GIFT OF Workmen's Accident Insurance in Germany \ A Scries of Articles by Harold G, Villard Revised and Reprinted December, J9J3 Workmen's Accident Insurance in Germany A Series of Articles by Harold G. Villard Kerised aad Reprinted December, 19)3 The following articles are based upon personal observations and study in Germany during the spring and summer of 1913, and upon a lengthier observation and study of workmen's compensation and in- surance laws throughout Europe. While touching incidentally upon agricultural accident and sickness insurance, they relate more par- ticularly to the industrial accident insurance. The first edition of this pamphlet, published in October of this year, having been exhausted, the opportunity has been taken to add the footnotes and to make a few minor corrections. Translations of the instructive addresses by Prof. Bernhard and Dr. Naegeli, so often quoted in this pamphlet, are in course of prep- aration and will soon be published. 205 W. 57th Street, New York. HAROLD G. VILLARD. December, 1913. CONTENTS Page German Social Insurance Legislation: Its Disheartening and Evil Effects 5 Growth of Economic Burden 7 No Cure for Poverty 7 Effects on General Health Questionable 8 Promotes Workmen's Carelessness 9 Retards Recovery from Sickness or Injury 9 Breeds Nervous Diseases 11 Bad Moral Effects 13 Unfortunate Change in Relations Between Doctors and Patients 16 Destroys Sense of Responsibility 16 Conclusion Germany Awakening to Mistakes 17 German Accident Compensation Law: Experience and Statistics 21 The Industrial Accident Insurance 21 Variations in Risks and Cost Industrial Accident Insurance 24 Causes of and Responsibility for Industrial Accidents 24 The Agricultural Accident Insurance 25 Causes of Agricultural Accidents 26 Responsibility for Agricultural Accidents 27 Expenditures, etc. Agricultural Accident Insurance 27 Cost of Accident Compensation Hidden by Confusing Practices 28 Lessons from Germany's Experience: Mistaken Provisions in Accident Insurance Law Errors in In- terpretation and Administration Proposed Reforms 31 Divided Responsibility for Accident Cases 32 Excessive Litigation Fostered 33 The Pension Fetish 35 Cures Not Desired 38 Over-Insurance Permitted 39 Errors in Interpretation and Administration 40 "Drink Money Pensions" 41 Mistakes of Tribunals 42 Harmful Publicity to Physicians' Reports 45 Mistaken Policy of Some Employers 46 Injudicious Method in Police Investigations 46 Conclusion 47 Bibliography of Principal Authorities Quoted 48 GERMAN SOCIAL INSURANCE LEGISLATION Its Disheartening and Evil Effects. Almost thirty years have now elapsed since the German nation first adopted the compulsory insurance laws against sickness and against accidents occurring to workingmen in the course of their employment. This initial legislation has been followed by other enactments designed to afford the worker protection and relief against other ills, such as invalidity and old age disabilities. To-day the Ger- man laborer is looked out for at every turn, and everything possible is done for his social uplift and physical well-being. No other coun- try has so complete or so carefully thought out a system of legisla- tion in the interest of its laboring class. Germany's pioneer example in this new field of lawmaking has been followed in a greater or a less degree by practically all the civilized peoples of Europe. This copying would doubtless have taken place in any event, but the spread of the new doctrine of com- pulsory legislation in the workers' behalf has been hastened and its imitation greatly stimulated by the action of the leading German of- ficials. On every possible occasion and at each available opportunity, the Government authorities have carried on an active propaganda to enlighten the rest of the world as to the beneficial effects of this new code of laws. Besides preparing and distributing very elaborate and detailed official statistics and general literature on the subject, no exposition of any importance has been allowed to take place during the last twenty years without an exhibit showing the important re- sults claimed for the German method of conserving the health and strength of the laboring population. Although thus far not productive of very many statutory re- sults, European legislation was inevitably bound to exert more or less influence on public opinion in the United States. Social workers have long deplored the lack of any similar enactments in our com- monwealths, and the passing of workmen's social insurance laws along the lines of European models has for many years been more or less actively urged. Already secured in some instances, their adoption is imminent in a number of other States. The desirability of this form of legislation will soon be a subject of absorbing popular discussion in America and any information tending to throw light on its actual effects should be welcome. Heretofore the world at large, generally speaking, has heard of only the agreeable side of German social insurance. Figures galore have been published recounting the millions of working people bene- fited, the immense sums annually spent and the efforts made to com- bat disease ^-ftd .i& guajrd : against the occurrence of accidents. Cer- tainly the* fact's recited make a most imposing showing, and no one will deny the tremendous amount accomplished in uplifting the stand- ards and in increasing the comforts of life for the great mass of toil- ers. But, as every object has its reverse side, one cannot get an idea of the true picture presented by this field of insurance work without taking into account certain drawbacks and insidious effects appearing in a constantly more disquieting degree. All the horizon does not indicate fair and smooth sailing, for some dark and portentous storm clouds are visible. These are more and more obscuring the out- look and contain elements of danger which, if allowed to spread, will largely counterbalance the material progress heretofore achieved. To ascertain, the true facts in regard to the workings of German social insurance is extremely difficult even for the most painstaking of observers. Very little data exists outside of the official reports and the more or less inspired government publications. There is no active polemical discussion of the subject to be found in Germany, as in France or England, either in reports of chambers of commerce, in periodicals or in the daily press. The reason for this is not hard to find. German officialdom from the Emperor down is intensely proud of the fact that the idea of legislating for the laborer's social better- ment originated with them and that they have, in this respect, set an example to all other nations. The present elaborate framework of social legislation, built up with so much patient care, is regarded as something distinctively national and German, and its carrying out as important a part of the government's work as the upbuilding of the army. To criticise either branch is therefore considered bad form and unpatriotic, besides bringing one into conflict with the all powerful official class. This accounts for the fact that so little has been spoken or written in elucidation or derogation of the pro- visions of the various workmen's insurance laws. The inner work- ings of the sickness insurance societies have yet to be revealed. What scanty literature has thus far appeared mainly articles in medical publications relates more to the effects of the accident insurance law. Consequently the facts hereinafter stated are based largely on results observed more particularly in that field. On the political side the new social policy has not fulfilled the expectations of its early sponsors. The belief of its original advo- cates was that a cure for social ills could be found in the positive advancement of the welfare of the working classes. By going further than any other nation in the granting of socialistic demands, the ground was to be cut out from under the discontented and the sup- port of the laboring element won. Such hopes, however, speedily proved themselves futile. The army of dissatisfied has constantly increased in number. From being one of the minor, the Social Demo- cratic, with its four millions of votes and in members of the Reich- stag, has grown to be the most important of all the German political parties. Strikes and lockouts and other forms of conflict between labor and capital are just as numerous and as acute as formerly. As a means of reconciling the masses, German social insurance has,, therefore, been a failure. Significant of the growing leering-'of; do io5.i,55<> 'For the German Empire as a whole, women engaged in industrial pursuits in 1907 were close to one-sixth of the total population, while in France they numbered less than one-eighth. Thus if one may judge by the number of women forced by economic necessity to earn their means of livelihood, conditions are really worse in Germany despite its costly legislation designed to raise the status of the laboring class than in the adjacent Gallic republic. Effects on General Health Questionable. Even if the cost of German social insurance be heavy, the ex- penditure would appear entirely justifiable from an economic stand- point provided it had resulted in diminishing sickness and in improv- ing health conditions among the great body of the laboring people. But a glance at the following table shows that just the contrary has been the case: Cases of Sickness Average No. of Days Year. Per 100 Insured, of Sickness Per Case. 1891 35.6 16.8 1901 38.6 18.2 1911 .'.... 43.3 19.7 To realize how disappointing these figures are, one should bear in mind that, aside from the fourfold increase in sickness benefit pay- ments in twenty years, 546 millions of marks have been spent up to the end of 1911 for new hospitals, convalescent homes and working- men's recreation resorts, and 362 millions more for hygienic laborers' dwellings. Yet, in spite of this vast expenditure, the German work- man is more prone than ever to fall a victim to disease and, when ill, requires a longer time than formerly to recuperate. Notwithstanding improved and better hygienic conditions, the German working popu- lation succumbs more readily to bodily ailments than before the in- auguration of the new system of insurance. In France, on the other hand, where practically nothing has been spent to improve housing- conditions or on other prophylactic measures and where sickness in- surance is voluntary, workers lose annually fewer days through ill- ness than ten years ago. The conclusion is irresistible that German workingmen's insurance contains elements which endanger the health of the work-people, and to a great extent undo the good accom- plished by bettering their surroundings and habitations. Proceeding to an examination of these hidden dangers, a loss in the powers of resistance to adverse physical conditions is first of all to be noted. Knowledge that he will be taken care of causes the workman to succumb much more readily to trifling ailments. In- juries of small importance, formerly unnoticed, are now deemed suf- ficient to warrant abstension from labor. A small finger cut leads to six weeks' idleness. Inconsequential diseases render the victim incapable of physical exertion. A hardly perceptible attack of ca- tarrh results in 50 days and a mild case of shingles in two months' stoppage of work. An uninsured person or a professional man in 8 like circumstances finds no difficulty in continuing his customary em- ployment. Constant reflection on their bodily state causes the in- sured to take notice of and to claim sickness benefits for minor trou- bles like passing stomach and intestinal disorders, previously deemed unworthy of notice. Promotes Workmen's Carelessness. Side by side with this diminuation in the stamina of the work- people is to be noted a greater degree of carelessness and of indif- ference to the consequences of accident. The feeling that a high pe- cuniary compensation is always to be had makes the dangers of his occupation appear less important to the factory hand and accounts for his frequently neglecting the commonest precautions. The per- centage of industrial accidents due to the faults of the workmen has risen from 26.56% in 1887 to 41.26% in 1907. In spite of all safety and accident preventing devices, the number of accidents both actu- ally and relatively is steadily rising. It is, of course, possible that the rise in the reported accident rate may be due to more widespread and successful malingering on the part of the workmen; but that would place the German insurance system in an equally unfavorable light. The following table shows how accidents have been running: Year. Accidents Reported. Per 1,000 Workmen. 1890 149,188 30.28 1895 205,019 37.90 1900 310,105 44.76 1905 414,445 50.57 1911 520,229 52.83 It is clear, therefore, that under the present insurance regime the German industrial worker is not being trained to take greater precautions against injury to himself by accidents. Retards Recovery from Sickness or Injury. Another pernicious result solely ascribable to the German scheme of workmen's insurance is a diminution of the chances of recovery in the case of the sick and the injured, accompanied by a prolonga- tion in the duration of treatment. As is well known, a great deal depends in every case of illness or accident disability on the atti- tude of the patient. If he is anxious to be up and about and to re- sume the use of his limbs, he will assist the efforts of the doctor in every way and make a speedy cure. Of especial usefulness is this disposition in cases where a full recovery can only be effected through the accommodation or training of another set of muscles or part of the body to do the work of the portion lost or impaired. But such seconding of the physician's recommendations is very rarely found among the beneficiaries of workingmen's insurance. As one German surgeon put it: "In the case of individuals who have no expectation of a pension, the best possible result is attained in the briefest time through the necessity of having 9 to work, through the satisfaction derived from the progressive healing and through constant, voluntary exercising. * * * When it comes to those en- titled to compensation, the results as regards the ability to earn a living are entirely different. * * * The so valuable reinforcement of the method of treatment which we note with non-insured patients, diminishes very consider- ably in these cases [of insured], up to entire passivity, especially with older patients."* More recently, another physician has made this statement: "Nevertheless, I must say that, as regards the time and prospects of re- covery, there is an enormous difference between insured and non-insured. * * * The difference is too great and too constant to allow of any other explanation, except that the covetous ideas of the insured are responsible for the prospects of recovery becoming worse. With a few notable exceptions, the one insured does not want to be restored to health, but wishes to obtain a pension. From this it happens that such an infinitesimal number of those in- jured admit themselves that they are entirely cured. If Dr. Stahl, on this point, mentions about 20 cases as having come under his observation in the course of his professional activities, this number, according to my experience, is still too high. In the case of paying patients, who are interested in getting out of the hospital quickly and in resuming work, wounds heal generally very quickly. On the other hand, we observe that, with identical injuries to insured patients, we often do not make any progress. With the latter, the treatment lasts three or four times as long as in the case of the former and often one does not attain one's object at all."f A high official gives this as his opinion : "It is beyond all question of doubt that the injured frequently fail in the absolutely necessary co-operation in the restorative treatment for fear that the amount of their future pensions may be influenced thereby. The result is, * * * that despite improvements in methods of healing and despite advances in surgery for workingmen, the prospects of recovery have not risen, but have even become worse than formerly "$ Another respect in which the surgeons complain of the insured as being so much more unsatisfactory than pay patients is in the refusal to undergo slight, painless operations by which restoration to former normal working capacity can be assured. Instead of wel- coming the chance of being forever freed from a stiff joint or some other functional disability, the workmen only too frequently obsti- nately decline to allow anything of the sort to be done. In the words of the same official: "In the same category belong also the unfortunately not infrequent cases, where the insured, in order to continue in the enjoyment of a pension, declines to allow quite unimportant, painless operative measures being resorted to, which no private patient would refuse, in order to regain his full bodily powers."