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REPORT ON K WORKMEN'S COMPENSATION FOR INJURIES By JAMES MAYOR Professor ofPoUtical Economy and Constitutional History in the University of Toronto PRINTED BY ORDER OF THE LEGISLATIVE ASSEMBLY OF ONTARIO TOJtONTO WARWICK BRO'S 4c RUTTER, PRINTERS. 1900 i^ ■ Ji The Hon. SiR,- which th( , I ha ance was , Hen HeiT Ka) thur; Hi Lord Go\ H. Angst the Hom( much effi I an in transli i '^' \ I ;' > 1 I V i I .e." vv 13443 * (lij ■'• V u '■.'. ■■r"\ The Hon. G. W. Ross, ■ • Premier of Ontario. University of Tobonto, 21st March, 1900. Sir, — I beg to submit herewith. Report upon Workmen's Compensation, which the Provincial Government did me the honor to ask me to prepare. - I have to acknowledge the kindness of the following gentlemen whose assist- ance was indispensable in procuring the necessary information. , ; I Herr Pfarrius and Dr. Zacher of the Imperial Insurance Department, Berlin; Herr Kaan of the Imperial Insurance Department, Vienna ; Herr Forrer, Winter- thur; His Excellency, Sir Charles Scott, H.B.M. Ambassador at St. Petersburg ; Lord Gough and the Hon. Richard Acton of H.B.M Embassy at Berlin, and Prof. H. Angst, H.B.M. Consul-General, Zurich. I have also to thank the o£Scials of the Home OflBce, the Insurance Companies and the Trades Unions who rendered me much effective assistance. ,. I am indebted to Mr. D. R. Keys, M.A., University College, Toronto, for help in translation. . Yours respectfully, ;. JAMES MAVOR. ,/ / f 3] w ;,;--''^:-;;-' _ CONTENTS I I <1) Relation between the Employers' Liability Act, 1880, and the Work- men's Compensation Act, 1897 — Great Britain - - ~ . <2) Synopsis of the Workmen's Compensation Act, 1897 - <3) The working of the Act of 1897 - do Analysis of leading cases brought under the Act <4) Criticisms of the Act from the Employers' point of view - <5) Insurance against Employers' Risks under the Workmen's Compens- ation Act -------... (6) Criticisms of the Act from the Workmen's point of view •(7) Notes on these Criticisms - (8) Bibliography of Workmen's Compensation for Injuries, Great Britain (9) Accident Insurance in Germany ---.... <10) do in France (11) do in Switzerland ^12) do in Austria-Hungary <13) do in Italy (14) do in Russia (15) General conclusions (16) Applicability of the principles of the Act to industrial conditions in Ontario -------..... w 5 9 13 16 21 22 24 26 27 29 35 36 38 39 40 42 45 im'" (1) Relat] Under accidents o accidents ii accidents o servants. Thisd have been tended to S does not a,] So lor at Commoi mon emplc workman ^ curred in t on the par have been representai the workii be inadequ everyone t of such ac was to n through th tion i'or en In all ployers' lii passed yea " all in its " session b; " workmer " the disch " ployors ( " employer (1) Alth gence !■> hk seventy year 1., p. 33. (2) See Emery, " A Webb, "Thi (3) Web (4) Cf. I 7063. iii A, vol. 1. p. 36 ' (5) Weh - (6) Sev€ -iv.;,,,;x. WORKMEN'S COMPENSATION FOR INJURIES (1) Relation between the Employers' Liability Aci", 1880, and the Work- men's Compensation Act, 1897, Great Britain. Under the Common Law of England an employer of labour was liable for accidents occurring through his own negligence or that of his servants when such accidents inflicted injury upon third parties ; W but was held not to be liable for accidents occurring to his own servants through the negligence of their fellow- servants. This doctrine that " common employment " was a good defence appears to have been recognized first in 1837.(2) It was not until 1868 that it was ex- tended to Scotland. (3) The doctrine has also developed in American law. It does not appear in legal practice in France nor in Germany. W So long as the doctrme was held in its rigour, the liability of the employer at Common Law was almost insusceptible of proof, because the defence of " com- mon employment " was almost always sufficient to nonsuit the plaintiff. The workman was thus in a less favorable position as regards accident**^ injury in- curred in the course of his employment than any third party. The first attempts on the part of organized labour to make employers liable for accidents appear ta have been made in 1858 by Alexander Macdonald, the well-known coal miners' representative.(5) At that time there were no adequate statutory regulations for the working of mines, the Mine? and Collieries Act of 1842 having been found to- be inadequate. A series of colliery disasters in the early sixties brought home to everyone the need for attempting by means of legislation to diminish the number of such accidents, and among the legislative expedients suggested by Macdonald was to make employers pecuniarily liable in case of accident occurring through their own negligence. This was the beginning of the trade union agita- tion i'or employers' liability. In all of the Trades Union Congresses after 1872 the question of em- ployers' liability assumed a prominent place, and the following resolution was passed year after year : — " That this Congress expresses its determination to da " all in its power to get a measure passed through Parliament during the coming " session by which employers shall be made liable to pay compensation to their " workmen for loss sustained by such workmen caused by accident occurring in " the discharge of their duties through the negligence of those for whom the em- " ploy»>r8 ought to be responsible, and that when such accidents are fatal, the " employer shall compensate the families of the workmen killed." <6) Those who (1) Although a master was liable at common law for injury done through his own negli- gence ': ~« his servant, no attempt seems to have been made to make this apply until about seventy years ago. Cf. Beatrice & Sydney Webb, "Industrial Democracy," London 1897, voU 1., p. 33. (2) See Priestley v. Fowler, 3 Meeson & Welsby, 1. R. Minton-Senhouse and G. F. Emery, " Accidents to Workmen ," London, 1898, p. 2. Also Beatrice & Sydney Webb, " The History of Trade Unionism," London 1894, p. 350. (3) Webb, id. (4) Cf. Sir Frederick Pollock, Memorandum in Report of Royal Commission on Labour, C. 7063. iii A, 1894, p. 346 to 348 ; ind Beatrice & Sydney Webb, " Industrial Democracy," vol. 1, p. 366. (5) Webb, " Industrial Democracy," vol. I, p. 367-868. (6) Seventh and Eighth Annual Reports, Trades Union Congress, 1875, etc. [5] \ I ^HE REPORT ON [No. 48 moved the resolution in the Trades Union Congress, consistently declared that compensation could not be demanded excepting when negligence had been proved, the trade societies being regarded as able out of their benefit funds to meet losses sustained by accidents from other, causes. Between 1872 and 1879 eight Employers' Liability Bills were introduced into the House of Commons, (i) The ground upon which all of these Bills were urged was that the workman, ow- ing to the doctrine of " common employment " was placed in a more disadvan- tageous position as regards his employer than was an outsider. The notion that in dangerous employments relatively high wages represented a payment for the extra risk was implicitly rejected by the trade unions.(2) The principal object aimed at was the prevention of accidents. The trade unions entertained the view that employers could be touched only through their pockets and that the sole means of preventing accidents was to make them ex- pensive. These views ultimately prevailed ; and in 1880 the Employers' Liability Act (43 and 44 Vic, Chap. 42) was passed. The Act of 1880 was an experiment. It modified the doctrine of common «mployment(3); but it retained the principle of liability being attached to negligence if a workman is injured by (a) a defect in the machinery, which was caused or remained undiscovered through the negligence of the employer or his agents ; or (b) by the negligence of the superintendent of the work ; or (c) by the negligence of the person to whose orders the workmen had to conform ; or (d) by an act or omission of any person done under any improper by-law of the employer ; or (e) by the negligence of the person having control ever any signals, etc., as in the <5ase of a railway. Negligence must be proved. Notice must be given within six weeks by the servant.(4) The Act of 1880 had not been long in operation before it was seen that the objects aimed at had only partially been achieved. The imposition of pecuniary liability was not shewn conclusively to result in the diminution of the number of accidents, and it was also found that employers, by means of establishing benefit funds for their workmen, contrived to escape liability by " contracting out." This practice of " contractini^ out " completely neutralized, from the trade union point of view, the advantages of the Act, the primary object being not to secure com- pensation but to prevent accidents, and in order to do so to punish negligent employers. From the trade union point of view, " contracting out " was thus a pernicious principle, and " Macdonald's idea of protecting the workmen's life by making accidents costly was in fact thereby entirely defeated." C*) Again resolutions began to appear in the Trades Union Congresses. At the Congress of 1881, a law months after the Act came into operation, a resolution was passed declaring that " the working class was deprived of the advantages accruing from the Employers' Liability Act, by reason of its permissive nature, which enables employers tfj contract themselves out of the Act." (2) This, or a similar resolution, appeared for twelve years at successive Trades Union Congresses. The evidence before the Labour Commission O on the experience of the working of the Act of 1880 showed that it had not been effective in securing the objects which were aimed at. The legal expenses were great and the cases were - (1) Webb, •' Industrial Democracy," vol. 1, p. 370. (2) Cf. infra p. 44. (2) For a good account of the Act of 1880, see ipr example R. M. Minton-Senhouse and .6 F. Emery, op. cit., also A. Pearce Higgins " Employers' Liability . . . ," Edinburgh, 1898. (S; Webb " Industrial Democracy," vol. 1, p. .S72. (4) 14th Annual Report Trades Union Congress, Lotidon 1881, Manchester 1881. p. 15. (6) See the Report of the Royal Commission on Labour. App. clviii. and clix. 1894. «. 7063 III. A., pp. 346-348 and 363-384 ; also Report of Commission sitting as a whole. Queries 7178-7187. The whole subject had been previously referred to several Select Committees of the Houce of Commons. See Bibliography infra. 19001 WORKMEN'S COMPENSATION FOR INJURIES. fought out bitterly by the Insurance companies who defended the actions W In 1893 Mr. Gladstone's government capitulated to the trade union demands, and a bill was brought in by Mr. Asquith, v» which modified the permission to " contract out " ho far as to prevent any " contracting out " unless it were agreed to by two-thirds of the workmen, and unless the method of compensation pro- vided were approved of by the Board of Trade. The workmen were to be per- mitted to vote by secret ballot in a prescribed way. This measure was amended to so great an extent in the House of Lords that it was not proceeded with. After this defeat the subject came up periodically at the Trades Union Congrepses, and was otherwise discussed from various points of view by labour represe/ - actives and others. Meanwhile legislation for the regulation of mineij, chemi< tl works and factories of various kinds, as well as legislation intended to prevent accidents upon railways, together with an increased number of inspectors and an increased efficiency of inspection due largely to the employment of proiCtical men and women as inspectors, had to a large extent achieved what employers' liability pure and simple seemed powerless to accomplish, namely, the diminution of the number of accidents (^) in proportion to the number of persons employed. The diminution of accidents in proportion to the number of persons employed during the past twenty-five years is so impressive as to leave no doubt as to the practical benefits of the Factory Acts. It may therefore be the case that the abolition of " contracting out " which was insisted upon by the Trade Unions so strenuously is not a matter of so much importance as it appeared to them to be. " Contracting out " is indeed simply :? form of insurance ; and to prevent employers from insuring might well be re- garded as unnecessarily oppressive. Still the rationale of the Trade Union posi- tion is that accidents ought to be made expensive to the employer in order to compel him to take means to prevent their occurrence. It does not appear, how- ever, that those industries in which " contracting out " has prevailed are more sub- ject to accidents than others where the practice does not prevail. (*) The Trade Union positii i has been directed rather towards the fixation of employers' liability and t o ' ovention of accidents by that means than towards compensa- tion for injurii jlting from accidents however they might be caused. Indeed the Trade Ui ought through their benefit funds to meet the requirement of compensation wii at legislation, and a perusal of • the statistics of the Trade Unions during the past twenty years will show that considerable sums have been paid by them on this account.