employee should never be allowed 
 to turn an injury into a source of profit. The accident-insurance 
 statutes were, therefore, purposely intended to be only partially repara- 
 tive, and were not meant to be a means of bestowing alms or charity 
 on any one. 
 
 What the Object Is. 
 
 In discussing this class of legislation, another fact should be borne 
 in mind, namely, that its object is not to make amends for the mutila- 
 tion or disfigurement of the human body, but merely to compensate in 
 
 *Reprinted from New York Evening Post of March 29, 1913, by per- 
 mission. 
 
part for any reduction in wages resulting from that loss. A victim 
 may be terribly seared and scarred, but he is not entitled to receive 
 any satisfaction for the loss of his good looks, unless accompanied by 
 a diminution in his wage-earning capacity. No sentimental reasons, but 
 purely business principles, should be applied in the interpretation of 
 accident insurance statutes. The probable salary after, as compared 
 wi'r-h: that; aretl before the occurrence of the injury, should be the 
 basis oh- wHitrh" any compenoation is to be estimated. In the considera- 
 tion of French or any other legislation on accident insurance, these 
 general rules or observations should be kept in mind. 
 
 When the French statute was passed in 1898, its sponsors clearly 
 understood that it was based on the idea of give and take. As one 
 Senator defined it: "The law is in the nature of a bargain; for, if it 
 obliges the head of an industrial undertaking to make good the loss in- 
 curred by the victim, without inquiry as to the cause of the accident, 
 on the other hand, it only makes the patron responsible for a part of 
 the damage suffered." 
 
 Unfortunately this original basis of the law has been more and 
 more lost sight of, and the tendency is to construe and amend the act 
 as though intended to make the employers the ones to be held re- 
 sponsible for any damages resulting from accidents. Disregarding the 
 fact that the employees were to share the burden, too, both courts and 
 legislature are daily more inclined to interpret and to change the law 
 so as to aid the injured as much as possible in their efforts to obtain 
 compensation from their superiors. The statute has come to Joe re- 
 garded more as a species of class legislation and as a measure directed 
 against the employers in the interests of the workingmen. Hence the 
 feeling that the poor and unfortunate should be favored whenever pos- 
 sible in their attempts to recover from the well-to-do masters and that 
 the employees and physicians are acting quite legitimately and entirely 
 within their rights in endeavoring to turn the law into as great a 
 source of pecuniary profit to themselves as possible. 
 
 Other Grave Evils. 
 
 Besides becoming thereby a socialistic instrument of oppression, 
 this narrow construction of the law has entailed other grave evils. The 
 laborer no longer looks upon an injury solely as a great misfortune; his 
 principal thought now is how, by exaggeration or otherwise, to make 
 his hurts produce for him the largest monetary return. Forgetting the 
 place assigned to him of impartial arbiter between conflicting interests, 
 the physician has assumed the law to have been enacted for his pecu- 
 niary benefit, too, and feels justified in swelling his charges for treat- 
 ment to the maximum possible amount, basing his attentions more ac- 
 cording to the size of the employer's purse than to the victim's station 
 in life. Lastly, the reform of the law and the doing away with abuses 
 has become very difficult, because the radical socialistic majority in 
 the Chamber of Deputies is disinclined to adopt any amendment urged 
 
 8 
 
by employers, fearing that it may in some measure interfere with or 
 curtail the rights or privileges of the workingmen. Indeed, the ten- 
 dency is all the other way to let down the barriers still further and 
 to facilitate the mulcting and exploitation of the employing class. 
 
 Passing now to the interpretation of the law in French courts, com- 
 pensation in cases resulting in permanent partial disability is fre- 
 quently erroneously based on the bodily injury received. A workman 
 in a textile industry, we will say, meets with an accident entailing the 
 loss of the forefinger of his right hand. When the wound is healed, 
 the attending physician certifies that the victim is suffering from a 
 permanent injury which can never change or improve. On this state- 
 ment, the Court issues a decree naming the sum the workman is to re- 
 ceive. Now, while the loss of the finger was susceptible of reducing the 
 workman's earnings, he might yet in time have been able so to train 
 his other fingers that the output of his machine would be as great as 
 before, and to earn the same salary as he originally obtained, in which 
 event, of course, he should cease to receive any payment on account 
 of his injury. 
 
 By being governed by the bodily state of the victim by making 
 the law a sort of pretium doloris and in overlooking the chance of the 
 injured party's regaining some of his accustomed skill through train- 
 ing other members to do the work of the missing part, the French 
 courts are putting a much heavier burden in the shape of compensation 
 for permanent injuries on French industrial heads than is the case in 
 other countries. In Germany, for example, the mutilation of the work- 
 man is disregarded. His loss in earning power is the sole criterion of 
 compensation as his wages rise, the latter diminishes or ceases al- 
 together. 
 
 \ 
 
 Rulings in Minor Accidents. 
 
 In the matter of minor accidents involving a disability of 10 per 
 cent or less, the rulings of the highest court is again placing the French 
 employers at a disadvantage, as compared with other competitors. In 
 Germany no compensation is granted in such cases and some of the 
 lower French courts have followed the same policy up to a 5 per cent 
 limit. Within a few months, however, the court of the highest jurisdic- 
 tion has decided that the law directs the payment of an indemnity in 
 all cases where the disability incurred is susceptible of causing, under 
 normal conditions, a reduction in the victim's earning capacity, and 
 that it fixes no minimum below which an indemnity is not allowed. 
 The practice of refusing compensation in accidents of minimum im- 
 portance on the ground that the injury received is not susceptible of 
 causing any appreciable reduction in the injured party's earning power 
 is condemned and held to be erroneous. 
 
 This ruling of the Cour de Cassation appears very unfortunate for 
 many reasons. It construes the law from a narrow point of view and 
 leaves out of account the theory of reparation and the broader pur- 
 
 9 
 
pose of the statute. Instead of holding that in cases of inappreciable 
 injury and of small fractional reduction in wages no indemnity is due, 
 the court preferred the view that every hurt, irrespective of size or 
 gravity, must be compensated for. Not the question of monetary loss, 
 but the occurrence of an injury is to entitle the workman to damages. 
 
 Now the fact is that in the vast majority of minor accident cases, 
 the workman cannot show any reduction in salary in consequence 
 thereof. Suppose him to earn fifty cents a day, and to lose 4 per 
 cent of his former efficiency he will not be put in a class by himself 
 at 48 cents, but will continue to draw his full pay as before. To pay 
 the slightly injured laborer under these circumstances is to bestow an 
 undeserved gratuity on him and to encourage him to nurse and magnify 
 the smallest contusions which were unnoticed before. The law is 
 twisted from its original intention and becomes a source of profit to the 
 workman with an insignificant wound. 
 
 This regrettable interpretation is certainly bound to increase the 
 number of claims for petty accidents, which were excessive enough be- 
 fore. In 1906, almost 60 per cent of the accident cases settled in the 
 courts related to permanent disability of 10 per cent or less, which in 
 Germany would have been regarded as too unimportant to be worthy 
 of redress. While mulcting the employers, this insistence on compensa- 
 tion in minor accident cases has heretofore proven to be of little ulti- 
 mate benefit to the workmen themselves. Settlement is usually made 
 by paying the victim a lump sum, which he is only too apt to waste, in- 
 stead of applying his award to a good purpose. 
 
 Attention has already been called to the difficulty of securing any 
 legislation against abuses in the French accident insurance law. The 
 proposals of the employers are regarded with suspicion and only one of 
 the amendments recommended by them has been adopted by the ap- 
 propriate committee of the Chamber of Deputies. All the changes op- 
 posed by them have been almost uniformly adopted, and some will un- 
 doubtedly be finally enacted into law. 
 
 Crying Evils of French Law. 
 
 Unquestionably, the most crying evils in the French law are due to 
 the clause giving the injured workman the right to select his own 
 physician and pharmacist. Without going into the subject at length, 
 it is sufficient to say that, owing to an unholy alliance beween the 
 physicians and the laborers, the employers are exploited and fleeced 
 at every turn. False medical certificates, undue prolongation of and 
 unnecessarily expensive treatments, simulation of injuries, all these and 
 other dishonest practices are resorted to. So profitable has this sort 
 of practice become that many doctors in Paris actually pay the patients 
 who present themselves for treatment. The customary rate is five 
 francs for the first call and thereafter a daily stipend not to exceed two 
 francs until a cure is effected. In the end the employers have to make 
 good these improper outlays in one shape or another. 
 
 10 
 
Physicians will at their own expense fit up clinics for the handling 
 of accident cases among trade-unionists, and rebate to the union with 
 which they are affiliated from 25 to 50 per cent of the fees collected. 
 Under the system of free choice, the workman suffers in that when 
 injured he seeks the practitioner who will pay him the largest retaining 
 fee instead of the one most skilled, who will cure him in the shortest 
 possible time. The employer loses through being swindled and over- 
 charged. 
 
 In the face of such patent abuses, common sense would indicate 
 that the most efficacious remedy would be to have only the employers 
 name the physicians in accident cases so that those who have to meet 
 the medical costs should have the means of controlling them. No 
 harm could come to the workingman for it is in the master's interest 
 too that any one injured be restored to health in as brief a period as 
 possible. But the French legislator is too timid to follow any such 
 course, or to restrict the laborer's liberty or freedom of choice in any 
 respect. Instead, a sort of half-way measure is finding favor and 
 stands the best chance of enactment, which calls for the appointment of 
 two physicians in all accident cases one to represent each side. Ex- 
 perience alone would show how far this change would affect the pres- 
 ent abuses and whether it would reduce the item of medical costs ap- 
 preciably or not. Restricting the choice of physicians to the employers 
 would be a much more direct and efficacious way of controlling and 
 getting rid of the now existing evils. 
 
 How the law is losing its character of a partially reparative meas- 
 ure, where both masters and men are called upon to share the loss, is 
 illustrated again in the change already made and further proposed re- 
 garding the period which must elapse before the injured workman re- 
 ceives compensation. In the original act, this time was fixed at four 
 days, the idea being that, as a necessary check on simulation of acci- 
 dents, the laborer should stand the loss for this initial period. A new 
 distinction was made in 1905, however, when a clause was inserted pro- 
 viding that an indemnity was due from the first day on in cases where 
 the length of disability exceeded ten days. 
 
 Effect of New Indemnity Clause. 
 
 It does not require much calculation to foresee that this change was 
 bound to encourage simulation, and to result in a decided augmentation 
 of accidents purporting to have caused disability in excess of ten days. 
 If a slightly injured laborer resumed work on the fifth day he would 
 (allowing for a Sunday) have earned at the end of the eleventh day 
 six days' full pay. By claiming continued disability, however, he would, 
 under the law, be entitled to half pay for eleven days, or five and one- 
 half full days' pay, or practically the same amount he would gain by 
 working. Consequently, the workman is under every stimulus to ex- 
 aggerate the extent of his hurts, and not to resume work until eleven 
 days or more have expired. That the alteration in the law has had 
 
 11 
 
-f 
 -f 
 -f 
 -f- 
 
 this very effect is strikingly proved by the following table of the length 
 of disability in accidents settled by a certain group of French insur- 
 ance companies in the year just before and in the year directly after 
 the change in the law was made: 
 
 Number of Accidents. 
 
 Days Difference. 
 
 disabled. 1904. 1906. Per cent. 
 
 5 .................................. 1,753 2,196 -f 25 
 
 6 .................................. 2,448 2,931 + 20 
 
 7 ................................ ' . . 2,697 2,063 - 23 
 
 8 .................................. 2,965 2,439 - 18 
 
 9 .................................. 3,132 2,479 - 21 
 
 10 .................................. 3,095 3,570 + 15 
 
 11 .................................. 3,037 6,799 
 
 12 .................................. 2,909 6,625 
 
 13 .................................. 2,866 5,850 
 
 14 .................................. 2,814 4,216 
 
 15 .................................. 2,802 4,837 
 
 16 to 20 ............................ 9,051 14,151 
 
 21 to 30 ............................ 8,349 12,443 
 
 31 to 40 ............................ 3,586 5,471 
 
 41 to 50 ............................ 1,771 2,560 
 
 51 to 60 ............................ 977 1,399 
 
 61 to 70 ....... . .................... 676 854 
 
 Over 70 ............................ 1,533 2,019 
 
 50,461 82,902 + 47 
 
 Total No. of accidents not over ten days 16,090 15,678 3 
 
 Of total number accidents (p.c.) ...... 32 19 - 13 
 
 Over 10 days ........................ 32,853 67,224 -f 96 
 
 Although the total number of accidents increased 47 per cent in the 
 two years, those entailing disabilities of ten days or less actually showed 
 a decrease. Instead of forming almost one-third of all accidents, they 
 constitute less than one-fifth. The most striking feature in this table 
 is, of course, the abnormal increase in accidents causing a cessation of 
 work of from eleven to thirteen days. 
 
 Employers Desire Repeal. 
 
 As this amendment to the law has simply resulted in grave abuses 
 and encourages the workman to simulate the extent of his injuries and 
 to prolong his period of idleness, the employers have asked for its re- 
 peal. Far from their wish being granted, the committee of the Cham- 
 ber has just voted that the workmen's compensation shall run in all 
 
 -f 123 
 -4-128 
 -f 104 
 -f 50 
 -f 73 
 56 
 49 
 53 
 45 
 -f 43 
 +26 
 -f 32 
 
 12 
 
cases, irrespective of the length, of disability, from the first day. In- 
 stead of remedying a flagrant abuse of the law, they would facilitate 
 its generalization. Even in the French Mutual Aid societies, where a 
 close inspectorship is maintained and self-interest impels the members to 
 keep tab on one another, it has been found necessary, in order to 
 guard against shamming, to refuse any sick or other benefits for the 
 first two days. 
 
 If no limit is imposed in accident cases, what way of preventing a 
 dishonest employee from feigning a petty accident in order to enjoy a 
 brief holiday on half pay? If all barriers are removed, the present 
 heavy charges imposed on the employers will be increased at least 
 25 per cent, even if the number of accidents remains the same as now 
 and without taking into account any possible increase through dishonest 
 practices on the part of the workmen. Losing sight of the forfeitary 
 principle on which the law was enacted, the committee have frankly 
 stated that, in their opinion, the four days' provision gave the masters 
 an unfair advantage, which they desired to see done away with as in- 
 equitable. Again we find the erroneous conception that the law is in- 
 tended solely to ameliorate the condition of the laboring class and that 
 only the employers are to be called upon for sacrifices. 
 
 If the removal of the four-day limit will put a premium on fraudu- 
 lent practices and simulation, the same is true of another measure 
 favored by the committee, providing that in case the victim's injury be- 
 comes worse or aggravated, the payment of the indemnity allotted 
 when the wound was declared healed, shall be suspended. So long as 
 the new period of treatment lasts, the injured party is to draw again 
 instead his half-pay, and all medical and pharmaceutical expenses are 
 to be charged to the employer. The objection to this proposed amend- 
 ment is, of course, that it makes any permanent settlement difficult, 
 especially in cases of minor accidents. If the victim with a small 
 award becomes sick or is thrown out of work, how great then the temp- 
 tation to claim a relapse with the help of some dishonest physician and 
 to draw half-pay until employment is again to be had. In times of 
 trade depression the demands for a revision of indemnity would foe 
 especially numerous. 
 
 Where Heirs Profit by Death. 
 
 Where death occurs, the accident insurance law, as revised in 1905. 
 grants in certain cases indemnity to such of the victim's ascendants 
 as can show that they were dependent on him for support. The com- 
 mittee has, however, just voted to do away with this requirement, in 
 which event the heirs of the victim would, in cases where they had not 
 previously received any of the earnings, actually profit by his death. 
 The basis of the present law the idea of partial reparation for an 
 actual money loss suffered is again entirely lost sight of. On what 
 theory except that it is a statute for the relief of the poor, should an 
 employer of a workman who has died from an accident, be compelled 
 
 13 
 
to contribute to the support of his relatives, to whom the laborer while 
 alive never gave any part of his wages? 
 
 But there is no need of giving any further instances. In brief, it 
 may be said that all the evils against which an ideal law on the sub- 
 ject of accident insurance should guard, are to be found in France to- 
 day. Instead of being eradicated, abuses are being strengthened and 
 multiplied. The burden on French industry is steadily mounting, and 
 bids fair to be radically increased in the near future. At the same time 
 the demoralization of employees goes on apace. It is no wonder, 
 therefore that the leaders of industry look forward with grave ap- 
 prehension as to what the future has in store for them as regards the 
 compulsory insurance of their laborers against accidents. 
 
 The history and application of the French act as well as past and 
 prospective changes, all emphasize the necessity, in the interpretation 
 of accident insurance statutes, of keeping clearly in mind the under- 
 lying principles on which this form of legislation was originally based. 
 Once the idea of a just and equitable division of an unavoidable indus- 
 trial loss between masters and workmen is lost sight of, the inevitable 
 tendency arises to construe the law as a piece of class legislation di- 
 rected against the employers on whose shoulders the burden must be 
 placed wherever possible. If the mere fact of injury and not the 
 actual wage loss suffered be taken as the ground for compensation, the 
 workman obtains a false conception of the purpose of the law and 
 seeks, by resorting to simulation and exaggeration of injuries, to de- 
 rive a profit from it. The ratification of abuses becomes increasingly 
 difficult because the laborer resists any projected legislation which 
 would take away any previously secured advantages, even if improperly 
 obtained. Lastly, where a wrongful interpretation prevails, the danger 
 is constantly present that the law will be turned more and more into a 
 sort of poor relief measure at the employer's expense with the conse- 
 quent disappearance of the idea of an equitable contribution by the 
 workingmen. 
 
INSURANCE UNDER THE FRENCH ACCIDENT COMPENSATION 
 
 LAW.* 
 
 Self, State, Co-operative and Corporate Insurance. Employer's Op- 
 tions. State Insurance Not in Favor. Showing of Private 
 Companies. State Monopoly Idea. 
 
 With the passage in 1898 of the law making the insurance of work- 
 men against the risks of their employment compulsory, employers' 
 liability insurance in France first began to develop on an important 
 scale. The statute leaves entire liberty of action to the employer. He 
 can either be his own insurer or have himself insured directly by the 
 State, or by one of the various private organizations authorized by the 
 Government to underwrite employer's risks. A large number of em- 
 ployers, with nearly one-third of all the workmen affected by the law 
 in their pay, have preferred not to take out any outside insurance, but 
 to meet their own accident losses as they occur. As five out of every 
 thousand employers, it is estimated, will fail to meet their workmen's 
 liability insurance, the Government compels all employers to contribute 
 to a special guarantee fund to make good losses incurred involving 
 death or permanent disability to employees. If the trade is one requir- 
 ing a license, this contribution was originally fixed at 4 per cent of 
 the license tax; if not, the contribution became 2 per cent of the total 
 premium paid for insurance. If the employer was uninsured, he had 
 to pay in 4 per cent of the face value of all accident losses incurred by 
 him, as they arose. 
 
 With the exception of 1903, the guarantee fund has yielded each year 
 a surplus, the total of which reached 12,241,892 fr. at the end of 1911. 
 In view of this comparatively large surplus, the annual contributions 
 are to be determined hereafter on a sliding scale based on the losses 
 which the fund was called upon to make good during the year im- 
 mediately previous, but in no case are they to exceed the figures orig- 
 inally fixed. For the years 1906-11, the only years for which full 
 statistics are available, the operation of this guarantee fund shows the 
 following results: 
 
 Receipts 15,692,465.34 
 
 Expenses and losses 8,171,704.05 
 
 Losses 5,712,654.65 
 
 Account insured employers 2,151,801.87 
 
 Account uninsured employers 3,560,852.78 
 
 Recovered from employers 2,201,511.71 
 
 Recovered from insured employers 1,970,166.37 
 
 Recovered from uninsured employers 231,345.67 
 
 Net losses account insured employers 181,645.50 
 
 Net losses account uninsured employers 3,329,507.11 
 
 *Reprinted, with additions and changes, from New York Evening 
 Post of April 5, 1913, by permission. 
 
 15 
 
What the Figures Rereal. 
 
 These figures are instructive in that they show that the losses, 
 which the fund is called upon to meet, are much larger in the propor- 
 tion of seven to four almost for uninsured than for insured employers. 
 Furthermore, nine-tenths of the losses assumed for the insured were 
 afterward recovered against only 6^ per cent for the uninsured, show- 
 ing that the chances are very slight of recovering any sums paid out 
 for the latter. The net losses in the six years on account of uninsured 
 employers were eighteen times as great as those on account of those in- 
 sured. From the standpoint of affording security for the payment of 
 indemnities to victims of trade accidents, individual insurance by em- 
 ployers in France is therefore not nearly so reliable as that offered by 
 the cooperative societies or stock companies. 
 
 Next in order may be mentioned Government insurance against ac- 
 cidents as conducted by what is termed the Caisse Nationale d' Assur- 
 ance en Cas d'Accidents. When the law of 1898 was enacted, the 
 authorities feared that, if left without any official competition, the 
 private companies engaged in employer's liability insurance would 
 form a combination among themselves and charge excessive rates. 
 They also believed that the companies might decline certain bad risks, 
 which would compel the employers in such cases to be their own in- 
 surers unless the State furnished them with a haven of refuge. Both 
 of these fears have proved to be absolutely groundless. As insur- 
 ance by the State was intended only to act as a curb on and as a sup- 
 plement to the operations of the private companies, the Caisse onl<y 
 insures employers against the more dangerous forms of risks involving 
 death or permanent disability. No profit was intended, and the aim 
 has been to have the premiums just sufficient to coven expenses and 
 losses. 
 
 State Insurance Not in Favor. 
 
 It will be seen at a glance that, unless some especial inducements 
 were offered, State insurance, covering only a limited number of acci- 
 dents, would not be apt to find much favor with employers, as com- 
 pared with that of an insurance company protecting against every kinr 
 of disability. These inducements not being forthcoming, Government 
 insurance against accidents has always been a negligible factor in 
 France, as the following figures will show: 
 
 Wages insured, francs. 
 
 Private 
 Year. State. organization. 
 
 1901 10,561,853 2,828,498,832 
 
 1902 15,558,196 2,949,882,941 
 
 1903 17,071,954 3,056,854,767 
 
 1904 21,869,159 3,149,993,700 
 
 16 
 
1905 26,568,928 3,329,454,708 
 
 1906 28,775,412 3,614,972,820 
 
 1907 40,169,428 4,189,346,269 
 
 1908 60,362,853 4,579,458,819 
 
 1909 74,143,699 4,856,040,803 
 
 1910 77,494,953 5,225,136,958 
 
 1911 80,840,511 5,664,146,910 
 
 Totals 453,416,946 43,403,787,522 
 
 In some respects, the French Government has a decided advantage 
 over individual competitors. It confines itself to death and permanent 
 disability cases, the cream of employers' liability insurance in France, 
 where the percentage of such accidents per 1,000 workmen has remained 
 stationary, and where the flagrant abuses which have developed in ac- 
 cidents involving only temporary disability are much less in evidence. 
 The Government has no commissions or agency force to pay, and is 
 under no expense for rent, as it makes use of already existing public 
 buildings. Consequently, in its insurance department, the expenses for 
 the last ten years have averaged only 8 per cent of premium receipts, 
 as against 26 per cent for the private companies. Yet in spite of 
 these advantages, the Government, has not made as good a showing as 
 the latter. 
 