!} Previous to the introduction of workingmen's insurance, the Ger- man standard medical textbooks named 40 days as the maximum period required for the healing of a broken arm or leg. It was soon noticed, however, that this prognosis was altogether too favorable where workmen were insured. To obtain a proper use of a frac- *H. Llnlger; "Archiv fur Orthopadle, Mechanotherapie und Unfallchlrurgie," 1907 p. 123. fBecker; Westphalian Alliance Report, p. 22; (for exact title, etc., of this re- port and of principal citations hereinafter, see Bibllograph, last page). tStocker; ib. p. 3. fib. IO tured arm required on the average, where insured workmen were concerned, four months' time, and eight months for a fracture of the thigh to heal. The same protraction in the length of treatment has been noticed elsewhere. Austrian workingmen's accident statistics indicate 12 weeks as the necessary period of healing for a broken fore- arm, 15 for a broken arm, 19 for a broken leg and 22 weeks for a broken thigh. In Holland, before the introduction of insurance laws, disloca- tions and fractures healed much more quickly than in Germany. The Dutch physicians could not get over their astonishment at the length of time needed across the border before an insured workman with, say, a dislocated shoulder could be pronounced cured. When an accident insurance law based on the German model went into effect, however, the time needed for a cure in Holland became longer and longer in the case of those insured. In spite of the perfecting of surgical methods, therefore, a much greater period of disability has to be assumed now where an insured workman is involved. Of those injured in the Austrian railway service, 0.26% became totally disabled and 1.58% semi-invalid in the ten years before the passage of the compulsory insurance act; whereas in the first ten years fol- lowing, 6.6% became totally disabled and 2.4% semi-invalid. Fur- ther illustrations of the effect of workingmen's insurance in delay- ing convalescence and lessening the prospects of recovery, are hardly needed. Unwillingness to resume and delay in the resumption of work is also to be noted, as set forth below : "The accident patient desires a high compensation and frequently his anxiety is great lest he should demand too little. He develops a quarrelsome disposition and, although he often knows better, makes much out of trifling matters. The question of money rules, tyrannizes over and demoralizes him. In order not to let his working powers appear too great, it is actually patho- gnomonic that people with even herculean bodily strength do not wish to per- form the slightest bit of work. Rather than find the most inconsequential oc- cupation before the determination of their claims, they prefer to do nothing for month after month."* Breeds Nervous Diseases. One of the most serious indictments brought against German social insurance is that it causes a new functional nervous disease" called traumatic neurosis. To cite some medical and economic writers : "Through the state taking care of accidents and sickness, many people acquire a disease of the nerves."f "One can say with certainty that before the coming into existence of acci- dent insurance legislation, traumatic neurosis did not in reality exist. "J "Workingmen's insurance is of itself the 'agent provocateur' of nervous diseases." "The severe nervous conditions following accidents * * * occur, with- *Naegell; "Ueber den EInfluss von Rechtsanspruchen bei Neurosen," (cf. "Biblio- graphy," last page), p. 11. fib., p. 4. Jib., p. 7. Bernhard; "Unerwiinschte Folgen der deutschen Sozialpolltlk," (cf. Bibliography, last page), p. 59. II out regard to rank in life, almost exclusively in the case of persons who have a right to compensation. Persons who have no such right, practically never have an accident neurosis. Thus, for example, one is hardly ever to be observed after students' duels in which severe wounds to the head are of daily occur- rence. Among the many thousand patients whom I have treated I have not yet come across a single case of severe neurosis after a non-indemnifiable ac- cident. * * * From this the inference almost universally recognized to- day in expert circles is to be drawn that the so-called accident or traumatic neuroses are almost exclusively neuroses with a right to compensation."* "It appears more and more clearly that an accident or injury is not needed for the arising of similar and in principle identical pictured illnesses. With frightful frequency, the same complaints appear of nervous relaxation and in- ability to work, even in the case of diseases which it is child's play for the non- or not fully insured to overcome."! "Not only does this disease occur as a result of accident insurance, but also exactly similar conditions are to be found in the case of persons, who by rea- son of the invalidity pension law, seek or have received a pension. "J "The origin of this sickness is generally of a gradual kind. At first, noth- ing is to be noticed of a true, nervous shock. Even the severely injured are able in the beginning to make extraordinarily rapid progress toward recovery. But then the complaints obtain the upper hand more and more. The disposi- tion of the sick person completely changes. He becomes surly, morose he sees in the physician his enemy, who would send him much too soon to work." "The now well known course is that after accidents, which can be as small and unimportant as one likes, nervous troubles of the most varied kind appear, joined with a hypochondriac ill-temper, which makes the one afflicted in- capable of work, and, at the same time secures for him, under the law, the right of drawing a pension measured accordingly to his condition. Simulation and intentional deception regarding non-existent ills are not in question, as was originally supposed. The individuals are really ill, but, strange to say, they zvould be well if the law zvere not in existence.** The inner connection here is this: The fact of being insured and having the right to draw a pension and even more (what helps to reinforce the suggestive effect) the talk of wives and comrades directs the attention in hypochondriac fashion to the state of the body, so that the educational factor of necessity is done away with as well as the for nervous individuals curative and needed obligation of pulling them- selves together and of overcoming small ailments by ignoring them."| "In the opinion of almost all writers, the women are the strongest impel- ling force; friends and relatives engage in a sort of officious competition to depict to the injured man in as severe a light as possible the results of the accident. Consequently he watches himself day and night, every ache, every weakness and every attack of dizziness is noted, highly-colored and magnified. The insured devote their whole attention to the state of their bodies and to the symptoms of their illnesses."] | "In cases of true neurosis, the one concerned is always in some respect physically below par. If one so affected meets with any sort of an accident, extreme caution is necessary. Generally every treatment is made hopeless by the injured man's family and his surroundings. * * * We doctors know, indeed, that it is always a critical period when one says to a patient: 'Now you are entirely well, now you can go to work again.' In the case of many, this calls for a certain self-command even if every personal advantage in re- maining ill is wanting. It is only too agreeable for many to continue in the *Weber; Westphalian Alliance Report, p. 20. fNaegeli, p. 5. $Sachs; "Die Unfall- neurose," (1909), p. 42. Naegell; p. 9. iHoche; "Geistetkrankhelt und Kultur," p. 2i. fHellpach; "Rentenhysterle." **ltal!cs in all quotations herein are the compiler's. 12 enjoyment of rest for a time and to allow themselves to be spoiled. We are even able to make the same observation in the case of animals. If a dog is stepped upon or run over, we see him continuing to limp for a long time without there being anything the matter with him. Should he suddenly, however, meet with another dog or a cat and his attention be attracted, he is off like the wind, and in the twinkling of an eye, thinks no longer about limping. The best means which exist to prevent traumatic neurosis from arising is timely resumption of work."* "If compensation for organic functional disturbances were excluded from the law, traumatic neurosis would be reduced to an infinitesimal minimum. This proposition sounds harsh, but it is just the contrary, for this provision would remove from the world, and thereby do away with a most undesirable effect of social legislation, a disease which is created by the law and its method of enforcement and which injures the afflicted most of all."f So run the reports regarding this especially unpleasing out- growth of workmen's compensation laws. Further elucidation or explanation would seem unnecessary. All authorities agree in say- ing that the statistics heretofore published showing only a limited number afflicted are of almost no value owing to faulty classification. The disease is far more prevalent than supposed and is constantly spreading. We may conclude this phase of the subject with the following: "Especially noteworthy also is the number of nervous disease cases among the insured engaged in agriculture. How often are no diseased conditions at the bottom of these nervous disease cases, but rather simulation or conscious exaggeration of unimportant troubles! How especially repugnant is the fre- quent occurrence in agricultural pursuits of nervous illnesses in conjunction with accidents, where otherwise the sojourn in the fresh air and the employ- ment in agricultural pursuits would have been deemed the best curative mea- sure of all for just such diseases!"! Bad Moral Effects. Passing now to a consideration of the moral and ethical effect of the German social insurance legislation, a number of unpleasant con- sequences are discernible. As a prominent official recently said : "The unfavorable influence of this insurance in the field of ethics is at hand to a disquieting degree and cannot be overlooked by anyone interested in the success of workingmen's insurance." "Directly untrue statements are unfortunately very common. I wish to re- call a regularly recurring incident. Many of the employers' associations ascer- tain from the employer what the injured workman is earning before the physician's after-examination takes place. If one compares the information derived from an inspection of the regular wage list with the statement made by the injured workman when questioned, it almost always proves true that the workman makes false statements regarding his pay. There are not two work- men in a hundred who state the amount of their wages correctly."f On the subject of exaggeration, another one remarks : "All those engaged in administering this insurance are so generally and universally convinced of its being an extraordinarily wide spread phenomenon that there is scarcely a doubt as to the actual correctness of this impression. *Becker; Westphalian Alliance Report, p. 22. fWeber; Ib., p. 20. $Stahl; !b. p. 13. lb., p, 14. flLohmar, !b., p. 28. 13 The material loss of the employers' associations through this attitude of the insured will hardly be very large. * * * The loss is to be found muck more in the domain of morals and psychology, in the weakening of the sense of truth and honesty. Certainly this phenomenon is not pleasing and is not to be excused."* A physician states: "According to my experience also, exaggeration in the case of victim* of accidents is extraordinarily widespread; in fact, it is to be termed as the usual attitude. It is greatly to be regretted that social insurance should have led in this respect to a destruction of ethical standards, but one must put up with the fact."f Exaggeration is not confined to the first treatment, but is found at all stages of a case. Referring to the periodic examinations of the injured, a law officer of the crown remarks : "Here also simulation and exaggeration play a deplorable role. * * * Among the great number of those entitled to pensions, in whose cases the consequences of accidents are either done away with or in a great measure re- lieved, there are very few who do not exaggerate the results of the accidents in order to continue to enjoy the pensions originally granted to them."J Another one says: "I have always been a warm friend and advocate of our system of working- men's insurance. I think I may say therefore all the more, that the improper exploitation of this insurance is extraordinarily widespread and has become a grave danger. I recall a great number of cases * * in which the re- sults of accidents were exaggerated in a quite unlawful way. Especially does this appear at every attempt to change already existing pensions; an injured man, who in such cases concedes of himself an improvement, can be termed a 'white raven.' " Exaggeration is prevalent everywhere, but conditions are worst of all among agricultural laborers. How widespread this evil is can be judged from the following: In 1906 the Westphalian Agricul- tural Association caused 1307 of its pensioners to undergo a strict examination with the outcome that 272 pensions were reduced and 388 were stopped altogether 81 of which were pensions for life on account of the recipients having been completely cured. In the case of the Posen Association, 877 pensioners were examined in 1900 and 146 life pensions done away with. In Hessen-Nassau, which shows the highest accident rate of all the Prussian agricultural asso- ciations, an examination of 10,548 pensioners in 1907 resulted in 17 pensions being increased, 2,092 reduced and 2,044 stopped altogether. In all these cases one-sixth to one-quarter of all pensions were being improperly paid to persons who had ceased to be under any dis- ability whatever. Such figures as these would certainly indicate that the German workmen have become past masters in the art of success- fully exaggerating the consequences of accidents and of fooling the doctors. Even more serious perhaps than exaggeration is the matter of simulation in accident cases. Regarding the extent of this evil reli- *St6cker; Westphalian Alliance Report, p. 9. fWollenweber; lb. F p. 23. tStahl; Ib., p. 14. Wandel; Ib., p. 19. able statistics are thus far wanting and are difficult to obtain. As one authority says : "Statistics which would give us the frequency of cases of simulation, prove very little; at the most, that cases of crass simulation are comparatively rare. The doctors balk at using the term simulation and choose instead a milder expression, probably for the most part out of a vague fear of possible criminal or civil proceedings."* A high medical authority makes this sweeping assertion : "Based on a very wide experience, I agree entirely with Schultze that the number of imposters and those who intentionally exaggerate constitute at least 50 per cent of all cases."