(5) Mr. Joseph Chamberlain had for some time caused his name to be identified with a pension scheme somewhat similar to the invalidity and old age insurance law of Germany, and finding the difficulties of establishing such a scheme in England to be at the time too great, it was natural that in his desire to imple- ment his promises in connection with labour legislation he should attempt a drastic change in the law of liability for accidents. The outcome of this was (1) Mr. Chamberlain, whi> had defended the measure of 1880 on its introduction, spoke of It in 1892 as "a half-hearted compromise." Nineteenth Century, vol. xxxii., p. 694, The defioiences of the Act of 1880 are well set forth by Mr. H. W. Wolff, " Employer's Liability, What ought it to be ? " London, 1897. (2) Employers' Liability. A Bill, etc. [H. of C] 288 of 1893. (3) Accidents occur not merely through the negligence of employers which may ba punished ; but frequently through ignorance which it is difficult to punish. For example, in places where machinery is used to an extent insufficient to justify the employment of an engineer, shafts and other machinery are frequently, through mere ignorance of mechanics, run at a speed which involves inevitable destruction of the machinery with great risk to life and limb. For cases of this sort see J. Calder, [Factory Inspector] "The Prevention of Factory Accidents," London, 1899, p. 76. (4) Compare Webb "Industrial Democracy," Vol. 1, p. 375. (5) See the successive Annual Reports of the Labour Correspondent of the Board of Trade. Ill J = THE REPORT ON [ No. 48 the Workmen's Cotnpen8ati')n Act of 1897; (i) The provisions of the Act are un- doubtedly up to a certain point copied from the German system. The Act falls short of the German system in respect to the absence of compulsory insurance and in respect to the retention of the ordinary legal proceedin(!;s for the enforce- ment of claims excepting in so far as these claims may be enforced through the Arbitration Courts established by the Act. The German system, as will be seen from the description of it below, relieves the injured workman from the necessity of meeting his employer face to face in legal proceedings for the recovery of com- pensation. It has the effect rather of placing him in the position of a claimant upon a fund to which he himself has contributed and over which he himself ex» ercises a certain elective control ; while the managers of the fund are entitled to recover from the employer the amount of compensation which has been granted. The English system under the new Act leaves the injured workman still face to face with his employer as before, with the exception that the workman may in the first instance bring his claim before a board of arbitration instead of before a court of law. In the German system a personal settlement of the employer with the labourer is not recognized ; in the English system such a settlement would stop proceedings. The new Act does not repeal the Employers' Liability Act of 1880, nor does it prevent action being taken, if so advised, under Common Law. While it does not provide for compensation in all cases of accidental injury, it increases greatly the number of cases in which the employer is rendered liable for such injury. The principal changes in the law have been in the shifting of the onus of proof from the shoulders of the injured workman to those of the em- ployer, and m rendering unnecessary proof of negligence on the part of the em- ployer. In this respect it goes even further than the demands of the Trade Unions. The new Act also substitutes the phrase '• wilful and serious misconduct " for the less definite " contributory negligence " of the Act of 1 880. It practically insures the workman, provided the employer or his assurer does not become bankrupt and compels the employer to pay the premium (2). Moreover a new {)rinciple is introduced into the law of damage. The death of an employer no onger prevents as it did, action being taken against his estate for injury to an employee. Aug. 1898. July The Workmen's Compensation Act in Parliament. The following dates indicate the progress Bill of 1897. 1897. Commons. of the Workmen's Compensation May 3. May 17. " 18. " 25. " 31 June 1' July 6. " 13 " 15 4. Bill read a first time. Sir Matthew White Ridley. Bill debated. Ditto read a second time. Speeches by Mr. Chamberlain, Mr. Asquith and Sir Richard Webster. Bill in Committee. Fresh clause added. Bill in Committee. Report stage. Report stage completed. Bill read a third time without a division. Lords. (1) Mr. Chamberlain had indicated his intention to deal with the question of Compensation for Accidents in his article on "The Labour Question," Nineteenth Century, (1892) Vol. xxxii., pa«e 677. - . ■ ,^^ ^2) Jainton-Senhouse and Emery op. ci*. p. 92. . . ', „ 19001 WORKMEN'S COMPENSATION FOR INJURIES. U- July 20. Workmen's Compensation Bill read a second time after debate in which Lords Balfour, Wemyss, Londonderry, Dunraven, Kimberley and Salisbury took part. " 26. After sitting of several hours Bill passeu ..nrough Committee. " 29. Bill read a third time by 69 to 6. " 31. Commons' reasons for disagreeing with the Lords' amendments re- ceived. Aug. 3. Lords agreed to Commons' amendments to Lords' amendments. 1898. July 1. Act became operative. (2) Synopsis of the Workmen's Compensation Act 1897. The principal changes in the law which have been brought into effect by the Act of 1897 are these :— (D (1) Instead of the indefinite compensation recoverable at Common Law or under the Employers' Liability Act, compensation is payable upon a definite prin- ciple. The maximum and minimum amounts payable on acccount of death and the maximum proportion of weekly wages payable on account of accidents which only cause injury are fixed. (2) (2) The doctrine of " common employment " is abolished in certain trades, and in this way the liability of employers is increased on account of their now being liable for injury done by accidents for which they were formerly not liable. (3) " Contracting out " of the Act is not permitted excepting in certain specified cases. (4) Should a master die before the injured workman has obtained compensa- tion, the workman may proceed against the administrators of his estate. Trades included under the Act of 1897. The Act of 1897 includes all employees employed in certain places, whether these employees be men, women or children, or whether they be employed at manual or other labour. The places to which the Act applies are as follows : (1) A Railway. (2) A Factory. (3) A Mine. (4) A Quarry. (5) Engineering work. (6) Certain buildings. (1) Includes all railways ; but does not include tramways (Street Railways). (2) Includes only the following places : — Print works, bleaching and dyeing works, earthenware or china works, lucifer match works, percussion cap works, cartridge works, paper staining works, fustian cutting workr., blast furnaces, foundries, copper mills, iron mills, metal and india- rubber works, paper mills, glass works, tobacco factories, printing wo^ks, book- binding works, flax scutch works. Also hat works, rope works, bakehouses, lace warehouses, shipbuil-r ig yards, and pit banks, if steam, water, or other mechanical powei* is used in aid of the manufacturing process carried on there. (1) In preparing this abstract, use has been made of the summary given by A. Pearce His;- gins in " Employers' Liability and Compensation to Workmen on the Continent." Edinburgh 1898, p. 110 et aeq., of Fabian Tract No. 82. " The Workmen's Compensation Act what it means and how to make use of it." London 1899, and of the Act itself. (2) Although the ambiguity of the expi'ession " average weekly earnings " has led to un- certainty and litigation Cf. infra p. 19. 10 THE REPORT ON [^o. 48 Any premises wherein steam, water or other mechanical power is used in aid of the manufacturing process carried on there, for the making, altering, repairing, ornamenting, finishing, or adapting for sale of any article. Any premises wherein steam, water, or other mechanical power is used to move or work any machinery employed in preparing, manufacturing, or finishing cotton, wool, hair, silk, flax, hemp, jute, tow, china^grass, cocoanut fibre, or other like material, or any fabric made thereof. Every laundry worked by steam, water or other mechanical power. Every dock, wharf, quay, and warehouse, and, so far as relates to the process of loading or unloading therefrom or thereto, all machinery and plant used in that piocess. [The accident, however, need not arise from the use of the machinery. But unless machinery is used, the Act does not apply. Thus, when a man was employed in unloading cases of cartridges from a ship by means of a crane, and an explo.sion occurred while he was putting a case into the basket of the crane, the Court of Appeal said his relatives were entitled to compensation, because he was working at a place to which the Act applied, although the accident was not caused by the machinery.] (3) Includes all mines used for working minerals, that is to say, all mines to which the Coal Mines Regulation Act, 1887 (50 and 51 Vict. Ch. 58), or the Metaliferous Mines Regulation Act 1872 (35 and 36 Vict. Ch. 77) apply. (4) A quar/y includes any place not a mine in which person work in getting minerals, provided it is more than twenty feet deep. (5) Engineering work is defined to mean any work of construction or alter- ation or repair of a railway, harbour, dock, canal or sewer, and includes any other work for the construction, alteration or repair for which machinery is driven by steam, water or other mechanical power. (6) As regards buildings, the Act applies only to three classes : — Any build- ing over thirty feet high, which is either (a) being constructed or repaired by means of a scaffolding ; or (b) being demolished, even when scaffolding is not used. The building must be at least actually thirty feet high at the time of the accident, the height being measured from the original level of the ground to the top of the roof A plank tied to a ladder and resting on a window sill has been held not to be scafiblding. (2) Any building on which machinerj' driven by steam, water or other mechanical power is being used for the purpose of construction, repair or demoli- tion of that building ; and (3) Any premises on which machinery worked by steam, water or other mechanical power is temporarily used for the purpose of the construction of a building or any structural work in connection with the building. Trades Which Do Not Come Under the Act. (1) Agriculttual labourers. (2) Seamen and fishermen. (J) Domestic servants. (4) Working operatives. (5) Shop assistants. ((}) Persons engaged in transport service and in tending horses. (7) Sailors in tlie navy and soldiers in the army. Kinds of Accidents Included. 'r If a workman meets with an accident whilst at work, his employer must pay compensation if the workman is prevented from earning full wages for more than the next two weekn. The accident must happen on or near to the employer's place of business. The employer is liable even although the accident may be \i 19001 WORKMEN'S COMPENSATION FOR INJURIES. 11 ¥ \y caused by the negligence of a fellow servant, and even although the workman himself was partly to blame. If, however, an accident occurs entirely from the fault of the workman, compensation is not payable to him for any injury he may have suffered, although it is payable to any of his fellow servants who may have suffered with him and in consequence of his conduct. Compensation is only to be paid for an accident which happens when the workman is doing his proper work. "CONTRACTINO OUT." Under the Employers' Liability Act of 1880 a workman might be practically obliged by his employer to contract out of the Act and to pay into an insurance fund a certain proportion of his wages, the employer also contributing, all accidents being compensated for out of this fund. This practice is abolished, with the important exception, that an employer may formulate a scheme bj'^ which pro- vision may be made for compensation for accidents. Before this scheme can be established however he must submit it to the Chief Registrar of Friendly Societies. The registrar, after consulting the workmen as well as the employer, may grant a certificate. This certificate lasts for five years, and if the workmen are dissatisfied with the results of its operation and think that they would be better not to bind themselves against taking action under the Act, the certificate may be cfincelled if the registrar thinks the complaints are justified. But an employer has no right to force any labourer to join in a scheme of this kind, nor can he make it a con- dition of employment. Notice of Accident. As the preliminary to a claim for compensation notice of accident must be given to the employer. If the workman is killed the notice must be given by his family. The notice must be in writing and it must give the name and address of the injured, the date of the accident and the cause of the injury. No special form is prescribed, but the information indicated must be given accurately. No time limit for the notice is set, but it must be given as soon as possible after the accident and in the case of mere injury before the workman voluntarily severs his connection with the employer. Claims for compensation must be given in within six months of the accident whether the accident results in death or not. Unless these rules are observed no compensation can be obtained. Compensation. Notice having been given as described, the next point is as to whether action for conipensation should be taken, if necessary, under the Employers' Liability Act, under the Common Law or under the new Act of 1897. If the claim is dis- puted, it may in the first instance be referred to any committee to which the work- man and his employer have mutually agreed to refer cases of claims for cotiipensation for accident. If tie committee does not settle the dispute within three months from the date of the claim being first brought before them ; or if the committee decides to refer the (juestion to a single person selected by them ; or if either the employer or the injured workman or his representatives object in writing to the settlement of the question by the committee, then the dispute is referred to arbitration. If the employer and the workman cannot agree upon an arbitrator, the matter may be brought before the County Court Judge,(i) or he may appoint an arbitrator to deal with the case. When the arbitrator is appointed, (1) The County Court Judge is held to act as arbitrator in cases under the Compensation Act. See case Mountain v. Farr (1899) 16 Times Law Reports, 262 ; No. 83 in/ra, reported " Workmen 'h Compensation Cases," Minton Senhouse, p. 110. 