 With slightly higher premium rates, the Caisse d' Accidents shows 
 a steadily growing deficit, which amounted to over 677,000 francs at 
 the end of 1910, or a loss of 1,763 francs for every million of wages 
 insured, as against a loss of 666 francs recorded by the private com- 
 panies and societies. The Caisse should have raised its premium rates 
 8 per cent to have come out even, while the companies only needed to 
 increase their premiums 3^ per cent in order to have attained the 
 same result. Most unfavorable is the Government's showing in the 
 item of legal expense. This has averaged 9.4 per cent of all losses in- 
 curred, as against less than 4 per cent for the private companies. Evi- 
 dently, the latter have nothing to fear from the competition of the 
 State with its staff of routine officials, lacking all initiative and adapt- 
 ability. 
 
 Classification of Corporations. 
 
 The Government authorities classify the various corporations and 
 associations insuring against accidents to workingmen, into four 
 groups French stock companies, foreign stock corporations, mutual 
 insurance associations or societies, and guarantee or trade syndicates. 
 These last are simply a special kind of mutual societies. In order to 
 obtain the necessary license to do business, a stock company or mutual 
 society must make a preliminary deposit of 400,000 francs with the 
 Government. Thereafter the deposit must equal 2 per cent of the 
 wages insured in the year preceding, with 400,000 francs as a minimum 
 and 2,000,000 francs as a maximum amount. If the company only in- 
 
 17 
 
sures one kind of risks, or a similar group of trades, or binds itself, 
 where accidents occur, to purchase all annuities or pensions for the 
 benefit of the injured through the Government Caisse Nationale for 
 Old Age Pensions, the required deposit is reduced one-half. If the 
 company agrees to both, its deposit is reduced to one-quarter. At the 
 end of 1900, licenses to do business had been issued to 21 foreign and 
 domestic stock companies and to 17 mutual societies and guarantee 
 syndicates. On December 31, 1911, the figures were 23 and 40 re- 
 spectively, the number of stock companies remaining almost stationary, 
 while the mutual societies and syndicates more than doubled. In spite 
 of this marked increase, the two latter combined only secured 30 per 
 cent of the total business transacted in 1911, as compared with 24 per 
 cent in 1901. 
 
 The following table shows the operations of all the companies for 
 the years 1901-1911: 
 
 Year. Premiums. 
 
 1901 52,451,438 
 
 1902 54,048,626 
 
 1903 59,874,899 
 
 1904 63,871,456 
 
 1905 73,045,711 
 
 1906 81,785,576 
 
 1907 98,386,328 
 
 1908 105,068,828 
 
 1909 112,564,406 
 
 1910 122,154,812 
 
 1911 134,045,529 
 
 Loss. 
 
 1901 4,514,675 
 
 1902 10,115,765 
 
 1903 2,247,019 
 
 1904 +1,093,103 
 
 1905 1,177,591 
 
 1906 4,084,020 
 
 1907 . 9,951,589 
 
 1908 7,104,495 
 
 1909 4,821,296 
 
 1910 6,034,122 
 
 1911 11,559,123 
 
 Total 
 
 Losses. 
 43,525,140 
 49,670,079 
 46,313,476 
 46,684,493 
 57,356,945 
 67,098,085 
 85,669,427 
 87,759,083 
 91,179,757 
 100,003,766 
 114,419,789 
 
 Sundry profits, 
 Interest, losses 
 recovered, etc. 
 307,936 
 555,988 
 1,504,892 
 2,583,245 
 2,733,528 
 2,686,111 
 2,914,877 
 4,162,983 
 4,739,904 
 5,810,976 
 6,851,015 
 
 Expenses. 
 13,440,973 
 14,494,312 
 15,808,442 
 16,093,760 
 16,866,356 
 18,771,411 
 21,678,490 
 24,414,239 
 26,205,945 
 28,195,168 
 31,184,863 
 
 Net loss. 
 
 4,206,739 
 
 9,559,777 
 
 742,127 
 
 +3,676,348 
 
 +1,555,938 
 
 1,397,809 
 
 6,036,712 
 
 2,941,512 
 
 81,392 
 
 233,146 
 
 4,708,108 
 
 Total. 
 
 56,966,113 
 
 64,164,391 
 
 62,121,918 
 
 62,778,353 
 
 74,223,302 
 
 85,869,496 
 
 107,347,917 
 
 112,173,322 
 
 117,385,702 
 
 128,198,934 
 
 145,604,652 
 
 Prem'm 
 rate. 
 1.854 
 1.832 
 1.958 
 2.027 
 2.193 
 2.262 
 2.352 
 2.294 
 2.318 
 2.337 
 2.375 
 
 29,897,322 
 
 With the exceptions of 1904 and 1905, every year shows a loss for 
 those engaged in this form of insurance. For the eleven years, the total 
 amounts to over twenty-nine millions francs. The heaviest losses oc- 
 curred in the years 1902 and 1907. The rise of 25 per cei\t 
 
 18 
 
in the average premium rate during the period covered should 
 also be noted. In 1911, the various organizations have again met with 
 severe losses. 
 
 Contrasting the operations of the various groups for the entire ten 
 years, 1901-1910, the following figures are of interest: 
 
 Mutual Stock Syndi- 
 
 cos. cos. cates. 
 
 Average premium 2.25 2.09 2.94 
 
 Losses to wages insured 1.92 1.67 2.66 
 
 Losses to premiums 85% 80% 90% 
 
 Expenses to premiums 17.8% 26% 21.5% 
 
 For 1911 alone, the showing is as follows: 
 
 Mutual Stock Syndi- 
 
 cos. cos. cates. 
 
 Average premium 2.58 2.28 2.69 
 
 Losses to wages insured 2.41 1.89 2.19 
 
 Losses to premiums 93% 83% 81% 
 
 Expenses to premiums 17.8% 25.5% 20.6% 
 
 Private Companies Show Best. 
 
 It is evident from the foregoing tabulated statement that the private 
 stock companies make the best relative showing. Their ratio of ex- 
 pense is, of course, higher as it includes commissions to agents, which 
 their competitors are spared. But their premium rates are the lowest, 
 as is also their percentage of losses incurred. The guaranty syndicates 
 have fared the worst of all as regards losses, and their premium 
 charges are by far the highest. During the ten years under review, 
 six stock, two mutual societies, and two syndicates, or ten units in, all, 
 have either failed or ceased to write employers' liability risks. As 
 this branch of insurance has yielded no profits, it is not surprising 
 to find that the number of stock companies engaged therein has re- 
 mained almost stationary, rising to only twenty-three, as against 
 twenty-one in 1901. Although the total amount of wages insured by 
 these companies is 70 per cent larger, almost the entire increase has 
 gone to twelve of the bigger companies. Two concerns show a dis- 
 tinct loss, and the gains of the other nine are relatively unimportant. 
 
 As to the mutual societies, they record a gain from fifteen to 
 twenty-three in number and have more than doubled the amount of 
 business transacted by them. But the major part of this gain has 
 been absorbed by six of the larger societies. Mutual societies to carry 
 on an insurance business can be formed in France under general laws, 
 and the consent of the Government authorities is not required thereto. 
 They must, however, just as in the case of the stock companies, make 
 a deposit with the Government before beginning business, and are 
 
 19 
 
obliged to collect reserves. They can issue policies either with fixed or 
 with unlimited premiums, in which latter event the premium rate is 
 ultimately fixed by the amount of loss incurred. Members cannot be 
 bound for a longer period than five years, at the end of which time 
 they have the right to step out if they desire. As carried on in France, 
 the mutual societies frequently confine their operations to those en- 
 gaged in one certain industry or located in a given industrial area. 
 
 The Guarantee Syndicates. 
 
 In permitting the establishment of guarantee syndicates, the author- 
 ities desired to make it easy for the smaller trades-people and em- 
 ployers of minor importance to secure cooperative insurance against 
 workingmen's accidents, just as the mutual societies provide it for 
 the larger industrial plants. Thus, for example, one syndicate had 
 among its adherents builders, contractors, barbers, coffee-house keepers, 
 silk weavers, and grocers. 
 
 The syndicates must have their regulations and governing statutes 
 approved by the Government before they can commence business. On 
 the other hand, they are relieved from keeping any sum on deposit, as 
 in the case of the other organizations. This exemption should reduce 
 their expense account, as no interest charge on capital has to be met. 
 Two kinds of syndicates are allowed. One insuring 5,000 laborers or 
 over, working for ten separate employers, as a minimum, five of which 
 at least must have no less than 300 laborers. In the second class, per- 
 mitted only since 1906, the minimum number of workmen is fixed at 
 2,000, that of the employers at 300, 30 of which must employ at least 
 three workmen each. 
 
 The grave objection to these syndicates is the fact that, unlike the 
 mutual societies, every member is individually responsible for any 
 losses incurred, and that there are no fixed or limited premiums. If 
 the provisional premium in any given year proves too low, an addi- 
 tional percentage can be levied up to any amount. In one case, the 
 supplementary premium was for 1907 95 per cent of the original amount 
 levied, and for 1908 65 per cent. Furthermore, members cannot with- 
 draw at will, but are bound for long periods. Unless, therefore, th,e 
 syndicates are well and economically managed, this form of employers' 
 liability insurance may prove exceedingly costly to those participating 
 therein. 
 
 Record Not Inspiring. 
 
 Unfortunately, the record of these syndicates has not been such as 
 to inspire confidence. As has already been stated, their average prem- 
 ium rate since 1900 has been 2.94, as against 2.25 and 2.09 for the 
 mutual societies and stock companies respectively, while their percent- 
 age of losses sustained is the highest of all in the three categories. 
 The latest reports of the Minister of Labor respecting their operations 
 
 20 
 
are full of complaints regarding their loose bookkeeping and conceal- 
 ment of their real condition. One syndicate reported a loss of 358,603 
 francs in fours years. Actually, the true loss proved to be 3,450,580 
 francs, or almost ten times as great as at first stated. Doubtful 
 amounts, like overdue premiums from members, are put down as though 
 a cash asset, and losses are underestimated. Those of the syndicates for 
 1909 were understated 1,332,423 francs, against an overestimation of 
 1,052,507 and of 4,223,545 francs for the losses sustained by the mutual 
 societies and stock companies respectively. Several of the syndicates, 
 too, are behindhand in making final settlements, exceeding the period 
 of grace allowed them by law. 
 
 In spite of their relatively poor showing and high rates," the num- 
 ber of guarantee syndicates has of late years shown a remarkable 
 growth. Starting with a total of three in 1906, there were seventeen 
 transacting business on January 1, 1911. This anomaly is explained by 
 the fact that unscrupulous promoters find a good field for the ex- 
 ercise of their talents in the formation of these syndicates. No capital 
 is required to start them, all that is necessary is to drum up a suf- 
 ficient number of adherents. By misrepresentations as to the cost of 
 insurance, this is a comparatively easy matter. With the statutes or 
 by-laws so drawn that the governing board names its own successors, 
 without the members having any voice therein, the promoters are en- 
 abled to keep the management in their own hands. As the Minister of 
 Labor in one of his reports warningly said: "It is hard to conceive, 
 besides, of the imprudence of heads of industrial establishments, who 
 affiliate themselves with such guarantee syndicates without observing 
 that, under the guise of purely mutual insurance, they in reality only 
 constitute a lucrative form of insurance exploitation on the part of the 
 promoters for their own personal profit." 
 
 How true this statement is appears evident from the following 
 figures taken from the account of certain guarantee syndicates for 
 1909: 
 
 Total Per Cent. 
 
 Premiums. Expenses. of Premiums. 
 
 228,286.80 114,133.30 40 
 
 223,136.15 94,120.19 42 
 
 81,933.85 40,452.20 49 
 
 34,832.28 34,723.25 100 
 
 The smaller the amount of business transacted, the higher the ex- 
 pense ratio is apt to be. 
 
 A Declining Tendency. 
 
 Despite their large increase in number, the total business transacted 
 by the guarantee syndicates shows a declining tendency. The highest 
 figure was reached in 1907, when the sum total of wages underwritten 
 was 331 millions of francs. For 1911 the figure was only 294 millions. 
 
 21 
 
Premiums dropped from 10 Vi to 8 millions. Three only of the syndi- 
 cates do business on a large scale, and one of these went into volun- 
 tary liquidation at the end of 1910 on account of excessive losses. In 
 1908 these three obtained four-fifths of the total business, the other 
 fifth being divided among twelve syndicates, with an average premium 
 income of only 140,000 francs. And with one of the large syndicates 
 finding it more advantageous to go out of business, with the minor ones 
 operating under an excessive expense ratio and not in fulfilment of any 
 public want, frequently, but more for the purpose of affording salaries 
 to their managers, the chances are all against the guarantee syndicates 
 obtaining much in the way of new business hereafter. 
 
 While the utmost freedom of choice has heretofore prevailed in the 
 field of employers' liability insurance in France, it should be stated in 
 conclusion that there is a more or less determined effort being made 
 to make the insurance business in all its branches a state monopoly. 
 If such a movement should succeed, accident insurance, where the 
 state is already a competitor, will in all probability be one of the first 
 branches to be taken over. That the state in such an event would 
 give better or cheaper service than any of the existing organizations is 
 not at all likely, if one may judge by the operations to date of the 
 Caisse d' Accidents. But everything takes time in France, and appar- 
 ently a considerable period will elapse before such a step is undertaken. 
 
PRINCIPAL ABUSES UNDER FRENCH ACCIDENT COMPENSA- 
 TION LAW.* 
 
 Increased Cost. Litigation Over and Pensions for Trifling Injuries. 
 
 Medical Abuses. 
 
 Since its first introduction in 1898, the scope and extent of the 
 French Accident Insurance law has been greatly widened and increased. 
 While the sum total of wages insured under the act has thus been 
 greatly augmented, complaint is heard on all sides, from employers, of 
 the disproportionate gain relatively in the number and cost of acci- 
 dents incurred, for which indemnity must be paid and which is en- 
 tailing each year a constantly mounting burden on the French indus- 
 trial world. That this complaint is well founded will appear from the 
 following figures: 
 
 Total wages 
 
 insured. 
 Year. Francs. 
 
 1901 2,828,498,832 
 
 1902 2,949,882,941 
 
 1903 3,056,854,767 
 
 1904 3,149,993,700 
 
 1905 3,329,454,703 
 
 1906 3,614,972,820 
 
 1907 4,189,346,269 
 
 1908 4,579,458,819 
 
 1909 4,858,040,803 
 
 1910 5,225,136,958 
 
 1911 5,644,146,910 
 
 Thus, while from 1901 to 1910, the number of workmen insuredf rose 
 from 3,614,000 to 4,728,000, or a gain of 31 per cent, and the total 
 wages insured increased 85 per cent, the total number of accidents 
 causing losses increased 80 per cent, and the amount of losses sus- 
 tained more than doubled, or gained 130 per cent. On the other hand, 
 the number of accidents per 1,000 workmen insured increased in the 
 same period 37 per cent, and the losses incurred per 1,000 workmen 75 
 per cent, or practically three-fourths. 
 
 *Reprinted with additions and changes from New York Evening 
 Post of April 12, 1913, by permission, 
 f Number of workmen insured 
 
 
 
 Acci- 
 
 Total losses 
 
 dents per 
 
 incurred 
 
 No. of 
 
 1,000 
 
 Francs. 
 
 accidents. 
 
 men. 
 
 43,525,140 
 
 229,162 
 
 63.4 
 
 49,670,079 
 
 223,286 
 
 60.6 
 
 46,313,476 
 
 212,753 
 
 54.9 
 
 46,684,593 
 
 222,124 
 
 52.8 
 
 57,356,945 
 
 259,828 
 
 61.3 
 
 67,098,085 
 
 306,860 
 
 70.7 
 
 85,669,427 
 
 359,747 
 
 80.1 
 
 87,759,083 
 
 354,027 
 
 77.9 
 
 91,179,757 
 
 383,249 
 
 82.9 
 
 100,003,766 
 
 412,278 
 
 87.2 
 
 114,419,789 
 
 
 
 19013,614,000 
 19064,340,000 
 19074,440,000 
 
 19084,544,000 
 19094,624,000 
 19104,728,000 
 
 23 
 
Nature of Accidents. 
 
 The following tables throw some 
 the accidents incurred: 
 
 interesting light on the nature of 
 
 Permanent Temporary Unclassi- 
 
 Year. 
 
 Total No. Deaths, disability. disability. 
 
 fied. 
 
 1905 
 
 259,882 
 
 1,470 
 
 4,589 
 
 250,649 
 
 3,174 
 
 1906 
 
 306,860 
 
 1,499 
 
 4,655 
 
 296,339 
 
 4,367 
 
 1907 
 
 , 359,747 
 
 1,762 
 
 5,191 
 
 347,911 
 
 4,883 
 
 1908 
 
 354,027 
 
 1,609 
 
 5,018 
 
 342,017 
 
 5,383 
 
 1909 
 
 383,249 
 
 1,660 
 
 5,121 
 
 371,198 
 
 5,270 
 
 1910 
 
 412,278 
 
 1,650 
 
 5,452 
 
 399,769 
 
 5,407 
 
 
 (Accidents 
 
 per 1,000 
 
 workmen.) 
 
 
 
 1901-3 .... 
 
 62. 
 
 .3 
 
 1.1 
 
 59.5 
 
 1.1 
 
 1905 
 
 61.3 
 
 .35 
 
 1.1 
 
 59.1 
 
 .75 
 
 1906 
 
 70.70 
 
 .35 
 
 1.07 
 
 68.38 
 
 1. 
 
 1907 
 
 80.10 
 
 .39 
 
 1.15 
 
 77.46 
 
 1.1 
 
 1908 
 
 , 77.9 
 
 .35 
 
 1.15 
 
 75.2 
 
 1.2 
 
 1909 
 
 82.9 
 
 .35 
 
 1.1 
 
 80.32 
 
 1.12 
 
 1910 
 
 87.2 
 
 .35 
 
 1.15 
 
 84.56 
 
 1.14 
 
 It is to be noticed that deaths and permanent disability cases show 
 practically no change in percentage throughout. The temporary dis- 
 ability or minor accident cases are therefore alone responsible for the 
 almost uniform rise in the number of accidents per thousand workmen. 
 
 The following statement of how the cases decided by the courts 
 since the inception of the law have been distributed, is likewise very 
 illustrative: 
 
 Year. 
 1899 ... 
 
 No. of 
 cases. 
 899 
 
 Deaths. 
 534 
 
 P. C. 
 59.4 
 
 Perma- 
 nent dis- 
 ability. P. C. 
 13 1.4 
 
 Partial dis- 
 ability. 
 352 
 
 P.C. 
 39? 
 
 1900 
 
 6,543 
 
 1,562 
 
 23.9 
 
 139 2.1 
 
 4,842 
 
 74 
 
 1901 
 
 10,627 
 
 1,729 
 
 16.3 
 
 227 2.1 
 
 8,671 
 
 81 6 
 
 1902 
 
 12,241 
 
 1,613 
 
 13.2 
 
 198 1.6 
 
 10,430 
 
 85? 
 
 1903 
 
 13,853 
 
 1,524 
 
 11. 
 
 179 1.3 
 
 12,150 
 
 877 
 
 1904 
 
 15303 
 
 1 560 
 
 10.2 
 
 197 1.3 
 
 13,546 
 
 88.5 
 
 1905 
 
 19,802 
 
 2,138 
 
 10.8 
 
 171 .9 
 
 17,493 
 
 88.3 
 
 1906 
 
 24,547 
 
 3,144 
 
 12.8 
 
 149 .6 
 
 21,254 
 
 86.5 
 
 1907 . . . 
 
 26,138 
 
 2,413 
 
 9.2 
 
 141 .5 
 
 23,584 
 
 90.2 
 
 1908 
 
 29,632 
 
 2,491 
 
 8.4 
 
 156 .5 
 
 26,985 
 
 91 1 
 
 1909 
 
 28,300 
 
 2,395 
 
 8.4 
 
 137 .4 
 
 25,768 
 
 91. 
 
 1910 
 
 30,266 
 
 2,450 
 
 8. 
 
 128 .4 
 
 27,688 
 
 91 4 
 
 1911 
 
 33,088 
 
 2,613 
 
 7.9 
 
 139 .42 
 
 30,336 
 
 91 7 
 
 1912 
 
 37,433 
 
 2,828 
 
 7.5 
 
 144 .4 
 
 34,461 
 
 92.1 
 
 It is again to be noticed that the percentage of cases involving only 
 partial disability shows an almost uninterrupted increase, rising in ten 
 
 24 
 
years from 74 per cent to over 92 per cent, while the proportion of 
 deaths and permanent disability cases shows an almost uniform decline. 
 
 Infrequent Appeals to Courts. 
 
 At this juncture it should be stated that employers in France have, 
 as a rule, not raised any unnecessary difficulties regarding the en- 
 forcement of the Accident Insurance law. It has been accepted in a 
 loyal spirit and appeals to the courts are infrequent. Since the law 
 went into effect, out of a total of 2,963,368 accidents reported up to 
 the end of 1910, all but 218,151 were settled for without having to call 
 in the help of the courts. Thirteen out of every fourteen accident 
 cases are thus privately settled without any litigation being started. 
 Nor are the appeals to the courts becoming more frequent relatively 
 than before in spite of the much larger number of accidents for which 
 claims are made. The general feeling on the part of employers seems 
 to be that the law has come to stay, and that it would work satisfac- 
 torily provided its provisions are not made more onerous and provided 
 the statute could be amended so as to do away with certain faulty pro- 
 visions which have allowed some serious and grave abuses to rise. 
 
 Concerning first the abuses against which the employers are pro- 
 testing, we find much complaint over the attitudes of the courts in 
 granting small life pensions of 10, 20, and 30 francs for slight injuries. 
 This tendency to grant relief for minor accidents is well illustrated in 
 the following table of cases judicially settled where the accidents re- 
 sulted in permanent partial disability. The percentage of disability has 
 been estimated as follows: 
 
 5-10 10-20 20-30 30-40 40-50 Over 50 Vari- 
 ous. 
 4.8 
 
 .5 
 
 Year. 
 