^ As to forms of simulation, the following is in point : "It is undeniable that cases of fraud and simulation occur and are made use of to obtain or retain the advantages granted by the insurance laws. And we who are in active practice have the feeling as though these cases are by no means infrequent and show a tendency to increase, especially in recent years. In our opinion, cases of simulation involving hoodwinking of the doctor do not occupy the first place, but rather the cases in which occupational accidents are invented in order to cover injuries incurred in reality outside of working hours. Also the cases in which it is wrongly sought to make either an accident which has not taken place during the time of employment, or an actually incurred ac- cident with inconsequential injuries, responsible for organic diseases. In this endeavor, the pension seekers are often mistakenly aided by their fellow work- men. These last, as we have been able to prove in innumerable instances, af- firm without the slightest compunction the absolute untruths of the injured when the official inquiry about an accident occurs, and only admit at the time of the judicial hearing, when they are put upon oath, that they know absolutely nothing about the accident. Not only do the employers' associations as the immediate sufferers, but likewise the administrative officials and the police authorities, who conduct the official inquiries into accidents, have the impres- sion that these designated cases are not at all uncommon and are on the in- crease.":!: A prominent physician records himself thus : "In my opinion the increasing number of feigned accidents deserves very serious attention. It is inherent in human nature to search for outside causes for every possible illness, nevertheless we find this tendency enormously en- hanced in the case of our obligatorily insured. If we hear absolutely nothing about an accident at the time of the admittance to the hospital, the accident becomes for the sick person within a few weeks a quite notorious event, easily and clearly provable. There is scarcely a case of consumption where an acci- dent is not soon given as the cause. If it is not a kick, a sprain or a disloca- tion, then 'lifting' appears in many cases. Especially by the last is every pos- sible ailment sought to be explained."! How ideas of simulation are spread is described by another medi- cal informant : "If a person with diseased lungs, while at work or a few hours after work, is stricken with a hemorrhage, so common in a disease of this kind, and if this is recognized as an 'accident,' then such a sick person becomes by no means infrequently a drain upon the employers' association for the rest of his life, although it is a case of disease in which there can be no discussion about an accident in the ordinary sense of the term. A few instances like this naturally *Wollenweber; Westphalian Alliance Report, p. 23. fNaegeli; p. 12, JStocker; Westphallan Alliance Report, p. 8. Peters; Ib., p. 21. become quickly known and are in an extraordinary degree adapted to arouse in persons similarly afflicted the desire for an accident pension, a circumstance which has a very bad moral effect. According to my experience, this un- desirable result of social insurance is especially widespread in the country dis- tricts, where an 'accident' in the above sketched sense can very easily be fabri- cated with the help of members of the family."* In a large number of cases it is extremely difficult for the physi- cian to detect simulation, and this in spite of the fact that most in- genious apparatus and methods have been devised to detect the falsity of a patient's statements. A case in point is that of a laborer, who complained of constant dizziness and headache after an injury to his head. In spite of long observation, his fraud was not discovered until he was detected one day scaling some lofty peaks with a party of mountain climbers, when the slightest feeling of dizziness might have resulted in a mis-step with fatal consequences. Here the ex- amining physician was hardly to blame, for to prove the simulation of pain is the hardest task of all. Unfortunate Change in Relations Between Doctors and Patients. Indeed, one of the saddest things to note since the adoption of German social insurance is the change in the relations existing be- tween doctors and their workingmen patients. Formerly the latter, like the private patients of to-day, would freely and frankly confide their woes to the family practitioner. If he restored them to health, they were correspondingly grateful. Nowadays everything is differ- ent. In place of being considered as a friend and helper, the doctor is regarded as an inimicable person bent upon cutting down as much as possible or upon doing entirely away with the hitherto granted pension. He is no longer a fraternal healer, but the one who would deprive the patient of a source of income. Hence all confidence be- tween the parties is destroyed, and mistrust and deception arise in- stead. In making his diagnosis, the physician must now first of aill consider the Avorkingman's character. As one medical man has writ- ten : "In my opinion, the cardinal point in the making of a report is to post one's self regarding the reliability of the patient. * * * In all these ex- aminations, I do not inquire into sharpness of hearing, keeness of sight, extent of vision, muscular force, or degree of sensibility, but rather first of all into the credibility of the individual."! How unpleasant must the doctor's profession be when he can never rely on the truth of a patient's statements and how much hate and bitterness must fall to his lot when he recommends less than the expected amount of compensation ! To treat patients under such conditions must indeed be a thankless task. Destroys Sense of Responsibility. Loss of individual sense of responsibility is one of the marked accompaniments of the new social insurance. As others have pointed *Weber; Westphalian Alliance Report, p. 20. fNaegeli; p. 17. 16 out, this does more than anything else to help the spread in epidemic fashion of unsound ideas. "The conviction that every accident entitles the injured party as a matter of right to the highest possible compensation has come to be a dogma among the people and the common property of the masses. The pursuit of a pension is regarded as eminently lawful. * * * The distortion of elemen- tary ideas has gone so far that the drawing of a pension is regarded as an honor."* Thus the ground is prepared for an epidemic outbreak of the pension mania. To show how serious this has become in Germany, we cannot do better than to quote the warning of the rector of a uni- versity in regard thereto: "Thirty years ago it was still an unknown term, to-day it is a disease which, as a cancer in the organism of our working population, is rightly a cause of grave anxiety. This people's plague did not only arise after the en- actment of accident insurance legislation, but is directly dependent on it. There is no doubt that the law has produced the disease. No one was able to foresee it. One is reminded of Bismarck's comparison of the state to a living organism, with which one should experiment carefully."f Another person remarks : "If there are to-day in Germany over 900,000 persons in receipt of pensions as a result of sickness and accident insurance alone, this fact constitutes a grave danger and is a means of infection not only for the apprehensive and the weak in character, but also for avaricious and for mentally defective per- sons."! In view of all that has gone before, the social effect of working- men's insurance laws hardly needs any detailed discussion. The fol- lowing quotation will probably suffice on that point: "By reason of the state looking after accidents and sickness, many people either fall a victim to nervous diseases or their healing is retarded and de- layed in a very high degree by the disorders closely connected with their being insured. On account of this undeniably existing condition of affairs, we have to speak of an anti-social influence of social insurance"^ Conclusion Germany Awakening to Mistakes. Whichever way we turn, therefore, and from whatever stand- point we regard German social insurance, drawbacks and serious objections are to be observed. Far from being a great blessing, as the interested officials would have us believe, it is breeding a host of evils which greatly diminish, if indeed they do not outweigh, its bene- fits. The cost is tremendous, for one must include not only the ex- pense in dollars and cents, but also the economic loss caused by the rise in the sickness rate, the prolongation in the time of healing, the diminution of the chances of recovery and the failure to work to full capacity. If sanitary buildings are lavishly erected in order to stamp out disease, other costly and baneful forms of illness are either di- rectly engendered or mightily stimulated. The efficacy of the great *Bernhard; p. 75. fHoche; "Geisteskrankhelt und Kultur," p. 25. gNaegall; p. 23. lb., p. 14. 17 sums spent for accident prevention is largely neutralized through a more widespread indifference and neglect of precautions. Simula- tion and fraud are much more prevalent than formerly, combined with a decided lowering in the moral standards of the working classes. Truly a far from pleasing picture ! The German system of social legislation has been likened to a plan to change the modern state into a vast insurance community, where everything is provided for or guarded against. Of the effect of such a policy, we may quote the following extract from an article in a Swiss newspaper : "The feeling that one's future is looked out for is in itself very pleasing, but with many it kills the desire for independence or to attain a higher sta- tion in life through one's own efforts. If the necessity of self-help no longer comes into play which brings to their full development the energies and the abilities, whether physical or mental, of persons in full vigor and every in- dividual relinquishes to Mother State all troubling about the future, then the danger arises of even those who are anxious to partake of the fray slackening their efforts in the field of open competition. For the community as a whole it appears of doubtful advantage if also the third estate becomes bureau- craticized and turned into a great horde of pensioners, in which the right to a pension stifles all further effort."* A Berlin master-artisan laments as follows: "We are at the point of destroying all creative effort and of creating a state consisting solely of a mass of officials. * * * Through all these regulations our German Nation formerly the most industrious in the world is becoming lazy and easy-going. If one thinks back to the period now many years ago, there was then universal joy in workshop and factory if many orders came in, and everyone whether master, apprentice or workman vigorously took hold so that work and remuneration might correspond. To-day, however, when a mass of orders appears there is a strike."f In another connection, a somewhat detailed explanation will be attempted of the various errors and faults to be found in German social legislation as typified in the case of the accident insurance law. It will suffice here to call attention to the great cardinal mistake of the whole German system, namely, the attaching of too great an im- portance to the matter of pensions instead of making the conserva- tion of human forces supreme. The German plan has worked badly because it is based on the idea of protecting and coddling the work- man, with everything revolving more or less about the question of a money indemnity. The only method in which workingmen's com- pensation laws can be made to redound to the profit of all concerned is by making them educational and restorative. In other words, they should teach and train the laborer above all other things to take care of and to preserve his bodily health and strength. If this correct principle be deviated from, pernicious results are certain to follow, and, rather than being the blessing intended, these laws, conceived in so noble and humanitarian a spirit, are more likely to prove a curse. The truth of this is being realized in Germany itself, as the following extracts from speeches of two prominent authorities will show: "In the case of social insurance, everything is made to depend much too *"Neue ZOrlcher Zeltung," Aug. 13, 1913. fib. 18 uniformly on the system of pensions. The insured now devote all their efforts to retaining their pensions as long as possible and they arrange to make cor- respondingly little use of their remaining working powers. This struggle for a pension ruins the sound and calls forth true pension hysteria among those hys- terically inclined."* "The pension mania frequently thwarts every rational mode of treatment, and especially all operative treatment. * * * Of course, this would have been entirely different if at the start, when the accident insurance law was first introduced, such an over-estimate of the pension idea had not prevailed and, if one had only clearly understood at the beginning instead of after 25 years, that the treatment, the restoration of the former working strength of the injured is to be regarded as of the first importance. Only when this wholly or partially fails should the awarding of a pension take its place. From my point of view * * * the great, truly new idea underlying accident in- surance is not to be found in the noble and humanitarian purpose of a pension grant for lessened ability to work. It is rather in having the employers, as a result of general public laws, obliged to give their money for the immediate and rational treatment of the injured and for so long as the enhancing or the restoration of the former working ability through the physician's art appears possible. The law should serve not only a humanitarian but above all a social purpose, that is, the preservation of the people's strength." "In other words: If the laborer's likelihood of obtaining a pension was as rare as it is to-day frequent he would then have an entirely different interest in his recovery and would have much more cause to do his part so that he could resume work as soon as possible."! Eight years ago, a far-sighted imperial minister exclaimed in the Reichstag, in substance : "We are proud of our social legislation it has merely aroused the spirit of lucre among our workingmen. Its charges are high and its success is relatively small, with the spirit of discontent everywhere rife."$ Recently the same idea has been expressed by another official, as follows: "The root of the evil is to be found after all in nothing else but the power of attraction which money exerts upon the human mind, in the curse of gold already sung in olden times. * * * We have to reckon with this quality of human nature, which is something we cannot change. From this the moral is to be drawn, however, to make use of every means to prevent those condi- tions arising which give a legal right to a money compensation." No greater fallacy exists to-day than the apparently widespread notion that German social legislation has had a wonderful success and is a pattern for other nations to follow. Founded on a mis- conception as to the correct underlying principle, and pushing the question of compensation in money always to the front, the German compensation laws are working very badly in practice and are full of defects. They are far from being masterpieces for others to copy slavishly .fl If given a chance to start over again with a clean slate, it is safe to say that the Teutonic law-makers would make radical *Ste!n; Westphalian Alliance Report, p. 60. fRieder-Bonn; ib., p. 16. $Von Posa- dowsky, April 11, 1905. Stahl; Westphalian Alliance Report, p. 14. fFor a similar diagnosis of the German social insurance laws, see "The German Laws of Insurance," by T. E. Young, Past- President of the Institute of Actuaries, Post Magazine and Insurance Monitor, (London), Oct. 11, 1913. 