12 THE REPORT ON No. 48 either by the parties themselves or by the judge, he may submit to the judge any questions of law which arise. On questions of fact no appeal can be made ; but an appeal lies from the judge's decision on questions of law to the Court of Appeal direct, excepting where the employer and workman have agreed before hand to accept the decision of the County Court Judge. The judge or the arbi- trator can order either party to pay the costs, which are fixed by the rules of thfr County Court. In disputes under the Act, provided the judge or the arbitrator gives leave, the workman may be represented by a member of his family or by &n officer of his Trade Union. A member of the workman's family is entitled to an allowance for loss of time, the amouid being fixed by the judge or arbitrator. Aa officer of the Trade Union is not entitled to any fee, excepting travelling expenses. The Amount of Compensation. The amount of compensation is as a rule readily susceptible of calculation on a basis laid down in the Act. Accidents are divided into two classes, those re- sulting in death, and those resulting in injuries which prevent the injured from .' earning full wages for more than the two following weeks. The compensation for death is payable in a lump sum ; compensation for injuries is payable in weekly sums. The Act fixes (a) a maximum and minimum amount of compensation pay- able in the case of a workman having been killed and leaving relatives wholly dependent on him for support ; (6) a maximum amount if the relatives were partly dependent upon him ; and (c) the maximum amount of the weekly .sum payable for injuries. Compensation for Death. If a workman leaves a wife, husband, father, mother, grandfather, giand- mother, stepfather, stepmother, son, daughter, stepson or stepdaughter, whom he entirely supported by his wages, the employer must pay at least £150 ($730); but he is not liable to pay more than £300 ($1460). The exact sum will depend on the average weekly earnings of the workman whilst at work for his employer. If he had been employed for three years or more, the amount is fixed by finding the average wages per week for the three years before the accident. If the three years' wages at that average wage come to more than £150, the employer must pay a sum equal to them ; in other words the employer must pay 156 times the average weekly earnings. But if the workman had not worked for the same employer during the three years before the accident, his average wages per week while he had worked for his employer must be found out. When that is done the apaount to be paid is three years' wages at that rate, that is 156 times his average wage. But his relatives must never get less than £150, excepting where the relatives were only partly supported by the workman killed, and in which , the judge, arbitrator or committee think that less than £150 may be sufticient compensation. If a workman killed leaves none of the relatives specified living at his death, the employer must pay reasonable funeral expenses. Any dispute as to cases of dependency or as to the division of the compensation among tiie dependants is to be settled by arbitration. J Compensation for Injury. Compensation for injury can only be obtained if the workman is unable to work for more than two weeks after the occurrence of the ac ident. At the end of these two weeks he may be wholly unable to work, or ho may be able only to do a portion of his customary work. In either case he is entitled to compensation in the form of a weekly sum until he has completely recovered. 1900 J WORKMEN'S COMPENSATION FOR INJURIES. 13 The amount of this weekly sum depends upon his average weekly wages before the accident. When a man is wholly unable to work, if he has been employed by the master for a year, the compensation is one half the average weekly wages ■earned b^ him during that period. If he has not been employed by the master for twelve months, the amount payable is half the amount of the average weekly wages earned by him whilst he has been employed by the employer. In no case, however, can the w.orkman get more than £1 per week. In the case of partial inability to work the compensation cannot be more than one half the weekly wages before the accident. The employer does not pay any compensation for the first two weeks after the accident. It is to be noted also that when compensation is awarded in terms of a weekly payment, review of this compensation may be made on the application •of either party at any time. . , ' „•, ' - ,. Treatment of Accidents. \ ' "^ When a workman has given notice of an accident, the employer may send a, doctor to examine him. Unless be permits the doctor to do so no compen- sation is payable ; but if he is not satisfied with the doctor he may get another - «5. Sect o. 48 :8. disputed. disputed. t disputed. >t disputed, ed. 1900] WORKMEN'S COMPENSATION FOR INJURIES. 17 Analysis of Leading Cases Brought Under the Act. — Oon. Principal issues in aotioa «5. 67. 68. 69. 70. 71. 72. 73. 74 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 86. 86. 87. 88. Security for costs in employ' ers' liability .case Proper work Bisk of contractors Definition of engineering work Dependency Illegitimacy of partiesto claim Defendants Basis of compensation .... Oourt of first initanoe. II P P Building claim Proper work Assessment of compensation postponed' Compensation not a bar to further proceedings Dependency Definition of workman . . Defect in factory Ladder not a scaffolding Absence of parties Proper work Proximity Dependency Payment during incapacity. 89. Basis of compensation on <• 90. 91. »2. 98. 94. 96. 96. 97. 98. 99. Misconduct of workman Previous bad health . . . . P P P P P P P P ^ D "b" Appeal oases. B.9ined the ich lower one-fifth )articular a certain ither as a the tariff ave been of risks iable, are Dmetimes ormed in of ^e re- perman- i not be to make htouse pub- determin- part of his .889. The y diminish 1900] WORKMEN'S COIfPENSATION FOR INJURIES. some estimate of the number of working people who had been brought under the operation of the Act and also of the aggregate amount of wages paid to them. Mr. S. Stanley Brown, General Manager (» the Employer's Liability Insurance Corporation, Ltd., estimates W that about 5,000,000 of working people come within the scope of the Act. This is considerably less than one-half of the total number of employed persons in the United Kingdom. The insuniible interest represented by the wages of these 5,000,000 of employees is estimated by Mr. Brown at £850,000,000 a year. Mr. Brown has investigated 75,000 cases of acci- dent. Of these cases 58.8 per cent, involved sickness of two weeks duration and less, 40.4 per cent, of over two weeks duration and .8 per cent, were fatal casea Of those non-fatal cases which involved over two weeks duration the average number of weeks per case in respect to which compensation was pai'^, was 6.8. Mr. Brown also estimates that the percentage of employees leaving u ^pendants would be 56 per cent, leaving the number of cases ic which no dependant was left at 44 per cent. The cost of insurance as worked out by Mr. Brown for an employment of 100,000 men is equal to about . 83 per cent of the wages paid. Mr. Brown also gives the following examples of rates charged : (2) Textile Industries 0.5 per cent, of wages paid. Cabinetmakers (no circular saw risk) 1.0 " Engineers (shop work) 1.5 " Coal merchants 2.0 *' Railway and general contractors (excluding the erec- tion of iron-work, tunnelling or blasting) 2.5 *' Dock service 3.0 " Engineers — bridae building 3.5 ** Stevedores (on Clyde) 5.0 The high premiums first charged by the tariff companies have had the inevi- table result of encouraging combinations of employers for insurance upon the mutual principle. These combinations have been subjected to a good deal of criticism, and some of them have already collapsed on account of their attempting to do the business on inadequate terms. It is obvious that the members of such a combination must all be employed in businesses that do not vary widely as esti- mated by a danger tariff. The combination must also accumulate a reserve. The chairman of the Ocean Accident and Guarantee Corporation, in his speech at its last annual general meeting, stated as regards these mutual associa- tions, that less employers are joining them " for the very good reason that a res- *' ponsible member whose desire is naturally to limit his own risk sees- that by " joining such an association he increases and trebles the same by becoming liable for " the heavy risks of his neighbours whose operations he cannot control, and mutual " insurers do not care to undertake a liability which may continue during the " lives of young annuitants and be payable by their executors for a period of half " a century hence. The better class of mutual insurers are, therefore, rapidly " withdrawing from these mutual associatic: s, leaving a residuum of weaker " brethren, whose want of capital or ineflBciency of works suggests the advisabiliy " of inducing others into the trade to share their risks.''^") It is to be noticed that it has been settled by the courts that a policy of insurance against liability, under the Act requires a lOs. ($2.50) stamp-i*) (1^. S. Stanley Brown " Workmen's Accidents in the United Kingdom." Transactions of the Second International Actuarial Congress, London, 1899 : p. 690 et seq. (2). Op. cit. p. 701. (3^ Hazell's Annual, 1900, p. 696. (4) Lancashire Insurance Co. v. Commissioners of Inland Revenue Workmen's Compensa- tion Cases (Clowes), 1899 ; 1 Q.B.D. 363 (Div. Ot.). See Minton-Stenhouse, Case Law of Workmen's Compensation Act, p. 7. 'M 1 4 ] -i ; t H 9A THE REPORT ON [No. 4 i: X (6) Criticisms of the Act from the Workmen's Point of View. While the Act came into operation on the Ist of July, 1898, fully a month elapsed ere the woi*king men awoke to the facts that there was such an Act, and to the enlarged powers of claim for compensation which they had under it. The Scotch workmen awoke first, and in about a month there was a larger proportion of ca»es brought in Scotland than there was in England during the first three months of the working of the Act. A sufficient time has not even yet elapsed for the growth of a decisive opinion upon. So far as the experience of the Act has gone, the principal objections from the point of view of the workmen, are : 1. That it is not wide enough in its interpretation, 2. That the payments for compensation should begin from the date of acci- dent. 3. That since notice of an accident is compulsory under the Factory Acts, notice by or upon behalf of the injured workman should not be necessary as a preliminary to action. Some details of these and of other objections may be given, t Objections by Trade Unions. The objections which are entertained by the Trade Union leaders may be gathered from the following series of resolutions which were brought before the Trades Union Congress, held at Plymouth in September, 1899 : Trades T^nion Congress, Plymouth, 1899. Combined Resolution Relating TO THE "Compensation Act." " That, in the opinion of this Congress, the Workmen's Compensation Act of 1897 should be amended. " 1. By the introduction of a clause including all trades and occupations, ashore and afloat ; without restrictions. . , " 2. That the clause relating to wilful and serious misconduct be deleted. " 3. The introduction of a clause guaranteeing to injured workers 50 per cent, of their weekly wage ; averaged from the standard wages earned during weeks when full time has been worked. Lost time in any weeks caused by sick- ness, accidents, holidays or want of trade not to be included in the 52 weeks' average. " 4. That the payments for compensation shall commence from the date of accident. " 5. The abolition of contracting out. " 6. That the restrictions contained in the schedule of the Notice of Acci- dents' Act, 1894, shall not operate." i Moved — Mr. W, Brace. ' Seconded — Mb. John Ward. I attended this congress, and am bound to say I was rather impressed by the almost entire want of interest in the subject which was displayed by the congress. Some three or four members gave evidence of having mastered it and of being really enthusiastic; but otherwise the subject did not appear to excite the slightest interest. This perhaps may be held as on the whole indicating that so far as the workmen are concerned the Act is working satisfactorily. Mr. Thomas Burt, writing on 28th August, 1899,(1) says: " It is too early " tt) give any final and definite opinion as to its value (speaking of the Com- " pensation Act). . . We (referring to the miners of Northumberland) have " not had much friction or litigation arising out the Act. So far as non-fatal (1) Letter to Mr. Minton-Senhoiwe published in " Case Law," p. x. t I 1900] WORKMEN'S COMPENSATION FOR INJURIES. 26 accidents are concerned, an agreement 0) was entered into between our Trades Union and the Coal Owners' Association. This has, on the whole, worked smoothly and satisfactorily. . . The officials of our union fear that aged and infirm workmen will be dismissed in greater numbers than heretofore. We have had a few cases of the kind, and should doubtless have had more if the coal trade had not been exceptionally brisk of late. This is an evil that cannot very well be lessened or removed by legislation. " One great defect in the Act is that, in the case of a youth who may be per- manently disabled, his compensation in based on the amount of the wage he has been receiving. . . " Of course, the Act leaving as it does outside its operations about one-half the workmen of the country, cannot long remain as it is. Time will show what amendments are needed." • ... Criticism by the I'abian Society. An acute criticism of the Act and its woriiing is to be found in a tract issued by the Fabian Society. This criticism is by far the best from the working man's point of view. 1st. It regards the Act as being too limited in its scope, and proposes the extension of the measure to include not merely seamen (a special measure for compensation to whom the Government pledged themselves two years ago) ; but also all workshop operatives, builders, agricultural laborers, shop assistants and at least those domestic servants who are engaged in hotels and institutions. It is proposed to make the test of the applicability of the Act, not the frequency of accidents in certain employments, but the fact that a worker is injured. (2) 2d. This criticism also points out that inj ury to health may be cttuaed grad- ually by industrial processes as well as by an accident which occurs suddenly, and that the employer should be liable for this as well as for misadventure to life or limb. (3) It is pointed out that in chemical works particularly a slight accident which lays a man aside for a few weeks will entitle him to compensation, but if he is affected permanently by the insidious and deadly lead poisoning he is not entitled to compensation. 3d. It is also insisted that a man who is laid up for a week is entitled to his proportionate compensation as much as a man who cannot go to work for a month. 4th. It is pointed out that the injured party has to recover the amount of compensation awarded him from his employer and that if he is awarded a pen- sion and if the employer becomes bankrupt without having commuted this pension there is no remedy. It is suggested that the pension should be made a preference claim upon the estate of the employer, or that as in Germany the workman should be entitled to compensation from an accident insurance fund, and that the fund should recover from the employer where this is possible. It may be noted on this point the tendency on the part of employers to commute pensions at once. On the other hand the Fabian Society suggests that compen- sation should always be in the form of pensions because of the risk of investment by workmen. 5th. It is suggested that the Compensation Act has gone too far in making employers liable for all kinds of accidents. When negligence on the part of the employer is proved liability should lie as it does at common law and under the (1) "The basis in every case to be the county averaare rate of wages, at the time of acci- dent, of the class to which the injured workman belongs." (2) It will be noticed that this point of view has never been advanced at the Trades Union Congress. (3) Compare case No. 20 in list of cases above. S6 THE REPORT ON [No. 48 Employeni' Liability Act. But where due precautions have been taken and an accident nevertheless occurs, it is to use the old phrase of the Marine insurance policies, " An Act of Qod."