present insolvency could be strengthened by making the judgment a preferred claim, even as against mortgages or other liens created after the enactment of the law.

XXV. COST OF COMPENSATION.

There has not been sufficient experience under compensation laws in this country to determine just the amount of the burden, if any, placed upon employers by these laws. There is no doubt but that upon the whole the cost to employers is considerably more than the cost under liability laws as they existed at the time of the adoption of the compensation acts. While here and there one finds an employer whose cost has been less under the compensation act than it had previously been under liability laws, this condition is principally due to the limited experience that these particular employers have had. It can not be definitely ascertained whether or not the compensation act is costing employers more than the liability law, with the three defenses taken away, would have cost them for the reason that comparatively few employers have remained under the liability law since these changes were made, and the experience of those remaining under it has been too short. As pointed out in Section III, in the absence of compensation acts, the employers' liability would eventually have been greatly increased over what it is at present.

It is argued by many that the cost of workmen's compensation does not place a burden upon employers or upon industry, as it merely regulates a burden that already exists in some form or other, and distributes it by means of insurance, the cost of which is eventually paid by the public.

While some employers complained of the increased burden placed upon them by the compensation act, the commission found the general feeling among them that the increased cost was not a real burden and that there was a general willingness to pay it rather than to revert to the old system of employers' liability. They feel that compensation places one of the problems arising out of the relation of employer and employee upon a just basis; and that the cost, falling upon all employers, is added to the selling prices of their commodities and is paid by the public. This condition is brought about more readily in some industries than in others. It constitutes an addition to the labor cost which, instead of being paid out in the form of wages to be expended by the workmen upon their every-day living expenses, is placed in some one of the different forms of insurance funds to be saved for the day when misfortune overtakes the unfortunate victim of industrial accident while he is engaged in producing the commodities or supplying the services essential to the existence and happiness of the consumer. This does not mean that the actual cost to the public is necessarily increased, as a large part of this cost is directly borne by the public without a compensation act in the expenses of charities, court proceedings, and otherwise. The commission has not been able to determine definitely how much the court expenses will be reduced, but estimates have been made, which it believes are fairly accurate, that in large industrial centers at least a third of the time of the trial courts has been consumed in employers' liability litigation. This is all

removed under a compensation act so far as the trial courts are concerned. If these figures are correct, the cost of jury fees will be reduced one-third in manufacturing centers. To illustrate, in a county in the State of New York, having a population of about 300,000, the jurors' fees amounted to $44,883.17 during the year ending September 30, 1912; if these are reduced one-third, the saving to that county will be approximately $14,000 in jury fees alone. The overseer of the poor of a large city in the Middle West stated that the expense of his office and the amount paid out for poor relief has been reduced 25 per cent. A saving of poor-relief cost as a result of a compensation act means more than the saving of the cost arising directly from industrial accidents, for the reason that where injured employees or their families are placed in a position where they are compelled to seek relief of this kind, there is danger that some of them will be weak enough to acquire the habit, and continue to seek such relief in later years, although the direct result of the injury has been remedied.

A member of the Massachusetss industrial accident board made the following deductions for the commission:

By the reduction in the number of accidents and a lessening of their severity, hundreds of thousands of dollars in insurance premiums, now paid because of present conditions, will be saved; just as fire insurance premiums are most materially reduced for those who take steps to safeguard against fire.

Nearly one-half of the money now spent for workmen's compensation insurance can be saved to the employers, while the wage earners will save the loss of the halfwages they now lose when under compensation, for they will not be injured and will therefore keep at work continuously instead of suffering pain personally, and their families privation, if not actual want. Through this saving, other and material benefits will accrue to the employees.

The present source of social waste runs into enormous figures. It is estimated by those who have made a study of industrial accidents that 50 per cent or more of such accidents are preventable; 25 per cent, judging from experience in those great workshops where this matter has been given most serious attention, can be prevented by the adoption of safety devices; from 25 to 40 per cent can be eliminated by educational work, instilling the safety idea into the minds of the workers and, in fact, of all the people in this Commonwealth.

The only information that this commission has received upon the subject of increased cost under workmen's compensation laws is that derived from 526 employers in different States, who reported their cost under the act with a comparative statement of their cost under the liability law for a similar period. These employers have paid under the compensation acts a total of $1,215,690.50, and for a similar period the same employers paid under the liability law, either in the form of insurance premiums or in payments direct to their employees, or both, the sum of $730,857.24. These reports, divided into States, are as follows:

The Massachusetts industrial accident board, in its report for 1913, publishes the result of its investigation as to the amounts paid beneficiaries of employees who were not under the compensation act and the amounts such beneficiaries would have received had the employees been uder the compensation act. The board found that such beneficiaries received only $60,322.42, an average amount in each case of $701.42, whereas had the employees been under the compensation act, the beneficiaries would have received $164,488, an average of $1,900.57 in each case.

STATISTICS.

No real knowledge of the operation of workmen's compensation acts can be acquired until complete statistics have been gathered. This is distinctly a public function, as the statistics should be gathered as a public benefit and be open to the use of all. Some of the States have recognized this necessity by requiring that State boards shall compile statistics. In those which have attempted such work the experience has been too short to reach a conclusion, but a good start has been made. However, this commission is of the opinion that the appropriations made in the different States have been inadequate properly to organize statistical departments. Injustice that may exist through the law can not be remedied until the facts are known, and the facts can not be known until complete statistics have been compiled. The insurance features of the law can not be worked out properly in the absence of statistics. The commission found everywhere a demand for statistical information. The State commissions are doing their part but are handicapped by lack of funds. This commission has no hesitancy in reaching the conclusion that the people of the several States are anxious to have created and maintained well-equipped statistical departments. There are presented herewith such statistics as the commission has been able to compile through the courtesy of the different industrial accident boards. (See Appendix No. 7A.)