19 changes in their whole system of social laws as at present constituted. As it is, the protests against the workings of these laws and the de- mand for their thorough revision are becoming louder and louder. The belief is growing in Germany that, as between the honest, indus- trious and thrifty among the working people, on the one hand, and the dishonest, lazy and shiftless on the other hand, these laws are of comparatively small benefit to the former, but in every way favor and subsidize the latter and at the expense of the former. If the Germans themselves are waking up to the fact that their social betterment laws are radically defective and defeating their own objects, if they are beginning to realize that they have been proceed- ing on the wrong tack and are seriously considering the advisability of changing their course on many points, how ill-advised it would be for any other State or country to take over the German laws in toto, as has been so often proposed. For the careful student and the would-be legislator the most valuable lessons as to how not to pro- ceed can be derived from the history of German social insurance. Consequently not to profit by the mistakes of the pioneer nation in the field of social legislation and to disregard the warnings of German experience, would seem the height of folly. Furthermore, it is of the utmost importance that all new social enactments be framed on the right lines. It will not do to pass a crude or faulty measure, for once the correct path is deviated from, it becomes extremely dif- ficult, if not impossible, to return to the right track. Party politics and the clashing of class interests block more or less the passage of any reform measure. This is what the Germans are now finding out. Finally, it should be said that the faulty provisions in the Ger- man compensation laws have been much aggravated in their work- ings by errors in administration and mistakes in interpretation. What these legislative defects are and how the laws are being misinterpreted and misconstrued will be pointed out later. GERMAN ACCIDENT COMPENSATION LAW Experience and Statistics. Compensation for accidents to workingmen in Germany dates back to 1885, when industrial accidents were first required to be in- sured against. Three years later accidents incurred in agricultural pur- suits were included within the scope of the law. To-day there are about twenty-five millions compulsorily insured against occupational accidents, or three-eighths of the whole population. Included therein are almost one-half of all the men and more than one-quarter of all the women. No other country has so extended or so complete a sys- tem of insurance covering accidents incurred by its laboring classes. In order to make clear the matter to be hereinafter set forth, the salient points of the German law will be briefly referred to and the accident statistics explained. The act obliges all employers affected to form and join mutual associations, over which the government authorities exercise a watch- ful supervision and a more or less intimate control. There are now 116 of these associations in all, 67 of which include those employed in industrial undertakings and 49 those engaged in agricultural pursuits. The Industrial Accident Insurance. Considering first the scope and accident record of the industrial association, the following table is of interest : Year. 1885 1886 1887. . . 1890... 1891... 1892... 1893... 1894. . . 1895... 1896... 1897... 1898... 1899. . . 1900. . . No. Workmen Insured. 2,986,248 3,473,435 3,473,435 4,320,663 4,742,548 4,926,672 5,093,412 5,078,132 5,168,973 5,243,965 5,409,218 5,734,680 6,042,618 6,316,834 6,658,571 6,928,894 No. Full Time Workers. 5,170,366 5,462,829 5,781,495 6,021,856 Accidents Per1,OOC Reported. Workmen. 92,316 105,897 121,164 139,549 149,188 162,674 165,103 182,120 190,744 205,019 233,319 252,382 270,907 298,918 310,105 27.42 28.04 29.42 30.28 31.94 32.49 35.23 36.37 37.90 41.77 42.89 44.89 44.76 21 Year. 1901.. 1902.. 1903.. 1904.. 1905.. 1906.. 1907.. 1908.. 1909.. 1910.. 1911.. No. Workmen Insured. 6,884,076 7,100,537 7,466,484 7,849,120 8,195,732 8,625,500 9,018,367 8,917,772 9,003,908 9,381,878 9,846,599 No. Full Time Workers. 6,000,615 6,226,584 6,553,514 6,868,496 7,159,842 7,512,728 7,869,421 7,868,531 7,945,797 8,291,936 8,653,302 Accidents Per 1,001 Reported. Workmen. 319,576 46.42 325,566 45.99 356,202 47.71 392,658 50.03 414,445 50.57 449,903 52.16 465,224 51.59 461,091 51.82 465,760 51.73 484,097 51.60 520,229 52.83 Noteworthy is the uniform rise in the number of reported acci- dents, which in 1911 reached their highest point both actually and relatively. In spite of all preventive measures, therefore, the accident rate is higher than ever. But when we turn to the results under the accident insurance an entirely different set of figures confronts us. This variance is due to the fact that, under the German law, all acci- dents entailing a disability of only 13 weeks or less are treated almost exclusively either by the sickness insurance societies to which the victims belong, or by the local authorities in case there is no sickness insurance. If an injured man has not recovered at the end of 13 weeks (approximately three months), the proper employers' associa- tion then steps in and assumes the expense of taking care of him. The accident associations, therefore, are only charged with and only record the number of accidents treated in excess of 13 weeks, which are, of course, only a small percentage of all the accidents incurred in any given year. This accounts for the comparatively small total of accidents reported in the next table under the head of "first time accidents" meaning thereby the accidents treated for the first time, in the year in question, by the accident associations. German accident statistics are, consequently, very confused and unsatisfactory, for they throw no light on the outcome of by far the greater proportion of accidents which are treated solely by the Krankenkassen or sickness societies. For the employers' industrial accident associations alone, the fol- lowing figures are published : Year. 1886 1887 1888 1890 1891 1892 1893 1894 1895 1896 First Time Acc'ts. 226 9,723 15,970 18,809 22,340 36,403 28,289 28,619 31,171 32,797 33,728 38,538 Deaths. 226 2,442 2,956 2,943 3,382 3,597 3,634 3,282 3,589 3,438 3,644 4,040 Perm. Total Disab. 1,548 2,827 1,886 2,331 1,784 1,570 1,507 1,377 855* 780 595 Perm. Acc'ts per Per 1,000 Part. Temp. 1,000 Full Time Disab. Disab. Insured. Workers. 3,780 8,126 10,270 12,788 16,194 17,481 18,049 19,740 20,025 19,312 20,251 1,973 2,061 3,710 3,839 4,828 5,604 5,781 6,465 8,479 9,902 13,652 2.80 4.14 4.35 4.71 5.36 5.55 5.64 6.03 6.25 6.24 6.72 *See note to next table. 22 Year, 1897.. 1898.. 1899.. 1900.. 1901.. 1902. . 1903.. 1904. . 1905.. 1906.. 1907.. 1908.. 1909.. 1910.. 1911.. First Perm. Perm. Acc'ts per Per 1,000 Time Total Part. Temp. 1,000 Full Time Acc'ts. Deaths. Disab. Dlsab. Dlsab. insured. Workers. 41,746 4,252 625 21,247 15,622 6.91 8.07 44,881 4,613 538 22,348 17,382 7.10 8.22 49,175 4,772 581 23,837 19,985 7.39 8.51 51,697 5,108 592 24,790 21,207 7.46 8.58 55,525 4,979 595 26,158 23,793 8.07 9.25 57,244 4,572 605 26,680 25,387 8.06 9.19 60,550 4,720 621 27,427 27,782 8.11 9.24 65,205 4,976 603 28,868 30,758 8.31 9.49 68,360 5,154 572 23,423 33,211 8.34 9.55 71,227 5,398 578 30,134 35,117 8.26 9.48 75,370 6,078 571 30,280 38,441 8.36 9.58 74,581 5,939 566 29,114 38,962 8.36 9.48 70,986 5,612 453 25,726 39,195 7.88 8.93 69,311 5,292 453 23,800 39,766 7.39 8.36 70,423 5,832 413 22,878 41,300 7.15 8.14 An examination of the above table reveals the fact that the num- ber of "first time accidents" reached their maximum in 1907. Serious accidents are somewhat less numerous, therefore, than formerly. As, however, the total number of accidents incurred annually is steadily mounting, it appears that the increase is entirely in minor accidents or those entailing less than 13 weeks' disability. Furthermore, be- sides being smaller in number, the consequences of the accidents handled by the employers' associations average less severe than for- merly, as the following table will show: r Per 1,000 Perm. Insured - Perm. \ Jr 1,000 Fi Perm. ill Worke Perm. rs Total Part. Temp. Total Part. Temp. Year. Deaths. Dlsab. Dlsab. Disab. Deaths. Disab. Disab. Disab. 1886 .... 0.70 0.44 1.09 0.57 1887 0.77 0.73 2.11 0.53 1888 .... 0.68 0.43 2.38 0.86 1889 0.71 0.49 2.70 0.81 1890 .... 0.73 0.38 3.27 0.98 1891 .... 0.71 0.32 3.42 1.10 1892 .... 0.65 0.30 3.55 1.14 1893 .... 0.67 0.27 3.82 1.25 1894 .... 0.65 0.16 3.82 1.62 1895 0.67 0.15 3.57 1.85 1896 0.71 0.10 3.53 2.38 1897 0.70 0.10 3.52 2.59 0.82 0.12 4.11 3.02 1898 0.73 0.08 3.54 2.75 0.85 0.10 4.09 3.18 1899 0.72 0.09 3.58 3.00 0.83 0.10 4.12 3.18 1900 0.74 0.08 3.58 3.06 0.84 0.10 4.12 3.52 1901 0.72 0.09 3.80 3.46 0.83 0.10 4.36 3.96 1902 0.64 0.09 3.76 3.58 0.73 0.10 4.28 4.08 1903 ..... 0.63 0.08 3.68 3.72 0.72 0.09 4.19 4.24 1904 0.63 0.08 3.68 3.92 0.72 0.09 4.20 4.48 1905 , 0.63 0.07 3.59 4.05 0.72 0.08 4.11 4.64 1906 0.63 0.07 3.49 4.07 0.72 0.08 4.01 4.67 1907 0.67 0.06 3.36 4.26 0.77 0.07 3.86 4.88 1908 0.67 0.06 3.26 4.37 0.75 0.07 3.70 4.96 1909 0.62 0.05 2.86 4.35 0.70 0.05 3.23 4.94 1910 0.56 0.05 2.54 4.24 0.64 0.06 2.87 4.79 1911 0.59 0.04 2.31 4.19 0.68 0.05 2.65 4.77 [NOTE: The remarkable decrease in the percentage of permanent total disability cases is due mainly to a change In the method of classification.] Variations in Risks and Cost Industrial Accident Insurance. Based on the number of "full-time workers," accidents from 1897 to 1908 average 9.11 per one thousand. The textile industry with 3.13 showed the lowest rate, while cartage and drayage with 14.83 showed the highest. Of the 66* industrial associations, the cartage and dray- age associations with 21.18 accidents stood at the head. The tobacco association with a rate of 0.53 brought up the rear. Considerable variation appears in the risk ratio among associa- tions in the same group. Thus the iron and steel associations for Saxony has a rate of 8.83 as against 14.57 f r the same industry in Silesia. In the textile group, 1.44 is the rate for the silk industry and 4.46 for the linen trade. In the building trade, the Hanover as- sociation has a rate of 8.19, while that for Wurtemburg reaches 16.49. Under inland navigation the East German association has a rate of 9.86 and the Elbe association 16.49. Accidents due to the use of machinery average 2.29 for all the associations. The private railway association has the lowest percent- age or only 0.38, while the woodworking association has the highest with 7.31. As to the number of deaths, the textile industry has the lowest rate of 0.12. Inland navigation stands at the head with 3.04. Of the various associations, tobacco with 0.03 makes the best showing and the West German navigation association with 3.49 the worst. In accidents involving permanent total disablity, the textile, wood- working and food products associations have the lowest rate of 0.02 ; and the mining group stands at the head with 0.40. Permanent par- tial disability cases show the lowest rate of 0.28 for the tobacco asso- ciation and the highest rate of 6.01 for the woodworking industry. In temporary disability accidents, cartage and drayage stands at the head with 13.84 and tobacco with 0.21 at the bottom. In the matter of administration costs, a great variation is to be found. The same depend on the number of insured in the various associations, the number of establishments included, the accident risk in the industry, the territorial extent, and the form of organization and administration. In general, the smaller the accident risk, the lower the administration costs are apt to be. Thus in the tobacco, silk and textile industry, the accident ratio runs 0.53, 1.44, 3.13 against administration costs of .36, .38, .47 per 1,000 mark wages, respectively. On the other hand, cartage and drayage, inland navigation and flour milling with a risk ratio of 21.18, 13.17, 14.98 show administrative costs of 3.25, 3.74, and 4.13, respectively. The chimney sweeps' asso- ciation with its small membership of 6,172 insured persons shows the highest administration costs of all the associations, namely 5.19. Causes of and Responsibility for Industrial Accidents. Between the years 1885-1908, the various industrial accident as- *That was the number during the period covered by the statistics. There are now 67 such associations. 24 sociations reported 1,002,174 due to the following causes : Machinery and elevators.. 246,273 Falling objects 165,410 Falls 162,074 Loading and unloading 131,240 Tools 71,911 Teaming 61,808 Unknown cases 51,792 "first time accidents." These were Pet. 24.6 16.5 16.2 13.2 7.2 6.2 5.2 Railways 40,355 Inflammable materials 33,689 Animals 13,968 Navigation 10,089 Explosives 9,993 Steam boilers 3,572 Pet. 4.0 3.3 1.3 1.0 1.0 0.3 According to official estimates the responsibility for industrial accidents is divided as follows, for the years mentioned : 1907. Fault of employer 12.06 " " workmen 41.26 " both 0.90 " " third persons 5.94 Hazard of industry 37.65 Act of God.. 2.18 1897. 16.81 29.89 4.66 5.28 42.05 1.31 1887. 20.47 26.56 4.61 3.40 44.96 not given The striking fact to be observed in the above table is the con- stantly increasing percentage of accidents ascribed to the faults of the workmen. The Agricultural Accident Insurance. Taking up now the statistics of the agricultural associations, the figures of accidents run differently. In 1888, 5,576,765 persons were assumed to be insured; 8,088,698 in 1889 and 1890; 12,289,415 in the years 1891-1895; 11,189,071 from 1896-1907, and 17,179,000 from 1908 on. The accidents reported group themselves as follows : First Accounts Time Year. Reported. Acc'ts. 1888 5,102 808 1889 19,542 6,631 1890 32,186 12,573 1891 42,296 19,359 1892 50,236 23,231 1893 59,006 27,553 1894 68,751 32,491 1895 80,598 37,383 1896 91,099 42,934 1897 98,363 45,438 1898 103,159 47,683 1899 107,861 51,287 1900 106,917 50,311 1901 116,185 55,983 1902 122,532 57,934 1903 133,085 62,397 1904 146,306 66,003 1905 144,939 66,335 1906 144,289 61,887 1907 141,975 62,673 1908 143,075 61,609 1909 138,785 61 ,240 1910 131,671 56,525 1911 136,469 55,587 Total Perm. Accidents Total Treated. Deaths. Disab. 808 354 43 7,271 1,368 260 18,252 1,877 438 34,338 2,153 644 52,325 2,026 785 72,336 2,142 770 94,422 2,261 560 121,240 2,213 571 149,963 2,363 623 177,421 2,474 544 202,848 2,598 332 229,329 2,608 440 250,379 2,662 511 276,993 2,751 568 304,386 2,672 541 322,735 2,893 604 362,081 2,948 668 387,412 2,907 610 400,831 2,872 593 415,847 2,843 507 422,848 2,980 371 431,085 2,942 443 425,897 2,788 423 420,784 2,853 399 Perm. Part. Oisab. 180 2,663 5,404 8,873 11,012 14,899 17,185 19,529 22,222 23,260 23,366 25,313 24,181 25,954 26,408 28,379 31,428 32,009 28,580 27,049 25,573 24,640 21,593 21,026 Temp. Dlsab. 231 2,340 4,854 7,689 9,408 9,743 12,485 15,070 17,726 19,160 21,387 22,926 22,957 26,710 28,313 20,521 30,959 30,809 29,842 32,274 33,685 33,215 31,721 31,309 It appears from the above tables that both reported and "first time accidents" grew uninterruptedly for many years, the former having reached their maximum in 1903 and the latter in 1905. Of late years, both show a declining tendency. In place of reaching 50% of all those reported, as for the period 1888-1908, "first time acci- dents" are now only 40%, which would indicate a more strict con- trol. The number of deaths per annum remains about the same, while there has been a marked decrease in the number of accidents involv- ing permanent total or permanent partial disability. Causes of Agricultural Accidents. The causes of the 892,503 agricultural accidents incurred from the inauguration of the law up to the end of 1908 are given as follows : Nature. Number. Per Cent. Falls from ladders, etc 253,373 28.39 Teaming 155,738 17.45 Animals 123,686 13.86 Engines, motors, etc 77,448 8.68 Tools 72,045 8.07 Loading and unloading 70,729 7.92 Unknown 69,046 7.74 Falling objects 57,779 6.47 Inflammable substances 7,788 0.87 Explosives 2,803 0.31 Railways 1,209 0.14 Navigation 612 0.07 Steam boilers 241 0.03 In explanation of the above table, it should be said that falls in- clude those from scaffoldings, stairs, ladders, lofts, trees, haystacks, and into ditches, wells and cellars. Teaming covers falls from ve- hicles while driving or getting on or off, and accidents suffered while leading or driving animals on foot. Animal accidents cover those incurred in feeding and handling animals, cleaning stables, plough- ing and harvesting, harnessing and unharnessing, milking, riding, etc. Falling objects include injuries received through the sliding of masses of earth, and the falling of trees, branches or parts of buildings, etc. As compared with 1905, "first time accidents" in 1911 show a de- crease of 10,748 or almost one-sixth. While there has been a diminu- tion in all classes of accidents, the largest decrease proportionately has been under the sub-division falls. Here the total has dropped from 18,879 to 14,618. A bad crop year is usually marked by a falling off in the number of accidents, as there is less harvesting and other agricultural work to do. A good fruit year means more accidents due to falls from trees. Machinery accidents now average about 8% of all as against 13.97% in 1890. In 1901, the "first time accidents" in agriculture were grouped as follows : Cultivation of fields 19,361 34.02% Vineyards 403 0.71% Cultivation of gardens. .. 