(i) The Fabian Society poirts out what is very obvious tJiat when the next large colliery explosion occurs it will probably completely rain the employers unless they are fully insured. Of course the suggestion is that neither the employer or the workman should suffer when it is an " Act of God," but that an accident insurance fund guaranteed by the state should ; in other words, that the state should compensate the workman directly in every C£U3e, and in case of negligence should recover the amount from the employer. i The Fabian Society also objects to the element of notice by the workman. It regards it as unnecessary, since by law notice must be given by the employer. Under the Factories* Act the Factory Inspector is required to make inquiry into nearly all accidents. (2) It is suggested that on the mere report of the inspector the state should at once pay the compensation and then claim from the employer. If the employer resisted, further notice could be given. In no case should an in- jured party require to go to the Court of Appeal on a question of law. On this it may be Observed that appeal on questions of law would simply by this method be shitted from the Court of Appeal to the Factory Inspector or the Home Office. There might besides be a disposition towards awarding compensa- tion solely in cases where an obvious breach of the Factory Act had occurred. 6th. As regards the defence of common employment and contributory negli- gence, it is sugj^ested that some of the antiquated legal doctrines which still cling to industrial legislation and cause frequently contradictory decisions in the law courts should be cleared up. 7th. The abolition of " contracting out " is recommended on the ground that there is no reason why a workman should contribute at all towards his own com- pensation. On this point it may be suggested in addition to the considerations mentioned above, that as a large number of the schemes which have already been authorized by the Registrar of Friendly Societies as offering a legitimate method of " contracting out " are friendly societies and as some part at any rate of the influence and functions of friendly societies would be taken away from them if no " contracting out " were allowed, the friendly societies might be dis- posed to object to this. On the other hand, it is obvious that if the workman is entirely relieved from anxiety about providing against the chances of accident, if his wages remain the same and if he is of provident disposition he may be able to take advantage of the Friendly Society, for so much as that is worth, to as great an extent as before, for there can be no objection to his voluntarily in- suring himself in addition to the likelihood of his securing compensation under the Act. At the same time it must be admitted that the persumption is rather against this suppo.sition. Even in the German system the workman has to bear a proportion (11 percent.) of th** cost of insurance as against accidents. 8th. The scale of compensation is objected to, one-half of the wage for tem- porary disablement being '-egarded as insufficient, and the pension amount being regarded as very inadequate. It is urged that both should be based on a real living wage. (7) Notes on These Criticisms. In addition to the .special points that have already been noticed, it may be observed that the extension of the measure is a much more difficult matter than at first sight appears. Indeed it becomes increasingly obvious that if the measure (1) ThiB has always been admitted in the Trades Union Congress. (2) There are however, vanvy cases to which the Compensation Act would and the Factory Act would nut, apply. 1900] WORKMEN'S COMPENSATION FOR INJURIES. 27 I n \\.: were extended to all industries it would be inoperative because of the inability of the small employers to pay, would ruin the small employers or would require to be conducted after the German model. This of course does not apply to the case of seamen which will, no doubt, be dealt v/i^k. In accordance with the pledge of the Government. The question of the period which should elapse before compensation is given is a fair subject of discussion. The fear expressed on behalf of the employers that to make the payment date from the date of the accident would give rise to malingering hardly seems likely to be realized. If the payment is n)und to be legitimate there does not seem any valid reason for making the workman suffer to the extent of a fortnight's accident allowance. He is either entitled to acci- dent allowance for the whole period, or he is not entitled to any at all. The grant- ing of compensation for shorter periods than two weeks is another matter. No doubt this would greatly increase the number of cases and would probably weigh down any scheme with excessive administrative expenses. The matter of maling- ering is a more general question than this W, but the large number of claims for compensation understood to have been made during the past year and the compar- atively small number of these which have been allowed by the employer to go into Court seems to suggest that in the employers* view at any rate maliogering is not an important factor. As to causing the payment of compensation to follow upon the report of the factory inspector, so far as I can see, the factory inspector is hardly the proper person to give a final judgement as to whether " serious and wilful misconduct " nas taken place or not. This is really a matter of evidence, and although the process is perhaps cumbersome, it may be diflficult to provide a remedy without permitting appeal either to a court of Arbitration or to the Courts of Law. If the decision oi the factory inspector were to be made final, an injustice might be done as grave as that which may be alleged to be done in compelling the injured party to go to the Court of Appeal when his employer chooses to dispute the judg- ment of the lower court, and if it were to be subject to appeal, the advantage of it is not apparent. The scale of compensation is however the rock upon which nearly all of com- pensation schemes split. If the compensation is too low the Act confers no benefit upon the working people. If it is too high, not only does the system lay itself open to abuse through malingering ; but also from the effect upon the industry of any excessive charge for compensation. In the case of a State com- pensation, or a State guaranteed compensation the matter assumes very serious financial proportions, as in the case of Gern.any where in spite of the grumbling of the working people that the compensation is inadequate there is a considerable deficiency which actuaries insist, ought to be larger than appears from the accounts ; that is, that the State Department of Insurance will require to add largely in the future to the amounts annually set aside to provide for pensions. (8) Bibliography of Workmen's Compensation for Injuries, Great Britain. Acts of Parliament : — The Fatal Accidents Acts, 1846 and 1864, 9 and 10 Vict, c. P3 ; 27 and 28 Vict., c. 95. The Employers' and Workmen's Act, 1875, 38 and 39 Vict., c. 90. (1) When the Gertnim Law came into operation there was during the first year or two a great deal of malingering. But inspection under the Act greatly reduced this element. It is now believed that there is very little malingering, probably not in more than 4 per cent, of the total number of cases is there any trace of it. Oii the serious aspect of the question of malingering called in Germany "simulation " in the early years of the operation of the Law, see for example • J. Graham Brooks, " A Weakness in the German Imperial Socialism," Economic Journal, Vol. ii. p. 302, London, 1892. ' 1 in n 28 THE REPORT ON [No. 48 The Employers' Liability Act 1880, 43 and 44 Vict., c 42. This was. a tem- porary Act, it was renewed from year to year by annual Acts and by the Expiring Laws Continuance Acts. A list of cases under the Em- ployers' Liability Act up till 1892 is given by Rumsey op. cit. at pp. Ill to 188 : and a further list is to be found in Minton-Senhouse and Emery, op cit. . i. v - . , • - ^^ Parliamentary Reports: — Report and Evidence before Select Committee on Employers' Liability; House of Commons .-...- 1866. do do - 1880. do do ... - No. 192 of 1886. do do . - . . No. 285 of 1887. Report of Royal Commission on Labour, c. 7063, III. A. App. clviii. and clix. (1894). Report of French Government " Commission du Travail," 1892. iSirrell, Augustine. "Employers' Liability," London, 1899. Bodiker, Dr. Die Arbeiterversicherung in die Europaischen Staaten," Leipzig, 1895. Brown, Edmund. " Past and Prospective Legislation, with special reference ta ' Contracting-out '," London, 1896. Brown, S. Stanley. Workmen's Accidents in the United Kingdom." Trans- , actions of the Second International Actuarial Congress . . . 1898,, London, 1899, p. 686. Calder, J., [Factory Inspector]. " The Prevention of Factory Accidents, being an account of manufacturing industry and accident and a practical guide ta the Law . . ." London, 1899. uvwvuj Campbell, G. L. " Miners' Thrift and Employers' Liability," Wigan, 1891. Chamberlain, Joseph. " The Labor Question," Nineteenth Century, November, 1892. Fabian Tract No. 82. " The Workman's Compensation Act, what it means and how to make u.se of it," London, 1899. Eiggins, A. Pearce. " Employers' Liability and Compensation to Workmen ou the Continent," Edinburgh, 1898. Industrial Sub-Committee of the National Union of Women Workers. " Law and the Laundries," Nineteenth Century, December, 1896. Macdonnell, J. " Law of Master and Servant," London 1883. Mhiton-Senhouse, R. M., and G. F. Emery. " Accidents to Workmen, being [a Treatise on The Employers' Liability Act, 1880. Lord Campbell's Act, The Workmen's Compensation Act, 1897, and matters relating thereto." London 189& I Mmton-Sev.house, R. M. " The Case Law of the Workmen's Compensation Act, 1897. London, 1899. Minton-Senhouse, R. M. " Workmen's Compensation Cases. Being reports of cases decided under the Workmen's Compensation Act. . . ." London, 1899. Pope, J. Buckingham. " Conservative or Socialist." London, 1897. Roberts, W. H., and G. H Wallace. " Duty and Liability of Employers," Lon- don, 1885. Spens, W. C, and R. F. Younger. " Employers and Employed," London, 1887. Webb, Beatrice and Sydney. " History of Trade Unionism," London, 1894, pp. 350-452 and 356. Webb, Beatrice and Sydney. " Industrial Democracy." London, 1897. Vol. I., pp. 365-391. Wolff, ti. W. " Employers' Liability, what it ought to be ? " London, 1897. For extended list on the whole subject see Bibliography published in Circular No. 1, Series B of the Mus^o Social, Paris, 1896. »i 1900] WORKMEN'S COMPENSATION FOR INJURIES. ^ (9) Accident Insurance in Germany. In England the history of workmen's compensation for injury due to accident is the history of a legal question, viz , the liability of the employer. It was scarcely necessary in giving an account of it to regard the contemp'jrary political and social development. The Workmen's Compensation Act of 1897 was not the outcome or any special propaganda ; but was due to the desire of Mr. Chamberlain to do something towards redeeming his pledges of insurance or pension legislation. In England the legislation was the outcome of imitation, and was not based upon any conscious system. There was, as is usually the case m England, a practical groundwork in the shape of the German experience, and there was no systematised theoretic groundwork whatever. In Germany the case is totally different ; the German legislation is inextricably interwoven with the political and social situation. In Germany when the accident insurance laws were brought forward they were formulated by economists who had thoroughly threshed out from their point of view the theoretical basis of the laws. They were in no sense a leap in the dark. The promoters of them were under no illusions on the subject. To the charge that they were " socialistic," Wagner replied : " Not as I understand Socialism." " Socialistic," said Bismarck, with greater bluntness ; " call it what ycu please : it is the same to me." (1) The changes made in the English legislation by the Act of 1897, may not unfairly be regarded as having been at least hastened more or less definitely by the continental legislation on the same si;' jut ;(2) and the continental legislation really had its origin in the German Insurance Laws which grew directly out of the message of the German Emperor on the question on the 17th November, 1881. This message however was undoubtedly the outcome of the propaganda previously carried on by the Economists Wagner and Schaffle, partly through their pamphlets and personal influence and partly through the '• Verein fiir Sozial* Politik." This moveaaeut in Germany was altogether different from the so-called Socialist movement, although it is true that Bismarck was predisposed to the mild form of Socialism advocated by Lassalle, and was therefore not unwilling to take the views of the duties of the State as expounded by Wagner and the other "Socialists of the chair." The position of Wagner was fundamentaUy different from that of the State Socialists, as represented by Marx, for example. It is unneces- sary here to discuss the full relations of the German labour legislation of which accident insurance was only a part, to the Socialist movement in Germany, especially since this relation has been discussed with much knowledge in the "Special Report upon Compulsory Insurance in Germany," by Mr. John Graham Brook8.(3) The fundamental distinction between the movement which resulted in the invalidity and accident insurance in Germany, end collectivism as pro- pounded by Marx is, that while opposed to laissez faire and all that that implies, the promoters of the labour legislation had no thought of abolishing the system of wage labour and private capitalism ; but had in their minds chiefly a new State which should not be merely a policeman, but which should have as its primary business the positive welfare of the people. As Wagner puts it, about 1879, " in the administrative functions of (1) Fourth Special Report of the Commissioner of Labor Compulsory Insurance in Ger- many ... by John Graham Brooks. Washinf^ton, 1893, p. 23. From the Marxist point of view, of course, Wagner was quite accurate. The accident laws are not socialistic, for they do not touch the wages system nor do they interfere with the private ownership of the means of production. Bismarck did not trouble himself with these refinements. It was sufficient that he recognized in them an engine for securing what he conceived to be the general interesk (2) For Trade Union Agitation on ICmployers' Liability see supra p. (3) Washington 1893. ; ■ ■ " . n 80 THE REPORT ON [No. 48 the State, of the parish or other public bodies, there should be included such measures as may help on the moral, intellectual, sanitary, physical, ecomonical and social advancement of the mass of the people, and so far as may seem necessary and expedient, the expenditure of public money for these pur- poses without fear of the public communism which would to some extent i.