HARDWOOD RECORD 



27 



method of adjustment should be simple, direct and expeditious. 

 In this connection the New Jersey plan is, in the opinion of careful 

 students, the most feasible. There can he little trouble in adjusting 

 claims where the law is definite. Expense and time will be saved 

 by permitting employer and employe to settle direct with each other. 

 If this can not be accomplished, a simple method of arbitration 

 should be the method resortt'' 'o.- 



Coming to the question of the solvency of the employer, and in 

 this connection the question of insurance, we approach a phase of 

 the problem laden with much controversy. 



As has been stated, workmen's compensation laws are in their 

 ultimate analysis insurance acts running in favor of the employe, 

 the charge to be borne by the industry. In the very nature of 

 things, a most important consideration on behalf of the workman, 

 as well as for society in general, is this: How can this charge 

 be best guaranteed? It is contended by many that the funds con- 

 tributed by the industry should be managed byi the state. On this 

 theory the so-called state insurance plan is builded. I want to 

 pay my respects to this phase of the whole question, and in doing 

 so will call attention to the Washington act, for in that state the 

 principle of this so-called state insurance plan has been adopted. 



Before taking up a discussion of state insurance, let as first give 

 attention to the idea back of all the controversy. 



The compensation act fixes the amount to be allowed for a given 

 injury. How can it be made certain that the employe will get the 

 money? All the laborer or his dependents are interested in is that 

 the award will be paid, and paid without delay. The employer is 

 concerned with the amount to be paid and the cost incitient to 

 underwriting the risk, if he desires to carry insurance. Now, if 

 we were to talk for hours, could more be said? The employe, on the 

 one hand, wants to know that he wiU get his money and does not 

 desire a bureaucratic lot of red tape to intervene in the getting 

 of it. The employer, on the other hand, is anxious to deal with 

 his men direct and not through the medium of an utterly useless 

 and very mischievous political machine. 



Generally, employers and employes are in favor pf replacing the 

 . unjust, wasteful and unsatisfactory employers ' liability system with 

 a compensation plan. Probably no compensation act wUl be entirely 

 effective unless compulsory and exclusive. But whether compensa- 

 tion be optional or compulsory, it is paramount that there should 

 be no further invasion of private relations and individual rights 

 than is necessary to accomplish the desired result. The injured 

 employe should be protected against the insolvency of his employer. 

 To that end employers in occupations embraced by the law, having 

 less than a certain surplus or financial ratijg as a going concern, 

 should, as a condition precedent to engaging in such an occupation, 

 be required to carry casualty insurance either in a properly organ- 

 ized interinsurance organization or in a state regulated company. 

 No employer financially strong enough to discharge his per- 

 sonal obligations should be required to pay premiums to a state 

 or private insurance organization. Why should the state undertake 

 this service when it can be done so much more effectively through 

 the medium of private channels? The business of insurance is in 

 its very essence highly scientific; why take this business out of the 

 hands of experienced, financially sound and thoroughly organized 

 concerns and turn it over to the uncertain fortunes of a political 

 machine? Mark you, we are not dealing with premium rates or 

 any other phase of the insurance question in which the public is 

 interested. The only way in which the body politic is at all con- 

 cerned in this subject matter is that the employe gets paid his 

 reward. This can be accomplished with absolute certainty through 

 the medium of properly organized interinsurance concerns, liceuted 

 casualty companies, or mutual organizations — all under state super- . 

 vision and inspection. The employer should have the widest possible 

 latitude of choice consistent with positively guaranteeing the injured 

 employes and their dependents the benefits which the law provides. 

 By turning collective funds over to the state, what is accomplished 

 of benefit to either party in interest? Positively no benefit, but, 

 on the contrary, a mass of bureaucratic red tape and the creation 

 of a political machine that will always seek to perpetuate itself in 



office at the expense of the industry, and to the great detriment 

 of public welfare. The delicate problems of classifying risks, 

 creating proper reserves, providing scientific inspection, suggesting 

 wise, prudent and adequate safety appliances, are all to be taken 

 out of the hands of skilled experts and turned over to a political 

 organization. The politician, ever on guard for the interest of self 

 or party, realizes that labor is organized and can vote as a unit; 

 business is unorganized and, unfortunately, apathetic on election 

 day. 



As a result of this inevitable situation the law will be adminis- 

 tered in such fashion as to gain favor from the class that can cast 

 the greater vote — and this at the expense of industry, and of 

 course at the ultimate expense of society at large. 



Go with me for a moment and examine the methods suggested by 

 those who advocate this so-caUed state insurance plan. 



As a matter of fact, the scheme proposed is not state insurance 

 at all. This jjhrase is a misnomer. Masquerading as state insur- 

 ance, the plan does not provide for tlie pa3-ment of compensation 

 generally by the state from general revenues, but the state merely 

 accumulates a fund by taxing certain industries which it disburses 

 to employes injured in the taxed industries. Let us take a classical 

 example, the state of Washington act. 



This act provides compulsory compensation. Every employer en- 

 gaged in any occupation classed as hazardous is taxed on the basis 

 of his annual pay roll a percentage fixed for the class to which his 

 occupation is assigned. The premiums obtained from the tax on em- 

 ployers of the various classes are not lumped in a general fund and 

 used in the payment of all claims for compensation arising from all 

 the risks, but the tax paid by the industries in each of the classes 

 is segregated and used in paying claims arising from the industries 

 embraced in that class. If at the end of the year there is a deficiency 

 in any fund the employers contributing to that fund are to be called 

 upon to make the deficiency good. 



It is to be noted that the law creates a mutual liability. The 

 employer who uses the highest degree of care in guarding against 

 accidents is forced to stand for the losses of poorly equipped plants 

 and reckless management. Each industry of a particular group must 

 pay the same rate, and this without regard to the hazard of the 

 several plants. No opportunity is offered to induce the employer to 

 reduce the rate of insurance by improving his plant and adding 

 provisions for the safety of his employes. The inevitable effect of 

 such a law will be to discourage the adoption of safeguards and so 

 actually increase the risks under which the employe must work. As 

 I recall it, there are forty-seven groups or classifications of industries. 

 This means forty-seven involuntary state mutual insurance organiza- 

 tions managed by state oflScials far removed from the operating 

 plants. In the event of injury the employe submits his claim to the 

 political adjuster having charge of that particular group. The end- 

 less red tape of bureaucracy is set in motion and after weeks of delay 

 the matter may or may not result in adjustment. 



The Washington law is now pending in the Supreme Court of the 

 United States. The matter went to the Supreme Court growing out 

 of an accident in a powder mill in the state of Washington. There 

 were five mills in the classified group. These mills were mutually 

 obligated to each other as against accidents: In all there were 196 

 employes in all the mOls combined. Of this number the Dupont mills 

 had 160. The Dupont mills- were well equipped and carefully man- 

 aged. No minors were employed in the dangerous phases of the work. 

 In the mill where the accident occurred minors were employed and 

 the plant was not properly equipped with safety devices. An acci- 

 dent occurred and several children were killed. The amount due 

 under the act was $8,259.35, of which amount the Dupont plants were 

 obligated to pay, under the law, $7,598.50, or 82 per cent of the total. 

 In the hands of the political treasurer of this insurance group there 

 was exactly $463.27 with which to pay this loss. Under the law the 

 Dupont plants were assessed to make up the deficiency. Hence the 

 test of the law in the courts. In the meantime the unfortunate 

 parents of the dead children wait empty handed. 



The above is a classical example of the folly of this law. 



If the powder plants operating in Washington had been under a 



