Chapter VIII: Section 1: , as to what extent that applies to farm workers. Supposing (4)

The second reason is ignorance as to the cost. The additional cost when benefits are paid to the disabled as long as disability continues is extremely small. Relatively few persons who have been totally and permanently disabled are living after five years, but the need is greater than ever for those who are. In point of fact, it will add very little to the total cost to give the benefit throughout their disability. You may argue, on the other side, that because there are a few of them, we can as well cut them off; but a scheme that starts out to cure this evil--this economic flaw in our business system, and that, notwithstanding, turns loose a permanently disabled man after five years because he happens to be so unfortunate as still to live--is fundamentally shortsighted and should not be tolerated. I, therefore, earnestly urge those Commissions which have not yet prepared their bills, to make the benefit payable during the entire period of disability.

MR. MCCARTHY (Wisconsin): On certain minor injuries, would you say that was true?

MR. DAWSON: Not so true. My impression about minor injuries is that a careful study of the Austrian practice will be of great value. These benefits are not paid as an annuity at all unless the person is injured at least to the extent of 20 per cent. of his earning power. Smaller impairments are compensated by lump sums.

Again, in the matter of widows and orphans there is a whole lot of feeling that you must cut them off at the end of three or four or five years. There is no occasion for that, and every reason why it should not be done. The additional cost of paying during widowhood and minority is not heavy; and you should again, in my judgment, take into account that you are expecting this business to be insured and should encourage its being insured, and encourage the employer to run the risk himself. Of course, in a very large plant, it is quite possible for an employer to insure himself, because he can have an average experience to judge from, but I am not referring to the exceptional case.

JAMES A. LOWELL (Massachusetts): The practical difficulty which strikes me is this: In Massachusetts, and everywhere else, for that matter, we have a financial situation to face. I would say, and every man here would say, that it would be much better to have a pension for a person who needs to be pensioned; but we are brought up at once in the very beginning, and this thing comes right up and hits us in the face: How much is it going to cost? It is very well to say, as Mr. Dawson has said, that it won't cost much. Perhaps it won't, but the question is how much. It may be just the turning point in Massachusetts as to whether we can do it as a practical financial measure--to have a lump sum or a pension. I, personally, should be very much in favor of a pension. But there must be some way of ascertaining how much this pension is going to be. It appeals to me that as a practical measure in the beginning of this thing, that although we should like to be able to say to the man who is injured for life: "We will give you so much a month for the rest of your life"; that we cannot do it right off, because we do not know whether he will live five years or whether he will live twenty-five years. The difference between the amount which you will pay if he lives twenty-five and the amount you will pay if he lives five years may be just the difference between a possible scheme and an impossible scheme.

The employer's trouble about this thing is the uncertainty. The amount of it is not so great an objection. It is not that the employer would say, "Well, if I have to pay $5000 for such-and-such a case I cannot do it. I can pay $2000, but I cannot pay $5000." The trouble is he does not know whether he is to pay $2000 or $15,000. That is the difficulty. It strikes me in starting your system here you have got to find something that is certain. If there is to be a pension you have got to put a limit of time on it so that it may be definite.

If we were to pass a law for Massachusetts to-morrow, and contained in that law were those various pensions, we should not know anywhere near how we were coming out; and, I understand, and I will stand corrected on this if I am wrong, that they have not figured those accurately in either Germany or Austria or in England. The amount of the pensions which had to be paid was much greater than was calculated. If they had known at the start they were to pay this greater amount it would not have made so much difference because they could have arranged it, but they did not know it and, therefore, they are getting a higher amount put upon them than they thought they would, which is very unfortunate for a great many reasons.

MR. DAWSON: There are reliable tables by means of which adequate premiums and reserves for annuities to the disabled and to widows and orphans can be computed.

DR. ALLPORT: I have a copy here of the workmen's compensation act of 1906, the English act, and I think it might not be a bad idea to read you the provision in the English act covering this matter. Of course, the English act started out just as our act must start out if we start out on the basis of compensation. It must be based on a certain proportion of the wage of the individual. When we come to consider the matter of disability, the point that comes up is whether we shall pay a man for a total or permanent disability in a lump sum or whether we shall limit the time in which the payments shall be made. It seems to me as though that is purely an actuarial matter, and that it is something which will adjust itself if any law goes into effect. No employer in England carries his own insurance; it is all carried by some form of insurance, and so the insurance companies will have to work this matter out for themselves, and they are going to be able to do it. The better class of insurance companies have prospered under that class of insurance. The provision in the English law is, briefly, this: It provides for the payment of compensation for disability as long as the disability lasts, and in case of death it provides for payment to the children until they reach a workable age, and for the widow until she marries again. Then there is this provision:

"Where any weekly payment has been continued for not less than six months, the liability therefor may, on application by or on behalf of the employer, be redeemed by the payment of a lump sum of such an amount as, where the incapacity is permanent, would, if invested in the purchase of an immediate life annuity from the National Debt Commissioners through the post-office savings bank, purchase an annuity for the workman equal to 75 per cent. of the annual value of the weekly payment, and as in any other case may be settled by arbitration under this act, and such lump sum may be ordered by the committee or arbitrator or judge of the county court to be invested or otherwise applied for the benefit of the person entitled thereto."