^j thereby encouraged. This implies the recognition of the principle of State help,, legislative, administrative and financial, for the lower classes, congenial with self- help to the co-operative 8y8tem."(i) From this it is evident that in general terms the advocates of these measures accepted the system of employment for wages and sought only to introduce such improvement into industrial arrangements as might result in raising the level of the comfort of the working people. These views supported as they were, by the powerful influence of Wagner, Schmoller and others were adopted by Bismarck and carried into effect. Labour legislation in Germany was carried more or less in the teeth of the manufacturing interests by the aid of the Conservative landowners. (2) The Conservative party, especially in Prussia, was the more drawn to support these measures that they seemed to offer a solution of social difficulties which was within the power of administration to accomplish, and which at the same time took as it were the ground from the feet of the Socialist propaganda. The immediate outcome of the message of the Emperor William was the Sick Insurance Law of the 15th June, 1883. This law was conceived with the idea of utilizing to the fullest possible extent existing institutions for sick relief and for incorporating these in the new measures.<3) The fundamental principles of it are : — 1st. Its compulsory character. 2nd. Its mutual basis. Apart from existing organizations which were recog- nized in the Act, there were prescribed the following obligatory associations ; (1) local sick clubs, (2) factory sick clubs, (3) builders' sick clubs, (4) sick clubs of the guilds, (-5) the miners' sick clubs. (6) the parish sick insuruance, comprising^ all those who are liable to insurance but do not belong either to a voluntary nor to an obligatory sick association. The purpose of the insurance is to secure as perfectly certain and adequate relief in case of illness during at least 13 weeks. The receipt of this relief does not imply pauperism, nor is the relief intended to to be conceived upon a more substantial scale, but is intended to be sufficient, while no stigma whatever attaches to the receipt of it. It is a payment to which the workman is entitled just as much as he is entitled to his wages. The mini- mum of relief to which all persons who are injured have a legal claim includes : (1) Free medical attendance, medicines, spectacles, trusses, bandages, etc., from the be^jinning of the illness. (2) In case of incapacity for work from the third day of the illness sick pay for every working day amounting to one half the daily wages upon which tho contributions to the insurance fund have been based ; or in special cases free ad- mittance to an hospital, tdgether with half the sick pay for the family. (3) Burial money of twenty times the average daily wages. (4) Sick relief to women during four weeks after confinement. It is open to anyone by paying double the ordinary insurance rate to secure sick pay to the full amount of the average daily earnings. The associations may also, if so advised, extend relief from 13 week.s to a year and forwomen to six in- stead of four weeks after confinement. The daily sick pay may also be raised, as may the burial money. The sick allowance may also be extended to the other members of the family and to injured persons during convalescence. The contribu- (1) Quoted by Mr. Brooks in Report nbove cited, page 24. (2) As was the case with the Factory Acts in England. (3) Fully described in " Guide to Workmen's Insurance of the German Empire." — Berlin, 1897. 1900] WORKMEN'S COMPENSATION FOR INJURIES. 81 tioDS are fixed by the law at from 1 to 1 1% of the usual local daily wages of ordinary labourers, and for others they must not exceed 2 to 3% of the average daily wages of that class of workmen for whom the club has been formed. The law binds the employers when depositing the contributions of their workmen to pay them- selves a sum equal to one-half the contributions of the employee, so that two-thirds of the whole a,i\ furnished by the workmen and one third by their employers. Th J cost of management which is mainly placed in the hands of the workmen al >ng with the contributing employers under the supervisioix of the insurance aL.thorities is paid by each club for itself. In the parish insurance it falls on the parish and in the industrial and building siclr clubs it is borne by the employers. At present there are insured about eight millions of persons in the National sick system, and annually twenty-five million dollars are expended in Germany for sick relief alone. It has been necessary to explain the organization of the Sick Belief Clubs, since they formed the indispensable basis upon which the Qerman system of compensation for accidents has beeii reared. The Sick Insurance law of 1883 was followed by the first Accident Insurance law of July 6th, 1884. This law has been supplemented by subsequent laws, particularly the law of May 28th, 1885, March 15th, 1886, and May 6th, 1886. It may be noted also that it was further supplemented by the Invalidity and Old Age Insurance Law of June 22nd, 1889. The principles of the German Accident Insurance Law are the same as that of the Sick Insurance Law, namely, compulsion and utilization of existing institutions. This law makes insurance compulsory for workmen and oflBcials in all industries liable to damages in case of accident. W The insurance is carried out under the guarantee of the Empire, on the mutual system by the employers united in trade associations. These trade associations may embrace the different branches of industry in a district ; or they may embrace the branches of industry throughout the Empire. The trade associations are legal persons and are autonomous. They may constitute branches or sections over which they may retain control. The object of the insurance is to secure compensation for bodil J injury, or for death resulting from an accident to the work- man whilst he is working for his employer. Injuries produced purposely and injuries inflicted otherwise than while he is at his employment, are excluded. The compensation includes the cost of the cure, and, in addition, a fixed allow- ance during the period of incapacity for work, or, for any fatal cases, burial money and an allowance to the survivors from the date of death. When the in- jured person is totally disabled, the compensation amounts to two thirds of his averrtge year's earnings ; for lesser injury a proportiona^'e amount. During the first 18 weeks after the accident,(^ the so-called"waiting-time"Karenz-oderWartezeit) the Sick Associations which have been described, or in their absence, the employers arerequired to provide medical attendance and other relief within the limits of their functions, as may be required. From the beginning of the fifth week the sick pay is raised at the cost of the employer to at least two-thirds of the standard wages. If however, it is necessary inthe proper treatment of the injured to extend the period during which the Sick Associations undertake the care or the invalid beyond the thirteenth week until a couiplete cure is effected, the Trade As-^ociations may either armnge with theSick Associations for reimbursement of the costs incurred by them for tlie additional period, or they may undertake the charge of the pat/ient themselves. The amount of compensation i.s determiied after a police investigation by the administration of the Tra«le Ass )ciaiion (Cei'ut's;i[eno8sen (^) Compare the suggestion qf the FaHixn S ciety that the English system should bo based upon f'e principle that an injured person is entitled to compensations irrepective of the character of the industry to which he belongs, whether it is dangerous or otherwise, in other words, thnt the criterion of compensation should be the dumaue which has been done rather than the general liability to dama> .>:.'. WORKMEN'S COMPENSATION FOR INJURIES. 33 cases of extended illness reimbursed by the Trade Associations. Tn the German accident insurance law the workman has thus a certain relief ; in case of injury he has not to prove regligence on the part of the employer ; he does not require to proceed at law against him ; he has only to have his case certified by the medical officer and thereupon relief accrues immediately. When the case has been investigated through the machinery of the Act, compensation accrues after the lapse of a certain time as described. In the first instance the accident insurance law did not embrace the numerous industries engaged in transportation, nor did it embrace the telegraph or the army and navy. It was extended to cover all these fields in 1885, and in 1886 it was extended to agriculture and foi-estry, including the case of small farmers with yearly earnings •"ot exceeding $500 (2,000 marks). Contributions may be assessed under this head, not according to the number of hands employed, which sometimes may be none at all, but on the basis of direct taxation, especially the land tax and small proprietors may under certain circumstances be exempted. The fundamental provisions are the same as those of the original law. In 1887 the system was extended to building and marine accident insurance. It had also been proposed to extend it to handicrafts and small trades and home industry and to persons engaged in commerce. This would have covered an additional number of about two millions of employed per- sons and about one million of establishments; but it has not yet been found practicable to extend it in this direction. Criticisms upon the German sy.stem from the side of the workmen chiefly refer to the alleged inadequacy of the amount of relief and to the details of the administration particularly on its medical side. It is alleged, for example, that in certain cases the exercise of special skill on the part of the surgeon or medical man would result in a speedier cure in the average case than now occurs where the general practitioner alone is called in. Thus, for example, in injuries to the eye the medical oflScer of- the sick relief club would not be so competent to give such advice as would result in a speedy recovery as an oculist. And again also any accidents which result in nervous or in partial paralysis the skill of a sur- geon specially devoting himself to this- branch of surgery might be relied upon to effect a speedier cure than would the less special skill of the ordinary club doc- tor. It is pointed out by H. Seelmann ( ' ) that the possibility of double pro- cedure which has been indicated above may result in contradictory decisions. Thus the workman may sue his employer alleging negligence, while the employer may defend the action and allege wilful misconduct on the part of the workman. The law courts may find that the workman has been guilty of misconduct, while the Trade Association may find him entitled to compensation. The question of notice is also the subject of criticism. When no notice is given of an accident by an employer either because he is not aware of the acci- dent or because he does not think it such an accident as may be necessary to give notice of, the workman may be in receipt of relief from his sick fund and on the expiry of the fifth week may claim for the relief to be made up to two-thirds of his wages. This claim may be refused. If it is refused he then cannot bring action until after the expiry of thirteen weeks from the date of the accident.(^) In general there has been a good deal of ditt'erence of opinion in regard to the expediency of having a long or short waiting time (karenz-zeit). Naturally it has been conceived that local boards composed of small groups of persons inti- mately acquainted with industrial conditions in their immediate neighborhood are u)ore likely etfective'y to control slight cases of accident, which indeed form the bulk of the cases, than larger bodies, which would not necessarily have such J '-. *.i (1) Seelmann, Hans, Das Sfcreitverfahren in den Reichsversicherungsgesetzen Systematisch dargeBtelt, Berlin. 1899. (2) This at all events seems to be the burden of the complaint made by Herr Seelmann. 8—48 ri ■1,1 i! 4-) " .1 •I -; 1 m 34 THE REPORT ON L No. 48 intimate touch with the workmen. It is for the slight cases within the control of these local bodies that the system of the waiting-time has been devised. In Germany, the Sick Associations and the Parish Clubs above mentioned have been in a fairly strong financial position, and the comparatively long wait- ing time of 13 weeks was devised with this in mind. In Austria, on the other hand, the sick clubs have not been strong financially and a 4 weeks' waiting time has been adopted there. But this has resulted, in Austria, in a large number of slight cases, that is to say, cases which required more than 4 weeks' attention, but 1» ss than 13 weeks' attention coming before the upper courts, thus actually increasing the expense of the administration of slight cases. There has there- fore been a disposition to increase the waiting-time in Austria to 13 weeks with some modification of the liability of the sick funds in connection with the extended period,(i) and in Germany, on the other hand, the commission considering legislation on accident insurance has resolved upon a diminution of the waiting time from 13 to 4 weeks on account of the fact that at present the sick funds have to bear the burden of nearly all the accidents, for the slight accidents form an immense proportion of the total, and the sick funds are therefore undoubtedly burdened so far as the number of cases is concerned. The shortening of the waiting time from 13 weeks to 4 would, according to the German experience, result in doubling the number of cases requiring compensa- tion. The lighter cases would be increased sevenfold. However, it is the case that the Trade Associations are already under a recent law, 10 April, 1892, under the necessity of at once extending medical aid in cases of sickness arising out of accident, and more and more use of this has been made in the general interest. Condensed Biblioography of Workmen's Accident Insurance in Germany. Qeorg Evert — " Der Arheiterachutz und aeine Entwickelung im neunzehnten Jahrhundert " — Berlin, 1899. Georg Evert — " Taschenbuch des Gewerbe und Arbeiterrechts," Berlin, 1895. HanaSeelmann — "Das Streitverfahren in den Reichs versicherungsgesetzen," Berlin, 1899. Dr. Zacher — " Invaliditats und Altersversicherung Krankenversicherung (Statistik) Untallstatistik Unfallversicherung." Jena 1897. Dr. Zacher — " The Workmen's Insurance of the German Empire " [Berlin] 1893 and 1897. Dr. Zacher — " Leitfaden zur Arbeiter-Versicherung des Deutschen Reichs," Berlin— 1894. linger H — " Accident Assurance in Germany." Transactions of the Second International Actuarial Congress 1898. Londoii, 1899. p. 457. Report of Foreign Ofllice on the Law of 1887 relating to insurance against accidents for persons engaged in maritime callings. London 1888. Diplomatic and Consular Reports No. 518, German Law of 1900, on sick- ness and old age insurance. Foreign Office; December, 1899. Amtsiche Nachrichten des Reichs-Versicherungsamts, Berlin, 1899. Invalidenversicherungsgesetz vom 13 Juli 1899. Berlin, 1899. " Entwurf eines Invalidenversicherungsgesetzes No. 93, Reichstag. 