 5 P. C. 
 
 P. C. 
 
 P. C. 
 
 P. C. 
 
 P. C. 
 
 P. C. 
 
 P. C. 
 
 1899 
 1900 
 
 5.6 
 10.5 
 
 14.6 
 17.8 
 
 23.8 
 25.5 
 
 13.2 
 11.7 
 
 13.8 
 11.2 
 
 9.3 
 
 7.8 
 
 14.9 
 12.9 
 
 1901 
 
 154 
 
 21 2 
 
 234 
 
 11 2 
 
 104 
 
 69 
 
 11 
 
 1902 
 
 1858 
 
 23 26 
 
 23 62 
 
 10 26 
 
 971 
 
 5 63 
 
 891 
 
 1903 . 
 
 22.7 
 
 263 
 
 21 5 
 
 10 
 
 76 
 
 4.6 
 
 7.3 
 
 1904 . 
 
 24.5 
 
 267 
 
 21.9 
 
 8.9 
 
 7. 
 
 3.8 
 
 7.2 
 
 1905 
 
 . 27.5 
 
 258 
 
 21 1 
 
 8.8 
 
 65 
 
 3.7 
 
 6.6 
 
 1906 . 
 
 32.1 
 
 27.1 
 
 18.3 
 
 8.2 
 
 5.6 
 
 3.3 
 
 5.4 
 
 From 1899 to 1906, of all accident cases decided the number in- 
 volving less than 10 per cent disability increased from 20 per cent to 
 60 per cent, or a percentage increase of threefold, while the percentage 
 of accidents involving more than 10 per cent disability, dropped from 
 80 to 40 per cent. Statistics for later years have not yet been published. 
 
 Right to Choose Physician. 
 
 We now come to the most important provision objected to by the 
 employers and the one most prolific in abuses, namely, the section 
 
 25 
 
giving the workman, in case of accident, the right to choose his own 
 physician and pharmacist. It is unquestioned that there has been a 
 regular and altogether disproportionate increase in the cost of medical 
 attendance and pharmaceutical expenses each year. The following 
 tables show this: 
 
 Amt. in Amt. in 
 
 Year. francs. Year. francs. 
 
 1901 5,416,893 1907 12,587,214 
 
 1902 6,464,425 1908 14,513,038 
 
 1903 6,640,419 1909 15,586,235 
 
 1904 6,947,212 1910 16,942,049 
 
 1905 8,411,276 1911 20,357,038 
 
 1906 10,533,987 
 
 This represents the following percentage of the total amount ex- 
 pended for accident losses: 
 
 Medical expenses Medical expenses 
 
 Per cent.of total Per cent, of total 
 
 Year. losses incurred. Year. losses incurred. 
 
 1901 12445 1907 147 
 
 1902 13617 1908 1652 
 
 1903 14337 1909 1709 
 
 1904 14881 1910 172 
 
 1905 14667 1911 178 
 
 1906 157 
 
 For every 100 francs of wages insured, the cost of medical expenses 
 figures out as follows: 
 
 Year. Franc. Year. Franc. 
 
 1901 19151 1907 30046 
 
 1902 21914 1908 31692 
 
 1903 21723 1909 32096 
 
 1904 22054 1910 32921 
 
 1905 25263 1911 36067 
 
 1906 29139 
 
 The average cost of medical attendance in accidents involving tem- 
 porary disability has been as follows: 
 
 Year. Francs. Year. Francs. 
 
 1901 12.95 1907 17.25 
 
 1902 14. 1908 18.30 
 
 1903 14.50 1909 19.55 
 
 1904 14.80 1910 20.44 
 
 1905 15.20 1911 21.58 
 
 1906 15.90 
 
 Thus in ten years, the average rate has increased from 12.95 to 21.58 
 fi-ancs, or two-thirds. 
 
 26 
 
What are now the causes for this steady augmentation in the cost of 
 medical attendance for injured workmen? The employers unanimously 
 ascribe it to collusion between their working force and dishonest or 
 conscienceless physicians and apothecaries. As a proof of this, they 
 cite the fact that when the naming of the physician is left to them, 
 the cost of treating petty accidents averages only 15 francs, while in 
 the case of physicians selected by the injured persons themselves, the 
 average cost will run from 50 to 60 francs. 
 
 In the French law, a very important role is assigned to the physi- 
 cian. If an accident occurs, he has to furnish an initial certificate 
 setting forth the victim's injuries and the estimated duration of dis- 
 ability. Later on, when the injuries are healed or their permanent ef- 
 fects known, he is called upon to make out a second or final certifi- 
 cate, which is of controlling importance in determining the amount of 
 compensation to be paid to the injured party. The physician's duty 
 is therefore not only to heal, but to perform a social duty as well 
 namely, to reconcile the conflicting interests of employers and em- 
 ployees, to balance the scales evenly between the two parties and to see 
 that neither side obtains an undue advantage over the other. It is 
 easy to see therefore that the successful and proper administration of 
 the law depends more or less upon the manner in which the prac- 
 titioners perform the functions assigned to them. 
 
 Surprising as it may seem, the French doctors appear from the very 
 start to have lost sight of the fact that the primary object of the new 
 statute was humanitarian to see that unfortunate workmen, who had 
 been injured in the course of their employment, should be in some de- 
 gree compensated and provided for instead of being largely left in 
 misery and want as heretofore. The physicians have regarded the law 
 as a means of procuring a new and profitable source of income for 
 themselves for services which they had formerly been glad to render to 
 a great extent gratuitously. 
 
 Clinics and Dispensaries. 
 
 When the law first went into effect, clinics, and dispensaries for the 
 treatment of injured workmen were at once established by some of the 
 large insurance companies and by the heads of many of the more 
 important industrial establishments. It was rightly foreseen that vic- 
 tims of trade accidents could be treated more advantageously and more 
 economically in a large institution under the charge of specialists than 
 if left to the care of a great number of physicians having little or no 
 experience in the treatment of accident cases. Employers used all 
 means to direct their injured hands to these clinics, and, if they would 
 not go voluntarily, pressure, such as a threat of refusal of further em- 
 ployment, was undoubtedly exerted in some cases to force their com- 
 pliance, until forbidden and done away with by a change in the penal 
 law in 1905. 
 
 Side by side with these clinics of employers and insurers arose 
 
 27 
 
others established by private physicians in the large cities and indus- 
 trial centres for the exclusive treatment of workmen's accident cases. 
 Usually these were started by young and unscrupulous doctors with 
 little standing or practice and indifferent to the established rules of 
 medical ethics. As the Accident Insurance law made the employers re- 
 sponsible for all medical costs and fees, these practitioners foresaw 
 that, once assured of a clientage, their path to fortune was secure. Ac- 
 cordingly, while self-advertising is deemed highly unprofessional in 
 the best French medical circles, the owners of these private clinics have 
 not hesitated to use the most flamboyant and often dishonest methods 
 to attract to their establishments workmen who have been injured in 
 the course of their employment. Drummers and agents are posted and 
 employed near important workshops, whose duty it is to steer injured 
 workmen to and to extol the merits of these clinics. The clinics them- 
 selves are painted in gaudy colors, flaring advertisements are posted 
 in conspicuous places, circulars are sent out and handbills distributed 
 among the working classes. Dressing of wounds, massage, electrical, 
 radium, and mechano-therapeutical treatments are offered. Attention 
 is also called to the fact that attached to the clinic is a legal bureau 
 which will procure the maximum indemnity allowed by law and attend 
 to all formalities prescribed for the procuring of the same. Certain of 
 the clinics have even gone a step further and now bestow a five-franc 
 piece on an injured employee when he first presents himself and allow 
 him a daily stipend ranging from one-half to two francs a day so long 
 as he is under treatment. With such inducements held out to them, it 
 is not surprising that the workmen, when injured, flock to these private 
 accident clinics. In Paris, more than half of all accident cases are 
 treated in them. 
 
 Profits of the Clinics. 
 
 Knowing of the heavy expenses these clinics are put to for adver- 
 tising, employment of runners and often for allowances to the patients 
 themselves, and of the moderate charges prescribed by law in accident 
 cases, an ordinary outsider might suppose that these establishments 
 would not prove very profitable. On the contrary, they pay extremely 
 well and are increasing in number from year to year. A recently pub- 
 lished list shows 31 in Paris alone. Many yield an annual income of 
 over 50,000 francs, a very large sum for a French doctor to earn. One 
 physician made more than 500,000 francs in a few years, and has re- 
 tired from practice. How, one asks, is this possible? The answer is 
 very simple through an elaborate system of dishonest and swindling 
 practices by which the employers and insurance companies are mulcted 
 in every possible way. 
 
 To begin with, these clinics have as their main object not the quick 
 and speedy healing of injured patients, but rather the running up and 
 manufacturing of the maximum possible charges and claims against the 
 employers. To this end every possible device and loophole in the law* 
 
 28 
 
is taken advantage of. Workmen are encouraged to exaggerate and 
 taught how to simulate injuries. If necessary, false medical certifi- 
 cates are furnished. The treatment is prolonged and spun out for as 
 long a time as possible. As the fees are low which can be charged 
 under the law, unnecessary and uncalled-for dressings, massage, elec- 
 trical and radium treatments are resorted to. These are charged for at 
 doctors' rates, although frequently given by nurses and attendants. A 
 simple visit will be magnified into a consultation. 
 
 In league with these clinics and no doubt dividing profits with them 
 on some agreed basis are certain pharmacists and apothecaries. The 
 most expensive medicines are prescribed, when those of a cheaper 
 quality would serve just as well, and in excessive quantity. Fresh sup- 
 plies and medicines are ordered in long before the old are used up or 
 exhausted. And lastly, when the workman is discharged as cured, the 
 clinic has its own legal bureau run by skilled advocates to look after 
 the collection of its inflated bill and charges and the half-salary due 
 the victim of the accident as well. No wonder therefore that employ- 
 ers find themselves called upon to pay three or four times the ordinary 
 rate for cases treated in these private clinics and that frequently the 
 amount of the doctor's charges exceeds the indemnity coming to the 
 injured party. 
 
 In recent years, a third class of clinics has been established by cer- 
 tain trades unions or labor exchanges, as they are called in France. 
 These treat not only members, but their wives and children as well at 
 reduced rates. In case of accidents, members are expected and ordered 
 to go to these union clinics for treatment. 
 
 Bad Results Apparent. 
 
 The bad results of the provision in the French Accident Insurance 
 law granting to the injured workman the right to select his own physi- 
 cian are thus apparent. The individual practitioner does not benefit, 
 for he finds no accident cases coming to him for treatment. The stand- 
 ard of medical ethics has been lowered in one Medical Congress a res- 
 olution was even proposed approving of a doctor's paying a stipend to 
 the workman who presented himself for treatment. The workmen are 
 demoralized, for they have been taught not to regard an injury or dis- 
 ability as a misfortune, but as a means of making something out of 
 their employers. Hence their readiness to travel even a distance of 
 fifty miles from their places of injury to the clinic that holds out the 
 most inducements. The employers and insurance companies are fleeced 
 at every possible turn, and a heavy burden imposed on French industry 
 in the shape of increased premium rates. 
 
 By what is known as the tariff Dubief, the French law prescribes 
 carefully what rates can be charged for different kinds of medicines 
 and treatment by pharmacists and physicians engaged directly by in- 
 jured workmen. No fault is found with these rates; in fact, the tariff 
 for medicines was increased on the average some 25 per cent on July 
 
 29 
 
1, but a strong protest is made against the number of visits, consulta- 
 tions, dressings, massage, and electrical treatments, etc., and against 
 the excessive quantity of medicines and drugs supplied. A case in 
 point arose at Uzes, where a physician gave the injured party 89 mas- 
 sages and 12 electrical treatments, and at the same time put in a bill 
 for 101 special examinations where apparently three or four would 
 have been sufficient. A favorite device is to charge varying and sep- 
 arate rates for massage of different parts of the body, although treated 
 at one and the same time. 
 
 In the matter of medicines and surgical supplies, physicians do not 
 hesitate to order the most expensive articles, and in entirely unneces- 
 sary quantities. An expensive medicine will be prescribed instead of an 
 equally efficacious low-priced laxative like castor-oil. Fresh drugs 
 are ordered in, although the quantity on hand is by no means exhausted. 
 In one flagrant case, when a laborer was incapacitated for twenty days 
 with an injury to his shoulder, his attending physician prescribed 5 
 pounds of liniment, 13 litres of wine, and 400 feet of flannel. One 
 apothecary even presented a bill for 1,148 francs for remedies furn- 
 ished a workman who had merely scratched his finger. 
 
 Patients have even been detected in reselling flannel and other 
 articles which had been supplied to them in excessive quantities. Fre- 
 quently an employee finds a physician dishonest or complaisant enough 
 to issue to him a certificate of disability when he is either not at all 
 incapacitated or finds himself perfectly able to work for some other 
 employer. The furnishing of these false medical certificates is unfor- 
 tunately by no means uncommon. In one extreme case, twenty-eight 
 certificates out of thirty-one were found to have been improperly 
 issued. 
 
 Apothecaries Follow Example. 
 
 ' v' : : 
 
 With the example of the physicians before them, the chemists and 
 apothecaries have not been slow to charge what the traffic will bear 
 and to swell their costs as much as possible. As in the case of physi- 
 cians' rates, the law carefully prescribes what an apothecary's charges 
 must be. The statute is circumvented, however, by furnishing supplies 
 and medicines in greater quantity than called for, or articles that are 
 entirely unnecessary. In one particularly striking instance, an apothe- 
 cary treated a workman for an insignificant injury to the fourth finger 
 of the left hand. To cure this light hurt, the pharmacist presented a 
 bill for 1,148 francs finaly reduced by the court to 364 francs 
 charging for dozens of bandages, whole packages of cotton wool, square 
 metres of oil-silk, litres of oxygenized water, and for 154 francs worth 
 of quinquina or tonic wine. 
 
 To such an extent do certain physicians and apothecaries swell their 
 charges, that frequently they receive more for their services than the 
 sum paid as compensation to the victim of an injury. Below are cited 
 a few instances: 
 
 30 
 
Physi- Physi- 
 
 Amt. paid cian's Amt. paid cian's 
 
 No. of days workman, charge. No. of days workman, charge. 
 
 disabled. Francs. Francs. disabled. Francs. Francs. 
 
 43 85 124 54 135 165 
 
 31 93 120 48 144 208 
 
 34 93 130 70 162 183 
 
 Except in cases where a large amount is involved, employers have 
 learned by experience, that it does not pay them to contest a physician's 
 bill, even though it be full of over-charges. To obtain a revision of a 
 doctor's account requires the starting of not inexpensive court proceed- 
 ings, and means the calling in of outside experts. The fees of these 
 and all court costs must be paid by the employer, whether he wins or 
 loses, and frequently these equal, or even exceed, the amount of the re- 
 duction obtained. Thus, in one case, the judge cut a physician's bill 
 from 1,027 to 420 francs, but legal costs borne by the employer were 
 500 francs, so that the net amount saved was only 107 francs. The 
 masters find it less expensive, therefore, to submit to over-charging in 
 minor accident cases, than to make a contest. 
 
 While the courts have ruled from the start that the workman had 
 the right of selecting his own physician, the law as originally passed in 
 1898 read somewhat obscurely on this point. Consequently a number 
 of the large industrial establishments insisted, under threats of dis- 
 missal or otherwise, that their employees when injured should be 
 treated by physicians appointed by the managers. The medical pro- 
 fession was, of course, violently opposed to this practice, and finally 
 succeeded in 1905 in having this sort of pressure expressly forbidden. 
 At the same time, the accident insurance law was amended and the 
 laborer's right to select his own physician and pharmacist stated in 
 clear and unequivocal language. This curtailment of the power of 
 employers to control the appointment of the physician was immediately 
 followed by a remarkable and wholly unlooked-for increase, both 
 actually and relatively, in the number of minor accidents involving 
 temporary disability. 
 
 Previous to this restrictive legislation of 1905, the number of lesser 
 accidents showed no change, remaining slightly under 60 per 1,000 
 workmen. After 1905, however, a striking rise is to be noted, attaining 
 in 1909 the figures of 80.32, a gain of one-third in the relative number 
 of accidents in four years. These figures certainly bear out the con- 
 tention of the employers that the physicians are encouraging the work- 
 men to simulate or magnify the number of unimportant accidents. 
 
 Increased Medical Expenses. 
 
 Again, another result of the legislation of 1905 has been greatly to 
 increase the cost of medical expenses. It is to be noted that up to 
 1904, the cost figures remain about the same. Beginning with 1905, 
 when the law was altered, medical costs immediately began to rise in- 
 stead of being stationary as heretofore. In 1910, they were actually 
 
 31 
 
two and one-half times as great as in 1904, and 50 per cent higher rela- 
 tively per 100 francs of wages insured. 
 
 Once more we observe that up to 1904, the figures for losses do 
 not vary appreciably. Nineteen hundred and five shows the first im- 
 portant gain, and every following year marks a further increase, until 
 in 1910 they have more than doubled as compared with 1904. 
 
 In the case of the Mutual Aid Societies, physicians attending mem- 
 bers are paid annually a fixed amount per head, according to the mem- 
 bership of the various societies. The system has never been followed 
 of paying by the number of visits, which has been adopted in accident 
 insurance cases and which is a direct incentive for physicians to make 
 unnecessary visits and to swell the amount of their charges as much 
 as possible. 
 
 The courts are doing what they can to check this fraudulent over- 
 charging by physicians. They are beginning to follow the rule that 
 where a bill is shown to be excessive the losing party must pay the 
 costs. If drugs and medical supplies are ordered in too great quantities, 
 the employer has the right to sue the physician on whose prescription 
 the supplies were ordered for the excess. Articles not mentioned in 
 the regular tariff, such as wine or mineral waters, cannot be charged 
 for nor the bottles in which salves or liniments are contained. These 
 decisions are all in the right direction. 
 
 On every ground, therefore, the right of the employee to choose his 
 own medical adviser and pharmacist should be done away with. It is 
 against the interests of both employers and workmen, and has given 
 rise to many dishonest practices on the part of physicians and apothe- 
 caries which mulct the employers and do not benefit the laborers. The 
 former are called upon to pay for unnecessary medical visits and for 
 excessive quantities of medicines and drugs, while the latter suffer in 
 not being promptly cured and in having the time of their enforced idle- 
 ness extended. 
 
 While the desirability of this legislation would seem to be apparent 
 to all, the French Parliament has thus far been unwilling to act in the 
 matter, although the agitation for the repeal of this portion of the law 
 has been going on for some time. In default of this relief, the em- 
 ployers are urging the abolition of the tariff Dubief and the substitu- 
 tion therefor of a maximum or tariff of forfeitures, based on the 
 principle now in force in Belgium and other countries. That is for the 
 various classes of accidents, the compensation of the physicians shall 
 not exceed a given amount. It is thought that such a tariff would do 
 away with the opportunity contained in the present law of making over- 
 charges in, the matter of visits and treatments. A suggestion has also 
 been made that a part of the physician's and pharmacist's charges should 
 be paid by the injured workman himself, who would thus have a direct 
 interest in seeing that the number of dressings and visits and thie 
 quantity of drugs used should not exceed a proper amount. These two 
 propositions have not yet been worked out in a concrete shape, how- 
 ever, and it is therefore futile to discuss the chances of their adoption. 
 
 32 
 
SICKNESS INSURANCE IN FRANCE. 
 
 Voluntary Mutual Associations. Government Subsidies. Recent Prog- 
 ress and Growing Importance. Defects. 
 
 While France has introduced the compulsory insurance of working- 
 men against accidents and old age disabilities, insurance against sick- 
 ness is entirely voluntary with the workers. This large and important 
 field of workingmen's insurance has been left to the mutual sickness 
 insurance societies. Subventioned by the Government on a more liberal 
 scale in 1898, since then their number and membership has increased 
 rapidly. Official statistics are now available of their operations up to 
 the end of 1908, and a review of their advancement in the ten years 
 preceding shows some very interesting and noteworthy results. 
 
 The societies are divided into two classes, approved and free, which 
 correspond to the registered and unregistered friendly societies in Eng- 
 land. A distinction is made in the approved societies between those for 
 adults and those for school-children or scholastic societies. 
 
 The following table shows how the various kinds of societies have 
 gained in number since 1898: 
 
 1898. 1903. 1908. 
 
 Approved adult societies 8,391 11,078 14,932 
 
 Approved scholastic societies 181 1,997 2,310 
 
 Free societies 3,253 3,203 3,243 
 
 Total, all societies 11,825 16,278 20,485 
 
 In contrast to the remarkable growth of the scholastic societies, 
 which are eleven times as numerous as ten years ago, is to be noted 
 the stationary number of the free societies. These do not receive a 
 Government subvention, and the limited number of new ones formed 
 do not suffice to make up for those changing to approved societies or 
 going out of existence. In 1908 their number diminished by 27 and 
 they are likely to decrease in number even more rapidly hereafter. 
 
 Of the 20,485 societies existing at the end of 1908, statistics were 
 only furnished by 14,346 adult, 2,049 scholastic and 2,958 free societies, 
 or 19,353 in all. As to the relief afforded, the approved adult and free 
 societies divide themselves into the following four classes: 
 
 Approved Free 
 
 Nature of relief. Societies. Societies. Total No. 
 
 Sickness insurance 5,737 2,307 8,044 
 
 Sickness and old age benefits 7,609 319 7,928 
 
 Old age benefits 495 75 570 
 
 Other objects 505 257 762 
 
 Totals 14,346 2,958 17,304 
 
 33 
 
Thus 92% of all the societies insure against sickness and 45% 
 against old age disabilities. The free societies devote themselves 
 mainly to sickness insurance and have paid little attention to the sub- 
 ject of old age pensions. 
 
 The growth of membership appears as follows: 
 
 Societies approved 
 
 (adults). 1898. 
 
 Active members 1,279,358 
 
 Honorary members 244,632 
 
 Totals 1,523,980 
 
 Societies approved 
 (scholastic.) 
 
 Active members 57,829 
 
 Honorary members 4,738 
 
 1903. 1908. 
 
 1,770,772 3,103,635 
 
 313,455 410,968 
 
 2,084,227 3,514,603 
 
 Totals 62,567 
 
 Free societies. 
 
 Active members 351,544 
 
 Honorary members 33,935 
 
 Totals 385,479 
 
 563,047 
 46,665 
 
 609,712 
 
 403,678 
 36,224 
 
 439,902 
 
 736,161 
 47,620 
 
 783,781 
 
 359,289 
 36,335 
 
 395,624 
 
 Total, all societies 1,972,026 3,133,843 4,694,008 
 
 Of the 4,235,785 active members in 1908, 2,691,780 were men, 551,140 
 women and 992,865 children. Of the children 736,161 were enrolled in 
 the scholastic societies and 256,704 insured along with their parents in 
 the free and the approved societies. All told, 940,560 persons were 
 members of societies insuring against sickness alone, 1,300,741 mem- 
 bers of those granting old age pensions, and 1,036,266 members of so- 
 cieties granting both forms of relief. The growth in the membership 
 of the approved adult societies has been very rapid in the last few 
 years. Between 1903 and 1908, they gained 1,332,863 active members, 
 as compared with 1,281,766 their total accession in the 33 years im- 
 mediately preceding from 1871 to 1903. 
 