These cases are put into the hands of the court and paid by the court and not by the attorneys, and it is left optional as to whether he will take a lump sum or an annuity.

DR. MCCARTHY: Some of the county judges over there with whom I talked told me that they were doing everything possible to keep the lump sums from being paid, because they believe that is a bad practice. There is no agitation over there that I could find in either Germany or England for limiting the time that a man should receive compensation. They understand over there that it has got to fall upon somebody in the end, and you must remember that in Germany and in England, to a large extent, this is done to keep away from the necessity of caring for the poor, and all that sort of thing. You go to any insurance company over there and say, "I have so many people working in my factory under such conditions; what are your rates?" and they will give you the rates and take care of an injured man for the rest of his life.

CHAIRMAN MERCER: It has seemed to me sometimes that it might be a good plan to provide for a lump sum settlement, subject to the approval of a court, in case a firm wanted to go out of business, or something of that kind. A corporation might want to dissolve, or the time of its charter might expire, and in that case what is it going to do?

MR. DAWSON: It would go to an insurance company and purchase an annuity to cover it.

CHAIRMAN MERCER: Suppose it is a big company that had been carrying its own risks?

DR. MCCARTHY: That is an actuarial matter. If it is a mutual company in Germany, there has to be a reserve kept by those companies to provide for the possibility of their going out of business.

CHAIRMAN MERCER: It seems to me we might now go to the question of whether we will administer our compensation law through the courts or through boards of arbitration. In New York I notice that they recommend staying under the courts in their present bill.

PROF. SEAGER: The characteristics of the two bills that have passed in New York were explained yesterday, and I will try to avoid repeating what was said at that time. When it comes to the details of the plan that the New York Commission recommended, and which the Legislature has adopted, the reasons why we did this rather than that are almost trivial, because they were always practical reasons of expediency. We have a Commission of fourteen members, and eight of them were members of the Legislature; one of them was a farmer; several of them were lawyers, and two of them were employers, so they represented in a very broad way the different interests of the State. It would have been quite impossible to get that Commission to agree on a plan that would include the farmers. It was difficult to get the employers to agree on our plan.

Taking up the details, however, we were very much impressed by the aspect of the case that Mr. Lowell spoke of a few minutes ago; that is, the uncertainty as to what it would cost and the opposition that developed against the measure because of that uncertainty. For that reason we felt that we ought to make the probable cost as definite as we could, and that meant requiring lump sum payments rather than continuous payments, limiting the period during which the continuous payments should be made in case of disability, and in other points making the measure precise and definite, when, from the point of view of the social interests of the community, it ought to be more vague and indefinite, that it might be adapted to the requirements of each special case. It was on those grounds of expediency, remembering all the time that this was the first step, that if the Legislature of New York passed these bills it would be the first State in this country to go in for any kind of workmen's compensation, and that every country which has adopted this policy has found it necessary to amend and modify as the result of experience, that the schedule which we finally agreed upon took the form that it did; that is, limiting the compensation in case of disability to not more than $10 a week, and to continue in case of a permanent disability for not more than eight years. In death cases not more in the aggregate than four years' wages, and not to exceed in any case $3000. That schedule has the advantage of being definite and of being one which enables the insurance actuary without much difficulty to name a rate, and, needless to say, we got such rates from the insurance company's representatives before we finally decided on that schedule.

As to the administrative features of our bills, our difficulty was to devise a plan which would do away with litigation and at the same time be constitutional. We all of us recognized the merits of some scheme of arbitration as preferable to court procedure, and yet the more we looked into it, and the more we studied the complexities of our system in New York, the more we were impressed with the necessity of creating an entirely new system of jurisprudence, if we were going to have in that State a scheme of arbitration comparable to the English scheme of arbitration. For that reason we left that to future amendment of the bill, and left the judicial procedure very much as it is under the employers' liability law, believing that under a law requiring definite compensation, both employer and employe, for their own interests, would keep away from litigation, and would enter into voluntary arrangements for arbitration that would not require a resort to the courts. Resort to the courts may be taken by either side under these bills as before, but it is our confident belief that it will not be taken, and that this plan will very greatly reduce the litigation, and at the same time greatly increase the number of reasons these bills took the form which they have taken.

MR. HARPER (Illinois): Do you provide that in case any question arises under the compensation plan, suit may be brought and the merits tried in an action at law?

PROF. SEAGER: Yes.

MR. HARPER: And you also provide, I believe, that no jury trial shall be permitted?

PROF. SEAGER: No; such a provision was in the original bill, but was stricken out of the act. I am sorry that I am not a lawyer, and, therefore, cannot explain the point definitely, but the other provision was simply to make it possible to bring suit and recover a lump sum in case there was any default in the periodic payments required in cases of disability. That is, in case of default in the payments under this provision the employe or the dependent entitled to payment can immediately bring suit and collect a lump sum in damages.