10 Legislatur-Periode. 1 Se.ssion 1898-99," " Denkschrift betrefiend die Hohe und Vertheilung der finanziellen Belastung aus der Invalidenversicherung. Zu Nr. 93 Reichstag. 10 Legislatur-Periode. 1 Session 1898-99." tax (1) Zacher, "Invaliditats und Altersversicherung. falJstatistik Unfallversicherung." Jena, 1897. (2) On all these queBtions see Zacher Joe. eit. Krankenversicherune (Statistik), Un- ;,;ft h, ■ L No. 48 control of (lentioned ang wait- the other }' waiting e number attention, i actually as there- a to 13 onnection and, the (I upon a fact that dents, for ick funds oncerned. ng to the ompensa- i the case 92, under ing out of terest. jERMANY. mzehnten rlin, 1895. gesetzen," sicherung " [Berlin] . Reichs," le Second ce against on sick- stag. 10 Belastung r-Periode. tistik), Un- 1900] WORKMEN'S COMPENSATION FOR INJURIES. 85 " Berichtder Kommission iiher den lintwurf eines Invalidversicherungsgesetzes. , - No. 270. Reichstag. 10 Legisiatur-Periode. 1 Ses>ior, 1898-99." • " Zusammentstellung des Entwurfs eines Invalid versicherungsgesetzes. Z\x / No. 270. Reichstag. 10 Legisiatur-Periode, 1 Session 1898-99." / (10) Accident Insurance in France. The law of compensation for injury in Fi'unce depended until 1887 upon articles 1382 to 1386 of the Code Napoleon, which simply fixed the responsibility for injury Uf)on the person who caused it, either by his negligence or by his im- prudence. The first proposal of change was brought forward in 1880 by M. Nadaud. In 1887 the Chamber of Deputies passed a bill which substituted for these articles the principle of trade risk. In 1890, M. Roche, Minister for Com- merce, introduced a bill which originated compulsory insurance. This bill was the basis upon which the Commission on Labor (la Commission du Travail) constructed a scheme for the organization of compulsory assurance by means of district mutual associations analogous to those of Austria. This bill was passed by the Chamber by a majority of 493 to 4, in 1893 ; but was rejected by the Senate, which, however, regarded as necessary a special guarantee of the compen- sation payable to the victims of accidents and to their representatives. The Chamber had committed itself to the principle of compulsory assurance, while the Senate rejected compulsion, but nevertheless desired a special guarantee. To meet this dead-lock between the two Chambers, the Government devised the ex- pedient of making a state guarantee of the statutorily permitted compensation, this guarantee to be sustained by a tax on licenses, to be borne by the whole of the firms in the trade. The State guarantee rendered obligatory insurance un- necessary. The Senate then passed a bill cutting out, however, the right on the part of the injured claimant to demand the capital value of his sick or accident allowance. The bill was finally passed on the 26th of March, 1898, and the law was issued on the 9th of .April, by which date it is commonly known. The law applies in general terms to all trades where mechanical power is employed ; but claims can only be made in respect of yearly earnings up to 2,400 francs. The period of " waiting-time " is only 4 days. The compensation pro- vided for cannot be diminished excepting in the case of an " inexcusable fault " (faute inexcusable). Compensation is barred only in the case of intentional fault (faute intentionnelle) L" the "inexcusable fault" has been committed by the employer, the compensation may be increased up to the total of the annual wages. Accidents are verified by a legal process. Arbitration courts are not established ; employers are not compelled to insure. They may meet their obli- gations in any way they please. On the side of the State a special guarantee fund is formed. It is managed by the officers of the National Old Age Pension Fund (la Caisse Nationale des Retraites pour les Veilles). The amount of the tax yielded by the addition of the trade licenses is passed to the credit of the guarantee fund. In the event of an employer being unable to pay the required compensation in the case of an injuiy, the injured person receives com- pensation from the fund and the fund then takes his place as creditor. It will do so, however, only if the employer (or in the event of his being insured, the insui'ance society) becomes bankrupt. In order to protect the Guarantee Fund, all societies carrying on an insurance business against accidents to work- men, are required to form reserves. The Act has been in operation for so short a time that details of its workings are not yet forthcoming ; but one of its effects is supposed to be likely to be the extensive development of accident insurance companies and of mutual insurance societies. While the premium for accident insurance is at present high in France, it is believed that when insurance becomes practically universal the rate will be much lower. The number of workmen who M THE rb;port on [No. 48 rr f I ' will benefit by the law is calculated to be 4,000,000, and the total annual charge for accidents when the working of the system comes to a permanent basis will be nearly 100,000,000 of francs. The effect of rigid control of the investments of private societies upon the accumulations which they must niuke in order to render their annuities secure is difficult to forecast. The tax which will consti- tute the Guarantee Fund will yield at present only about 750,000 francs ($150,000). It is supposed that this is ample to provide for failures amounting to 1 per cent, of corresponding expenditure. The tax may, however, be increased or diminished (I). (11) Accident Insurance in Switzemland. (2) Prior to 1875 the systems of employer's liability which were in vogue in different cantons, and even in different municipalities in Switzerland were very varied. The general principle of Conr.mon Law underlay them all — f he principle, that is, of personal responsibility for acts done by one person to another. The Employers' Liability System was introduced to a limited extent by its adoption with regard to railways in 1875. The principle was extended under the Factory Laws of 1877. In 1883 the law became general. During the period from 1880 to 1890 two contrary opinions were entertained by controversialists upon the subject. One was to extend the principle of the Employers' Liability to all em- ployments, and the other (held by the late Herr Klein, of Basel) was to replace all the mere liability laws by an insurance system. Both proposals were referred to the Federal Council. There the first was vigorously supported, and the second as vigorously opposed by Herr Numa Droz. Herr Droz was at the time the most powerful influence in Switzerland, and in 1887 he readily succeeded in accomplishing the extension of Liability Lav, and so in setting aside entirely for the time being the movement for the adoption of an insurance system. The extension of the liability law so brought about did not, however, include the small industries, nor did it include agriculture. It happens that the small in- dustries in Switzerland are characteristic of the country, and what Herr Forrer describes as " lack of logic " in this limitation of the scope of the liability laws, led to the renewed agitation for the insurance system. The movement for insurance was importantly promoted by the replacement of Herr Droz by Herr Deucher in the Department of Industry. Herr Ueucher was a partisan of '^'' insurance system, and the result of his appointment was the preparation of a revision of the constitution in order to enable the Swiss Confederation to legislate for sick and accident insurance. This revision was accomplished in 1890. It is notable that the revision includes not merely accident insurance but also sick insurance. This was mentioned because it became apparent to those who were going into (1) The above details are taken from "Louis Weber, Actuaire dn I'office du Travail (Paris) fitat Actuel de la Question des Accidents du Travail en France." Transactions of the Second International Actuarial Conj^/ess, London, 1899. See alao Labour Gazette, London, 1898, Vol. VL, p. 132, and Zacher, "Die Arbeiter-Versicherung in Frankreich," Berlin, 1898. For ex- tended Bibliography .see Circular No. 1, Series B., Mubee Social, Paris, 1896. (2) The detailed history of the long public controversy in Switzerland on the question of obligatory insurance is to be found in Foreign Office Reports, Miscellaneous Series Nos. 160 and 202, 1890 and 1891 ; and in the address of Herr Forrer delivered at Berne 20th December, 1898, "Kranken— and Unfallversicherung," Bern, 1899. See also Bundegesetzos betre^end Haftpflicht aus Fabrikbetrieb, 1881. (Bern) 1881 ; Scherer H. "Die Obligatorische Unfall- versicherung." Zurich, 188(5 ; Botschaft des Bunde-rathes an die Bundesversammlung betref- fend Unfiihring des Gesetzgebungsrechtes iiber Uiifall und Krankenversicherung, (Bern 1889) ; Vorlage des Bundesrathes und Beschliisse des Natiotialrates (A) Krankenversicherung (B) Unfallversicherung, (Bern 1897) ; Berichte der Kantonsregierungen iiber die Ausfiihrung des Bundesgesetzes betrefFend die Arbeit in den Fabriken, 1897 and 1898 : Aarau, 1889 ; and in the Labour Gazette, December, 1899, vol. vii., p. 355. [No. 48 lal charge m will be jnents of order to ill consti- )0 francs mounting incr(!ased 10«K)] WORKMEN'S COMPENSATION FOR INJURIES. 37 vogue in i^ere very principle, ner. The adoption e Factory rom 1880 upon the to all eni- to replace e referred he second time the ceeded in itirely for iem. The elude the small in- irr Forrer ility laws, placement r Ueucher ment was bhe Swiss Msion waa y accident ?oing into i.Vfvil (Paris) the Second 1898, Vol. i. For ex- question of in Nos. 160 December, I bctreTend che Unfall- ung betref- Bern 1889) ; iherung (B) iilirung des 89 ; and in the matter that it was important to deal in a comprehensive way with sickness in preparing to deal with accident. This changed the character of the (luestion entirely from one of Employers' Liability to one of Oblicjatory Insurance against sickness and accident alike. The tirst proposals for the following up of the revision by a special law on the subject were formulated in 1892, and in 1893. these were referred to a large commi-ssion of experts. In 1894 thTHE REPORT ON I"'- b IP m m I* '■ [ No. 48 partial. The Cantonal authority may on the recommendation of the District Sick Fund Committee increase the allowance to the full amount of the wages. These benefits last only one year. The revenue of the District and Factory Sick Fujids consists of grants from the Federal Government and of contributions from employers and work people. These contributions are fixed on a danger tariff. In the case of the higher rates the employer is not entitled to deduct the excess from the wages of his work people. The employer pays the full premium und deducts the authorized proportion from the wages paid. Accident Insurance is accomplished by the payment of one-fifth of the premium by the workman, three-fifths by the employer and the remaining fifth by the Federal Government. In addition to this subvention the Federal Govern- ment will make annual grants to Sick Funds, etc., and will defray the cost of establishing and administering the federal insurance office. The benefits are the same as those for sickness excepting when in case of permanent incapacity from accident the injured person will receive from the Federal Institution a monthly allowance equal to 60 per cent, of the diminution of his daily earnings likely to result from the accident. The Federal Insurance Oftice has power to make rules for prevention of accident. A special court is established for deal- ing with certain cases of disputes arising out of the law.O (12) Accident Insuuance in Austria. Accident insurance in Austria practically dates from the Accident Insurance Law of 1887. Prior to this law, in addition to recourse at Common Law, the in- jured person had the right of action against his master if it could be shown that the master had been careless in retaining in his service the person by whose fault the injury was caused (sections 1314 and 1315 Austrian Code). A further modi fication for the protection of the special case of railway servants was effected in 1869. This modification had the effect of shifting the presumption of blame upon the shoulders of an employer.(2) The leading features of the Austrian are some- what similar to those of the German law. The essential point is compulsory in- surance. Under the law of 1887 " all workmen and officials employed in manu- facturies, foundries, mines, (those for certain minerals excepted), wharves, ship- works quarries, and all localities pertaining to these works," and in general for ail works includ'ng agriculture, and forestry in which machines are worked by mechanical power were brought under the law of Obligatory Insurance. The supplementary law of the 20th July, 1894, extended obligatory insurance to per- sons employed on railways, in theatres, in fire brigades, and in cleaning streets, houses, chimneys and canals.(3) In Germany the organizations of Accident Insurance is industrial. In Austria it is territorial. The only Austrian "trade association" in the German sense is that of the railways. From the Austrian point of view the territorial system offers a pi-ospect of the ultimate unification of the whole system of life, health and old age insurance. The policy of the Austrian Government seems to be making in the direction of creating a local Industrial Board which will have under its charge the inspection of factories, mines, etc., as well as the administration of Workmen's Insurance. While the system is thus essentially a state system inasmuch as it involves a central board tis a supreme authority, administrative and judicial, it also involves a devolution of these powers to local authorities. At present there are seven of these local boards and the policy seems to involve their multiplica- (1) The Labor Gazette, Vol. VII, p. 356. (2) A. Poarco HigtfinR " Einployew' Liiibility . . . ," |>. 