XXVI. SUMMARY AND CONCLUSIONS.

In conclusion, the commission found that workmen's compensation acts, either compulsory or elective, have in a large part of the country become the prevailing method of adjusting the financial losses inflicted upon workmen by industrial accidents, and that not only are more than 5,000,000 workmen now operating under compensation laws, but that laws going into effect during the coming year will bring several million more workmen under this system. Even elective acts have been so generally accepted by employers and employees in States where they are in force that in those instances a vast majority of industrial accidents are covered. In those States that have had experience under the law general satisfaction is given both to employer and employee, and the opinion is generally expressed by those whom the commission met that such principle will soon be the ruling doctrine throughout the country. Nevertheless, here and there an employer was found who, owing largely to his peculiar kind of business or his particular experience, criticizes the principle of the law. These cases, however, were scattered and were confined as a rule to men who had few if any accidents in their plants. Some employers had

not accepted the law for the reason that they were carrying on plans of their own which they considered better.

While at the outset the compensation acts were not exclusive, but were given in addition to the workmen's common-law right of action for negligence, the tendency to make the compensation remedy the exclusive one has grown until now the majority of the statutes furnish an exclusive remedy, and it can be well said that the principle of making the remedy exclusive, provided the compensation is adequate, is now accepted by both employers and workmen as the proper method.

The laws have improved the relation existing between the employer and employee; they have had a marked effect upon accident prevention by calling attention to the subject and exciting interest in safeguarding machinery and in the organization of safety committees, and they have created a general campaign for accident prevention. The difficulties feared by some employers and some workmen have not, to any great extent, materialized under the actual operation of the laws; while the commission heard some statements to the effect that the laws lead to fraud, deception, and malingering on the part of employees, and discrimination by employers against certain classes of workmen, these complaints have generally come from those who have had little or no experience under such a law, or have had so few accidents in their establishments that their opinion can hardly be considered against those of men at the head of establishments who have had a large and active experience even in the short time that the laws have been in effect. The latter class of employers generally stated that they have found little, if any, malingering or deception; that that can be avoided; and that the laws are easy in administration and fair in their operation. However, it is claimed by some that there has not been sufficient experience, during the short time that the statutes have been in force in the United States, for these troubles to develop; that they do exist in European countries; and that they will develop here unless the administration of the laws is safeguarded in these respects. (See extract from Report of Massachusetts Industrial Accident Board, Appendix No. 5a.)

In the States where there are industrial accident boards having power to pass upon settlement agreements, to make rules and regulations, to require the filing of receipts showing the actual payments of compensation to the men, and having arbitrations and hearings before them in cases of dispute, there was found no danger from fraud or deception on the part either of the employer or the workman. these States the law is being fairly administered, and employees are receiving promptly their full compensation under the law. It is evident that the law can not be well administered except through a board or officials charged with powers and duties similar to those of the existing State boards.

In

It is the general opinion both of employers and workmen in the States covered by this inquiry that all employments with the possible exception of farm labor, domestic servants, and casual employmentsshould be included, and that any restricted classification is not only unjust but leads to confusion and uncertainty.

The subject of medical attention to injured employees is one of utmost importance. With a few exceptions, the States require that the employer, in addition to the compensation, shall pay the medical

bills of the injured workmen, with certain restrictions. Outside of the State of Washington, the commission found no sentiment opposed to this requirement, it being generally conceded that the workman is not only entitled to medical treatment in addition to his compensation, but that it is to the interest of the employer and society to see that he receives it, thereby to minimize the extent of the disability. There has been a great deal of discussion, however, with regard to the cost of medical service. Various methods have been suggested and are now being worked out in different States for the purpose of reducing this cost which amounts to a sum equal to 40 or 50 per cent of the amount of compensation received by the workmen.

The amount of compensation has aroused considerable discussion, and it varies from 50 to 663 per cent of the wages of the injured employee, with minimum and maximum weekly amounts varying in different States, to be paid during the period of his incapacity or, as in some States, limited to specified periods, with definite allowances for amputations and certain enumerated injuries. While employers, in States paying only 50 per cent of the injured workmen's wages, feel that their schedules are fair and are fearful of the effects of increasing the percentage, there is not much complaint from enployers in States having a higher rate of compensation. Employers do, however, insist that the amount of compensation should be definite and certain, with as much uniformity between the different States as possible, and with the statutes so drawn as to avoid uncertainties and litigation with its consequent waste. There is considerable sentiment among employers in favor of having the elective acts made compulsory so that the cost will be uniform. Among workingmen the sentiment for compulsory compensation laws is practically uniform, and the tendency of legislation is in the direction of compulsory enactments. This is evidenced by the recent change in Ohio and California from elective to compulsory acts, and by the adoption in New York State of a compulsory act.

Litigation, so far as accidents to workmen are concerned, has been practically eliminated in the States in which compensation acts have been generally accepted by employers. About 2 per cent only of the compensation cases are disputed so as to require arbitration; not more than 10 cases out of 10,000 compensation cases have gone into the courts. The payments of compensation to employees are prompt and usually commence at the end of the second or third week, and where arbitration is had, the payments are not delayed on an average more than three or four weeks.

One of the most difficult problems, and one that has caused more diversity of views than any other, is that of protecting the injured workman against the insolvency of his employer. As the payments are not usually made in lump sum but extend in some cases through a long series of years, this is important from the standpoint of the workman and his family. The commission found it generally accepted by employers that the workman was entitled to as full protection in this respect as possible. The only difference in opinion was as to the method of protecting him or insuring him. In most States the commission found the workman indifferent as to the method of protection so long as he was properly insured against default on the part of the employer. A strong feeling existed among employers against being