 The growth in income is shown in the following table: 
 
 Approved Adult Societies. 
 
 1898. 1903. 1908. 
 
 Premium. Francs. Francs. Francs. 
 
 Active members 17,890,204 23,997,813 36,735,850 
 
 Honorary members 2,568,449 3,306,106 4,333,240 
 
 Subventions, gifts and legacies . 2,253,217 2,938,841 3,435,799 
 
 Other receipts 2,594,269 4,429,077 7,363,759 
 
 Interest 3,670,175 5,868,725 12,399,544 
 
 64,268,192 
 
 Totals 28,977,014 40,540,562 
 
 34 
 
Approved Scholastic Societies. 
 
 Premiums active members 2,549,304 3,610,187 
 
 Premiums honorary members 134,700 109,517 
 
 Subventions, gifts and legacies 205,209 178,741 
 
 Other receipts 131,494 184,375 
 
 Interest 101,930 217,694 
 
 Totals 3,122,637 4,300,514 
 
 Free Societies. 
 
 Premiums active members 5,222,335 5,552,786 6,562,588 
 
 Premiums honorary members . . . 389,374 457,418 514,318 
 
 Subventions, gifts and legacies . . 1,302,760 1,542,394 1,370,358 
 
 Other receipts 921,365 2,019,678 1,056,339 
 
 Interest 1,460,402 1,529,739 1,512,086 
 
 Totals 9,296,236 11,102,015 11,015,989 
 
 The expenses in 1908 were reported as follows: 
 
 r- Approved Societies >> Free 
 
 Adult. Scholastic. societies. 
 
 Expenses 49,586,850 3,733,487 7,752,170 
 
 Surplus income 14,681,324 567,027 3,263,819 
 
 Available resources . . 262,848,360 6,548,968 47,731,630 
 
 Pension funds 222,400,243 7,819,219 
 
 Totals 485,248,603 14,368,186 
 
 All the societies combined thus show available resources of 547,- 
 348,419 francs. 
 
 Passing now to the number of beneficiaries and the nature of the 
 relief afforded by the various societies in 1908, the following figures 
 are of interest: 
 
 Approved Societies > Free 
 Adult. Scholastic, societies. Total. 
 
 Sick 560,884 
 
 Pensioners 177,380 
 
 Funeral benefits . . 22,692 
 Widows and orphans 21,301 
 
 Aged 7,461 
 
 Confirmed invalids 4,420 
 
 Total, all societies 
 
 83,721 
 195 
 
 96,864 
 8,811 
 2,979 
 2,112 
 1,106 
 588 
 
 741,469 
 
 186,191 
 
 25,866 
 
 23,4ia 
 
 8,56T 
 
 5,008 
 
 990,514 
 
 35 
 

 r Approved Societies- 
 Adult. Scholastic. 
 8,048,454 1,990,860 
 
 Daily sick benefit (francs) 
 
 1 34 462 
 
 Sick benefit per member (francs) . 
 Cost medical attendance (francs) . . 
 Cost medicines (francs) 
 
 29.66 11.44 
 5,190,780. 10,819 
 5,916,092 8,954 
 
 Sick benefits paid in cash (francs) 
 Funeral benefits 
 
 10,789,995 921,421 
 1,558,590 4,040 
 
 Widows and orphans 
 
 1,815,474 
 
 Aged 
 
 375,198 
 
 Chronic invalids 
 
 232,485 
 
 Pensions and saving funds (francs) 
 
 13,758,455 2,374,230 
 
 Free 
 
 societies. 
 
 1,549,404 
 
 1.56 
 31.87 
 630,775 
 848,013 
 2,419,978 
 196,460 
 906,026 
 96,713 
 45,040 
 1,348,975 
 
 Thus the total monetary relief afforded in one shape or another was 
 not far from thirty-six million francs. The average retiring pension 
 obtained in the approved adult societies varied from 75 to 80 francs. 
 For the free societies, the corresponding figure was 153 francs. The 
 management expenses of the approved adult societies were 2,531,083 
 francs or 5.1 per cent of all expenditures; of the scholastic 195,629 or 
 5.23 per cent and of the free societies 333,729 or 4.32 per cent. 
 
 As to the subventions granted to the societies by the State in one 
 form or another, the same reached the total of 10,287,465 francs in 1908. 
 Of this amount 8,996,705 francs came from the central government; 
 920,536 from the various communes and 370,224 from the different de- 
 partments. The approved societies alone benefited by these subven- 
 tions, with the exception of 50,604 francs granted by certain depart- 
 ments and communes to the free societies. 
 
 One notable feature of the mutual sickness insurance societies is 
 their small average membership 134 and 216 active members in 1908 
 for the free and approved adult societies respectively. In this re- 
 spect they lag behind the sickness societies in Germany and Austria, 
 where the average number of members is 500 and 1,000. But while 
 there is a steady increase in the cost on account of sickness in Germany, 
 where the insurance is compulsory and overseen by the State, the op- 
 posite tendency prevails in the French mutual societies. The following 
 table shows this: 
 
 Cases of Sickness Per 100 Insured. 
 
 1898. 1903. 1908. 1910. 
 
 Approved adult societies 33.28 29.25 23.08 20.99 
 
 Free societies 33.60 27.79 25.22 18.33 
 
 German societies 35. 37. 43.2 43.3* 
 
 Days of Sickness Per Case. 
 
 Approved adult societies 21.39 22.30 22.57 21.96 
 
 Free societies 18.55 21.41 20.49 18.33 
 
 German societies 17.6 19. 19.63 19.7* 
 
 *For 1911. 
 
 36 
 
Days of Sickness Per Year Per 100 Insured. 
 
 Approved adult societies 712 652 521 4(51 
 
 Free societies 623 595 517 387 
 
 German societies 616 701 848 853* 
 
 According to the above figures, there are now 90 per cent more 
 days of sickness among every 100 workmen insured in Germany than 
 among the members of the French mutual sickness societies. Among 
 the latter, too, the cases of sickness per 100 insured are one-third 
 less than ten years ago, while among the Germans they are one- 
 third greater. To account for this difference and for the opposite 
 tendencies prevailing in the two countries is difficult. Germany is be- 
 coming more and more an industrial nation, where the conditions of 
 life are more strenuous, while France still remains largely a country 
 of small landowners and shopkeepers. Doubtless, too, the French mutual 
 societies with their smaller membership are able to exercise a better 
 control over their members than is the case with the German sickness 
 societies. 
 
 It should be further noted that in Germany the average annual con- 
 tribution per member increased in the period 1892-1907 from $4.14 to 
 $6.19 or 50 per cent. In France the contribution from active members 
 is much lower and shows rather a declining tendency. For the adult 
 approved societies, it fell from $2.89 in 1898 to $2.60 and $2.36 in 1903 
 and 1908, respectively. Benefits per member have remained about 
 the same in France, while in Germany they have shown a marked rise 
 coincident with the increase in the amount of sickness and in the sum 
 total of contributions. 
 
 Although the mutual sickness societies in France have made such 
 great strides in numbers and adherents since 1898, they are as yet 
 largely confined to the more important centres of population. Instead 
 of a network of societies covering the whole country, the larger part of 
 the rural districts possess none. Thus in 1908 out of the 36,222 com- 
 munes in France, societies were only to be found in 8,548 or 24 per cent. 
 424 out of 2,911 cantons, or 15 per cent were likewise without any 
 societies. There is therefore a large extent of territory to which the 
 operations of the societies could be extended. Again the societies are 
 weak in the number of women members. In 1908 women comprised 
 but 551,105 out of a total active membership in the free and approved 
 adult societies of 3,462,924, or 15 per cent, as against 35 per cent in the 
 German sickness societies. 
 
 French mutual societies have thus by no means reached the limit 
 of possible growth. Indeed if sickness insurance among workmen in 
 France were as widespread as in Germany, their active membership 
 should exceed eight millions or almost double the number reported at 
 the end of 1908. That their membership is still increasing rapidly ap- 
 
 *For 1911. 
 
 37 
 
pears from the statement recently published in the daily press that their 
 total number of adherents to-day of all classes is six millions as 
 against 4,694,000 on December 31st, 1908. A contributing cause to this 
 growth is the provision in the new law making insurance against old 
 age disabilities compulsory, by which the State assumes one-sixth of a 
 workman's contribution for such insurance provided he can show that 
 he is insured against sickness in a mutual society and is paying 6 
 francs a year as premium therefor. 
 
OLD AGE PENSION LEGISLATION IN FRANCE. 
 Reasons for Its Non-Success and Unpopularity. 
 
 No sooner had the French legislature in 1898 passed the law pro- 
 viding for the compulsory insurance of workingmen against accidents 
 than the question of providing old age pensions for laborers began to be 
 agitated. It was generally admitted that something should be done in 
 that direction, but public opinion was divided as to the best method to 
 be followed. The choice lay between a system of compulsory insurance 
 such as enforced in Germany, or the plan of teaching and helping 
 workmen to insure themselves by making use of and encouraging the 
 establishment of voluntary associations like the Mutual Aid Societies. 
 Although the result of a canvas made in 1903 showed that an over- 
 whelming majority of the Chambers of Commerce and of the various 
 labor organizations were opposed to any form of compulsory insurance, 
 the French lawmakers decided to adopt the German system. Even if 
 opposed by public sentiment, they concluded that compulsory insur- 
 ance was the only means by which the careless or improvident workman 
 could be made to help provide for himself a pension against old age 
 disabilities. Voluntary state aided insurance, they believed, would not 
 accomplish sufficient in this direction to make its adoption desirable. 
 
 Without attempting a minute description, it suffices to say that 
 the French law provides for the compulsory insurance of all salaried 
 employees who earn less than 3,000 francs, or $600, a year. Instead 
 of a sliding scale, based on a division into wage classes as in Germany, 
 all workers, regardless of the wages earned, pay the same fixed amount, 
 namely, nine, six and four and a half francs each year for men, women 
 and children, respectively. The employer has to contribute an amount 
 equal to that paid by his employee. When the retiring age limit of 60 
 years has been reached (in Germany and England the limit is 70 years), 
 the French Government adds 100 francs or $20 each year to every 
 individual pension. This amount is increased 10 per cent whenever the 
 insured can show that three of his children survived at the age of six- 
 teen years. In normal cases the workman must make 30 annual pay- 
 ments before he becomes entitled to a pension. Each year of military 
 service for the man and every child borne by a woman counts as a 
 year of payment. 
 
 For employees earning from 3,000 to 5,000 francs a year and for 
 tenants, small farmers and shopkeepers without fixed salaries, volun- 
 tary insurance is permissible, with nine francs annually as the mini- 
 mum and eighteen as the maximum payment. A bonus equal to one- 
 half of the insured's payment is added by the Government each year, 
 but in no case more than sufficient to increase the retiring pension by 
 100 francs a year. If desired, both compulsory and voluntarily in- 
 sured workmen can let their pensions accumulate until they have 
 reached the age of 65 years, in which event the retiring pension is 
 very much higher than at 60 years in some cases two-thirds. While 
 
 39 
 
in Germany the maximum pension at 70 years has been $58 and the 
 average pension but $41, the highest possible pension in France at 65 
 years is $110. No statistics are yet available as to what is the average 
 pension in France. 
 
 At the time the French law was enacted, the assertion was made 
 that out of the 22 million adult population, 12 millions would be en- 
 rolled as compulsorily insured and that the adhesion of six million more 
 voluntarily insured workers might be expected. Just as in Germany, 
 where 11^ million workmen were enrolled the first year after a simi- 
 lar statute was passed, the supporters of the French act expected an as 
 equally prompt and universal enlistment on the part of the French 
 laborers. The contrary, however, has proved to be the case. In place 
 of 25 million dollars realized from the contributions of employers 
 and employees during the first year of the operation of the German 
 law, the corresponding receipts during the first twelve months of the 
 French act were only $5,700,000. The French law took effect on July 
 3rd, 1911, and is therefore now in its second year. The receipts for that 
 year are running higher than for the first and at the rate of fifty 
 million francs, or ten million dollars a year. This means, if 14 francs 
 be taken as the average individual contribution, that only about three 
 and one-half million laborers have been brought under the provisions 
 of the law, or only about one person in ten. Contrast this with the 
 showing in Germany, where one person out of every four is insured 
 against old age disabilities. The government claims an enrollment of 
 almost eight millions, including about 800,000 voluntarily insured work- 
 men; but its figures are thoroughly distrusted and are not borne out 
 by the published table of receipts of contributions. These have been 
 practically stationary for the last six months, and according to the 
 Government's own figures, the number of employees insured has in- 
 creased only two per cent during the last quarter. In other words, 
 the law is not making headway, and the French working classes are 
 persistently refusing to accept its benefits. As an evidence of this 
 may be cited the experience of a group of landowners who offered to 
 pay out of their own pockets the contributions required of their agri- 
 cultural laborers, thus securing to the latter the benefits of the law 
 free of charge. To their astonishment, the laborers one and all de- 
 clined to become insured even on those terms. That the authorities 
 are thoroughly dissatisfied with the results thus far obtained is evi- 
 denced by the Government's proposal to amend the law so as to compel 
 all employers to report what employees are not obeying its provisions 
 and to deduct from every salary the amount of the workman's contri- 
 bution, irrespective of his consent. 
 
 Why is it that the French working population are so unwilling and 
 reluctant to accept the benefits of this legislation, while in Germany a 
 similar statute has met with universal and prompt acceptance? The 
 answer to this question is to be found in the failure of the French 
 legislators to adopt a system of old age insurance suited to the habits 
 and mental attitude of their people. The idea of old age pensions is 
 
 40 
 
not repugnant to the French workman, but the Prussian bureaucratic 
 way of providing for it does not appeal to him. Not the principle, but 
 the method, is what he objects to. Insurance against old age disabilities 
 is nothing more than a system of enforced saving by which the laborer 
 is compelled to set aside or contribute part of his earnings so that he 
 will not be without resources when his strength begins to decline and 
 he can no longer find work. But in France thrift does not have to 
 be taught, it is practised by all classes and from the earliest years. 
 Little school children are enrolled in mutual aid societies to which 
 they contribute two cents a week. There are over 2,300 such societies 
 for public school children, with a membership of 818,000 pupils. When 
 the children leave school their deposits are returned to them and the 
 opening of a savings account through the post office is made possible. 
 The first step towards the securing of a retiring pension has thus been 
 taken. Generally, however, a pension or annuity is not the object 
 saved for, but rather the acquisition in time of a small plot of land or 
 of a little shop. In other words, the French laborer aims to be inde- 
 pendent and to be able to invest his savings as he deems best. This 
 ingrained desire for liberty of action on the part of the race was 
 lost sight of by the French legislators when they decided to follow the 
 German system of old age pensions for workmen. The German people 
 are accustomed to a minute Government supervision of their method 
 of living and of their private affairs and to implicitly obey official 
 regulations. To the Frenchman, however, the complicated formalities 
 and the involved workings of the German plan, where the individual has 
 no control over the disposition of his own savings, are extremely dis- 
 tasteful. Nor do the French seem to possess a sufficiently expert body 
 of officials capable of handling efficiently the elaborate governmental 
 machinery required. The payment of pensions is in many cases six 
 months in arrears, and complaints are universal of the long delays in 
 the carrying out of the provisions of the law. Even if these adminis- 
 trative difficulties be overcome, there is little likelihood of the statute 
 ever becoming very popular. In time, by amendments the present mil- 
 lions of the recalcitrant workers may be brought into line and compelled 
 to comply with the law; but it will be a forced and unwilling adhesion. 
 Possibly, too, as urged by many prominent men, the whole system may 
 be changed, the obligatory features modified and more encouragement 
 given to individual initiative and to private organizations. That would 
 be the more desirable method. 
 
 The lesson to be derived from French legislation on this subject is 
 plain. In devising a new law to cover any branch of workingmen's 
 insurance, the greatest care should be taken to secure the adoption of 
 a measure that will conform to or fit in with the habits and disposi- 
 tions of the working people. Because a certain system has produced 
 satisfactory results and run smoothly in one country is no reason why 
 it should be blindly followed in another. Only when a law complies 
 with public sentiment will it find a prompt and universal acceptance, 
 without which successful operation cannot be anticipated. 
 
 41 
 
HOLLAND. 
 
 WORKMEN'S ACCIDENT COMPENSATION. 
 
 How Insured. Functions Performed by the State. Extent of Abuses. 
 
 Some Defects. 
 
 Under the Dutch common law, an employer could not be held re- 
 sponsible for an accident to an employee where the same resulted from 
 an act of God, an unknown cause or through the laborer's negligence. 
 That, of course, resulted in an unsatisfactory state of affairs, which 
 was not materially helped by the placing of employers' liability risks 
 with private insurance companies. Those insurers paid only small 
 sums in proportion to the injuries and then often only after contests. 
 Yet, in spite of the example set by Germany almost a decade before, 
 compulsory insurance of workingmen against accidents did not come 
 into force in Holland, until February 1st, 1903. 
 
 Originally the intention was apparently to follow the Austrian law 
 as a model. The idea of compelling employers to group themselves 
 into associations for accident insurance purposes was, however, aban- 
 doned on the plea that the country was too small and the number of 
 employers in many forms of industrial pursuits too limited to make 
 the establishment of such associations desirable. As just recently in 
 Switzerland, a bitter struggle took place between the advocates and 
 opponents of establishing a State monopoly of this form of insurance. 
 In the lower house, where the labor and socialistic element was most 
 strongly represented, the vote was overwhelmingly in favor of monopoly 
 and against freedom of choice. Owing, however, to the obstinate re- 
 sistance of the upper chamber the monopoly plan was finally defeated 
 and free competition between State and every other form of accident 
 insurance allowed. This outcome has proved very fortunate for the 
 employers, as State insurance has turned out to be the most costly of 
 all. 
 
 Underlying the Dutch law is the false idea that this form of enact- 
 ment is class legislation, in which the interests of employers and em- 
 ployees are opposed. Thence the theory that the rights of the victim 
 of an accident will not be safeguarded if the employer has any say 
 as to the method of treatment. For this reason the injured workman 
 is given the right of selecting his own physician and a Government of- 
 ficial is made to intervene at every turn between the employer and the 
 workman. The State alone, through its own medical department, de- 
 termines the extent of the disability incurred and the compensation to 
 be paid. 
 
 Not only does the Government fix, but it also pays out the indem- 
 nity awarded to the victim, in weekly installments. No contact between 
 employer and employee after an accident is, therefore, the rule. This 
 
 42 
 
fact should be borne in mind before proceeding to a detailed examina- 
 tion of the workings of the law. 
 
 Leaving for later discussion the question of how the various sys- 
 tems of insurance are faring in this open but not on an equal footing 
 competition, the first thing to consider is the number of workmen af- 
 fected by and of injuries reported under the law. This is shown in the 
 following table, which covers only serious injuries that lasted over two 
 days and for which an indemnity was paid. 
 
 
 No. No. Under 
 
 Over 
 
 
 Year. 
 
 workmen. accidents. 6 weeks. 
 
 6 weeks. 
 
 Deaths. 
 
 1903 . . 
 
 455,365 30,020 26,594 
 
 3,176 
 
 250 
 
 1904 . . 
 
 508,356 39,136 34,495 
 
 4,408 
 
 233 
 
 1905 . . 
 
 528,820 44,219 39,204 
 
 4,782 
 
 233 
 
 1906 . . 
 
 557,992 51,337 45,631 
 
 5,470 
 
 236 
 
 1907 .. 
 
 574,472 54,458 48,304 
 
 5,894 
 
 260 
 
 1908 .. 
 
 586,427 49,799 44,463 
 
 5,102 
 
 234 
 
 1909 .. 
 
 605,450 48,377 43,514 
 
 4,622 
 
 241 
 
 1910 .. 
 
 631,307 48,782 43,825 
 
 4,700 
 
 257 
 
 1911 .. 
 
 650,000 52,741 47,552 
 
 4,923 
 
 266 
 
 1912 
 
 669,000 
 
 
 
 
 
 Accidents per Under 
 
 Over 
 
 
 Year. 
 
 1,000 workmen. 6 weeks. 6 weeks. 
 
 Deaths. 
 
 1903 .. 
 
 65.9 58.4 
 
 5.4 
 
 0.54 
 
 1904 .. 
 
 77. 67.9 
 
 6.8 
 
 0.46 
 
 1905 .. 
 
 83.6 74.1 
 
 6.8 
 
 0.45 
 
 1906 .. 
 
 92. 81.7 
 
 7.4 
 
 0.44 
 
 1907 .. 
 
 94.8 84. 
 
 8.2 
 
 0.48 
 
 1908 .. 
 
 84.9 75.8 
 
 6.8 
 
 0.42 
 
 1909 .. 
 
 79.9 71.9 
 
 5.8 
 
 0.41 
 
 1910 .. 
 
 77.5 69.6 
 
 5.6 
 
 0.42 
 
 1911 
 
 81.2 74. 
 
 7.6 
 
 0.41 
 
 The 
 
 following figures have been published as yet 
 
 only for the period 
 
 1903-1910: 
 
 
 Permanent Per Average r-- 
 
 -Disability 
 
 N 
 
 Year. 
 
 disability 1,000 disability 25% 
 
 25- 50- 
 
 75- 
 
 
 cases, workmen, per cent, or less. 
 
 50%. 75%. 
 
 100%. 
 
 1903 . . 
 
 657 1.54 45.01 33.2 
 
 33.9 16.7 
 
 16.2 
 
 1904 .. 
 
 890 1.89 43.46 35.7 
 
 30.5 18.3 
 
 15.5 
 
 1905 .. 
 
 1,152 2.24 39.09 41.3 
 
 33. 13.3 
 
 12.4 
 
 1906 .. 
 
 1,261 2.43 36.88 44.2 
 
 32.3 14.4 
 
 9.1 
 
 1907 .. 
 
 1,224 2.14 35.98 46.3 
 
 31.1 14.9 
 
 7.7 
 
 1908 .. 
 
 1,109 1.93 34.52 51.2 
 
 29.1 12.3 
 
 7.4 
 
 1909 .. 
 
 1,125 1.90 34.38 50.6 
 
 30.9 12.1 
 
 6.4 
 
 1910 . . 
 
 1,071 1.84 32.19 57.5 
 
 26. 10.0 
 
 6.5 
 
In 1910, the average premium charged by the state insurance de- 
 partment or bank was 2.73%. In relation to wages, losses in Holland 
 and Austria since 1903 have run as follows: 
 
 Year. 
 1903. 
 1904. 
 1905. 
 1906. 
 