107. (3) Karl Kogler, (Lirector of the Workmen's Accident AHsurance Efitablishment for Lower Austria Die Arboitor-Unfallvorsicherung in Osterreich." Transactions of the Second Actuarial Congress. Ijondon, 1899, pp. 713 et seq. 1 1 1900 J WORKMEN'S COMPENSATION FOR INJURIES. m tion as may be found necessary. Both employers and employed are represented upon the Boards and are thus brought into close association. It is even proposed to place in the hands of these Local Boards the disposal of the insurance funds which might thus be used for building workmen's houses or other local purposes. In detail, the Austrian allowance for total incapa- city amounts to about 60 per cent, of the yearly wages. For death, the amount awarded depends upon the numbers and status of the dependants, illegitimate children as well as legitimate being provided for although not at the same rate. The specification of dependency is very precise in the Austrian law. In Austria, the principle of accumulation of funds for the purpose of cover- ing future liabilities has been observed instead of the Assessment system which has been adoped in Germany. These two principles characteristic of the Austrian method namely, the accumulation of funds and territorial adminiatration are due to Messrs. Emil Steinback and Julius Kaan. These principles have been adopted by Norway and have been proposed for Switzerland and Holland.(l) (13) Accident Insurance in Italy. The Accident Insurance Law of Italy was passed on the 17th March, 1898. Prior to its adoption, the subject was discussed at great length in the Italian Parliament and in the press and in magazines, chiefly by economists and lawyers. The principle points of difference were the following : — The expediency of State regulation of industry ; the system of professional risk as opposed to civil respon- sibility ; the expediency of obligatory insurance. The two principles upon which the Italian law is based are " professional risk " or " trade liability " and " obligatory insurance." The number of persons who are brought within the scope of the law is estimated at 1,700,000.(2) The average daily wage was estimated by the late Senor Auriti (3) at two lire for the men and one and a half for the women. These figures yield according to Senor Luzzati, the following results : — (a) An annual wage bill of 935 millions of lire ; (6) a charge upon the Italian employers for insurance against accident in terms of the Law of 8,400,000 lire according to the Italian accident tables, or 9,750,000 lire according to the German accident tables ; and the net results that the charge is equivalent to one per cent, of the amount of the wages paid. This net figure of one per cent, would, however, according to Senor Luzzati have to be increased, in order to provide for the costs of administration and the cost of legal proceedings (■*) in any estimate of the total cost to the community of the working of the law. " In taking account of the effects that may be foreseen from all these new elements of cost ... it may be concluded that the opinion ... of Senor Vitelleschi . . . was not exaggerated, when he estimated that the annual charge upon industry would be from 10 to 12 million lire. (1) Koyler op. cit. See also Ziicher, "Die Arbeiter-Versicherung in Oesterroich und Ungarn," Berlin, 1899 ; and " Oobaninfi und die Ergebnisse der Unfallstatistik . . . ," (annu- ally) («. (/.) 1890. Wien, 1898. (2) "'he.se and t)thor details are derived from Luzzati, (i., (Manager of the Italian Accident Assurance Company of Milan), " Los Accidents du Travail en Italie." See also Zacher " Die Arbeiter-Versicherung in Italion," Merlin, 1899: and Fessioro, Edgardo. " L'Assicurazione degli operai contro gli Infortuni sul Lavoro," Koma, 1899, (containing a copy of the Law of 17th March, 1898, with comments). (H) In his Rei)ort to tlio Ualian Senate, February, 1892. (4) This is an element very difticult to estimate. In (lermany the administrative costs in- volve, according to Senor Luzzati, an expenditure of 20 per cent, upon the amount of com- pensation paid, while the costs of legal proceedings under the exisiing laws are stated at five times those which fell to be paid under the former laws. cf. Luzzati op. cit. p. 740. The German Statistical documents tfo not, however, so far as I have been able to discover, precisely bear out these figures. '-. .--■i^fr- ■;. ■ :Xf -« s-u-. > 40 THE REPORT ON [ No. 48 " Whatever may be the reason, and by whatever name it may be called, this sum represents a new and heavy impost upon Italian industry, which, in its present circumstances cannot bear it without injurj'^ or danger ; and it will neces- sarily have to throw the burden partially upon labour and partially upon the consumers ; hence upon the shoulders of the very class which it was desired to favour by the new law."(') The adoption of the new law upon Workmen's Compensation had been to a certain extent prepared for not merely l^y the existence of a large number of accident insurance companies ; but also by the establishment at Milan in 1883 of the National Fund, and by the establishment in 1893 of the National Assurance Fund against Labour Accidents. The proposal to give these funds a monopoly was rejected by the Italian Senate, so that they work alongside the private insti- tutions which undertake accident insurance. (14) Accident Insurance in Russia. (2) Through the kindness of His Excellency Sir Charles Scott, H.B.M. Amba.ssa- dor at St. Petersburg, I am enabled to give the following Memorandum upon the state of the law^ as regards employers' liability in Russia. The Memorandum has been specially drawn up for this report by Mr. John Michell, Consul-General for Great Britain, in Russia. Memorandum Upon Compensation for Injuries to Workmen for Accident BY THE Consul-General for Russia at St. Petersburg. No special provisions are contained in the Russian code of laws for injur- ing working people at factories, mills, workshops, &c., against want, in the event of any of them being incapacitated fron^ labour through illne.ss, accident or death. The only legislation on the subject is to be found in the General Code of Civil Laws, viz., in sections 683, 684, 6s5, 574, 660, 661 ; partly also in the law relating to inspection of factories. The latter, however, partake of the character of police regulations, and have more for their object the prevention ol accidents than anything else. (Sgd.) John Michell. St. Petersburg, Nov. 14th, 1899. Translation from the Russian. Sect. 683. Persons suffering harua or loss in consequence of death or injury to health shall receive compensation from proprietors of railways or steam- ships on the basis of the following rules : 1. Proprietors of railwaj^s or steamship enterprises (the Crown, companies or private individuals) are bound to compensate everyone who may have suffered harm or loss by death or injury to healtli caused in the exploitation of railways or steamships. The compensation is fixed in accordance with sections 657, (io8, 659, 660 and 661 with the observance of the rules laid down as under. 2. The proprietors of railways and steamships are absolved from the necessity of com- pensating those who may have suffered injury or loss when they can prove that the accident did not occur by fault of the manager of the enterprise or their agents, or that it arose from uncontrollable circumstances. 3. The application of the rules 1 and 2 cannot be set aside or modified by private managements with (1) LiizzHti op. oit. p. 740. (2) See also V. P. Letvenov-FHlenski, " Kmi)loyorB' Li»bility," St. Petersburg, 185M). (In Russiiin) ; iind Pokotiloff, A., " Coinpi'nsiition for Accidents in Russia." Transactions Second International .Xctuarial CongrosH London, 18W p. 703. No. 48 led, this li, in its II neces- pon the sired to een to a niber of 1883 uf 5SU ranee lonopoly ite insti- Linbassa- ipon the dum has neral for lCCIDENT or inhur- b, in the accident ral Code 1 ihe law iharacter iccidents ELL. or injury r .stoam- pume.s or I Murt'ered railways 657, (i.i8, •2. The ,' of coni- •ove that 3 or their cation of nts with , 1H!)9. (In )ns Second 1900] WORKMEN'S COMPENSATION FOR INJURIES. 41 railways or steamship passengers or other persons. 4. The extent of the compen- sation must depend exclusively on injury suffered in each separate case. 5. Com- pensation is made in accordance with the wishes of the injured (a) either in the shape of a sum of money paid down at once ; or (b) in the shape of an allowance paid annually or at determined periods. 6. In the event of new circumstances coming to light the amount of compensation periodically paid can either be increased or diminished by a court of law at the request of the party receiving or paying the compensation. 7. Claims for compensation must be made within a year if the accident has occurred on a railway and within two years if on a steamer. Railway proprietors and steamship owners have the right of recoveiing from their agents who may have been the cause of an accident any amounts they have been compelled to pay in compensation. Sect. 684. All persons are bound to make compensation for injury or loss caused to anybody by their act of commission or omission, even if such act or neglect do not constitute a crime or offence, if it were proved that he was not obliged to act as he did by requirement of the law or government or in necessary self-defence or by a concurrence of circumstances which they could not avert. Sect. 685. Injuries and losses so occasioned are compensated under the rules laid down in sections 671 and 673.* When these injuries and losses neces- sarily result from some structure established by the defendant, such as a mill, sluice, dam, barrier, etc., and the same continues to cause anybody injury or loss, or threatens fresh injury or loss, the defendant is bound to abolish such structure, and should he not do so within a given term the abolition shall be carried out by the police. Sect. 574. As under the general law no one without the adjudgment of a tribunal can be deprived of rights belonging to him, every detriment to property and losses and injuries caused to any persons on the one hand impose an obliga- tion to afford, and, on the other, to create the right of demanding compensation. Translation from the Russian. Sect. 657. When it shall be established that the person who has lost his life in consequence of a crime committed on him had supported by labour his parents, wife or children, if he possess no other means, or if such be insufficient, out of the property of the person who was the cause of death, the court shall apportion sufficient maintenance for the family of the deceased, the amount allotted being commensurate with the property of the guilty party. Sect. 658. All expenses attending the medical treatment, nursing and funeral of the person deprived of life shall be defrayed out of the property of him who was the cause of death. Sect. 659. In the event of the deprivation of life of a person of the taxable class, all arrears of taxes due to the (Jrown shall be recovered from the property of him who was the cause of his death. Sect. 660. Anyone guilty of causing injury to health is l)Ound to repay all expenses attending the medical treatment and nursing of the person whose health he has injured, and if the person injured have a family who is supported by his labour, he who has caused the injury in question shall pay the expenses of the maintenance of the family to the complete restoration to health of the injured party. St'ct. 6()1. It' anyone by the commission of a crime or offence committed against a person shall suffer such injury to health that he is permanently disabled to earn his livelihood, the party guilty is bound to provide for the sufferer and his family in so far as his means will permit, paying annually a sum fixed i»y the courts for the jiurpose until the death of the person whose health has been * Spct. ff!\. Refers to onmpenRatinn to be made incases of appropriation of property belonging tu othe perBons in which rpstitution is to bo made in kind or in vahie. Sect. t>73i Refers to compensatioa for destruction or injury to property. 42 THE REPORT ON [ No. 48 injured, then his parents and wife; so lon^ as she does not remarry, and after the death of the parents, until the sons attain majority and the daughters contract marriage. (14) General Concluions. In forming general conclusions concerning tho working of the new laws upon workmen's compensation which have been recently passed by nearly every country in Eiirope, regard must be had to the facts that (a) during the past few years the industrial and commercial populations of Europe have been enjoying a period of remarkable prosperity, and (6) that the strain upon any system of in- surance does not come upon it fully until it has been in existence for a few years. (a) The industrial prosperity in Europe has not been confined to England. Germany, France and to some extent Russia have also enjoyed it. Wages have been relatively high and profits have been large. Under these circumstances payments by way of premiums or even actual disbursements for accident-costs are likely to pass without serious question. No doubt the larger the number of persons employed, and the greater the amount of production, the greater the num- ber and the costs of accidents ; and as trade becomes less brisk, a diminution all round may be expected, of accidents as well as of wages and profits. The amounts paid by way of compensation for accidents will be less, but the administrative expenses will not be materially diminished, while the "sick funds" may have to bear heavier charges. (6) The " assessment system," as in Germany, and the "accumulation system," as in Austria, are alike on their trial ; and both may have serious strains to endure should a succession of bad harvests or other potent causes produce a fall- ing oflf in the earning power of those who just now are able to support without difficulty the burden of the charge. The following special points may be noted : — (1) The dependence of English legislation upoh the old principle of employers' liability with recent " inversion of proof" under the Work.nen's Compensation Act. (2) The adoption of obligatory insuiance by Germany, Austria and several of the smaller European countries. (3) The adoption of the principle of " assessment " buttressed with reserve funds by Germany. (4) The adoption of the principle of "accumulation of funds" against liabili- ties in respect of pensions by Austria. (5) The adoption by France of the principle of State guarantee of compensa- tion, the State having recourse against the employer. (6) The tendency towards bureaucratic management, which is most manifest in Germany, moditiod in Austria and confined to control in France and in Eng- land. {7) The association in Germany especially of group autonomy with bureau- cratic control ; tlie trade associations being self-governing v/ithin large limits. ^8) Relief, in Germany for example, of the injured workman without the necessity of incurring the cost in time and money of fighting to the Court of Appeal for his compensation. (9) In general, continental legislation may be said to have gone far towards providing certain compensation to the workman for injury, irrespective of the culpability or even of the liability of the employer. (i) (1) On the nbove and other similar points, see Bodiker I, "Die Arbeiterversicherung m den Eur(»i)aiHchi;n Stnaten," Leipzig, 1805 ; the interesting review by H. W. VVolfl", Economic Journal, vol. 5, p. <512; Clay. W. J., "The Law of Eniployera' Liability and Insurance against Accidents" in the Journal of (.'omparative liOgislation, vol. ii, 1897< pp. l-lll,and Flux, A. W., "Compensation Acts in Europe," Fxc nomic .Journal, vol. viii., p. 559. 