2,638 4.64 Housework 3,058 5.37 Work in forests 5,718 10.05 All others 20,926 26.77 Meadow and pasture 4,803 8.44 26 The nature of the ground has thus much to do with the number of accidents incurred and accounts in part for the extraordinary dif- ference shown by the various agricultural associations in the degree of risk per 1,000 insured. For the period 1888-1908 it varied from 1.42 for the Lippe association to 5.66 for that of Weimar. Again, the char- acter of the country exerts an important influence on the kinds of acci- dents incurred. Thus, while accidents due to loading and unloading run 7.93 out of every 100 for all Germany, they foot up 14.47: for the Baden association. This exceptionally high rate is to be explained by the fact that the hilly territory covered by the Black Forest is included in the Baden association, where the loading and unloading of materials is attended with a much higher degree of risk on account of the steep and uneven roads. Another factor of importance affecting the num- ber and the time of accidents is the relative intelligence of the popu- lation. Thus in Silesia, the number of illiterate and untrained for- eign agricultural laborers is higher than anywhere else in Germany. Consequently we find a risk ratio much above the average and acci- dents resulting from the use of tools forming one-sixth of all as against an average of &% for the country as a whole. Responsibility for Agricultural Accidents. Responsibility for accidents incurred in agricultural pursuits is apportioned as follows: 1901. 1891. Unavoidable danger of Industry 49.23 51.38 Fault of laborer 27.90 24.99 Fault of employer 17.67 18.61 Fault of both and third persons 2.63 2.81 Act of God, etc 2.57 2.21 Over one-half of all accidents are therefore ascribed to unavoid- able causes such as inherent dangers of the occupation or act of God. Expenditures, etc. Agricultural Accident Insurance. The total expenditures, in marks, of the agricultural accident as- sociations have been as follows: Total Total Year. Expenditures. Year. Expenditures. 1888 461,796.50 1900 23,466,522.37 1889 1,714,327.80 1901 26,313,999.03 1890 3,392,786.97 1902 29,489,353.11 1891 5,608,773.25 1903 32,295,075.52 1892 7,469,903.52 1904 34,736,861.27 1893 9,439,471.04 1905 36,911,032.22 1894 11,880,812.26 1906 37,877,491.54 1895 13,519,057.73 1907 38,916,819.68 1896 16,072,386.81 1908 39,877,920.43 1897 18,182,155.85 1909 40,436,477.13 1898 19,853,845.34 1910 40,886,410.67 1899 21,849,791.77 1911 40,587,815.27 27 The following table regarding pensions paid, in marks, to those injured in agricultural accidents is also of interest : Year. 1888 Number Pensioners. 376 Pensions Paid. 14,857 Year. 1900 Number Pensioners. 228,882 1889 5,277 423,789 1S01 253,067 1890 . . 15,136 1,288,371 1902 . . . 278,907 1891 27,942 2,505,680 1903 306,994 1892 45 861 3 793 397 1904 333,946 1893 64,203 5,125,148 1905 . . . . 358,830 1894 85,234 6,647,878 1906 372,143 1895 109,363 8,175,673 1907 384,943 1896 136,370 9 987 613 1908 389,319 1897 161,707 11,508,240 1909 391,233 1898 186,396 12,934,817 1910 385,876 1899... 210,330 14,391,680 1911. . 380,83-5 Pensions Paid. 15,699,208 17,470,438 19,327,972 21,518,897 83,268,863 24,674,306 24,252,100 85,669,082 25,912,466 26,032,546 25,821,994 25,506,206 Cost of Accident Compensation Hidden by Confusing Practices. While in other countries, like France and Holland, one is able to tell with some accuracy the actual cost of workingmen's accident in- surance, it is impossible to do so in the case of Germany. For 1911 the sum total of all expenditures of all the accident associations is stated in the official reports to be 202 million marks ; but these figures include only the outlays of the employers' accident insurance asso- ciations. No statistics are available to show what it cost the sick- ness societies to treat the minor accidents of less than three months' disability and the major accidents during the first three months. A second unknown quantity is the cost of the services rendered by the central and local State governments and of the quota assumed by them of the expenses of the employers' associations. Again, in 1911, for example, 1,018,075 workmen in all were in receipt of indemnities for accidents incurred. The pensions of all of them were paid through the post office, which in turn charged the employers' associations with the total thereof payable in June, 1912. The associations are thus not only saved all the expenses of distribution, but also are pre- sented with from five to seventeen months' interest on all the monthly compensation payments made for their account by the postal authori- ties a no inconsiderable sum. Another confusing factor arises through the Germans having adopted generally the "current cost" as distinguished from the "capi- tal reserve" plan of providing for deferred payments on losses. For instance, the amount payable in the current year on the "first time accidents" incurred by the employers' industrial associations in 1886 (the first full year of accident insurance) was 1,720,800 marks. In- stead of requiring their members to advance 16,372,600 marks which would have provided for the annuities due to all the victims and thus done away with all further assessments for losses incurred in 1886 the associations merely asked them to contribute the current cost for the year* or 1,720,800 marks, thereby leaving 15,164,600 marks to be *Pluf mail contributions towards partial reserves. 28 paid in the following years on account of the losses of 1886. Through this system of deferring the evil day of liquidation and of paying only what they have to from year to year, the associations were able to show low expenditures at the outset, but with a constantly rising in- surance cost. This is brought out in the following table relating to the industrial accident associations only : Compensation Wages Actually Rate Paid In Paid In Per 1,000 "First Million Thousand Marks Time Year. Marks. Marks. Wages. Losses.' 1885 475.8 1886 2,228.3 1,720.8 0.77 1,720.8 1887 2,389.3 5,342.5 2.25 3,093.1 1888 2,646.0 8,615.4 3.27 3,653.7 1889 2,947.1 12,203.7 4.17 4,281.8 1890 3,183.8 16,252.4 5.13 5,006.1 1891 3,318.4 20,184.5 6.13 5,314.5 1892 3,292.7 23,861.5 7.28 5,628.2 1893 3,366.5 27,333.5 8.16 5,958.1 1894 3,431.7 30,975.2 9.07 6,922.2 1895 3,577.3 34,374.1 9.64 6,477.9 1896 3,922.9 38,653.3 9.87 7,294,2 1897 4,253.6 42,933.3 10.18 7,778.8 1898 4,643.4 47,621.3 10.27 8,490.0 1899 ,. 5,008.8 52,747.7 10.54 9,258.0 1900 5,399.1 58,494.8 10.85 10,088.3 1901 5,710.4 67,120.5 12.17 11,818.3 1902 6,115.1 72,987.5 12.80 12,217.2 1903 6,115.1 79,337.2 12.98 12,767.3 1904 6,538.3 85,882.2 13.14 13,540.1 1905 6,996.6 92,263.0 13.19 14,182.0 1906 7,714.9 97,951.0 12.70 14,882.3 f907 8,410.1 104,518.1 12.43 16,155.5 1908 8,463.6 110,157.4 13.02 16,971.1 1909 8,567.3 113,536.8 13.25 16,148.9 1910 9,187.6 115,176.0 12.54 15,313.6 1911 9,932.5 117,322.5 11.80 15,449.2 Estimated Capital- ized Values, Same In Thousand Marks. Est'd Dlf. Bet. Cap. Values and Comp. Paid In Thou- sand Marks. 16,372.6 29,429.4 34,763.3 40,739.4 47,630.7 50,565.0 53,549.7 56,688.6 59,967.4 61,634.2 69,401.0 74,011.7 80,778.4 88,058.6 95,985.5 112,445.7 116,241.0 121,475.0 128,827.8 134,935.2 141,598.2 153,712.2 161,464.2 153,649.6 145,701.2 146,991.8 15,164.6 40,625.3 69,110.3 101,063.6 137,077.4 173,318.9 210,112.3 247,848.8 286,426.9 324,666.0 367,853.2 412,894.2 461,663.1 514,396.0 571,202.7 638,106.4 705,207.5 773,502.4 845,023.7 918,765.3 996,096.9 1,081,876.3 1,172,904.5 1,255,572.9 1,331,011.5 1,408,304.4 Under the column "Rate per 1000 marks wages" is given the actual expenditure for compensation per 1,000 marks of wages. For the period 1885-1911, this averages 10.77, or I -77 P er IO marks of total wages. Taking the capitalized values of unpaid losses outstanding at the end of 1911 as 1,408,304,400 marks, the actual reserves of the industrial associations at that date totaled only 309,574,574 marks, leaving a de- ficit of almost 1,100 million marks. As the grand total of wages for this 27-year period was 137,240.6 million marks, annual premiums or contributions would have had to have been about four-fifths of one per cent higher if losses had been provided for on the capitalized value basis instead of the current cost assessment plan. Of the 117,322,555 marks paid as compensation for accidents in 1911, 15,449,178 was expended for "first time accidents" and 102,113,- 377 f r accidents incurred in previous years. Even if we add to this the 21,155,497 marks that year paid into the reserve fund, the amount is not equal to the capitalized value of the cost of the "first time acci- dents" of 1911. Consequently, the deficit in reserves is still on the increase, and a rising insurance cost for the industrial associations may be expected for some time to come. For how long and to what extent that cost will rise before a state of equilibrium is reached, it is impossible to predict with exactitude. In consequence of all these uncertain elements, and of the post- ponement and division of expenditures, no one can pass an intelligent opinion as to whether the German method of meeting the expenses of workingmen's accidents is very costly and uneconomical or not. It is at any rate a very cumbersome and involved system and one ad- mirably fitted to conceal the truth although, of course, it was not de- vised for any such purpose. LESSONS FROM GERMANY'S EXPERIENCE Mistaken Provisions in the Accident Insurance Law Errors in In- terpretation and Administration Proposed Reforms. In view of the fact that Germany was the first nation to attempt this kind of legislation, it is not surprising to find defects in its statute calling for the compulsory insurance of workingmen against the con- sequences of accidents. A pioneer has to blaze the path for others, and it is hardly fair to blame him severely if he fails to find the least objectionable route and the one freest from dangers. But there can be no excuse for such as would enter on a similar track not avoiding like snares and pitfalls to those which have led astray the one who hewed the way. Therefore it behooves all would-be imitators of a compulsory accident insurance system not to follow the German ex- ample blindly, but rather to select the line of procedure which the experience of Germany indicates as the best. At the outset, it is proper to call attention to the difference be- tween a select system of private insurance and one carried out on a large scale, as results when compulsory workingmen's insurance laws are enacted. To quote the words of a prominent Germany official : "General workingmen's insurance differs from private insurance principal- ly in two points in the prodigious number of risks and in the indiscriminate insurance of all risks, even of the worst possible kind. The enormous number of risks itself causes cases where covetousness comes into play to be corres- pondingly more numerous than in private insurance. Another unfavorable in- fluence on the number of cases of covetousness is the entire absence of exclu- sion of unfavorable risks. At least, as far as accident insurance is concerned, all persons eligible for this insurance come under its protecting care irrespec- tive of age, sickness or infirmities. In this way, a wide opportunity is pre- sented for ascribing to accident the consequences of old age or of illness, which in reality have had nothing to do with an accident. Furthermore, the moral qualities of the insured are left out of account where general insurance pre- vails. The danger is thereby increased of the public as a whole being improper- ly exploited by the individual."* This being the inevitable and unavoidable case, it becomes all the more important to have workmen's compensation laws made as defect free as possible. If the slightest loophole presents itself for securing an unfair and an unintended advantage, the worthless mem- bers of society will not hesitate to avail themselves of this opening, even to the extent of using dishonest means. If the body politic is to be kept in a healthy condition and free from contaminating in- fluences, every avenue of approach should be carefully guarded so as to prevent the undesirable element from gaining a foothold. Once they find out a weak spot in the law and a point to begin their un- *Stahl; Westphalian Alliance Report, p. 12. desirable practices, their example will prove contagious, with the re- sultant infection and demoralization of the sound part of the popula- tion. The only way to pass a workmen's compensation act of any kind with beneficial results to all concerned is to make the occurrence of abuses under it impossible as far as human foresight can foresee. Half-way measures or compromises will not do and are bound to cause pernicious consequences. Divided Responsibility for Accident Cases. Divided responsibility seldom leads to satisfactory results; and this has again been proved true from the workings of the German accident law, which makes both the sickness societies and the em- ployers' associations obliged to look after the injured. The care for the first 13 weeks devolves on the former, and thereafter the em- ployers' associations take charge. It is often difficult to determine whether an injury was caused by an occupational accident or whether it is really to be ascribed to the consequences of a previous illness. But, as the victim requires prompt treatment, the German law directs that, in every case, the sickness societies must give the first aid jto the injured. Not until the long waiting period of 13 weeks has ex- pired can the employers' association step in and direct the treatment. During this waiting period, the sickness society is financially inter- ested in proving that an occupational accident caused the injury. Once that fact has been established, it is not particularly concerned with the further history of the case, or in seeing that the treatment is properly followed up. This gives those their opportunity who, consciously or unconsciously, are bent on deriving as large a pecuniary profit as possible from an accident. After the expiration of 13 weeks, when the employers' association first takes hold, it is usually ex- tremely difficult to prove that certain symptoms especially nervous troubles existed before the accident. Nor can the appliances for re- storing flexibility to broken or dislocated limbs be then applied with much hope of success, as they must be made use of within two weeks after injury if the proper results are to be obtained. Realizing this weakness in their accident insurance system, the German authorities early sought to better matters by allowing the employers' associations to take over the treatment of accident pa- tients before the expiration of the waiting period, if they so desired. But, owing to the difficulties raised by the sickness societies, very little use has thus far been made of this privilege. In 1910, only 2.63% of all reported accidents were taken over by the employers' associations before the 13 weeks' limit was passed. Recently the procedure enabling the employers' associations to take charge of ac- cident patients from the outset has been simplified and it is hoped that they will do this to a much greater extent than before. In order to prevent unscrupulous persons from deriving a profit from this sys- tem of double treatment first at the hands of the societies and then of the associations many physicians and the most experienced offi- cials are urging the abolition of the waiting period so that all acci- dents would be looked after by the employers' associations from the 3 start. That is certainly a reform to be greatly desired, for it would produce uniformity in the treatment of accident cases under the charge of the organizations most directly interested in having the injured workmen attain their former working capacity. The opportunity for fraudulent practices and for falsely ascribing previously diseased con- ditions to accidents would also be greatly lessened. It is difficult for anyone to say how serious are the results of the double system of handling accidents in vogue in Germany. As bear- ing on this point, however, a comparison of the consequences of in- dustrial accidents in Germany and Holland is instructive. Per 1,000 ^-Full-Time Workers-^ Accident Per Over Over ,-1,000 Full-Time Workers-^ 13 Weeks. 6 Weeks. Year. Germany. Holland. Germany. Holland, 1S03 54.35 65.9 9.24 5.4 1904 : 57.21 77. 9.49 6.8 1905 57.09 83.6 9.55 6.8 1906 60. 92. 