 Austria 
 , .. 1.91 
 . .. 1.95 
 ... 1.95 
 . 2.09 
 
 Holland. 
 1.54 
 1.82 
 1.91 
 2.00 
 
 Year. 
 1907, 
 1908, 
 1909 
 1910 
 
 Austria. 
 
 . . 1.95 
 
 , .. 1.86 
 
 . .. 1.57 
 
 . 1.40 
 
 Holland. 
 1.92 
 1.63 
 1.54 
 1.40 
 
 The following is the rate of accidents per 1,000 workmen in the dif- 
 ferent trade groups for the same years: 
 
 Group. 
 
 I. 
 
 II. 
 
 III. 
 
 IV. 
 
 V. 
 
 VI. 
 
 VII. 
 
 VIII. 
 
 IX. 
 
 X. 
 
 XL 
 
 XII. 
 
 XIII. 
 
 XIV. 
 
 XV. 
 
 XVI. 
 
 XVII. 
 
 XVIII. 
 
 1903. 
 
 Pottery, glass, lime, etc 64.9 
 
 Precious stones 17.5 
 
 Printing and lithographing . . . 19.4 
 
 Building and engineering 89.4 
 
 Chemicals and explosives .... ,40.1 
 
 Wood, cork and straw 61.8 
 
 Clothing and cleaning 20.3 
 
 Fine arts 23.6 
 
 Leather, rubber, etc 30.3 
 
 Minerals, coal, etc 61.4 
 
 Metals 78.1 
 
 Machinery, etc 116.3 
 
 Ships and vehicles 117.3 
 
 Paper products, etc 44.4 
 
 Textiles 21. 
 
 Gas and electricity 57.8 
 
 Food products 47.7 
 
 Trade and transportation ... 71.9 
 
 1905. 
 
 1907. 
 
 1909. 
 
 1910. 
 
 90.2 
 
 113. 
 
 96.38 
 
 98.88 
 
 13. 
 
 17.6 
 
 14.48 
 
 15.04 
 
 28.4 
 
 31.5 
 
 30.97 
 
 28.25 
 
 112.2 
 
 119.3 
 
 102.60 
 
 99.38 
 
 52.5 
 
 62. 
 
 51.44 
 
 57.98 
 
 85.9 
 
 100.1 
 
 90.30 
 
 88.63 
 
 21. 
 
 25.8 
 
 24.33 
 
 23.74 
 
 56.8 
 
 49.2 
 
 30. 
 
 23.20 
 
 48.3 
 
 55. 
 
 50.81 
 
 49.12 
 
 96.3 
 
 118.8 
 
 147.49 
 
 170.82 
 
 115.6 
 
 129.6 
 
 112.21 
 
 107.72 
 
 134.1 
 
 152.9 
 
 132.89 
 
 126.67 
 
 153.7 
 
 198.3 
 
 165.08 
 
 138.46 
 
 51.4 
 
 64.8 
 
 61.68 
 
 56.50 
 
 26.7 
 
 34.9 
 
 27.07 
 
 27.44 
 
 65.7 
 
 75.1 
 
 53.37 
 
 54.40 
 
 62.4 
 
 70.6 
 
 63.18 
 
 61.75 
 
 87.9 
 
 95. 
 
 71.90 
 
 69.43 
 
 65.9 83.5 94.8 79.94 77.52 
 
 As in almost all other countries the percentage of cases involving 
 death or permanent disability remains about the same. Whatever in- 
 crease has occurred has taken place in the minor accidents entailing 
 a disability of less than six weeks' duration. 
 
 It is to be noted that up to 1907, accidents increased both in total 
 and in relative number. Since that date, however, there has been quite 
 a decline in both respects, due largely to a stricter control exercised 
 by the Government officials. In this regard, Holland is having a hap- 
 pier experience than France, where accidents show an almost uninter- 
 rupted gain from year to year. This difference is all the more striking 
 because some false rules are followed in the interpretation and adminis- 
 tration of the Dutch law, which afford opportunities for abusive prac- 
 tices. 
 
 In the first place, the Government physicians who, in every in- 
 
 44 
 
stance, determine the extent of the injuries received by the victim of an 
 accident, base their appraisal on the theoretical impairment suffered 
 and not on the actual loss in wages incurred. For example, if a laborer 
 loses an eye, he is deemed to be 30 per cent less efficient than before 
 and receives an annuity accordingly. Yet his work may have been of 
 a comparatively simple nature, which he is able to perform just as well 
 after as before his accident. If given his full wages again, besides the 
 indemnity awarded him, he will receive much higher pay than an able- 
 bodied workman with unimpaired vision. In order to avoid having 
 workmen, who have been formerly injured, receive more than the pre- 
 vailing rate of wages, the large employers exchange lists containing 
 the names of such employees as are known to be in receipt of weekly 
 indemnities. If one applies for work he will not be taken on unless he 
 will agree to a reduction in the amount of the usual weekly wage by 
 the sum received by him as an indemnity. Consequently, whenever he 
 can, the workman tries to conceal from his employer the fact that he is 
 drawing a regular pension on account of an injury previously incurred. 
 If he succeeds, his salary is higher than that of the ordinary laborer 
 doing the same work, while if he fails the employer reaps the benefit 
 of the indemnity through not having to pay the full rate of wages. In 
 either case, someone makes a profit out of the pension, which, of course, 
 is wrong. Atonement for an actual wage loss suffered is the only cor- 
 rect rule to be followed in settling for workingmen's accidents. Any 
 other method is a direct incentive to the laborer to exaggerate the ex- 
 tent of his injuries as much as possible. 
 
 Indeed, while much better kept in check than in some other coun- 
 tries, exaggeration and simulation of accidents by workmen are not 
 unknown and are much complained of by employers, especially the 
 former evil. In general, the same drawbacks to the compulsory work- 
 men's accident insurance are to be observed in Holland as elsewhere. 
 A hurt that would not ordinarily cause a stoppage of work in a com- 
 pulsorily insured trade results in a cessation of labor, and an injury to 
 an insured employee takes much longer to heal than if he were unin- 
 sured. 
 
 Another incentive to prolonged and unnecessary idleness on the part 
 of those injured exists in Holland through workmen obtaining benefits 
 from outside sources in addition to the amount alloted to them by the 
 accident insurance law. The amount is fixed at 70 per cent of their 
 usual wage. If, in addition, they receive monetary assistance from 
 a fraternal order, their total income frequently becomes greater during 
 the period of disability than while they were at work. In one instance, 
 half of the workmen treated were receiving from 90 to 150 per cent 
 of their usual salaries. Under such circumstances laborers will 
 naturally delay resuming work as long as they can. The experience 
 of the Dutch nation in this respect emphasizes the necessity of not 
 putting the scale of compensation for accidents at too high a figure. 
 The injured laborer should always be under a strong pecuniary in- 
 centive to resume his employment. The possibility also of obtaining 
 
 45 
 
benefits in excess of the usual wage through carrying outside insur- 
 ance should be strictly guarded against and forbidden, as in the re- 
 cently adopted Swiss law. 
 
 Although injured workmen have the right of selecting the physicians 
 who shall treat them, the grave abuses that have resulted elsewhere 
 from the adoption of this system are hardly to be found in Holland. 
 Medical costs per accident and in the aggregate have remained about 
 the same. Various reasons account for this difference from the experi- 
 ence of France, where free choice by the laborer of his medical iat- 
 tendant also prevails, with a resultant constantly augmenting burden 
 of expenditure. In the first place, the physician's role in Holland is 
 limited to treating the injured party. He has nothing to say as to 
 the compensation to be paid the victim, which is fixed by a Government 
 official. There is thus no opportunity for the exploitation of the em- 
 ployer through doctors and workmen acting in collusion and making 
 false statements as to injuries. Secondly, Holland is a small country, 
 with only 2,500 physicians in active practice. It is easy therefore for 
 the authorities to keep tab on each individual practitioner and to call 
 him sharply to account if his treatment of accident cases is unnecessarily 
 prolonged and the convalescence of his patients unusually slow. Besides, 
 a doctor caught in improper practices may have his license to treat 
 accident cases revoked. 
 
 A third and important deterrent is found in the clause of the Dutch 
 accident law, which permits the employer to prescribe the first aid 
 treatment to an injured employee. How important the provision is will 
 appear from the following table: 
 
 Total No. injuries Total No. injuries 
 
 accidents cured within accidents cured with- 
 
 Year. reported. 2 days. Year. reported, in 2 days. 
 
 1903 38,706 8,686 1908 65,550 15,571 
 
 1904 49,667 10,531 1909 64,404 16,027 
 
 1905 55,497 11,272 1910 66,086 17,304 
 
 1906 64,864 13,527 1911 71,731 18,990 
 
 1907 68,994 14,536 
 
 As the law prescribes that no indemnity shall be paid unless the dis- 
 ability resulting from an injury exceeds two days, the figures in the 
 second column give the number of accidents reported which either re- 
 sulted in no harm being done or which were cured in two days' time 
 through the use of simple medical surface applications. These form 
 one-quarter of all, and about the treatment of them the employer has 
 the say and the workman has practically no voice in the selection of 
 the physician. This is a very valuable privilege for the employers 
 and checks dishonest practices, as the following illustration will show: 
 In some of the larger industrial plants, surgical rooms are established 
 with a company doctor frequent in attendance. No matter how trifling 
 his hurt may be, a workman is obliged, under penalty of instant dis- 
 missal, to report at once as soon as he suffers an injury at the doctor's 
 headquarters for treatment. Suppose something has flown into his 
 
 46 
 
eye. The offending particle is forthwith removed, and the physician 
 can tell at once whether the patient should continue work or not. If 
 the injury is found to be a slight one, the laborer knows that it will 
 be useless for him to attempt to magnify it into an excuse for not 
 working, even though he can find an easy-going physician willing to 
 substantiate his claim. Not only does the prompt first aid treatment 
 furnished by the employer thus prevent any exaggeration or simulation 
 of injuries, but it also greatly lessens the chances of a wound leading 
 to a prolonged disability through neglect or lack of treatment in its 
 early stages. 
 
 On the question of medical treatment, therefore, the experience of 
 Holland cannot be cited as an argument in favor of the free choice of 
 the physician by the workingmen. If abuses have been kept down, it 
 has been due to limiting the choice in part and to other favoring cir- 
 cumstances, like the strict control possible in a small country. Black 
 sheep exist among the members of the medical profession in all the 
 large centres, who would be only too ready to mulct the employers if 
 the opportunity arose through aiding injured laborers to make un- 
 founded and exaggerated claims. 
 
 Dissatisfaction on the part of the workingmen with the amounts 
 awarded them, so prevalent in Germany, hardly exists in Holland. 
 Appeals to the courts especially established to pass on disputed ques- 
 tions arising out of the accident insurance law are comparatively in- 
 frequent. In 1911, 1,650 cases were decided in the first appeal court of 
 which only 1,284 related to questions of indemnity. Mention may be 
 made here that the Dutch law does not permit the settlement of small 
 annuities by the payment of a lump sum, as allowed in France. But 
 in Holland, instead of the employer, it is the Government office which 
 has the burden of making these small regular payments, on each re- 
 curring Tuesday, amounting in some cases to only a few cents a week. 
 That requires much additional bookkeeping and is one cause why the 
 administrative expenses of the State insurance department are so high. 
 
 As a whole, it may be said that, while the law has some serious de- 
 fects, workingmen's accident insurance in Holland has not produced the 
 baneful effects to be found elsewhere. In spite of the increased strain 
 on laborers due to the greater industrial activity and attendant over- 
 time working during the last few years, accidents are relatively less in 
 number than in 1904. Fraudulent and simulated accidents are guarded 
 against. Collusive practices between physicians and workmen are almost 
 impossible on account of the strict control and settlement of claims by 
 Government officials, whose probity and uprightness are very high. 
 Yet one must admit that owing to certain defects inherent in every 
 system of government administration, the role played by the State in 
 Holland has very considerably increased the burden on industry from 
 workingmen's accidents. What those defects are and how they tend to 
 unduly raise costs can be most clearly brought out by passing to an 
 examination of State as contrasted with private insurance in the matter 
 of employers' liability risks. 
 
 47 
 
DUTCH EXPERIENCE IN STATE VERSUS PRIVATE INSURANCE. 
 
 Higher Cost and Disadvantages of Former. Disappearance of Self In- 
 surance, Eclipse of Corporate Insurance and Rise 
 of Mutual Insurance. 
 
 In Holland, as in France, all forms of insurance are available to 
 the employer. He may carry the risk himself, become a member of a 
 cooperative or mutual insurance association, insure himself in a stock 
 company or place his insurance in the State insurance department, 
 which bears the title of Royal Insurance Bank. While these various 
 systems are open to all alike, they are far from competing on equal 
 terms. Employer's self insurance is under the greatest handicap of all 
 and is, consequently, the least favored. On the other hand, the Royal 
 or State Bank enjoys certain important advantages, which ought to put 
 it in the lead of all rivals. 
 
 To begin with, the debit-side of accident insurance underwriting is 
 made up practically of two items administrative expenses and losses. 
 Now, because under the Dutch system, accident claims are settled for all 
 writers of risks through the State Bank, rival insurers are unable to 
 secure any advantage over that institution in the important matter of 
 losses. No opportunity is afforded them to demonstrate that they can 
 adjust losses more expeditiously or more cheaply than the Government 
 officials. Only in the item of expenses have they a chance to better 
 the record of the State Bank. Here, however, the contest is again un- 
 equal. Every risk not placed elsewhere falls to the Government insti- 
 tution, which thereby is dispensed from the necessity of employing an 
 agency force. Furthermore, it enjoys the use of the mails free of 
 charge. Again, half of all the salaries of the higher officials of the 
 bank, or about two-fifths of its total administrative expenses, are paid 
 by the central Government. The remaining three-fifths are divided 
 among all those insuring workingmen's risks according to the amounts 
 respectively underwritten by them. Thus, if in any given year the 
 private insurers insure one-half of all workers salaries, such insurers 
 would then be called upon to pay one-half of 60 per cent, or 30 per 
 cent, of the State Bank's administrative expenses. In other words, be- 
 sides meeting their own quota of expenses they must also contribute 
 largely towards those of an institution carrying on an insurance busi- 
 ness in competition with themselves. 
 
 With various expense items, which its competitors are called upon 
 to meet, thus taken care of, the State Bank, whose aim is to furnish in- 
 surance at cost and not for a profit, ought to be in a position to make 
 lower premium rates than anyone else. One would expect therefore to 
 find by far the larger part of existing accident risks insured with the 
 
 48 
 
State institution. Such has, however, not proved to be the case, as a 
 glance at the following table will show: 
 
 Total 
 salaries 
 Year. Florins. 
 
 1903 226,046,000 
 
 1904 251,212,700 
 
 1905 264,803,000 
 
 1906 280,799,800 
 
 1907 292,401,500 
 
 1908 297,164,000 
 
 1909 312,092,300 
 
 1910 330,612,100 
 
 1911 349,761,000 
 
 1912 364,000,000 
 
 Insured by 
 Year. Mutual Comp. 
 
 1903 38,100,000 
 
 1904 48,200,000 
 
 1905 62,200,000 
 
 1906 75,700,000 
 
 1907 85,600,000 
 
 1908 92,000,000 
 
 1909 104,400,000 
 
 1910 120,000,000 
 
 1911 134,000,000 
 
 1912 155,600,000 
 
 Salaries 
 
 
 
 open to 
 
 Insured by 
 
 
 competition. 
 
 State Bank. 
 
 Pet. 
 
 198,565,000 
 
 72,341,000 
 
 36.4 
 
 219,460,000 
 
 65,891,000 
 
 30. 
 
 230,780,000 
 
 66,356,000 
 
 28.8 
 
 240,890,000 
 
 69,925,000 
 
 28.6 
 
 254,607,000 
 
 89,879,000 
 
 35.2 
 
 256,224,000 
 
 124,323,000 
 
 48.5 
 
 271,000,000 
 
 132,800,000 
 
 48.6 
 
 285,700,000 
 
 136,500,000 
 
 48. 
 
 300,950,000 
 
 134,525,000 
 
 44.7 
 
 
 134,000,000 
 
 
 Pet. 
 19.2 
 22. 
 
 26.9 
 
 30.9 
 
 33.5 
 
 35.9 
 
 38.5 
 
 42. 
 
 47.8 
 
 Insured by 
 
 Stock Comp. 
 
 88,124,000 
 
 105,358,000 
 
 102,224,000 
 
 99,300,000 
 
 79,100,000 
 
 39,891,000 
 
 33,800,000 
 
 29,200,000 
 
 32,400,000 
 
 Pet. 
 43.4 
 48 
 43.3 
 40.5 
 31.3 
 15.6 
 12.9 
 10. 
 7.5 
 
 In the column of total salaries insured are included the wages paid 
 by those employers carrying their own insurance. These are now but 
 a handful in number, comprising the leading municipalities, certain 
 Government departments and the principal railway system, which have 
 always insured their own risks. The wages paid by these self insurers 
 should therefore be deducted, as has been done in the second column, in 
 order to obtain a correct estimate of the total percentage of business 
 open to competition secured by the several systems of insurance. While 
 permissible on making a minimum deposit of 30,000 florins, self insur- 
 ance by individual industrial employers no longer occurs. One reason 
 for this is that, if an accident happens, the full purchase value of the in- 
 jured man's annuity must be deposited by the insurer with the Gov- 
 ernment bank, either in cash or in the shape of securities. If he is the 
 employer himself, no part of this fund is ever returned, even though 
 the victim should die the next day. A corporation, on the other hand, 
 would in such case receive its securities back. On account of this dis- 
 crimination and because those insured in a large organization obtain 
 certain advantages free of cost, such as advice in legal matters, em- 
 ployers' self-insurance by owners of industrial plants has been elimi- 
 
 49 
 
nated in Holland, leaving only State, mutual and corporate insurance to 
 dispute the field. This last branch is only open to domestic corpora- 
 tions all foreign companies being excluded. 
 
 Besides the State Bank, there were originally in competition eight 
 stock companies and one employers' mutual association. At the begin- 
 ning, the stock companies were far ahead in the amount of business se- 
 cured and held their own until 1907. In that year, one of the com- 
 panies, owing to heavy losses sustained, ceased insuring risks and was 
 followed later by three other companies, leaving only four active to-day. 
 
 The salaries insured by these companies declined rapidly after 1906, 
 until 1909, since which date the amount has remained almost stationary. 
 It is evident therefore that the stock companies, handicapped as they 
 are, have been conducting a losing fight. Nevertheless, they are able 
 to hold their own and underbid the State Bank on one-tenth of the possi- 
 ble business. That they find it profitable to accept these risks at lower 
 terms than demanded by the Government clearly shows the premium 
 rates of the State Bank to be in many instances too high. As the 
 authorities move slowly in changing rates, the stock companies will 
 probably hereafter always find some lines of accident insurance which 
 they can handle to advantage. Employers, who would rather pay a 
 fixed premium, will always prefer them to a mutual organization, 
 where the rate varies according to losses incurred. But, so long as 
 conditions in Holland remain unchanged, they will continue to play only 
 a minor role in the insurance of accident compensation. 
 
 Like that of the stock companies, the amount of salaries insured by 
 the State Bank remained stationary until 1906. With the decline of the 
 companies in 1907, the figures of the bank begin to rise. In 1910 
 they reached their maximum and have since remained at the same 
 figure, with a decline in the relative percentage of all open risks under- 
 written from 48 to 43 per cent. State insurance in Holland appears 
 therefore to have passed its zenith and to be now on the decline. After 
 having held the lead for the four years 1907-1911 in the amount of 
 salaries insured, the State Bank in 1912 dropped to second place, having 
 been out-distanced by its strongest and most successful competitor, the 
 Employers' Mutual Association. Although the total of workers' salaries 
 insured increased some 10 per cent between 1910 and 1912, the amount 
 insured in the State Bank barely held its own. Whatever new business 
 offers itself now is secured by its competitors. 
 
 From the outset, it was easy to foresee that employers mutual or 
 cooperative insurance would be the kind most likely to make headway 
 against the system of Government insurance in vogue in Holland. 
 Furnishing its members protection against risks at cost price, dis- 
 pensing with an agency force and all participants directly profiting 
 through losses being kept down, this form of private insurance should 
 compete on more equal terms than any other with the State Bank. 
 Such, indeed, has proved to be the case as the figures of its steady and 
 uninterrupted growth from year to year in the amount of salaries 
 underwritten plainly indicates. Starting in 1903 with the least amount 
 
 50 
 
of all or only one-fifth of all salaried risks, mutual insurance took the 
 lead in 1912 with 47 per cent of all risks covered. In nine years, its 
 business has quadrupled, while that of the State Bank has merely 
 doubled. 
 
 In Holland, therefore, employers' mutual has to-day outstripped and 
 surpassed State insurance in amount, through being able to offer lower 
 rates than those demanded by the Government authorities. Its striking 
 superiority in this respect is clearly demonstrated by the following 
 table: 
 
 Salaries insured Prem. based Actual 
 
 in mut. system, on gov. rates. prem. paid. 
 Year. Florins. Florins. Florins. 
 
 1903 38,100,000 865,000 729,000 
 
 1904 48,200,000 1,121,000 1,060,000 
 
 1905 62,200,000 1,537,000 1,335,000 
 
 1906 75,500,000 1,776,000 1,490,000 
 
 1907 85,600,000 2,021,000 1,599,000 
 
 1908 92,000,000 2,449,000 1,575,000 
 
 1909 104,400,000 3,310,000 2,133,000 
 
 1910 120,000,000 4,187,000 2,346,000 
 
 1911 136,000,000 4,703,000 2,808,000 
 
 1912 155,600,000 5,310,000 3,327,000 
 
 Total 917,800,000 4 7,279,000 18,402,000 
 
 Saving over 
 
 Year. gov. figures. Pet. 
 
 1903 136,000 15.7 
 
 1904 61,000 5.4 
 
 1905 202,000 13.1 
 
 1906 286,000 16.1 
 
 1907 422,000 20.9 
 
 1908 874,000 35.7 
 
 1909 1,177,000 35.6 
 
 1910 1,841,000 44. 
 
 1911 1,895,000 40.3 
 
 1912 1,983,000 37.4 
 
 Total 8,877,000 
 
 32.5 
 
 To the above figure of savings should be added the sum of 139,000 
 florins found to have been overcharged the mutual association for losses 
 from 1903-1907. The total actual saving is thus brought up to 9,016,000 
 florins or 33 per cent over what the employers would have had to pay 
 if they had been obliged to insure with the State. If the State pre- 
 miums be estimated at 100, mutually insured employers paid one-third 
 less or at the rate of 67. In other words, the average premiums de- 
 manded by the Government for the ten years 1903-1912 have been al- 
 
 51 
 
most 50 per cent higher than what those insured mutually have found 
 sufficient to meet all losses and expenses. And even with its two-fifths 
 higher premiums and with the major part of its administrative expenses 
 contributed from outside sources, the State Bank failed to come out 
 even. At the end of 1911, the total deficit in its accounts figured about 
 1,800,000 florins. The excessive cost in Holland of the Government sys- 
 tem of insurance as compared with that offered by a well-managed and 
 economically run private organization is thus conclusively proven. 
 