SENATOR SANBORN (Wisconsin): We have appreciated in Wisconsin all these troubles and oppositions you have been discussing here, and have been trying to find some way that we can put a law into operation in Wisconsin so that we can have some basis for improvement hereafter, realizing at the outset we were going to meet the opposition of the manufacturers if they did not know exactly what it would cost. If we were going to get their hearty support the rates would have to be so low that they would know it was not going to cost them any more than at the present time. On the other hand, we realized that the laboring man does not want to give up anything he has got, but wants more. That he is entitled to more than he is receiving under the law everybody, I think, will concede. The question was, how were we going to accomplish that and get for the laboring man all that he would get under the law.

We realized that practically 60 per cent. of every dollar that was paid out by the employers for industrial accidents under the present system was wasted and did not go to the laboring man, and if we could bring about a system which would prevent anywhere near that great amount of waste, and turn that money over to the laboring man who was injured, we felt that we would be taking one great step in advance, and we are trying now to get a system by which that can be done. In fact, we want to do away entirely with court proceedings, if possible.

The first step we propose to take in this regard is to change the law generally in our State, so that the manufacturer will feel that he must have relief. In order to reach that result we are going to make them all liable for the negligence of the fellow-servants and strike out the assumption of risk. We have practically agreed on that, and that leaves the only defense remaining for the employer, that of contributory negligence. That will reach a great many cases, and leave it so that the manufacturer will feel that he must have some relief.

Our whole plan is optional. No employer and no employe is obliged to come under it, but if a manufacturer or an employer of labor wants to come under it, all he has to do is to file a declaration with the commissioner of labor, and he is under it. He is not under it definitely, because he can get out at the end of any year by serving notice sixty days in advance of his desire so to do.

Then, as far as the laborer is concerned, the plan is that as a part of his contract of employment he waives his right to anything else except the compensation, and this law will fix his compensation. Then we follow that up by arbitration to settle all the disputes that may arise. The only question that can arise for the court to pass on is whether the arbitrators have exceeded their jurisdiction under the law, but all questions of fact are to be settled by the Board of Arbitration. If we had some criterion to follow, something that we could point to definitely as to just what would be the result to the employer and the laboring man, we would feel differently. But we feel that we can put this system into operation, and we feel further that the manufacturers and the laboring men in their present spirit will operate under it until we can arrive at something definite. We are endeavoring to make our schedule just as large as it can be made. Our schedule is indefinite and will undoubtedly be increased over what it is in the bill. In other words, we propose to do just as the railroads have always done, to put onto the traffic for the benefit of the laboring man every dollar it will bear, and get that money to the man who is injured with as little expense as is possible. That is what we are aiming to do, and we know of no other way to do it except by putting it under a voluntary system, so as to get away from the constitutional conditions that you meet everywhere. Under a compulsory system you cannot do that, but under an elective system you can.

As to the expediency, we feel that our people will try it, and if it does not work it will not take any act of the Legislature to annul it. We can accomplish some results, and the time will come when we can have some figures perhaps to give conferences like this in their effort to ascertain what is best as the policy to be followed. We started out first with an insurance scheme connected with it, but we abandoned that and made up our minds to make it just as simple as we could, and to let the employer of labor have the widest possible scope to protect himself. If he does it through mutual insurance companies, well and good; if he does it through the other insurance companies, well and good; the idea being to hamper him as little as possible in that respect. All we want is to make it absolutely sure that when a man is injured he will receive his pay. That has been one of the troublesome questions; we have tried to make a provision, which is still tentative, by which the employe's claim shall be an absolute lien upon all the property of the employer.

PROF. SEAGER: We have not previously provided for the expenses of this Conference or for the expenses of the next Conference we may hold. With that thought in view, I would like to move that the members of the Commissions and committees represented at this Conference be requested to use their best efforts to secure an appropriation from the funds of such Commissions and committees of $50 from each Commission and committee toward the expenses of our Conference.

CHAIRMAN MERCER: Without any formal motion that will be taken as the sense of the meeting.

MR. DAWSON: I move that when we adjourn, we adjourn to meet in St. Louis, and that the time be fixed between Christmas and New Year. The reason I make this suggestion is that there are to be other meetings at that time in St. Louis--the American Economic Association and the American Association for Labor Legislation, and also because by that time all the bills of these various Commissions will be ready, and we can have a final interchange of views before they go to their various Legislatures. I will add to that motion also that the Executive Committee be given power to change the date and place of the meeting if they deem it advisable.

(The motion being seconded was adopted by a _vivâ voce_ vote.)

DR. ALLPORT: It appears in the matter of making provisions of the kind we have been discussing that their constitutionality would depend on two aspects: First, that we take the view as suggested by Mr. Mercer, that it lies within the police power of the State to regulate this matter and so constitute all these employments as dangerous employments, or whether we shall put into the law something which looks like a joker. The particular point I have reference to is this: The specifications in Sections 1, 2, 3 and 4 of the Wisconsin tentative bill relative to waiver of the matters we have been discussing; that is, assumed risk and contributory negligence, fellow-servants, etc. The second bill recommended makes this provision: "The provisions of this act shall apply to any person, firm or corporation transacting business in this State who shall have elected to accept and operate under such provisions."

That implies an election to accept the provisions of the act. In