9.48 7.4 1907 59.12 94.8 9.58 8.2 1908 58.10 88.5 9.48 9.1 1909 58.62 82.9 8.93 7.9 1910 58.38 79.8 8.36 7.7 1911 60.12 81.2 8.14 7.6 Average 58.18 82.7 9.14 7.43 In the German figures of accidents reported are included all ac- cidents in excess of three days' disability and probably many others, while the Dutch figures take in accidents resulting in more than twq days' disability. In spite of this exclusion of all minor accidents from the Dutch statistics, Holland is far ahead of Germany in the ratio of accidents reported. The figures average 82.7 for the former as against 58.18 per 1000 for the latter. When it comes to the results of acci- dents and the duration of disability, however, the showing is quite different. Here the German figures are far in the lead. On the aver- age, the number still under treatment in Holland at the end of six weeks runs only 7.43 per thousand as against 9.14 still unrestored in Germany at the end of thirteen weeks. In other words, over 90 per cent of all accident cases in Holland are discharged as cured at the end of six weeks, while in Germany at the end of thirteen weeks one- sixth of all cases are still under treatment. This showing is all the more remarkable, for the reason that the Germans claim to have far more accident preventing devices and better surgical apparatus for the treatment of accidents than any other nation. Undoubtedly the, shifting of accident cases between sickness societies and accident as- sociations has something to do with the poorer results attained in Germany. Excessive Litigation Fostered. Another provision of the German law giving rise to great com- plaint is that regarding appeals to the courts. When a person has 33 been injured, his pension is determined by the employers' associa- tion. If dissatisfied with the award, the statute gives the victim the right to appeal, free of charge, first to a court of arbitration* and later again to the imperial insurance office. As the workingman can thus prosecute a lawsuit without expense to himself, the inevitable result has been to encourage an immense amount of entirely uncalled for litigation. While only one decision in fourteen is appealed from in France, one-sixth of all those rendered in Germany are excepted to. The official statistics set this out in detail : Year. 1890 Awards Open to Revision. 68,684 Awards Appealed to Arbi- tration Court. 14,879 33,553 46,655 68,742 72,917 70,023 Per Cent Ap- peals Decided Per Cent in Favor Appealed. Workmen. 21.66 35.59 23.34 27.88 21.01 26.42 17.38 22.79 17.49 17.15 16.48 15.58 1895 143,783 1900 217,333 1905 395,563 1910 416,913 1912... 424,855 Appeals from the courts of arbitration to the Imperial Insurance Office make the following showing: Per Cent Number Per Cent Original Decisions of Possible Decisions Year. Appealed. Appeals. Confirmed. 1890 2,354 23.33 73.7 1895 7,806 28.56 73.9 1900 11,048 26.68 69.9 1905 17,422 27.91 71.8 1910 25,666 28.79 72.1 1912 22,827 25.72 73.9 Not only is the number of appeals taken appalling, but the ma- jority of them are absolutely unwarranted. Thus in 1912, of the appeals taken to the courts of arbitration only 15.58% were decided in favor of the workmen 74.02% being affirmed without change. In the appeals to the higher court of the imperial insurance office 80.9% of the workmen's appeals were denied and 73-9% of all appeals af- firmed. The workmen were responsible for four-fifths of all the ap- peals taken. The courts are simply overwhelmed by the avalanche of cases and are falling more and more behind in their work. In 1900, 63% of all appeals to the courts of arbitration were decided in the same year in which they were taken, in 1911 only 22%. At the end of 1912, 134,567 undecided cases were pending in these courts, a figure never before reached. So serious has this overburdening of the highest court of the im- perial insurance office become that a different arrangement has re- cently been adopted, limiting appeals in some instances and simplify- ing methods of procedure. But this is a mere palliative measure. The real way to put an end to this unwarranted litigation is to do away with the workman's right of appeal free of charge. If he had to pay as loser the costs of a wholly unmeritorious appeal, he would think twice before taking an appeal unless he had good grounds to *Code of 1911 makes a change In this procedure. 24 do so. It is doubtful, however, whether this much to be desired re- form will be carried out in the near future. The fear of offending the workingman and of losing the labor vote makes all the German political parties afraid to advocate the change. Why exemption from all costs on appeal, regardless of the merits, should have been inserted in the law alongside of the workman's right to appeal is difficult to explain, except on the ground that it was intended as a sop to the radical labor vote. It is not to be found in countries like France and Belgium. Anyone could have foreseen that it would certainly result in breeding a mass of unnecessary litigation. From the standpoint of the workingman's best interest, the insertion of such a provision was bound to be disastrous. No worse service could have been rendered him than to facilitate his carrying on law- suits regarding his compensation in accident cases. Instead of turn- ing his attention to the question of getting well, his thoughts are thereby centered more about matters of litigation and the prospects of his suit. His actions too are governed with a view to its outcome, and he often fears to resume work lest that fact may influence the result. As prompt judgments are no longer rendered owing to the clogged condition of the courts, habits of idleness too are often ac- quired while awaiting a final decision. Finally, as one prominent German has pointed out, the ease with which the insured thanks to judicial proceedings being free of cost, are enabled to prosecute claims of doubtful validity is one of the leading causes that has helped to spread the pension mania from which the German working popula- tion is now suffering. All these evils flow from one single unwise pro- vision in the law, and prove again how carefully the effect of every sentence in a workmen's compensation act should be weighed. The Pension Fetish. In 1910 the German imperial insurance office issued a jubilee publication to commemorate the twenty-fifth anniversary of the first introduction in Germany of a system of social insurance. In this pub- lication, the following sentence occurs : "The system of social insurance against accident and infirmity would have failed of its object had not the method of pension been preferred. Only in this way is it possible to provide adequately against need and to secure to people of small means, during loss of earning capacity caused by accident or infirmity, a care which cannot be sacrificed owing to improvident conduct or misfortune, as may easily happen where compensation takes the form so largely favored by private insurance of a lump-sum payment."* To judge from the foregoing citation, a large part of the success of German social insurance is due to the adoption of the pension system for the settling of indemnities for disabilities. As a matter of fact, however, the hide-bound adhesion to the pension system has been deemed by many a great defect in the German accident insur- ance law, and a source of many evils. *"Das Relchsversicherungsamt und die Deutsche Arbelterverslcherung," (cf. "Bib- liography," last page), p. 88. 35 Originally the statute provided for lump sum payments only to injured foreigners, but in 1900 the German workman was given the right to ask for a lump sum payment when a pension of 15% or less of his usual wages was awarded him. Little use has been made of this provision, however. In 1909, the lump sum payments were granted to 5,405 cases out of a total of 139,070 cases in which com- pensation was paid for the first time. The government has attempted to have all pensions of less than 20% settled on the lump sum plan irrespective of the consent of the injured party, but a majority of the Reichstag failed to give its assent thereto. Lump sum payments have been objected to on the ground that the shiftless and improvident workmen soon waste or dissipate the money paid them, and then become dependent on the poor relief system. On the other hand, it is urged that the effect on the least worthy of the working population should not be considered alone, and that it is more important to preserve the average normal work- man from falling a victim to chronic disease. On this point we may quote a German medical authority: "As domestic and foreign experience has proven that the system of lump sum payments has a very much better influence on the restoration of neurotics than the granting of pensions, a judicious lump sum settlement for neurotics (if traumatic neuroses are not indeed to be barred from all compensation), would be, irrespective of the size of the pension granted, a great step forward in social insurance and a blessing for these poor sufferers."* Switzerland is one of the countries where accidents causing ner- vous disorders are settled by lump sum payments. On the effect of this system, a leading physician writes in a Swiss medical journal r "In Switzerland, accident neuroses are generally settled by lump sum pay- ments and are cured by them. * * * In Switzerland, there are no unhealed neuroses two years after lump sum payments are made."f At another time he speaks of 138 cases of traumatic neurosis ex- amined by him and all entirely cured within two years from the time of settlement. In the case of Sweden, Dr. Bihlstrom has shown that 90% of all such cases have been cured within a short space of time. The prac- tice in Denmark is described by a Copenhagen physician as follows : "As soon as the injured man is known to be suffering from a traumatic neurosis, he is granted a provisional indemnity based on the then existing circumstances of 1,000 marks on the average; 51.9 per cent of all cases are healed by means of this lump sum payment. The remaining cases, from one to two years later, if by reason of special examinations and explanations regard- ing the actual working capacity of the injured a greater degree of invalidity than originally assumed has been proved to exist, receive a further final lump sum of 1,300 marks on the average."! By this method, 93.6% of all Danish traumatic neurosis cases are cured. Nothing like as favorable results can be shown where the pension system is in force. *Weber; Westphalian Alliance Report, p. 20. t"Korrespondenzblatt fUr SchweJzer Aerzte," 1910, No. 2. JWimmer; "Zentralblatt fUr Nervenhellkunde," 1910, p. 117. 36 The following quotation bears on this subject: "Cures also occur in countries where pension settlements are in vogue. Usually, however, pensions continue to V e paid for many years and a very high percentage of former patients draw their pensions so long as they live. Thus, to be specific, Schaller, in an article based on the experience of the psychiatric clinic in Tubingen, was only able to report four cures in 43 cases of neurosis."* The reasons for the ill success of the pension system in cases of neurosis are set forth in the following extracts: "The explanation of this is to be found herein, that a lump sum payment does away with the nervous strain brought on by a suit for a pension. For a lump sum payment results in a final determination, while an accident pension [in Germany] is invariably granted subject to revision. While the one pen- sioned is continually under observation, the workman enjoys entire freedom of movement after the making of a lump sum payment. He is able to con- sider himself again as a well man, is again able to compete and acquires there- by, as well as through his having been placed in a stronger financial position, the possibility of again making his way upwards."! "In a country which uses the pension system of compensation, the un- favorable influences are forever in operation in consequence of the many ex- aminations, disputes with the insurance officials and, above all, the wish not to lose one's pension."! Some German officials are advocates of the lump sum payment system. We may quote from the statements of two: "All the speakers have corroborated the statement that the same regret- table evils make their appearance both in private as well as in a system of so- cial insurance. Private insurance has, however, this advantage that it can act promptly with a lump sum payment and thereby quickly put an end to the pen- sion mania with its dangerous moral accompaniments. On the other hand, in social insurance everything is much too uniformly made to depend on the pen- sion system. * * * I am of the opinion that one should make use of lump sum payments in the case of pensions even much higher than 20 per cent and in certain cases, even instead of pensions for temporary periods." "I consider it very desirable to make use of lump sum payments to the greatest possible extent, because the injured person so settled with deems him- self again an able-bodied workman. In some cases an existing hysteria is dis- pelled to a surprising degree through making a lump sum payment." U Despite the sweeping assertion of the authorities of the imperial insurance office to the contrary, it is clear from the foregoing that the one sided system of pension settlements in vogue in Germany is in many cases most undesirable. Instead of helping to benefit the sufferers from nervous disorders due to the occurrence of acci- dents, regular pension payments merely aggravate the symptoms and often make the troubles incurable. German experience, therefore, does not prove the superiority of the pension plan of compensation for injured workmen, but rather that the failure to make a much more widespread use of the lump sum settlement plan is a serious imper- fection in the German accident insurance law. Indeed, this is fully recognized outside of official circles. A commission is now engaged in studying on behalf of the employers' associations the question whether it would not be advisable to provide for lump sum payments in all cases, except where permanent disability results. That would *NaegeU; p. 22. fBernhard; p. 86. tNaegell; p. 20. Ste!n; Westphallan Alliance Report, p. 30. Wandel; Ib., p. 19. 37 be a marked departure from the now prevailing practice and is sig- nificant of the dissatisfaction felt with it. As the subject is as yet merely being discussed, no immediate change in the law in this re- spect is to be expected. Cures Not Desired. Mention has been made elsewhere of the refusal of the insured when injured to undergo slight, harmless operations. As one learned professor of medicine says : "The constantly increasing aversion of the insured to having themselves made well is a cause for serious thought. An end must be put to the con- stantly increasing fear and disinclination to allow an operation, even if it be the most trivial operative measure, and one free from all danger."* The same authority also remarks : "It is a fact that most of those injured in accidents, in order not to lose their pensions, hardly ever submit, after the 13th week, to a carefully planned mode of treatment and one promising good results. Indeed, one even ex- periences that they categorically refuse to allow the employment of quite simple, harmless and entirely painless measures."! This attitude of the insured is largely made possible by the lack of a sufficiently efficacious provision in the accident insurance law penalizing such actions. One paragraph indeed allows a temporary reduction in the amount of a pension in such cases of refusal. But judicial proceedings have to be brought, and as far as restora- tion is concerned the delay is fatal, for to be efficacious the treat- ment must be prompt. By the time the courts have acted, the period for successful treatment has gone by. The following quotation ex- plains why this is: "Section 606 of the imperial insurance code provides, it is true, that com- pensation can be wholly or partially refused the injured person, for a time, where he declines to follow, without a legal or any other good reason, a direc- tion concerning the healing treatment, if his ability to work suffers thereby and the provisions of the law are called to his attention. But the possible chance of judicial proceedings being instituted affords untractable persons, who prefer the acquiring of a pension to the restoration of their health and working powers, an opportunity to delay proceedings so long that the most precious time for a resort to medical measures is lost."