 The question may be asked, why, if so much more costly, the State 
 Bank should yet be able to secure two-fifths of all the possible busi- 
 ness. The answer is to be found in the fact that Holland is a country 
 where small employers predominate and where large industrial estab- 
 lishments are comparatively few in number. The last available statistics 
 show that in 1910 there were 89,728 employers insured, with 631,307 
 workmen, or seven workmen on the average for each separate employer. 
 For the State Bank alone the figures were 75,179 employers and 291,731 
 workmen, or 4 workmen per employer, showing that the less im- 
 portant risks were generally insured with the Government office. This 
 has been the case from the start. The small employer with only two or 
 three workmen to insure is under no particular inducement to make a 
 change because the total premium he has to pay is not large in amount 
 and the possible saving to be effected would not in any case exceed a 
 few dollars. Consequently, he is apt to stick to the State Bank, while 
 establishments of any size or importance, as a rule, insure elsewhere. 
 But for this hold upon the small employers, the amount of insurance 
 effected through the Government office would be very much less. 
 
 In order to ascertain why Government insurance is so much more 
 expensive, one need only contrast the methods of the State Bank with 
 those of the Employers' Mutual Association. This latter, known as the 
 Central Bank for Employers' Risks, is an incorporated association, on 
 January 1, 1913, serving the interests of 5,275 employers, with some 
 267,000 workmen in their pay. Its members consist of 96 large em- 
 ployers carrying their risks directly with the Central Bank, and 41 af- 
 filiated mutual associations, to which the remaining 5,179 employers 
 belong, with an average membership of 130 employers each. Each as- 
 sociation levies its own premiums based on losses suffered and on its 
 quota of the expenses of the Central Bank. That Bank, in turn, acts as 
 a clearing house for all the associations, settles all losses as called upon 
 by the State Bank, provides a legal bureau to pass on disputed claims 
 and maintains a technical department for the inspection of plants and to 
 suggest safeguards against accidents. 
 
 Through adopting the plan of dividing its members into small 
 groups and making each group responsible for accident losses suffered 
 in the establishments of those belonging to it, every individual em- 
 ployer insured in the Central Bank is under the strongest possible 
 stimulus to reduce the number of accidents as much as possible among 
 his employees. If the indemnities paid his workmen for injuries re- 
 ceived in any given year are materially cut down, the owner knows 
 
 52 
 
that it means a saving to him in the shape of a reduced premium. He 
 has the greatest incentive therefore to adopt safety appliances and to 
 enforce the observance of preventive rules. Contrast to this attitude, 
 the position of an employer insured in the State Bank. Once he has 
 paid his premium, it is immaterial from a pecuniary standpoint whether 
 accidents among his employees occur frequently or not. So long as his 
 equipment measures up to the ordinary standard, he has to fear no in- 
 crease in his premium rates. As one of sixty or more thousand employ- 
 ers insured, any precautions against accidents taken by him in his single 
 establishment will have only a very remote influence, if any, towards 
 lowering the charge for the insurance in his particular industry. Un- 
 able to directly influence results through any especial action of his 
 own, therefore, the employer insured in the State Bank has no particular 
 cause to seek to reduce the number or frequency of accidents. 
 
 How this indifference as to the number of accidents operates to the 
 disadvantage of the State Bank appears from the following table: 
 
 Year. Accidents per Million Florin Wages. 
 
 State. Companies. 
 
 1903 153 165 
 
 1904 186 186 
 
 1905 225 192 
 
 1906 262 209 
 
 1907 286 207 
 
 1908 258 179 
 
 1909 236 170 
 
 1910 223 171 
 
 Accidents, therefore, are considerably more frequent among those 
 insured in the State Bank. Yet the contrary ought to be the case. As 
 has just been pointed out, Holland is a country where small industry 
 prevails. In 1910 69,074 employers, or 78% of all, had 5 workmen or 
 less in their establishments, or a total of 92,802 workmen. Such small 
 employers are the best risks. The official figures of accidents per 1,000 
 workmen, given below, indicate this: 
 
 1903. 1904. 1905. 1906. 1907. 1908. 1909. 1910. 
 
 For all employers 65.9 77 83.6 92 94.7 68.4 72.9 69.5 
 
 For employers with less 
 
 than 5 workmen 47.7 57.4 64 69.4 73.9 84.9 79.9 77.5 
 
 In the latter category, the average number for the eight years comes 
 to 65^, as against 82 in the former. But, as previously indicated, it 
 is just the small and best class of employers from a risk standpoint, 
 which is usually insured in the State Bank. Yet, instead of making 
 a better showing, however, as would be expected, its accident ratio per 
 1,000 workmen is decidedly higher than that of other insurers. 
 
 Besides excelling in the number, the State Bank also formerly led in 
 
 53 
 
the loss per accident. For the five years 1903-1907, the losses ran in 
 florins as follows: 
 
 Year. State. Companies. Year. State. Companies. 
 
 1903 102.78 90.66 1906 115.67 80.93 
 
 1904 112.58 94.24 1907 102.56 74.70 
 
 1905 114.34 89.24 
 
 An injured workman insured in the State Bank, therefore, received 
 twenty-five per cent more indemnity on the average than one insured 
 elsewhere. That was not due to any favoritism, but rather to lack 
 of proper control by the Government officials. For example, a casual 
 dock laborer injured with one may be able to resume work with an- 
 other employer long before his period of estimated disability has ex- 
 pired. In such a case, the Government officials, having had no adequate 
 system of check, would continue to pay the regular indemnity as before. 
 Those privately insured, however, make it a point to keep tab on their 
 workmen, and the laborer's recovery would in all likelihood be observed 
 and the authorities notified to stop any further payment of indemnity. 
 With a higher average loss and a relatively larger number of acci- 
 dents, it is not surprising to find that in 1907 the total losses of the 
 State Bank amounted to 2.79% of salaries insured, against 1.70% for 
 those of the private companies, or an excess of 64%. 
 
 Since 1908, however, the showing of the State Bank as regards 
 losses per accident has been as favorable as those of the companies. 
 The last figures reported run as follows: 
 
 r-Losses per Accident-^ r-Losses to Wages Insured A 
 
 Year. State. Companies. State. Companies. 
 
 r- florins -^ r- per cent > 
 
 1908 84.57 70.64 2.13 1.41 
 
 1909 75.60 80.54 1.74 1.55 
 
 1910 69.03 77.79 1.51 1.51 
 
 Through having to consider only a comparatively small number, 
 when it comes to an apportionment of losses, the premiums of th,e 
 Central Bank can be more quickly and fairly adjusted to meet actual 
 costs than those of the State institution. The latter has always pro- 
 ceeded on the theory that stability in premium rates is the great thing 
 to be desired. The law itself prescribes that rates shall be revised at 
 the end of every five years, and it is very seldom that any particular 
 rate is altered during the five year period. The red tape that has 
 to be gone through with in each instance acts as a deterrent against 
 effecting any change. 
 
 Furthermore, in raising or lowering the tariff of charges, the 
 authorities are governed more or less by their official statistics of ac- 
 cidents and losses in the various branches of industry. While very 
 full and complete, their publication must necessarily be several years 
 delayed in each instance on account of their very elaborateness. In- 
 
 54 
 
deed, those from 1908 on have yet to be published. Now, in Holland, 
 as elsewhere, accident risks in different branches of trade or industry 
 may change very quickly in this age of invention and improvement, 
 and often from the most unexpected causes. For example, who could 
 have foreseen that employees in butcher shops were to become a much 
 more dangerous accident risk in consequence of meat being delivered in 
 the Dutch cities by young men or boys on bicycles, where formerly they 
 went on foot? Under its methods, a number of years must alwayjs 
 elapse before the State Bank will realize that its premiums in that par- 
 ticular trade are too low to cover the losses, and perhaps an even 
 longer period before its rate will be raised. Unlike the Central Bank, 
 where premiums are automatically adjusted every year to suit the vary- 
 ing results in each particular branch of industry, the rates of the State 
 Bank are generally based on conditions as they were three or four 
 years previous. Consequently, through its inability to speedily change 
 rates, one would naturally expect to find the premiums of the govern- 
 ment institution deviating from the normal more or less and being 
 either too low or too high. And that has proved to be the case. For 
 the first five year period after the enactment of the law, namely, from 
 1903-1907, the State Bank showed a deficit of 4,189,000 florins, as 
 against total premium receipts of 7,233,000 florins. Of this total 
 deficit, due to a variety of causes, 2,520,000 florins was ascribed to 
 insufficiency of premium receipts. For the Bank to have covered costs, 
 therefore, its premium income should have been over one-third higher. 
 If 100 be taken as the correct standard, the actual premium receipts for 
 1903-07 were only on the basis of 73. 
 
 From this era of too low premiums and recurring deficits, we find 
 in the second five year period from 1908-1912 that the Bank has 
 achieved a surplus in every twelve months, or a total profit of about 
 2,850,000 florins. Its net deficit now stands at about 1,350,000 florins. 
 Taking the figures for 1911, which are the last published, the gross 
 premiums yielded 3,300,000 florins and the profit coming to the bank 
 through excess of premium receipts amounted to 570,000 florins. In- 
 stead of an actual premium rate of 2.44, one of 2.02 per cent would have 
 sufficed for the Bank to have come out even. Its present rates, there- 
 fore, show an excess of over 20% above actual cost figures. For 1910, 
 the excess was 40%. 
 
 Again, taking the full figures for 1903-1910, the Bank's losses as 
 contrasted with premiums run as follows: 
 
 Year. Per cent. Year. Per cent. 
 
 1903 82.2 1907 154.9 
 
 1904 112.4 1908 104.2 
 
 1905 149.7 1909 125. 
 
 1906 184.9 1910 166.6 
 
 Starting with a surplus in 1903, the Bank met with a loss in the 
 next twelve months. If this had occurred to a private company, it is 
 safe to say that rates would have been promptly raised to overcome 
 
 55 
 
the deficit. Nothing was done by the officials of the Bank, however, 
 so that its loss in the two following years reached alarming propor- 
 tions. Only in 1907, or three years after the deficit had first de- 
 clared itself, were rates partly raised and the loss partially reduced. 
 The slowness of Government action, even in cases calling for prompt 
 and decisive proceedings, could not be better illustrated. 
 
 Perhaps the most instructive example of the methods followed by 
 the State Bank is to be found in the insurance of longshoremen, }or 
 those engaged in the loading of ships. As a basis for its tariff the 
 Bank followed the Austrian statistics of 1895 and 1896, showing 48 
 serious accidents in this calling, involving the payment of 14,732 florins 
 indemnity. On this showing a premium of 2.64 per cent works out. The 
 Bank consequently started with average rates of 4 per cent in this 
 branch. The loading of ships, however, is in Holland a very dangerous 
 occupation, varying in risk according to the size and equipment of the 
 vessel, the manner of loading, whether elevators are used or not, and 
 the intensity or speed with which the work is carried on. From the 
 very start the Bank's premium rate proved to be entirely too low, 
 entailing losses as follows: 
 
 Losses to 
 Year. Premiums. Losses. Deficit, premiums. 
 
 1903 104,078 227,918 123,840 219 
 
 1904 112,573 446,632 334,059 396.8 
 
 1905 167,044 653,072 486,028 391 
 
 1906 . . . . 194,102 867,557 673,455 447 
 
 1907 440,264 1,180,101 739,837 268 
 
 Although total premiums in 1903, the very first year, did not cover 
 half the losses, the same disastrous rate figure was adhered to for 
 the three following years. Losses increased by leaps and bounds until 
 in 1906 they were four and one-half times the premiums. Finally, in 
 1907, while the deficit was larger than ever, premium receipts began 
 to rise due to rates having been at last increased. Instead of at 4, as 
 originally, the average rate in this industry at present varies from 
 15 to 30 per cent. 
 
 Although the government rates up to 1907 were often too low, they 
 were in frequent instances fixed too high. The following table, giv- 
 ing conditions at the end of 1907, shows this: 
 
 Per cent of wages insured 
 
 State Bank Loss outside State Bank. 
 
 Risks. Premium. Rate. 1903. 1907. 
 
 Painters 3.673 1.46 81.22 87.30 
 
 Plasterers 3.673 2.91 82.15 86.46 
 
 Carpenters 4.521 1.92 72.71 81.49 
 
 Masons 3.673 2.89 74.38 79.13 
 
 In thus quoting and adhering to premiums far in excess of the 
 true risk rate, the Bank made it easy for its rivals to secure from 
 
 56 
 
year to year a constantly increasing percentage of the business in the 
 above trades. 
 
 Looking at the reverse of this picture, the next table illustrates 
 what occurred when the Bank's official rates proved too low to cover 
 losses. 
 
 Percentage wages insured 
 
 Risk. outside State Bank. 
 
 1903. 1907. 
 
 Blacksmiths 60.49 26.88 
 
 Pottery workers 41.87 0.11 
 
 Glass blowers 67.42 0.00 
 
 Here other insurers have either wholly or in greater part withdrawn 
 from the field, leaving to the State Bank the doubtful satisfaction 
 of carrying on a losing business more or less alone. 
 
 Coming back to the variance in methods between the employers 
 mutual or Central Bank and those of the government institution, the 
 branch or minor associations of the former have not only a limited 
 number of members, but are made to include as far as possible only 
 those engaged in one form of industry, for instance, sugar refining or 
 carpet making. This grouping of employers by trades is deemed most 
 desirable both for purposes of general information and because it leads 
 to a better understanding of the causes of and possible preventive 
 measures against accidents in each particular industry. Those en- 
 gaged in the same business can learn far more accurately than can any 
 outsider whether an employer is financially responsible or not, the con- 
 dition his machinery is in, whether or not he has taken proper pre- 
 cautions against accidents in his work-rooms, the state of discipline 
 among his workmen and whether they observe properly precautionary 
 rules and regulations. In this way, the Central Bank obtains a much 
 more accurate knowledge than can its State rival of the degree of risk 
 incurred in different establishments. Each local association has its 
 committee on admissions to pass on the qualifications of candidates; 
 and, as far as practicable, only employers animated with the common 
 purpose of reducing accident losses to the lowest feasible limit and of 
 safeguarding the lives of their employes in every possible respect are 
 taken in. If members fail at any time to install acceptable methods 
 of protection or allow their workmen to become careless in observing 
 rules of safety, they are asked to withdraw. Thus the Central Bank is 
 enabled to carefully guard against losses arising through changes in the 
 degree of risk and to hold its insured employers, through fear of ex- 
 pulsion, up to a high standard in methods of safety. 
 
 Neither of these conditions exist in the case of the State Bank. 
 It cannot threaten expulsion in case of imperfect equipment, for it 
 must insure all risks. Through its failure to keep in close touch 
 with the changes occurring in classes of or individual risks, it is at 
 a great disadvantage as compared with other insurers. As an instance 
 of this may be cited the case of the blacksmiths. In 1903 they were a 
 
 57 
 
fair risk and were insured as such both in the State and Central 
 Banks. By 1906, however, accidents had so increased in this trade that 
 the risk had become a much greater one. Accordingly, we find the 
 Central Bank abandoning this branch of insurance and directing its 
 customers to the State Bank. Later on, when the government rates 
 were raised to correspond with the increase in risk, we find the Cen- 
 tral Bank once more competing for this insurance. Again in 1909, the 
 government premium for peat gatherers was lowered. This was deemed 
 insufficent by the Central Bank to cover losses in that branch. It 
 therefore instantly disbanded its own local association for this trade 
 and had the members insure in the State Bank. In this way, all un- 
 profitable individual or trade risks are unloaded upon the latter in- 
 stitution to the detriment of its finances and to the benefit of those 
 of its competitors. 
 
 Although its losses from accidents are so very much higher in 
 comparison with those incurred by other insurers, the government in- 
 surance department has made no systematic effort to find out ways of 
 cutting down the number of accidents. Mention has been made before 
 of the Central Bank maintaining a special bureau for this very purpose, 
 which is constantly making valuable suggestions and devising appli- 
 ances for reducing the chances of accidents. The low costs shown by 
 the Central Bank are in no small degree due to the work of this 
 preventive bureau. Frequently it has happened that, where some rec- 
 ommended improvement has entirely done away with a certain kind of 
 accident, the government factory inspectors have then made its adop- 
 tion compulsory. But the point to emphasize is that the invention of 
 such safety devices and improvements is due to private initiative and 
 not to government action. The State follows, but towards the dis- 
 covery of preventive measures it does practically nothing. 
 
 Compared to losses incurred for workingmen's accidents (which in- 
 clude the indemnities paid for other insurers), the administrative ex- 
 penses of the State Bank run as follows: 
 
 1903. 1904. 1905. 1906. 1907. 1908. 1909. 1910. 
 12.4% 14.5% 19.2% 19.5% 21.5% 25.7% 27.7% 26.5% 
 
 Unfortunately, only the total of these expenses is given, and no 
 attempt is made to subdivide them. In the nature of things, however, 
 they must run pretty high on account of the centralized system of the 
 bank. Every loss no matter how trivial has to be referred to the 
 head office in Amsterdam for settlement, which entails far more cor- 
 respondence and clerical work than if adjustments were made directly 
 on the spot. The administrative costs show an upward tendency and in 
 1910 were 21^% of losses and expenses combined. If, in order to put 
 the Bank on an equal footing with a private company, there be added 
 to the percentage of 21.5% for 1910, 10% for the cost of an agency 
 force and 1%% more for free postage, the total expense would be 33 
 per cent. 
 
 58 
 
Advocates of Scate insurance may claim that the superior showing 
 of the Central Bank is due to its system of selected risks. It accepts 
 only those which measure up to a high standard, and rejects all others. 
 If obliged to insure every employer, good, bad or indifferent, as is the 
 State Bank, its saving in expenses over the figures of the government 
 office would not be nearly so great. A comparison between the two 
 systems, it may therefore be contended, is unfair, because they do not 
 serve the same class of risks. In answer to that contention one should 
 recall that both systems are intended to furnish insurance at cost. The 
 odds should be in favor of the State Bank, on account of its having to 
 pay only a part of its own administrative expenses. In 1911 such ex- 
 penses amounted to 1,292,000 florins, of which the State Bank had to 
 meet only 347,000; whereas the Central Bank, besides footing its own 
 administration expenses of 168,500 florins, had to contribute 317,000 
 florins towards those of the State Bank. If, in spite of this and other 
 advantages, the State Bank, in order to come out even, cannot charge 
 at the rate of 70, like the Central Bank, but is obliged to charge at 
 the rate of 100, either one of two things is clear, namely, either its 
 expenses are unduly higher than those of its rival or its method of 
 determining premium rates is entirely wrong. 
 
 Assuming that the State were able to operate as cheaply as the 
 Central Bank, it should, if the principle of cost prevails, quote a like 
 figure of 70 for the risks insured with its business opponent. If it 
 pleads inability to do so because obliged to accept the more dangerous 
 and unprofitable risks, which the Central Bank is at liberty to discard, 
 the reply is that the remedy lies in its own hands. Although obliged to 
 insure everyone who applies, the State Bank may fix its own premium 
 rates. It is not obliged to do business at a loss, and, if its tariffs were 
 properly rated and kept up to date, the private companies could not load 
 it down with the unprofitable risks. That they do so is its own fault, 
 and is a grave reflection on its management. Not its obligation to 
 insure all comers, but lax methods and improper adjustment of pre- 
 miums are the cause of its excessive loss ratio. If the experience of 
 the Dutch nation is to count for anything, State insurance of occupa- 
 tional accidents would not appear desirable from any point of view. 
 It is very costly; and, far from being a check upon, it tends to breed 
 indifference as to the number of accidents. 
 
 In conclusion, the result of the contest in Holland, lasting now for 
 over ten years, between State and private agencies in the field of 
 accident insurance has been to prove the decided superiority of the lat- 
 ter. Official routine methods, slowness of action, tenacious clinging 
 to false ideas and erroneous conceptions mark the proceedings of the 
 one system, against which are to be contrasted up to date measures, 
 prompt adaptation to changing conditions and a constant watch for 
 possible improvements. The outcome strikingly confirms the opinion 
 of those who believe that individual effort and private initiative can 
 always be counted upon to produce better results than can be secured 
 by entrusting the conduct of an ordinary business to the State. 
 
 59 
 
AGRICULTURAL ACCIDENT INSURANCE IN HOLLAND. 
 
 Voluntary Compensation Insured in Mutual Associations Favorable 
 
 Experience. 
 
 While the insurance against accidents of industrial employees has 
 been compulsory in Holland since March 1st, 1903, the statute has not 
 yet been extended to include accidents occurring in agricultural pur- 
 suits. A project looking to that end was submitted to the Lower House 
 of the Dutch Parliament on April 13th, 1905, but has not yet been en- 
 acted into law. All agricultural workers, cattle growers, nurserymen, 
 florists, market gardeners, keepers of woods and parks and those en- 
 gaged in forestry were to be included in its provisions. No regular 
 wage lists were to be required, but a commission was to determine in 
 each instance the salary of the workmen injured, the total amount of 
 salaries to be charged against the individual employer and the degree of 
 risk incurred by each separate establishment or exploitation. 
 
 Aside from this, the proposed legislation followed closely the pro- 
 visions of the act covering industrial accidents, and centralized the 
 settlement of claims and the payment of all indemnities in the hands of 
 the State insurance department at Amsterdam. The extension of the 
 accident insurance law so as to cover also agricultural workers is 
 bound to occur before long. The leading agricultural societies have ex- 
 pressed themselves in favor thereof because agricultural laborers, being 
 uninsured and thus discriminated against, are hard to obtain since in- 
 dustrial workmen have obtained the benefit of the accident law. 
 
 In its original draft of the law of 1903, the authorities planned to 
 make a government monopoly of workingmen's accident insurance and 
 to require all risks to be carried in a central State institution. In order 
 to forestall a like attempt on the part of the government when it comes 
 to include agricultural accidents among those compulsorily insured and 
 to prove that such risks can be economically and satisfactorily taken 
 care of by private organizations, two employers mutual insurance as- 
 sociations have been started. One commenced operations on January 
 1st, 1909, and insures against accidents in horticultural pursuits only. 
 The second and more important started exactly a year later, and covers 
 all other agricultural accident risks. It was deemed best to separate 
 these two classes, because the accident risk is much lower in horticul- 
 ture and because of the different units of organization to be made use 
 of in the two professions. In horticulture local or regional associations 
 are preferable, while in agriculture associations group themselves best 
 by provinces. 
 