1900] WORKMEN'S COMPENSATION FOR INJURIES. 48 (10) In adoptin<» any legislation in the direction either of the continental methods or of the English methods it would be essential to discover so far as pos- sible to what extent any proposed scheme will simply redistribute an existing burden with an added cost for the redistribution and to what extent it will impose fresh burdens upon industry or upon the community. ") In Germany, as will be observed from the particulars given with reference to sick and accident insurance existing associations were incorporated into the insurance system. So far as Germany is concerned it would appear that this union of State administration and quasi-voluntary effort has been on the whole successful The English system involves a modification of this in respect, that while there is no obligatory insurance as in Germany, there is obligatory compensation, the liability for which compensation may be insured against by means of ^' contracting out," provided this " contracting out " be done through approved benefit societies. This provision is objected to by the Trade Unions and is probably destined to some modification. It does not, however, appear as yet to have any considerable influence upon the friendly society system as a whole. A comparatively small number of societies have applied for approval under the Compensation Act. (2) This suggests that the Friendly Society managers do not think that the Act will interfere with their busi- ness to any extent. But what would the effect upon the societies be, if as is the case with analogous societies in Germany, the Trade CFnions and the friendly socie- ties were to be regarded as liable to give medical aid, etc., in all cases at once, the sum so expended to be afterwards recouped by the employer or by the State ? The difficulty of predicting the effect of any such movement has in England made the working people and the Government alike pause. The German system may fairly be described as a system of compulsory in- surance, in which the^ premium is paid partly by the particular enterprise or business concern, parlly by the industry or group of indus'^ries to which the business concern may belong ; partly by the workmen as inc'.ividuals ; partly by workmen in ;^roup8 (sick associations) ; and partly in case of need and for pur- poses of administration by the State. Prevention of accidents and compensation tor them when they do occur are both rendered more eflfective, it is thought, by mutual liability instead of individual liability. The English system, on the other hand, discourages " mutual liability " by placing barriers in the way of " contracting-out," while the English trade unions appear to desire to abolish all forms of " contracting-out," which policy, if it were fully developed, would involve more firmly than ever the fixing of in- ^ : v, On all grounds, so far as any definite conclusion is suggested by the forego- in,y, it would appear to be. wise to wait for some time in order to ascertain more fully what has been the effect of the change of principle in the English Law ; and to ascertain also whether further change in the direction of the German legislation or otherwise be not imminent in England. The mere drafting of the English Act has proved to be so defective that some amendments are indispensable. Although the English and other experience is quite essential to know, the special conditions in Canada must be taken into account. A haphazard adoption of the English system here would probably lead to so much uncertainty and so much litigation that disappointment would inevitably result It is only fair to face the contingencies fully. It is clear that such legislation means really the redistribution of an already existing charge with perhaps some added cost which may arise in consequence of the redistribution. It would be well, as it seems to toe, if it be practicable, to have some calculation made as to the cost in Ontario of such risks as would be involved by the adoption of an Act similar to the English Act of 1897. From the wide difference of risks in different employments and in different places, the equitable rates ' compensation and of insurance vary widelyf All this would require to be tak ' into account. The question must be looked at largely from an actuarial standpoint, and if possible the incidence of the proposed burden should be determined. If it were found on examination that under the existing conditions of industrj'^ in Ontario, the adoption of such a measure would involve a burden upon the organizers of labor, which the industries presently carried on here could not bear, the advantage of its adoption does not seem obvious ; on the other hand, it might be found that a more equitable distribution of the cost of accident than that which pre- vails at present would result under an Act similar to the English Act, and that no material disturbance of existing relations would result from its adoption. That the risk can be insured against does not, from the English experience, seem to effect the question materially. In those industries in which wages form a large part of the cost of production, the pressure of the rate upon the industry might be so considerable as to obliterate the margin by which under conditions of competition it is kept in the Province. Thus, if the rate of insur- ance against given risks amounts to ^ per cent, upon the wages paid, and the amount of wages paid be $100,000 the premium would be $500. If the capital employed in the industry were $10,000 this would amount to 5 per cent, upon the capital involved. Unless the market admitted of an advance in the price ot the goods manuf ictured while the elements of cost remained the same, or unless the cost of the law material were reduced, or wages diminished correspondingly, it is clear that as resfards t'aat particular industry the inducements to undertake it would be less by 5 per cent, upon the total capital than they were before. It may be that if an Insurance Company fixed a rate which would be certain to cover the risk the nature of which was not susceptible of precise actu- arial determination, it might do no business and the risk would then fall entirely upon the employer, who would have been deprived of the resource which he has at present, viz., to insure against a loss whose incidence is fully known, and \- 4. \ri \n \ I r which is not excessive. Given a serious increase in the number of cases in which compensation claims arise, the plain question is, can a rate be fixed which could be paid in average trading years ? On the other hand, it is the case that the industries carried on in Ontario most extensively are not the most dangerous ones — that the number of accidents is not large, partly owing to the conditions of labour, which are on the whole good, and partly owing to factory and other legislation devised for the purpose of preventing accidents. It is possible, therefore, that a rate so low as to form no heavy burden upon industry might be found to be adequate. If it were not found to be adequate, there would be no alternative but the f • nation of a State Department and the sharing of the liability among the public, the employers,, and perhaps also inevitably the workers, either directly, or through the influence, seen or unseen, upon wages, of the adoption of the mea{?ure. Measures of this, kind cannot be administered without cost. It is hard for one country to go much in advance of others in legislation. The growth of what is called "social legislation" has been possible in the less influential countries merely because the more influential ones have adopted it previously. No doubt in all countries whose primary need is popu- lation there are strong practical grounds for encouraging immigration by pre- cisely such means ; by making the country a desirable one for the working man to live in — making it, in short, his interest to live there. Similarly in those countries which, like Germany, have lost heavily by emigration, it is equally expedient to check this emigration by laws having for their object the ameliora- tion of industrial life While undoubtedly workingmen are attracted to a country where the con- ditions of labour are good, where wages are high, factories well appointed and well looked after, hours not excessive and the general conditions of life agiee- able, and are repelled from countries where the reverse is the case, it is also true that these conditions are largely the outcome of the competition of capitals seek- ing employment, and that capital is " easily scared " is when all is said, an im- f)ortant fact. Yet in the long run every improvement of the condition of labour eads by natural growth of the population or by immigration to the increase of the number of labourers and thus to the abundance of labour which enable* the capitalist to employ his capital oi\ terms that will yield him a profit. In default of any other system of organization the absence of voluntarily supplied capital in abundance for a country undergoing rapid industrial development must cause serious practical inconvenience. It is well known that with the facilities for obtaining credit which the Cana- dian banking system affords, many manufacturing businesses in Canada are con- ducted by means of an exceedingly narrow margin of business capital. Many so- called employers are really workingmen making in normal years a barely living wage hoping that an extraordinary year may enable them to realize larger gains. This has led to the growth of a great number of small firms doing a manufactur- ing business and borrowing upon the parts of things as they are made. The tax upon industry which would be involved in an extension of the Compensation Acts would if owing to external competition it could not be shifted upon prices be virtually a tax upon management and labour rather than a tax upon capital. Legislation which would make small concerns more difficult to conduct or which would wipe them out could scarcely be defended on any gr(mnd.(i) If accidents occur which are preventable by means of legislation, humanity (1) " The Secretary of a Masters' Mutual Insurance Association told me that small employer* " in his trade had been simply ruined by compensation cases (brought under the Act of 1880) '* succesufully carried against them. They work with a very small capital and any little extra burden may break them." W. H. WolflF, "Employers' Liability— What Ought it to be?" London, 1897, p. 23. [ No. 48 1900] WORKMEN'S COMPENSATION FOR INJURIES. 47 jases in which d which could on in Ontario sr of accidents on the whole )r the purpose ow as to forra If it were not ion of a State he employers^ the influence, jasures of this in legislation. 1 possible in ial ones have need is popu- ration by pre- working man arlv in those it IS equally ; the ameliord- ^here the con- appointed and } of life agiee- it is also true capitals seek- s said, an im- tion of labour he increase of which enables him a profit. voluntarily •id industrial ich the Cana- nada are con- al. Many 80- barely living 3 larger gains. i manufactur- de. The tax ompensation d upon prices upon capital, iuct or which would determine that legislation should be passed without delay. But this is not a case of that kind. It is rather a question of the distribution of the cost of accidents which ex hypotheai are not preventable. At present the employer bears a part under The Workmen's Compensation for Injuries Act (R.S.O. 1897, c. 160); the workman bears a part where contributory negligence on his part diminishes or neutralizes the liability ot the employer, or he bears a part in respect to his payments to friendly societies or labor organizations, who, in turn pay him sick allowances, or in case of death pay his family the amount for which he was insured. The public also bears a part where, as is sometimes the case, the dependants of the injured or dead workman are thrown upon the charity of the public for support. The effect of a ^Vorkmen's Compensation Act for Ontario if it were as it is in England, would, no doubt, be in the direction of throwing the whole cost of industrial accidents upon the particular industry — a tax upon management and partly no doubt also upon capital and upon labor. Only in certain cases could it be transferred to the consumers. If this arrangement were found to be oppressive, as conceivably it might, especially if the system were extended to small concerns, to go back would be found to be impossible, and there would be no alternative but the payment of a portion or even, perhaps, the whole of the compensation out of the public funds, with perhaps an extension of the criminal code to include employers' or work- men's negligence in all cases where accident resulted from this cause. The cii'cumstance that to a larger extent than is the case in almost any other country, the people of Canada, as farmers, miners, fishermen and the like employ themselves and are not in the position of employees, must render any compensation scheme which depended upon the principle of Employers' Liability alone, effective to a very limited extent. ADDENDUM. The statistical results of the first ten years working of the German and Austrian laws are well worked ct by Professor A. W. Flux in " Compensation for Industrial Accidents." Manc,\eater Statistical Society Transactions, 1898, pp. 267-806: on, humanity small employers bhe Act of 1880) anv little extra ght it to be?"