! Furthermore, the courts are very unwilling to enforce this provi- sion. As the secretary of a miners' employers' association remarks : "As far as my knowledge goes, Section 1 of the Miners' Employers' Asso- ciation has not succeeded even in one single instance in having such a reduc- tion in a pension sustained on appeal, no matter how slight the reduction may have been." The same official further says : "After great sums have been expended in Germany for the equipment of sanitariums fitted up with modern and most improved appliances; after the German medical corps has understood how to dedicate itself with such con- spicuous success to the duty devolved on it under social insurance laws; after *R!eder-Bonn; Westphalian Alliance Report, p. 19. fib., p. 16. tFlemming; ib.. p. 25. Ib.. p. 28. 38 the insurers spend yearly many millions of marks for restorative treatment, it does not seem right to leave it to the whim of the insured workman to de- cide whether he too shall make intelligent use or not of these appliances con- secrated to the health of the people." Undoubtedly the lack in the German accident insurance law of a suitable paragraph under which the insured can be forced, in their own best interests, to undergo the proper course of treatment is a serious omission as things have turned out. But who could have foreseen that the insured would be so blind as to the best course for them to pursue and that they would prefer infirmity with a perma- nent pension to being made well and able to work as before? The results of social insurance certainly appear in a very curious light, when money is deemed of more importance than a return to former health, and where the insured have to be clubbed, as it were, by legal measures into undergoing a proper course of treatment. How the German legislators will proceed to force the recalcitrant victims of accidents into line, it is difficult to say. The most radical remedy yet proposed has been the loss of the pension in such cases ; but its adoption is exceedingly doubtful. This unforeseen difficulty which the Germans have experienced in persuading the insured to undergo the right treatment teaches again the necessity of making the question of restoration appear of paramount importance to the vic- tims of accidents. If the chase of the almighty dollar is allowed to take the first place, very poor results from a healing standpoint are sure to follow. Over-Insurance Permitted. Encouraging to those inclined to prolong as far as possible their period of idleness after an accident is the absence of any provision in the German law forbidding double or over-insurance. If a mem- ber of a sickness society, an injured workman is entitled to half-pay from his society during disability for the first 13 weeks after an acci- dent. But there is nothing to prevent him from also insuring himself elsewhere. As one physician explains : "In the case of some, the system of double insurance which is apparently very widespread helps to augment this delay [in healing]. It results in wages being almost entirely made good, whereby the incentive to work is lessened for many."* It seems strange that in spite of their years of experience, the Germans have not yet attempted to do away with this abuse and the demoralization it causes. We may conclude our review of the defects of the German acci- dent insurance law with the following suggestion from a competent authority : "On the one hand, there are expended yearly over one hundred million marks for the preservation of the health and lives of the employed workmen and workwomen, especially for accident prevention in industrial occupations of all kinds. The greater part of these expenditures falls upon the mining in- dustry, which, in the struggle with the elements in the dark bosom of the earth, has to contend with especial difficulties. These outlays are cheerfully ^d gladly made for this purpose, and numerous public and private bodies and *Peters; Westphallan Alliance Report, p. 21. 39 officials find their life-work in devising proper accident preventing regulations and in carefully watching over their conscientious enforcement." "On the other hand, Section 1,254, paragraph 2, of the imperial insurance code provides: The violation of the regulations of the mining police * * * is not an offence within the meaning of the present law.' In other words, it is immaterial whether the insured, through the non-observance of safety regulations, brings himself or his fellow woikmen into jeopardy; he has the same right to compensation as the one who unavoidably perishes in the per- formance of his work or while conscientiously observing safety regulations. A change in the law is here eminently in order, by which at least a small re- duction can be effected in the accident pension of the culpable party. If the government officials and German industry combined expend every year large sums for the safety of the employed, the law must provide a means for compelling an observance of these regulations by compensating the ones who suffer injury through their non-observance less than the ones who obey them and yet incur injury."* Errors of Interpretation and Administration. The provisions of the German accident insurance law heretofore discussed are thus to a considerable degree responsible for the evils arising out of the enactment of the statute. But the existing abuses are after all mainly due to the false interpretation of the law by the officials and to errors in its administration. This may seem surprising in view of the vaunted efficacy and superiority of German methods, but such is the fact. As one high German official has stated : "A further practical result of the discussion appears to me to have been the recognition that the law as such is responsible for only a small percentage of the existing evils, while the manner of its enforcement is responsible for the major part. From this the conclusion follows that we are not obliged to resign ourselves to a determination of the evils * * * and to call for a change in the law, but that the possibility exists * * * of securing a reduction in the unpleasant consequences through an intelligent co-operation of all those in- terested."f When the law was originally proposed, it was to be one of a series of contemplated measures intended to please the working peo- ple and to appease their social discontent. It was meant to have a political as well as a remedial effect. Hence the authorities felt obliged to construe the law in as liberal a spirit as possible and to favor the workmen whenever possible. The far-reaching effect of erroneous interpretation was in no wise foreseen. Typical of the attitude of the officials is the simile ascribed to the first president of the imperial insurance office, wherein the workmen were likened to children who could best be won by kindness. So the idea was spread forth that they should be petted and indulged as much as possible. The Germans, therefore, started with the notion that every victim of an accident ought to be compensated and that the letter of the law required every injury to be measured in terms of money. Elaborate tables were prepared, with minute gradations, cov- ering disabilities of from $% to 100%. Even unimportant finger hurts without any serious consequences received the minimum rate of 5%, The workmen were quick to perceive that these small pensions for *Flemmlng; Westphalian Alliance Report, p. 27. fStocker; ib., p. 31. 40 trivial injuries could be obtained without the slightest difficulty and the recipients of them came to be objects of envy. Known as "drink- money pensions," they were much sought after, and improper methods were frequently resorted to for obtaining them. Drink Money Pensions. In 1897 a careful examination disclosed the fact that for dis- abilities of 10% or under the average pension paid was 9 pfennigs or slightly more than 2 cents a day, or just about enough to purchase a glass of beer or a fair cigar every day. The knowledge gleaned from this investigation, and the very patent abuses and swindling practices prevalent, caused the authorities finally to take a back track. Accordingly, on October 5th, 1901, a decision of the imperial insur- ance office was rendered in which the precept was laid down that "pensions of less than 10% are not to be granted as a rule, because experience shows that degrees of disability taxable at less than 10% are not regarded as a measurable loss in industrial life." But this action came too late the virus of the pension mania had already taken hold of the working population and started on its baneful career. If the German officials hoped to check the spread of unlawful practices by excluding minor injuries from the operation of the law, they were soon undeceived. The false conception originally fostered by them of the object of a pension had become too deeply ingrained in the minds of the work people, who to-day are still laboring under the delusion that not proven loss in working capacity, but the mere occurrence of an accident, is what entitles them to a pension. As a law officer recently stated : "The false idea is still running in the heads of the insured that the legal compensation is a kind of smart-money, which can be demanded for every ac- oident."* Another one says : "Finally, I wish to mention those persons who have received an unim- portant injury and who at the expiration of the waiting period can show either no diminution in working capacity or one not worthy of notice. Almost all these persons make a demand for compensation upon the employers' associations without being able to allege anything for the foundation of their demands be- yond the fact that they have met with an accident. In such cases, the object sought after is the small pensions ranging from 10 per cent to 20 per cent.^f In the recent consolidation of the various workingmen's compen- sation laws, the higher officials went a step further than before and proposed that it should be permissible to grant pensions of 20% or less for a definite fixed period, with no right of appeal therefrom. The purpose was, of course, to exert some pressure on the workmen suf- fering from minor injuries so that they would make greater efforts to recover their former working ability. Although a very wise move, the workingmen were opposed to its adoption and defeated its pas- sage. In addition, the leading parties in the Reichstag joined in se- verely criticising the imperial insurance office because of its attempt- *St6cker; Westphallan Alliance Report, p. 18. fStahl; ib., p. 13. 41 ing through its judicial instrumentalities to do away with the smaller pensions. Looking back on this phase of the interpretation of the German accident insurance law, the point to be emphasized is the necessity that officials should have always clearly in mind the main purpose of such a compensation statute. Not realizing that it was primarily a law of partial reparation for the inevitable loss due to workingmen's accidents, the German men in office began by construing it more as a political measure intended to make the workmen contented and happy. This resulted in the dissemination of the. mistaken idea that the happening of an accident carries with it in all cases a right to com- pensation, and the consequent spread of the pension mania. Once started in the wrong direction, the Germans have thus far not been able to return to the right track. The attempt of the higher authori- ties to make for the correct course has been largely nullified by party politics, the action of the minor .administrative officials and the deep- seated nature of the pension disease. The importance of having all workingmen's compensation acts drafted and interpreted along proper lines cannot, therefore, be too strongly dwelt upon, and should be in- variably borne in mind in the introduction of any new legislation of this sort. Mistakes of Tribunals. If the head officials have of recent years had a correct under- standing of the underlying principles to be followed, the same can- not yet be asserted of the other bodies engaged in the administration of the law, and especially not of the courts. Here faulty ideas stil! prevail. To quote a few authorities : "Very widespread is the struggle for these small pensions, which the courts of arbitration with great predilection allow the insured as habituating or accustoming pensions. This yielding to the efforts put forth for the at- tainment of these small pensions is especially adapted to augment covetous- ness and pension mania. It is far from my thoughts to speak against a benevo- lent interpretation of the question of compensation. A benevolent view should and ought to be taken, but only where it is in place, namely, in the case of severe injuries."* "These truly very undesirable side-effects in the law of accident insur- ance would be largely robbed of their evil consequences if the judicial bodies the higher courts of the imperial insurance office and the courts of arbitration would allow themselves to be convinced more than formerly of the widespread extent and of the injurious consequences of this 'physiological' pension mania, and, before wasting their benevolence upon the unworthy, would take proper note in every case, when they come to deliver their opinions, of the state- ments of the doctor in charge. "f "It is indispensible that these [judicial] bodies should also of themselves' realize that the treatment and the restoration of the former working cap- ability of an injured person is the principal thing to be attained, and that all medical efforts in that direction must be most vigorously supported by the ap- propriate officials of the arbitration and the imperial insurance office courts. From my previous experiences, I can say that this has by no means been the case to the proper extent. I must here call attention to this fact, that one can- *Stahl; Westphatian Alliance Report, p. 14. tRieder-Bcnnr ib.. p. 16. 42 not by any means approve when certain arbitration tribunals often change the accident pension determined by the doctors by a few (5 per cent) in favor of the insured. This occurs, unfortunately, only too often and without any good reason. A procedure of this kind only tends to damage the prestige of the treating physicians in the eyes of the insured and to encourage them in their already sufficiently obstreperous conduct towards the doctor in charge. Furthermore, I consider it also as unjustifiable when, as has not seldom hap- pened to me, an arbitration tribunal alters the rates of pensions on the basis of a single examination by its confidential physician, lasting only a few min- utes, which rates we who had a comprehensive knowledge of the case had recommended after weeks and months of treatment, after consultation with several doctors and after the most careful and conscientious weighing of the facts."* "The judicial bodies can and must follow in the same groove. Their duty is to strive for as speedy as possible an ending to litigation, and also to avoid furnishing new fuel to the covetous ideas and litigiousness of the pension seek- ers through inconsequential alterations in the awards of the employers' associa- tions. For the reasons mentioned by several speakers, the arbitral courts must devote especial care to the choice of the revising doctors and to seeing that the physicians intended for such duties possess really greater knowledge than the specialists of the employers' associations in the branch of medicine particu- larly in question. The caution was certainly justified against listening to theorists, who were strangers to the requirements of an active practice. In order to do away with the mercenary demand for pensions, it is especially de- sirable that the judicial authorities should construe the law more strictly and more consistently than heretofore. They must above all things avoid helping to spread the false idea that the object of a pension is to furnish smart-money by allowing pensions for injuries of no consequence from an industrial stand- point. Also, in our opinion, a more critical appreciation of the medical reports is in place concerning the actual relation between an accident and internal dis- orders. It appears to us only too often as though the 'probability reports,' with their supposed state of facts and logical train of thoughts, are not scrutin- ized with; sufficient care by the college of judges. It is as clear as daylight that a statutory construction, which does not require a strict proof in these cases, increases in a dangerous degree the mania, deplored by almost all the speakers, for making alleged occupational accidents responsible for all sorts of internal troubles."