 Identical in their purpose, namely, to insure employees against the 
 consequences of accidents at the employers' expense, these two associa- 
 tions are organized on the same general lines. Local or provincial as- 
 sociations are formed, each managed by its own board and each hav- 
 ing a number of local committees for controlling and looking after ac- 
 
 60 
 
cident cases. The cost of treating all minor accidents is borne by the 
 various provincial associations, which further determine the terms at 
 which members may join and the actual wages paid. The associations 
 can engage in other forms of insurance if they so desire. Each asso- 
 ciation has its board of arbitration, with employers and employees 
 equally represented thereon, to decide disputes as to compensation. 
 Only two disputed cases arose in 1912. 
 
 These associations, with such affiliated employers as pay salaries in 
 excess of 50,000 florins a year, form and are members of a central asso- 
 ciation, with headquarters in Amsterdam. This central association bears 
 the expense of all serious accidents involving permanent disability or 
 death, thus re-insuring the local associations. The central association also 
 furnishes expert technical advice on the prevention of accidents, on legal 
 and financial questions, and regarding safety regulations. In short, 
 two underlying principles were followed in the formation of these asso- 
 ciations. The first was the greatest possible centralization in every- 
 thing relating to financial administration, both in the interest of 
 economy and also, to make it easier to meet serious losses. The second 
 was the greatest possible decentralization in all matters relating to the 
 treatment and settlement of accidents. To local committees is left the 
 control and determination of the medical treatment and monetary relief. 
 How efficacious and strict a watch is kept over all cases can be judged 
 from the fact that 52,000 laborers insured at the end of 1912 were 
 under the surveillance of 253 separate committees, or one for every 200 
 employees. Under such conditions, simulation and exaggeration of ac- 
 cidents by the workmen is very difficult. This plan of local committees 
 to supervise accidents is in direct opposition to that provided in the law 
 regarding industrial accidents, under which all matters are controlled 
 and settled from one State head office in Amsterdam. 
 
 In starting this new system of mutual insurance, many possible 
 adherents were deterred from joining by the inability to determine the 
 cost of the insurance in advance. As all members are proportionately 
 liable for losses, the premiums to be paid could not be limited before- 
 hand, as in the case of insurance by a corporation. To overcome this 
 objection, the estimated premiums for the first year were all paid in 
 full in advance, thus enabling the associations to start with a reserve 
 fund. In consequence it has not been necessary to call on members 
 for any extra contributions. Premiums are high enough to cover a reg- 
 ular addition to the reserve funds as well as expenses and losses, and 
 are levied by the local associations. In turn, they remit to the central 
 body for its expenses. 
 
 Passing now to the results of this insurance, it should be noted 
 that indemnities paid under it are on the same scale as proposed in 
 the Government's bill for compulsory insurance of agricultural acci- 
 dents. Consequently a fair idea of the risks and cost of such insurance, 
 if made universally obligatory, can be obtained from the operations of 
 these mutual associations. At the end of 1912 they insured one-half of 
 all employees engaged in horticulture and about one-tenth of those in 
 
 61 
 
agricultural pursuits. The figures for the two classes of organizations 
 
 BfcoTr the following results for 1912: 
 
 Horti- Agri- 
 cultural, cultural. 
 
 Local associations 40 10 
 
 Employers insured 2,464 9,378 
 
 Employees insured 12,000 40,000 
 
 Wages insured (florins) about 5,000,000 14,000,000 
 
 Expenses and losses (florins) 31,381 144,747 
 
 Per 100 florins wages 0.65 1.04 
 
 Losses 19,013 99,193 
 
 Per 100 florins wages 0.40 0.71 
 
 Expenses 12,367 48,554 
 
 Per 100 florins wages 0.25 0.33 
 
 Accidents 220 1,132 
 
 Less than 60 days' disability 198 1,030 
 
 Over 60 days 19 88 
 
 Deaths 3 14 
 
 Permanent disability 4 9 
 
 Contrasting these results with those in the case of industrial acci- 
 dents, the following comparative figures appear: 
 
 Horti- Agri- Indus- 
 cultural, cultural. trial. 
 
 Average premiums 0.75 1.10 2.40 (1907) 
 
 Accidents per 1,000 workmen 18 28 81 (1911) 
 
 Deaths & permanent disability per 1,000 0.58 0.57 8.00 (1911) 
 Expenses & losses per 100 florins 
 
 wages 0.65 1.05 2.22 (1907) 
 
 In the Dutch mutual associations, premiums and settlements are 
 based on actual payrolls, differing therein from the German system. 
 The payroll system works smoothly and satisfactorily. Owing to the 
 lack of sufficient data, no risk classes have as yet been established. It 
 is intended, however, ultimately to introduce that system. A beginning 
 has been made, of course, in differentiating horticultural from other agri- 
 cultural accidents. Every effort is made to exclude claims for non- 
 occupational accidents, and the strict control and prompt investigation by 
 the local committees tends effectively towards this end. 
 
 Employers have the option of insuring members of their own 
 household against risks or not as they desire. All but five per cent 
 prefer to have their families covered by the insurance. 
 
SWITZERLAND. 
 
 THE RECENT LEGISLATION REGARDING WORKMEN'S ACCI 
 DENT AND SICKNESS INSURANCE. 
 
 Good and Weak Points of the Measure Peculiar and Novel Features 
 
 and Reasons Therefor The Sickness Insurance Law 
 
 The Accident Insurance Law. 
 
 Switzerland enjoys the distinction of being one of the first coun- 
 tries to do away with the theory of employers' liability for accidents 
 to employees for negligence only. In 1875 transportation companies 
 were made liable for all accidents to employees, except in case of willful 
 neglect or "Act of God"; and from 1877 on the same principle was 
 gradually extended to apply to work in factories and in building, min- 
 ing and contracting and to other industrial pursuits. Instead of re- 
 maining content with this form of legislation, however, the National 
 Council in 1890 submitted to the voters an amendment to the Federal 
 constitution allowing the introduction of an obligatory system of insur- 
 ance against sickness and accidents. This amendment was ratified on 
 October 12th of the same year by the overwhelming vote of 283,228 for 
 and only 92,200 against. Although the authorities immediately began to 
 work out the details of a new scheme of insurance, the same, known as 
 the Lex Forrer, was not completed until 1898, and only adopted by the 
 National Assembly on October 5th, 1899. Its leading features were the 
 compulsory insurance of workingmen against sickness and accidents; 
 and all classes workmen, artisans, agricultural laborers and small 
 trades-people were made subject to its provisions. Unlike the German 
 compensation laws, wherein the limit is $500, the Forrer Act applied 
 to all those earning up to a thousand dollars a year. Accident insur- 
 ance was to be placed with a state institution, which was to have a 
 monopoly of this branch of the insurance business. The State was to 
 bear one-fifth of the cost of accident insurance and to contribute a 
 certain amount for each person insured against sickness, which con- 
 tributions together would have entailed an estimated cost of eight mil- 
 lion francs. Arrangements were made for the establishment of gov- 
 ernment sickness insurance societies, which would have competed with 
 the existing private societies. That act contained over 200 para- 
 graphs, and its provisions and administrative details were complicated 
 and involved. 
 
 No sooner was the Lex Forrer enacted than a storm of opposition 
 arose. The existing private sickness insurance societies, with their 
 influential followings, objected to the organization and competition of 
 the public sickness insurance societies therein provided for. The agri- 
 
 63 
 
cultural interests claimed that the compulsory insurance of laborers in 
 their industry would impose altogether too heavy a burden. And the 
 industrial classes were opposed to the idea of a government monopoly 
 of accident insurance. A referendum having been demanded by 117,461 
 voters, the Lex Forrer was submitted to a popular vote on May 20th, 
 1900, and rejected by a vote of 341,914 against and 148,035 for. 
 
 Disheartened by this rejection, the Federal Council did not present 
 another bill affecting workingmen's insurance until December 10th, 
 1906. In its draft of a new measure, the Council was actuated not so 
 much by a desire to frame a perfect statute as by a wish to submit 
 a measure that would receive the approval of the majority of the voters. 
 That motive should be borne in mind in any study of this law. The bill 
 was debated at great length, and was not finally adopted by the National 
 Assembly until June 13th, 1911. Like its predecessor, the Lex Forrer, it 
 aroused great opposition; but this time the objections came mainly 
 from the employer class. With difficulty 75,930 citizens were found 
 who demanded the usual referendum. On February 4th, 1912, the elec- 
 tion took place, preceded by a bitter contest, and the law was finally 
 approved by a vote of 287,585 ayes against 241,416 noes, or by a 
 majority of 46,149. Eight only of the 25 cantons rejected the measure, 
 the most important of them being the French speaking cantons, where 
 the monopolistic features of the new law were strongly disliked for 
 interfering too much with the freedom of the individual. On the other 
 hand, owing to the support of the laboring class, the cantons contain- 
 ing the important manufacturies and industrial workshops approved of 
 the act, as did also those cantons wherein the agricultural interests 
 predominated. The authorities are now busily engaged in preparing the 
 necessary organization to put the new law into effect. That part relat- 
 ing to sickness insurance is expected to go into operation in 1914, and 
 that relating to accidents not later than January 1st, 1916. 
 
 The Sickness Insurance Law.* 
 
 While the provisions of the new law relating to accidents aroused 
 great antagonism, those relating to sickness insurance met with com- 
 paratively little opposition or criticism. It has been generally regarded 
 as a step in the right direction, though many persons are of the opinion 
 that it does not go far enough. 
 
 Before taking up this new statute, a brief survey of the existing 
 system of voluntary sickness insurance is in place. That system has 
 grown rapidly, as the following figures will show: 
 
 Year. No. societies. Total membership. 
 
 1865 632 96,000 
 
 1890 1,085 209,920 
 
 1903 2,006 505,947 
 
 *Title I of Federal Law of June 13, 1911. 
 
 64 
 
Out of every 100 inhabitants, 18 are insured against sickness in Ger- 
 many, 13 in Switzerland, 10 in Austria and 7 in France. Next to Ger- 
 many, therefore, where such insurance is compulsory, Switzerland oc- 
 cupies the post of honor. 
 
 But, while the figures just given make a gratifying showing, every- 
 one familiar with conditions in Switzerland admits that there is a cry- 
 ing need for increasing the scope and efficiency of the present system 
 of sickness insurance. In 1903 it covered only 30% of the male adult 
 population and 7% of the women, only 29% of the men and 21% of 
 the women factory hands being insured. Hardly any children are in- 
 sured; and many perish annually because the parents are unable to pay 
 for proper medical attention. In the remote mountain districts physi- 
 cians are not to be had in the Canton Wallis over half of those who 
 die are without medical attendance. In one extreme case 39 out of 
 the 42 deaths occurring in one community during a given period took 
 place without a doctor being available, even to sign the death certifi- 
 cate. These are grave evils which everyone admits should be remedied 
 as soon as possible. 
 
 On the part of many of the largest employers of labor, the govern- 
 ment was urged to introduce a system of obligatory sickness insur- 
 ance. Where voluntary insurance prevails, the younger workmen neglect 
 to join, and, handicapped by too large a percentage of older and less 
 healthy members, the societies are often unable to fulfill their obliga- 
 tions. To this fact is ascribed the failure of 31% of all the Swiss sick- 
 ness insurance societies during the period 1880-1903. In the various 
 trades and occupations wherein the employer is now made responsible 
 for all accidents, only one-half of all the workmen are insured against 
 sickness. As only a limited number are injured in accidents, whereas 
 all laborers sooner or later meet with sickness, compulsory sickness in- 
 surance forms the foundation for any universal and satisfactory sys- 
 tem of social insurance. 
 
 However sound these arguments, the authorities felt that the decisive 
 vote by which the Lex Forrer was rejected proved conclusively that the 
 Swiss people did not desire as yet the introduction of a system of 
 compulsory sickness insurance. As the next best thing therefore, the 
 government decided on the plan followed in Sweden, Denmark and Bel- 
 gium of encouraging the growth and extension of voluntary sickness 
 societies by a system of subsidies. But, in order to expedite introduc- 
 tion of compulsory sickness insurance, permission is granted in the new 
 law to the individual cantons and communes to declare sickness insur- 
 ance compulsory, either for all or for certain categories only, of work- 
 men, such as the more poorly paid. If a canton makes such insurance 
 obligatory and defrays part of the expenses, the Federal government 
 agrees to contribute an amount equal to one-third of the total outlay by 
 the canton. It is impossible to say as yet whether any of the communes 
 or cantons will avail themselves of this right. 
 
 Under the new law all existing Swiss sickness societies irrespective 
 of religious, political or other entrance requirements for members 
 
 65 
 
may become approved or recognized societies and thereby entitled to 
 government aid. They must not be run for profit, must show their 
 financial responsibility, must be open to both sexes and must receive 
 Swiss on as favorable terms as members of any other nationality. Their 
 rules and regulations, as well as all proposed changes, must first be 
 approved by the government authorities. The societies must agree to 
 receive members of a year's standing coming from other societies, who 
 desire to transfer their membership on account of removal, change of 
 occupation or dissolution of the original society. To obtain govern- 
 ment aid, the societies must either furnish medical attendance and 
 medicines or pay their members a sickness benefit of at least one franc 
 a day. As a preventive of simulation, children under 14 years of age 
 cannot be insured in societies which give sickness benefits. For the 
 same reason, the sickness benefit is payable only from the third day of 
 illness, whereas medical treatment must be given from the first day. 
 As the period of disability is apt to be less where the ailing member has 
 to shoulder a part of the cost of medical treatment, the societies are 
 obliged to bear only three-fourths of such cost where the time of treat- 
 ment in any given twelve months aggregates 270 days or more. But 
 the societies are required, if they so elect, to give members only 180 
 days of treatment in the course of one year. 
 
 Besides the matters just mentioned, the societies must undertake 
 to treat for the account of the accident funds all accident cases for the 
 first six weeks of disability, subject to reimbursement and appropriate 
 remuneration. In addition, they must forego the right of selecting 
 physicians as heretofore, and must accept the services of any doctor, 
 chosen by any ailing member, who resides in the locality, and who is 
 willing to serve at the rate of compensation prescribed by the govern- 
 ment. 
 
 Up to the present time, women have had comparatively little oppor- 
 tunity of insuring themselves against sickness. Of the sickness societies 
 existing in 1903, 58% accepted men only as members, for the reason 
 that women are a more dangerous risk. Although not so frequently 
 ill, they are apt to be longer sick than in the case of the other sex, and 
 there has been a decided prejudice against admitting them as members 
 of sickness societies. In prescribing, therefore, that no woman may 
 hereafter be excluded on account of her sex from any recognized society 
 the new law makes a great step forward. Nor can she be required to 
 pay any higher dues than a man she is put on a plane of equality. 
 
 Although the same disability results as in the case of an ordinary 
 illness, only a few of the Swiss sickness societies have furnished sick 
 benefits or medical treatment in the event of childbirth. Hereafter, 
 however, the accepted sickness societies are obliged to treat all such 
 cases as though they were ordinary illnesses, and must give assistance 
 or treatment for a minimum period of six weeks. And as experience has 
 shown that children have a much better chance of surviving if nursed 
 by their mothers for the first few months of their existence, the so- 
 cieties are obliged to pay all mothers who nurse their children for a 
 
 66 
 
period of at least ten weeks from time of birth a special grant of 
 twenty francs. In this way it is hoped to do much in the way of dimin- 
 ishing the rate of infant mortality. If 300,000 women are insured in 
 the approved sickness societies, which is the number the authorities 
 have calculated upon, 18,000 cases of childbirth are expected to occur 
 among them each year. 
 
 Whenever a sickness society shall have fulfilled the necessary re- 
 quirements, it becomes entitled to an annual subsidy or contribution 
 from the central government, based on its membership. The amount of 
 this contribution varies. For children in all cases S 1 /^ francs, and the 
 same amount for the male members of such societies as pay either 
 benefits of at least 1 franc a day or furnish medical attendance. In 
 the case of women members, 4 francs is contributed, because their ratio 
 of risk is higher. Societies supplying both benefits and treatment are 
 to receive 5 francs a member, the sexes being treated alike, and 50 cen- 
 times extra is paid in all cases where in the course of 540 days, 360 
 days of treatment are allowed. Twenty francs is allowed for every case 
 of childbirth, and the same sum in addition for each newly born child 
 nursed by its mother for a period of ten weeks. But the sum total of 
 the government's contribution in any given year is not to exceed two- 
 thirds of the gross amount realized from members' dues, gifts and 
 other sources. And where cantons or communes have made sickness 
 insurance obligatory either for all or for only certain portions of the 
 laboring population and have assumed the payment of the dues of 
 members, either in whole or in part, the Federal government is to 
 contribute one-third of any amount thus expended. 
 
 Specially favored treatment is accorded the remote and thinly 
 populated mountain districts, with limited means of communication. Here 
 the total of the Government's contribution may reach 7 francs per mem- 
 ber per year; and it may also make a special grant of 3 francs per head 
 to the cantons or communes in order to reduce the cost of treating sick 
 persons. 
 
 In 1903 there were 505,947 persons insured in the various private 
 sickness societies. After the new law has gone into full effect, the of- 
 ficials count on a membership of 800,000 in accepted sickness societies 
 entitled to benefits under the act; 660,000 in voluntary societies and 
 140,000 in societies in cantons and communes wherein sickness insurance 
 shall have been made obligatory. The Government's sickness insurance 
 budget is therefore estimated in detail as follows: 
 
 Voluntary Insurance Societies. 
 
 100,000 children, at fr. 3% fr. 350,00 
 
 255,000 men, at fr. 3% " 892,500 
 
 70,000 women, at f r. 4 " 280,000 
 
 235,000 men and women, at f r. 5 " 1,175,000 
 
 400,000 extra treatment, at fr. 0.50 " 200,000 
 
14,000 births, at f r. 20 " 280,000 
 
 4,700 nursing mothers, at f r. 20 " 94,000 
 
 Total fr. 3,271,500 
 
 Compulsory Insurance Societies. 
 
 140,000 members, at fr. 4 (contributions to cantons) fr. 560,000 
 
 35,000 members at fr. 2 (cantons assuming dues of needy 
 
 persons) " 70,000 
 
 2,800 births, at fr. 20 " 56,000 
 
 700 nursing mothers, at fr. 20 " 18,000 
 
 Total fr. 704,000 
 
 For societies in mountainous districts " 500,000 
 
 Grand total fr. 4,475,500 
 
 Based on the figures expended by the societies in 1903, the cost 
 of providing 800,000 persons with benefits and treatment in sickness 
 would be about seventeen million francs. The Government's contribu- 
 tion, therefore, will be slightly more than one-fourth of the total amount 
 required certainly a very generous proportion. An enrollment of 800,- 
 000 would mean that about 21% of the total population would be pro- 
 tected by sickness insurance, which percentage is about the same as 
 that in Germany. 
 
 But will the existing societies accept the Government requirements ? 
 As we have seen, the new law has many good points. It does away 
 with all discrimination against women and enables them to obtain in- 
 surance on the same terms as men. Medical assistance is granted them 
 in case of childbirth. A very important provision is that allowing the 
 transfer of membership from one society to another where a laborer 
 changes his place of occupation, for 100,000 such transfers are said to 
 occur annually in Switzerland. The way is left open for the gradual 
 introduction by the individual cantons of compulsory sickness insurance 
 for all classes, while especial care has been bestowed on the formation 
 of sickness insurance societies in the remote mountain districts. The 
 widespread and successful application of this law depends, however, 
 largely on the extent to which societies can be found to conform to 
 the Government requirements, so as to become entitled to the Federal 
 subsidies. As far as the existing societies are concerned, there are 
 several provisions in the law which may cause a number of them to 
 hesitate about accepting its terms. 
 
 In the first place, the societies must give up their independence 
 of action and subject themselves to Government inspection and regula- 
 tion. Many of them are supported to a considerable degree by con- 
 tributions from employers, etc., which will be lost in the event of 
 
 68 
 
change to accepted Government organizations. No longer will they be 
 able to keep down medical costs and to guard against simulation by 
 having members treated by trustworthy physicians of their own selec- 
 tion. Lastly, which is the most serious objection, they may get into 
 grave financial difficulties by being obliged to treat for the state insti- 
 tution all accident cases for the first six weeks of disability, and to 
 advance the compensation therefor at the rate of 80% of wages, instead 
 of about one franc a day, as in the case of sickness. The Government 
 agrees, of course, to reimburse the societies according to a fixed tariff 
 for the handling of such accident cases; but whether that tariff will 
 suffice to cover the additional outlays made in this connection remains 
 to be seen. 
 
 It should be noted, however, that under the law any accepted so- 
 ciety can cease to act as such by giving three months' notice of such 
 intention. In view of this provision, it is safe to assume that the ma- 
 jority of the existing sickness societies will elect at the outset to be- 
 come accepted Government institutions. Later on, if they find the 
 burdens and annoyances of acting as such to be too heavy, doubtless 
 a number of them will take advantage of this loophole in the law and 
 give notice of their desire to resume their former voluntary, uncontrolled 
 and unassisted form. To what extent such withdrawals will take place 
 it would be futile to speculate in advance. 
 
 The Accident Insurance Law.* 
 
 The new law establishes a National Swiss Accident Insurance De- 
 partment, with headquarters at Lucerne and individual agencies i[n 
 each canton, governed! by an administrative council of 40 members 
 appointed by the Federal Council for a term of six years. Twelve of 
 them are to be representatives of the compulsorily insured employees 
 and sixteen of the same class of employers, four are to be named as 
 representatives of the voluntarily insured and eight as representatives 
 of the Government. The active management is to be in the hands of a 
 board of managers nominated by the Administrative Council, but elected 
 by the members of the Federal Assembly, who are not bound, however, 
 to follow the recommendations of the Administrative Council. 
 
 Four branches of insurance are to be undertaken by the National 
 Insurance Department. First, compulsory occupational accident insur- 
 ance affecting all workmen employed in Switzerland in the following oc- 
 cupations: Railway and steamboat services; postoffice employees; those 
 engaged in factories subject to the provisions of the law of March 23, 
 1877; in the building trades; transportation by land or water; the erec- 
 tion and repairing of telephone and telegraph lines and machinery; in- 
 stallations of a technical nature; general contracting, tunnelling, mining, 
 
 *Title II of Federal Law of June 13, 1911. 
 
 fThis body is really more advisory than governmental; see infra. 
 
 69 
 
quarrying, and the building of streets, bridges, waterworks and sewers. 
 The premiums for this insurance have to be paid by the employers. 
 
 Second in the list is a decided innovation, namely, compulsory in- 
 surance in the trades and occupations just enumerated against non-occu- 
 pational accidents or such as occur outside of working hours. Here 
 one-fourth of the premium is charged to the Federal Government and 
 the other three-fourths to the employee. The employer is to advance the 
 workman's share of such premium, and may deduct the amount of the 
 same from his wages. 
 