! "I consider it very deplorable that the trend of judicial decisions has been to assume the occurrence of an accident in the case of internal diseases, even if all especially unfavorable occupational factors are wanting, such as, for ex- ample, where one suffering from hardening of the arteries receives an apoplec- tic stroke while performing his customary work. This might just as well have happened to him while he was at home engaged in some harmless occupation, or indeed while he was asleep. This leads beyond all question of doubt to an occupational cause being asserted and assumed as proven in the case of those suffering from internal disorders, such as diseased lungs for example, when it [the occupation] has played absolutely no part in originating or in develop- ing the disease."! "The efforts of the insurers and of the doctors to perfect the methods of restorative treatment as far as possible, and especially to put into practical effect the excellent instructions of the imperial insurance office on this sub- ject, have only then a prospect of success if the opposition thereto of certain of the insured can be overcome. In this matter, the imperial insur- ance office could act very beneficially if it would request its courts and the courts of arbitration to dispose of all such matters [where treatment is re- fused] by as fast a procedure as possible. * * * To-day in such cases, re- port after report is demanded, and not the carefully thought out directions of the imperial insurance office, but the individual judgment of the persons who have to decide each particular case are controlling." *Rieder-Bonn; Westphalian Alliance Report, p. 18. tStocker; ib., p. 31. tWeber;- fb., p. 20. Flemmlng; Ib., p. 25. 43 "The presiding officer in Hamburg referred to a crass case, where the pre- tended injured man obtained 2,000 marks by swindling methods and was fined merely 150 marks. One must energetically protest against such decisions. * * * From my own experience, I am obliged to conclude that many judges lack the proper insight into the disastrous effects, from a general public standpoint, of the telling of lies for the attainment of pensions."* From the foregoing statements all made by men high in au- thority and friends of social insurance a good idea can be obtained of the shortcomings of the courts engaged in administering the Ger- man accident insurance statute. In place of a strict, vigorous en- forcement of the law and the rejection of all seriously doubtful claims. we find the judicial officials weakly yielding to and favoring the de- mands of the insured. Uncalled for pensions are allowed where only slight injuries have resulted from accident, and the occurrence of an accident is assumed or inferred from wholly insufficient evidence, where disability is almost certainly due to some internal disease. In their construction the courts evidently feel still bound to adhere to former precedents adopted when a benevolent interpretation was deemed the proper thing. Hence the hesitancy in imposing adequate fines in cases of fraud and simulation, and the readiness to increase the workmen's pension on appeal even though it be but by a paltry 5% Instead of relying on the report of the attending physician for the medical features of a case, the favorite practice seems to be to obtain a multiplicity of reports and to be largely governed, when it comes to making a decision, by the statement of some pet medical adviser. This profusion of documents with accompanying diversity of opinions is doubtless one reason why the courts do not dispose of ap- peals more quickly and why they have fallen so far behind-hand in their calendars. On its judicial side, therefore, the German accident insurance law is not being administered with anything like the requisite promptness or efficiency. Long delays and involved procedure are the rule. The striking fact is the independence of the courts and the lack of team work between them and the higher directing officials of the imperial insurance office. While in Belgium the department in charge of the accident insurance statute enforces uniformity in the interpretation of the law by means of ministerial circulars, the rules of guidance laid down in Germany by the imperial insurance office are frequently nulli- fied by the action of the courts. The two branches often work at cross purposes; and for this the German law itself is responsible. One of the legal advisers of the imperial insurance office explains this as follows : "One question is still to be determined: Can the imperial insurance office bring about a change in the administration of the law by means of a circular addressed to its courts and to the courts of arbitration? I believe this way is closed by the law itself. The imperial insurance office can only exert an influence on the other insurance bodies through its principles being inculcated by means of judicial decisions."! Thus hampered, the imperial insurance office is not in a positiom *Bracht; Westphalian Alliance Report, p. 29. fib. 44 to directly enforce its views on the courts, and, before those views can become controlling, must await the adoption of its opinions by the law- naking branches. Harmful Publicity to Physicians' Reports. Another provision of the German law, which is too indulgently interpreted, is that allowing the insured to know the main feature of the physician's reports concerning their condition. The practice in vogue is described in the following quotations : "Where, under the terms of the law, the right of the insured to obtain copies of medical reports and analogous matters is clearly defined, the judicial proceedings required afford, nevertheless, an opportunity of avoiding unpleas- ant consequences. For in Section 1607, it is distinctly stated that copies are only to be given out in so far as a consideration of the state of the one entitle'd thereto warrants. For example, if an unfavorable prognosis is expressed in the report about the future course of the illness, this can naturally exert a very unfavorable influence on the patient's state of mind. I therefore con- sider it exceedingly dangerous to make known in such cases, either orally or in writing, the contents of the report in such a detailed fashion as is frequently done to-day. In looking through medical reports, which were made out months before, the injured man striving for a pension recalls often ailments and subjective ills, which he had forgotten long ago. In the case of the nerv- ously enfeebled or those weak in character, the continued giving out of medi- cal opinions concerning their ailments works very unfavorably. This occurs at two different stages in the imperial insurance office once before the courts of arbitration and again before the highest court. The mere naming of some ailments can in certain instances prove only too fatal for the family happiness. * * * The judicial officers could simplify their proceedings in this respect and still keep within the letter of the law."* "I desire to refer to a matter which does much to increase the cases of simulation, namely, the provision that the main features of the medical re- ports are to be made known to those injured. Generally it is so observed that they are given, upon their demanding it, a full copy of the report. In such instances I have often observed that injured persons whom I have myself reported upon and treated complained at the next examination about troubles and showed alleged symptoms which were certainly absent before and which, as a matter of fact, were even then non-existent. They had learned about them through the medical reports. Every medical examiner can confirm the same fact a hundred times and a change in this provision appears most essen- tial. This change is also necessary for the reason that it is in the interest of the injured themselves, because they derive from the report a prognosis and information regarding the nature of their ailment which is qualified to cause a severe mental depression. This was certainly not within the intention of the lawmakers."! It is evident from the foregoing that the officials are acting from a mistaken sense of kindness in furnishing with such liberality to the insured copies of the medical reports concerning their condition. A broad construction of the provision in question is out of place, for the result is ordinarily to unfavorably affect the mental state of the honest workman and to put additional weapons for fraudulent practices in the hands of the dishonest. The natural query also arises why the contents of confidential medical reports, submitted to a court for its guidance by its trusted medical adviser as a rule, should be revealed at all. Their *Flemming; Westphallan Alliance Report, p. 26. tBecker; Ib., p. 23. 45 primary object is to inform the court, but, if made public and un- favorable to the claimant's side, the natural desire is to contest them. This leads to new reports and protracted proceedings, while public policy requires above all things a quick and speedy adjustment of work- ingmen's claims for compensation in accident cases. Mistaken Policy of Some Employers. If the charge is justified that the German officials too indulgently interpret the accident insurance law where the workingmen's interests are concerned, the same lenity towards their injured laborers is dis- played by many employers. To use the language of a government rep- resentative : "In the industrial employers' associations in particular those with small or moderate sized establishments the employers themselves transgress by shielding their injured laborers too much. One wishes to be especially kind to one's own fnjured laborer and feels that, if premiums have been paid so long a time, one ought to assist him in obtaining an indemnity and in retain- ing it for as long a time as possible. Indeed, from the reports regarding wages and conditions of employment which the associations are accustomed to call for, one often receives the impression as though the employer was seek- ing to make a profit out of the accident through giving an exaggerated ac- count of the diminution in working powers and thus retaining for himself a low priced workman, that is, one that is paid too little after an accident and not according to his real working capacity."* The shortsightedness of such a policy need not be dwelt upon ; but such practices would be largely obviated if the law were strict- ly construed and actual loss in working capacity made the standard of indemnity in all cases. If unable to conceal the fact, the workman receiving a larger compensation than the state of his injuries warrants profits little in the end, for his employer merely reduces the amount of his daily wages accordingly. The same phenomenon is to be ob- served in Holland, where indemnities are graded according to anatom- ical defects and not purely and simply according to loss in earning power. Injudicious Method in Police Investigations. When a workman meets with a mishap during the course of his employment and is incapacitated wholly or partly for more than three days, the fact must be reported to the local police, who thereupon con- duct an inquiry into the cause of the accident. A criticism of the police method of conducting this inquiry is contained in the following re- marks of a manager of a large German brewery : "Attention should also be called to a matter, which should not be ignored in the list of factors helping to spread the pension mania. That is the method followed by the lower police organizations in the case of accident investiga- tion. Only read through the reports. Even if the simplest kinds of bodily hurts are in question, which, according to well-known experience, result in no appreciable diminution in working capacity at the end of the waiting period, again and again is the injured man asked at the close of his examination, 'Do you claim an indemnity?' As a matter of course, this question is always an- swered in the affirmative. If these demands for compensation are often made when there is absolutely no ground for them so that they possess no material *K6nen; Westphalian Alliance Report, p. 24. 46 disadvantages for the associations, nevertheless this declaration of the injured person is the moving cause for disputes to arise, the warding off of which is to be regarded as a very unpleasant phase of our social work. The fulfilment of the duty imposed on us by law to look out that the injured workman re- acquires the highest possible percentage of his former working capacity is made appreciably more difficult and often all but impossible through his obstreperous attitude, dating from that time [of examination], and assumed towards our measures directed to the preservation and restoration of his work- ing capacity. The root of the evil is the inquiry of the police whether an indemnity is demanded. For without doubt, the thought of an indemnity would never have arisen in the case of the majority of those injured in accidents if it had not been aroused by the question of the examining police official."* Thus at the very start of German accident procedure, the attention of the victim is directed to the possibility of obtaining a money in- demnity. Irrespective of the degree of injury, the same question is always asked whether compensation is expected. No wonder, there- fore, at the insured laboring under the delusion that smart-monjey goes with every accident no matter how trivial and paying more at- tention to obtaining compensation than to the all important matter of getting well. Great evils can often be traced to small causes and this is true of the question as to indemnity required to be answered in the German police reports. Even the minutest details must be looked out for, therefore, in the operation of a workingmen's compensation law, if abuses would be avoided. Conclusion. In the foregoing, a brief sketch has been attempted of the mistakes made in the drafting of the German accident insurance law and in its administration and interpretation. The reforms called for to do away with these evils have also been described and it will hardly be neces- sary to enumerate them again. Perhaps the most important are the abolishment of the handling of accident cases by the sickness societies and the abrogation of the workmen's right to appeal free of cost. It is to be hoped that all the reforms proposed will sooner or later come into effect, but thus far little headway has been made towards their intro- duction. As like causes generally produce like effects, German experi- ence in the compulsory insurance of workingmen's accidents should be carefully borne in mind by all investigators of social insurance so that the errors committed will not be repeated when it comes to the enact- ment of new legislation along similar lines. In conclusion, we cannot do better than to quote the thoughtful criticism of a leading Berlin professor on the German system : "The desire to derive a profit from an accident is so human that a promi- nent physician has designated such 'enrichment ideas' as 'entirely normal oc- currences even in the case of the best of our people.' " "The real danger lies herein, however, that one threw open a wide field to this human weakness when one compulsorily introduced the system of pen- sion insurance and when one partly out of ignorance and partly from a wish to win the masses neglected necessary safeguards and gave a cast to gov- ernment pension insurance which is just provocative of abuses."! *Mauritz; Westphalian Alliance Report, p. 30. fBernhard; p. 47. 47 BIBLIOGRAPHY OF PRINCIPAL AUTHORITIES. Amtliche Nachrichten des Reichsversicherungsamts. 1885-1913. Jahresberichte der gewerblichen Berufsgenossenschaften tiber Unfallver- . 1907-1911. Berlin, Behrend & Co. Das Reichsversicherungsamt und die Deutsche Arbeiterversicherung. Berlin, Behrend & Co. 1910. Kommentar zur Reichsversicherungsordnung. Berlin. Carl Heymann. 1912, 25 Jahre Unfallverhutung. Berlin. A. Seydel. 1910. Die Landwirtschaftliche Versicherung im Deutschen Reiche. 1888-1908. Berlin, Behrend & Co. 1911. Unerwunschte Folgen der deutschen Sozialpolitik von Prof. Ludwig Bern- liard. Berlin. Julius Springer. 1913. Ueber den Einfluss von Rechtsanspruchen bei Neurosen von Prof. Otto Naegeli. Leipzig. Veit & Co. 1913. Bericht ueber die Versammlung der Westfalischen Vereinigung berufsge- ossenschaftlicher Verwaltungen. Dortmund. W. Truwell. 1913. * '*. not "S / c XJ / / UNIVERSITY OF CALIFORNIA LIBRARY