 A third category covers voluntary insurance up to 3,000 francs, 
 against accidents to persons not included among the obligatorily insured, 
 residing in Switzerland and over 14 years of age. One-eighth of the 
 premium required in such cases is to be advanced by the Government. 
 
 Lastly comes the voluntary insurance of employers against liability 
 for injuries to outside or third persons. 
 
 In these two last branches, the Government institution will be ex- 
 posed to the competition of the private insurance companies, but on 
 equal terms only in the last class, for in the field of voluntary self- 
 insurance the private companies will be badly handicapped and will be 
 at a great disadvantage through the Federal Government's donation of 
 one-eighth of the required premium. 
 
 Besides endowing the department with a working capital of five 
 million francs* and a reserve fund of the same amount, the Govern- 
 ment is to pay one-half of all the administrative costs of the central 
 institution and to allow it the free use of the mails and exemption from 
 all taxation except on real property not made use of in its insurance 
 business. A certain part of the premiums are to be set aside in each 
 of the four projected branches of insurance as a reserve until such 
 time as the fund shall equal one-half of the average premium receipts 
 plus the Government subsidy received by the institution during the last 
 preceding five years. 
 
 The authorities are empowered to compel the societies subsidized by 
 the Government under the sickness insurance law to treat all accident 
 cases for the State institution's account for a maximum period of six 
 weeks. Only from five to ten per cent of all injuries caused by acci- 
 dents remain unhealed or uncured at the end of that period; and spe- 
 cial arrangements will have to be made for those cases. 
 
 Compensation under the new law is to be granted on a liberal scale. 
 Besides free medical treatment, the injured party is entitled, from the 
 third day on, to 80% of the wages earned by him before the accident. 
 In every case, 14 francs is taken as the maximum daily wage any- 
 thing in excess of that figure is disregarded. If permanent disability 
 ensues, 70% of his customary wages is to be paid, but 4,000 francs is 
 to be considered the maximum salary in calculating the rate. If only 
 partial permanent disability ensues, the amount is reduced in propor- 
 
 *This donation to the working capital, however, is simply an advance 
 to be repaid. 
 
 70 
 
tion to the extent of the injury received. In case of death, a funeral 
 benefit of 40 francs is provided for, and the widow is to receive during 
 her widowhood an annuity equal to 30% of her husband's yearly wages. 
 Children each receive 15% until they are 16; if orphans, 25%. If a 
 child is permanently incapacitated at the age of 16, the annuity does not 
 cease, but runs until the 70th year. Ascendants receive for life, and 
 brothers and sisters up to the age of 16, an annuity equal to 20% of 
 the annual wage. But in no case of survivorship is more than 60% 
 paid if an excess results, the annuities are scaled down, each propor- 
 tionally, to 60%. The widow and children are preferred for the 
 amounts due them, but if they aggregate less than 60% the ascendants 
 and collateral heirs receive the difference. Where the annuity to sur- 
 vivors, or that granted to the victim for permanent partial disability, is 
 less than 10 francs a month, the State institution has the right to com- 
 pound it by the payment of a lump sum. 
 
 Foreigners, (of whom 200,000 are estimated to be working in 
 Switzerland), receive only % of the benefits accorded to natives, unless 
 their home country grants to Swiss* citizens equally as high a com- 
 pensation in case of accident or sickness, as is to be provided by the 
 Swiss law. 
 
 Under the present employers' liability system, an injured workman, 
 if only temporarily disabled, is entitled to recover the full amount of 
 wages lost by him. In granting only 80% of the daily wage earned 
 in such cases, the new law operates to the disadvantage of the em- 
 ployee. In case of death or permanent disability, however, he will 
 receive a much higher rate of compensation than now. Instead of a 
 maximum recovery of 6,000 francs, the amount to be awarded is an 
 annuity equal to 60% to 70% respectively of his former wages, up 
 to 4,000 francs annually. 6,000 francs capitalized at 4% will yield 
 an income of only 240 francs a year, which is the highest amount an 
 employee can now recover. But hereafter, the average yearly annuity 
 paid will vary between 60% and 70% of 1,200 francs (the average 
 yearly wage), i. e., will be between 720 and 840 francs. Thus a per- 
 manently disabled workman will be three times better off than under 
 the present system. 
 
 According to the calculation of the authorities, 700,000 persons 
 are counted upon to become insured against accidents. This number 
 is made up as follows: 
 
 51,000 Railway and steamboat employees. 
 
 377,000 Employees covered by present employers' liability insurance. 
 122,000 Employees additional in compulsorily insured list. 
 150,000 Employees voluntarily insured . 
 
 700,000 Total number. 
 
 At an arerage wage of 1,200 francs, this would make a total pay 
 
 r 
 
 71 
 
roll of 840 million francs. The premium rate is figured as follows: 
 
 For occupational accidents 2.75 
 
 For non-occupational accidents 55 
 
 For administration expenses 33 
 
 Total 3.63 
 
 Based on the premium rate and total pay roll just mentioned, the 
 cost of this new insurance will amount to 30,492,000 francs. This is to 
 be divided as follows: 
 
 Per cent, 
 of Wages. 
 
 Employers, 19,008,000 francs 2.26 
 
 Employees, 8,320,500 francs 99 
 
 Government, 3,163,500 francs 38 
 
 The employers have to bear the entire cost of insurance against 
 ordinary occupational accidents, less the Government's contribution to- 
 wards the estimated administrative expenses. The employee's share 
 is divided as follows: 
 
 Francs. 
 % cost of non-occupational accidents of the com- 
 
 pulsorily insured 2,871,000 
 
 % cost of occupational accidents of the volun- 
 tarily insured 4,539,500 
 
 % cost of non-occupational accidents of volun- 
 tarily insured 910,000 
 
 Total 8,320,500 
 
 The Government's contribution is apportioned as follows: 
 
 Francs 
 
 ^4 cost of non-occupational accidents of the com- 
 
 pulsorily insured 957,000 
 
 % cost of occupational accidents of voluntar- 
 ily insured 648,500 
 
 % cost of non-occupational accidents of volun- 
 tarily insured 130,000 
 
 % cost of administration expenses 1,428,000 
 
 Total 3,163,500 
 
 To this should be added the cost of the special insurance tribu- 
 nals, viz: 161,000 francs, which brings the Government's total esti- 
 mated outlay up to 3,324,500 francs. If to this be added 4,475,500 
 francs to be bestowed on the sickness insurance department, the Swiss 
 
 72 
 
Government is facing an anticipated annual expenditure all told of 
 7,800,000 francs on account of its new insurance law. 
 
 On behalf of the new law one can say that it will bring about 
 compulsory accident insurance for one-fourth more employees than 
 under present conditions. To the severely injured workman it affords 
 a much higher compensation, given in the form of a permanent 
 annuity instead of by the payment of an easily dissipated lump sum. 
 The average rate of indemnity is higher than that granted in any 
 other country. Even non-occupational accidents, or those outside of 
 working hours, are to be compulsorily insured, something that has never 
 yet been attempted in any other country. Whether as many as 
 150,000 will become voluntarily insured, is an open question. Even 
 though the Government assumes one-eighth of the total cost, the em- 
 ployees, especially in the more poorly paid occupations, like agri- 
 cultural pursuits, may find it beyond their means to pay the remain- 
 ing seven-eighths of the high premiums required. 
 
 As compared with those in the obligatorily insured categories, those 
 taking out voluntary insurance are at a decided disadvantage. The 
 former obtain insurance against every kind of accident and only have 
 to defray % of the premium for non-occupational accidents, amounting 
 to 0.041 2-3 of the total wage earned. To obtain the same protection, 
 the voluntarily insured must pay the entire premium, less only the 
 Government's Vs share and its contribution to the cost of adminis- 
 trative expenses. For them the premium charge works out over 3% 
 of the total yearly wage. If insurance against non-occupational acci- 
 dents had been left optional, one-sixth of this charge could have been 
 saved; and no good reason exists why this should not have been done. 
 But the authorities preferred to have the two classes of insurance go 
 together both occupational and non-occupational insurance must be 
 taken out, or the worker not compulsorily insured will get none at all. 
 
 From nearly every point of view the insurance of non-occupational 
 accidents appears to have been a mistaken move. It is right and proper 
 to insure workmen against the consequences of accidents arising in the 
 course of their employment, but to go a step further and to indemnify 
 them against injuries incurred while not working and while under no 
 professional risk is to put them in a favored class as compared with the 
 rest of the population. As no other country except Sweden, where the 
 Government furnishes such insurance but only on a voluntary basis 
 has attempted to insure such risks, no reliable statistics are available 
 as to the cost. Its financial consequences are therefore altogether un- 
 certain. If, in spite of unremitting watchfulness, simulation is constantly 
 on the increase in occupational accidents to workingmen, how are such 
 fraudulent practices to be checked or controlled where injuries are re- 
 ported to have occurred away from all oversight or witnesses ? Will 
 not, therefore, the estimate of 13% of all accidents be greatly ex- 
 ceeded? The experience of the Swiss insurance company, The Helvetia, 
 need only be recalled, which company undertook such insurance, but 
 was speedily obliged to give it up on account of the losses entailed due 
 
 73 
 
to artificially inflicted or simulated injuries. The workmen of Italian 
 nationality were especially noted for self-made wounds, produced by 
 acids and corrosives. 
 
 Another interesting problem is whether the employers will not 
 sooner or later assume the employees' quota of the premiums for non- 
 occupational accidents, in which event all check upon simulation from the 
 employees' self-interest will be lost. That this will come to pass is pre- 
 dicted by many in touch with the situation. By the terms of the law, the 
 employer is obliged to remit to the Federal insurance department the 
 portion of the premiums due from his employees for non-occupational ac- 
 cident insurance. Where an employee is earning merely a minimum liv- 
 ing wage he cannot shoulder this amount, small though it be, and it 
 must perforce be borne by his employer. In the larger and more pros- 
 perous establishments, the employers will do this for all classes of em- 
 ployees rather than be bothered with the annoyance of having to keep a 
 complicated set of books and of deducting the small sum of a few cents 
 a week from the wages of each workman. And in time the smaller em- 
 ployers may follow suit. 
 
 As is no secret, undesirable concessions and unnatural compromises 
 were made in order to secure the passage of the accident insurance law. 
 To this circumstance is due the insertion and retention of the provision 
 for the insurance of non-occupational accidents. The Lex Forrer, so 
 overwhelmingly rejected in 1900, contained a like provision, advocated 
 on the ground of the difficulty in distinguishing between these and the 
 usual run of occupational accidents. On its being shown that in the 
 case of 280,000 accidents settled by the three leading Swiss employers' 
 liability insurance companies, only 16 lawsuits arose to determine the 
 category in which the accident belonged, the retention of the non-occu- 
 pational accident clause was then urged on the ground that for the in- 
 jured workman the consequences of an accident incurred outside of 
 working hours were just as disastrous as in the case of one received 
 in the course of his employment. That is doubtless true. But why 
 should the State be called upon to help protect a certain class of 
 its population only at the expense of the rest against the results of ac- 
 cidents incurred through causes common to all classes, and in no way 
 due to the risks of their employment? 
 
 Besides its unfairness to the remainder of the community, the in- 
 clusion of the non-occupational accident clause is responsible for the 
 rise of 14% in the estimated cost of the new law as compared with the 
 acts heretofore in force. If that clause had been omitted the employers 
 would have been able to shoulder the entire cost and no contribution 
 from the workmen would have been necessary. The Federal Govern- 
 ment would have been relieved from the burden of granting subsidies to 
 carry out its scheme of accident insurance, which nearly every other 
 nation that has legislated on the subject has thus far succeeded in 
 avoiding. The money thus saved might have been used in starting a 
 system of old age insurance. In spite of all these possibilities, the Na- 
 tional Assembly, influenced by political considerations, resolutely stuck 
 
 74 
 
to its determination to include non-occupational accidents within the 
 scope of the law. Otherwise the influential Socialist party threatened 
 that they would vote against the measure; and it was realized that with- 
 out its support the act could not obtain the support of a majority of the 
 electorate. It should also be noted that the Government's being obliged, 
 owing to the inclusion of non-occupational accidents, to grant subsidies 
 for accident insurance, was one of the principal reasons urged for intro- 
 ducing a State monopoly of accident insurance. 
 
 Another section of the law which has been much criticised is that 
 relating to the compensation of foreigners. Its wording is unfortunate 
 in providing that foreigners are only to receive three-fourths of the 
 usual compensation, except those from countries wherein Swiss are paid 
 as high an indemnity as they would have received if injured at home. 
 But such a case is never likely to occur, inasmuch as the Swiss law 
 grants a much higher rate of compensation than that afforded by any 
 other country 25% more than Germany, which is the next highest. If 
 the section had read that foreigners, whose countries indemnified work- 
 men of Swiss nationality as liberally as native citizens, should receive 
 full instead of three-quarters compensation, other nations would have 
 been under some incentive to treat injured Swiss laborers as liberally 
 as their own subjects. To make full compensation to foreigners em- 
 ployed in Switzerland dependent on other countries raising their com- 
 pensation rates to the high Swiss standard, is seeking the impossible. 
 Consequently this provision of the law will fail of its object and will 
 accomplish nothing towards doing away with any existing discrimina- 
 tions against Swiss laborers in foreign countries. 
 
 Much stress has been laid by the advocates of the law on the fact 
 that the central government insurance establishment is to be rim on 
 mutual lines. In effect, it is claimed, the institution should be likened 
 to a large mutual insurance company managed by those directly inter- 
 ested. The appointment of the members of the governing board, how- 
 ever, is vested in the National Assembly, and, with eight direct repre- 
 sentatives of the Federal Government thereon, the authorities are pretty 
 certain to control the policy of the insurance department. Besides, 40 
 governors is altogether too cumbersome a board to work efficiently, and 
 the real management and control of policy will be in the hands of th 
 directors, whom the National Assembly can select as it chooses. The 
 Government office is expected to begin operations with a staff of from 
 500 to 600 clerks. 
 
 As has been stated before, the unhappy insertion for vote getting 
 purposes of compulsory insurance against non-occupational accidents, 
 with its attendant Government subsidy, was one of the chief causes why 
 a State accident insurance department was deemed necessary. The 
 other reason urged for its establishment, that the Government would 
 furnish through its central institution insurance most cheaply and satis- 
 factorily does not appear well founded. 
 
 Even the advocates of a Government system have had to admit that 
 the existing private agencies stock companies, mutual societies, and 
 
 75 
 
employers' associations have covered this field of insurance eco- 
 nomically and given a very satisfactory service. The average profits of 
 the 17 domestic and foreign stock companies directly insuring em- 
 ployers liability risks have only equalled 1% of the total premium re- 
 ceipts such insurance being given at cost price. The largest and 
 strongest company of them all (the Zurich) showed for the period 
 1906-1910 gross premium receipts of 159 million francs and net profits 
 of 12,700,000 francs. Of these only 2,200,000 francs came from surplus 
 earnings, while 10,500,000 francs were derived from interest on th* 
 legal reserves carried. In 1910, the two leading companies (the Zurich 
 and the Winterthur) showed, the former a profit of 218,000 and the lat- 
 ter a loss of 213,000 francs, after paying all losses and administrative 
 expenses. Had it not been for the interest on the large reserves ac- 
 cumulated of 2,706,000 and 1,803,000 francs, respectively, the companies 
 would not have been able to declare a dividend. Claims are settled 
 quickly and satisfactorily and with almost no litigation. Out of a 
 total of 103,000 accidents settled during the course of two years by the 
 different Swiss private organizations, only 165 were taken into court, 
 or less than two lawsuits per 1,000 accidents. In contrast to this, one 
 need only think of the enormous and constantly increasing mass of liti- 
 gation in Germany and Austria. In Austria there is one appeal for 
 about every three accidents entitling the injured to compensation. In 
 1909 76,352 appeals, or 18% of all accident cases, were brought before 
 the German arbitration tribunals, and 25,234 of these, or 33%, were 
 further appealed to the imperial insurance office. On account of the 
 excellent record made by the Swiss companies, it is all the more sur- 
 prising that the National Assembly should have decided on suppressing 
 their activities in the accident insurance field. In favor thereof the 
 argument was advanced that, if allowed to compete, the private com- 
 panies would take only the better class of business, leaving the state 
 institution to handle all the bad risks. Even if that were so, it is im- 
 material, for the state can charge what rates it pleases and thereby 
 recoup itself for any losses. As a matter of fact, the Zurich and Winter- 
 thur companies formally offered to share any and all risks with the 
 state institution on an equal basis. Nevertheless, the Swiss lawmakers, 
 perhaps fearing that the government institution could neither flourish 
 nor make headway unless it had the field to itself, remained unmoved 
 and determined to do away with all private competition. 
 
 Aside from the possible heavy cost of non-professional accidents, it 
 remains to be seen whether the intended government monopoly of work- 
 men's accident insurance is going to work reasonably well in practice or 
 prove a very costly experiment. State insurance has usually resulted 
 either in excessively high premium rates, with costs covered, or in too 
 low premiums, with constantly recurring deficits. 
 
 That the new government accident insurance department will furnish 
 insurance cheaper or settle claims more promptly than the private com- 
 panies is not to be expected. Whatever experience there is, points the 
 other way. The history of the government's military insurance depart- 
 
 76 
 
ment against sickness and accidents, where costs have been rising by 
 leaps and bounds during its 10-year existence and have averaged more 
 than five times the original amount estimated, is far from re-assuring. 
 Complaint is made of the dilatoriness and of the disagreeable haggling 
 of the government officials in settling with victims of railway accidents 
 occurring on the lines owned by the state. 
 
 In view of this, both employers and employees may hereafter have 
 decided cause to regret in many respects the suppression of the existing 
 system of private competition and its replacement by a bureaucratic 
 government monopoly. 
 
SWISS EXPERIENCE IN MILITARY INSURANCE. 
 
 An Instructive Ten Year Test of State Insurance Unfavorable Ex- 
 perience. 
 
 As throwing some light on the subject of State insurance, th* 
 operations during the last ten years of the government bureau for in- 
 suring those engaged in military service is not without interest. 
 
 Beginning in a small way in 1874, the Swiss government thereafter 
 gradually extended the relief offered to those who become ill or dis- 
 abled while in the military service. During the period 1889-1894, the 
 State insured such military risks in one of the larger private Swiss 
 insurance companies with very satisfactory results, as was frankly 
 stated in the National Assembly. Nevertheless, the officials came to 
 the conclusion that it was undignified for the government to employ a 
 private agency, and, from 1895 on, conducted this branch of insurance 
 for account of the government direct. 
 
 In 1898 a new proposal was made to increase the rate of compensa- 
 tion to be paid to soldiers, who suffered injury or incurred sickness or 
 disability during the time of their military service, to the same amount 
 that an industrial establishment would have to pay to one of its em- 
 ployees in like circumstances. The advocates of the measure asserted 
 that, based on the most careful estimates, the increased cost of this 
 extra insurance would not exceed 100,000 francs a year. In place 
 of an annual average outlay of 64,000 francs, the government experts 
 confidently predicted that 164,000 francs would suffice to meet all 
 charges in the course of the year under the proposed act. Accordingly, 
 on these representations, the Swiss Parliament adopted the proposed 
 law; and it took effect January 1st, 1902. 
 
 Hardly had the new law gone into operation before it was seen that 
 the estimates of its cost were absolutely untrustworthy and too low. 
 In the very first year after its passage, an extra credit of 500,000 francs 
 had to be voted, in addition to the 165,000 francs provided in the gov- 
 ernment budget. How far the authorities erred in the figures they 
 submitted, namely, 165,000 francs, is best shown by the following table 
 of the actual cost of the insurance of the Swiss military establishment 
 for the 10-year period beginning with January 1st, 1902. 
 
 Insurance cost. 
 
 1902 fr. 680,000 1908 fr. 850,000 
 
 1903 " 807,000 1909 " 893,000 
 
 1904 " 787,000 1910 " 1,017,000 
 
 1905 " 836,000 1911 " 1,316,000 
 
 1906 " 879,000 Average " 894,000 
 
 1907 " 876,000 
 
 In the original government estimate, the sum of 116,500 franen 
 
 7i 
 
waa deemed sufficient to meet all payments required on account of ac- 
 cident or disability cases. The actual average amount required for the 
 10-year period has proved to be 351,000 francs, the least in any girea 
 year being 220,000 francs and the highest (in 1911) being 607,000 
 francs. In the department of sickness insurance, the showing is even 
 worse. In place of an anticipated annual outlay of 36,000 francs, the 
 amount expended has run beyond that required for disability cases and 
 in 1911 reached the total of 614,000 francs. Administration costs have 
 likewise far exceeded the original estimates and show a steady in- 
 crease from year to year, having risen from 33,000 francs in 1902 to 
 69,000 in 1911. 
 
 Most of these figures are clearly set forth in a message dated No- 
 vember 12th, 1912, addressed by the Bundesrat, or governing council, 
 to the Swiss National Assembly. The increased cost is ascribed in 
 part to the higher indemnity rates paid under the new law, which have 
 induced more of the well-to-do soldiers to apply for relief than was the 
 case with the small amounts previously doled out, and secondly, to the 
 simulation and exaggeration of illnesses and accidents. Thus the gov- 
 ernment counted on having to issue only 20 permanent pensions a 
 year, instead of which the average number has been 53. In one year, 
 the figure rose to 129. In the last 12 months before this law took ef- 
 fect, 2,908 cases of sickness were reported, entailing 47,010 days of 
 illness, whereas in 1911 the corresponding figures were 5,906 cases and 
 109,474 days. 
 
 Whatever may be the true causes for its unexpected and costly re- 
 sults, the experience of the government in the branch of military in- 
 surance makes a very unfavorable showing. The losses to be met proved 
 from the start to be four times as great as had been counted on, and 
 are constantly rising although the size of the army has remained 
 about the same. Simulation of illnesses and exaggeration of injuries 
 are rife; and the officials are unable to make any headway against 
 these abuses. This chapter of Swiss State insurance has only added 
 to the misgivings of those who so strongly opposed the introduction 
 of the system of compulsory accident insurance to be carried on by the 
 State alone without any outside competition. Will the State make a 
 better showing when it comes to handling this new class of risks or 
 will the outcome be as similarly unfortunate and costly for the govern- 
 ment finances as in the case of the insurance granted to those in its 
 military service? This is a question which must be left to time and 
 experience for an answer. 
 
Photomount 
 Pamphlet 
 
 Binder 
 Gaylord Bros. 
 
 Makers 
 Stockton, Calif. 
 
 PAT. JAN. 21. 1908 
 
 678980 
 
 7 
 
 UNIVERSITY OF CALIFORNIA LIBRARY