1901 1902 1903 1904 1905 1906 One cotton-trade mutual insurance association, covering 40,000 work people, originally estimated the cost at one-eighth of one per cent on wages for weaving, and three-eighths of one per cent for spinning, but found that one-sixteenth of one per cent was adequate for weaving, and thought a little more than one-fourth of one per cent would suffice for spinning. The Master Cotton Spinners' Association, paying £3,000,000 ($14,599,500) a year wages, which had estimated the cost of spinning up to one-half of one per cent, gave evidence showing a similar cost, though it had secured insurance at less. A mutual builders' accident insurance company that "insured some thousands of firms," found without, however, reserving for permanent injuries, that the cost was one-half of one per cent. A large firm of building contractors courteously related their own experience. They stated that they transfer the cost to the purchaser in their contracts, and that they also protect themselves by contract with their sub-contractors against claim by the sub-contractors' men, though in practice the latter invariably proceed against the sub-contractors. RATIO OF ACCIDENTS TO TOTAL WORKMEN EMPLOYED AND OF COMPENSATION TO TOTAL WAGES PAID BY A FIRM OF BUILDING CONTRACTORS, 1901 TO 1906. As to the regular commercial insurance companies, the committee quoted especially the evidence of Mr. S. Stanley Brown, general manager of a leading company, who said that rates of insurance against accidents charged by an association of these insurance companies, which were at first based on the German and Austrian experiences, had been found too high, and in June, 1899, were reduced one-third, resulting in the percentage of rates on wages shown in the second column of the following table, while his own company's rates for December 31, 1903, are shown in the last column of the table. His company gives the average of all rates charged by them as nearly 1 per cent. RATE PER CENT ON WAGES IMPOSED FOR INSURANCE AGAINST ACCIDENTS IN VARIOUS INDUSTRIES BY AN ASSOCIATION OF INSURANCE COMPANIES IN 1899 AND BY A LEADING COMMERCIAL INSURANCE COMPANY IN 1903. The reports of the same insurance company show an almost steady yearly increase in the average cost of each accident settled, as follows: Each death case cost £113 ($550) during 1901, increasing to £177 ($569) during 1905; each permanent disablement case cost £55 ($268) during 1991, increasing to £87 ($123) during 1995, and in 1906 to £97 ($172); each temporary disablement case cost about £5 ($21), with little fluctuation during the period. The committee said that it was through such associations of masters and men, respectively, and the ordinary insurance companies that the financial burden was removed from the shoulders of the individual employer and distributed more or less equally throughout the trade. The actual cost of the compensation acts to the different trades is not to be had officially, with one exception, that of railways. In the home office returns it is stated that the total amount paid by the railway companies as compensation under the act in the whole country was £118,819 ($578,379) in 1899, £146,027 ($710,610) in 1900, £153,928 ($719,091) in 1901, £144,155 ($701,530) in 1902, £155,495 ($756,716) in 1903, and £162,155 ($789,127) in 1904. Bankruptcy of Employer. It was found that so far, owing to prosperous times and the act being limited to the large employers, there had been little difficulty from this source; however, the committee felt that the danger of distress to workmen through it happening was very real and should be provided for, especially if the act were extended to cover small employers. They advocated substituting for the personal responsibility of the individual employer the security of a solvent insurance fund. The committee attached great weight to recommendations of statutory regulation of all insurance companies undertaking the risk, such as exist in America, etc., to provide against dangerous competition, and draw attention to the necessity of seriously considering a State or compulsory insurance, in some form or other; especially was this necessary to enable the workmen of the small employer to get his benefits, since through ignorance or inability his employer failed to insure in many instances. The committee concluded that this evidence showed that the burden on employers had as yet not been excessive, but that it tended to increase. This suggested caution in legislation increasing it and especially in adding to its indefiniteness or uncertainty. CHOICE OF REMEDIES AND LIABILITY OF EMPLOYER. The committee reached the conclusion that the provisions of section 1 (2) (b) and (4), permitting choice of the remedies of suit under the employers' liability act of 1880, or common law, or proceeding under the workmen's compensation act, and also allowing the benefits under the latter to be assessed on failure of suit under the former, had worked largely to the disadvantage of both employers and workmen and were responsible for a large amount of illegitimate legislation, in that they had resulted in the illegitimate use or threat of use against the employer of the remedies at common law and under the employers' liability act of 1880, either for the purpose of benefiting the unscrupulous lawyers, who could thereby run up the costs, or for the purpose of improperly forcing settlement under the workmen's compensation act, and that the judge's power to assess the costs of an unsuccessful suit against the compensation under the workmen's compensation act was in practice rarely used and was therefore ineffective as a check. That this abuse had assumed somewhat extended proportions was shown in the fact, that according to Mr. Troup's testimony, in litigated cases in 1902 the cases under the employers' liability act amounted to about half the workmen's compensation cases in Scotland, as against one-third in England, and that the costs under the employers' liability act averaged £25 ($121.66), as against £11 ($53.53) under the workmen's compensation act. A simple remedy for these abuses would have been to repeal the employers' liability act and common-law rights or consolidate them with the workmen's compensation act; however, while admitting that the testimony showed that the advantages to workmen were great of proceeding under the workmen's compensation act in preference to taking the risks, uncertainty, and costs of suit under the old remedies, they believed repeal of those old remedies was not justified, as there were cases where they were the more appropriate remedies, though they anticipated they would fall more and more into disuse. Another suggestion considered was to grant higher benefits under the workmen's compensation act where there was much pain or suffering, disfigurement, extraordinary expenses of cure, or wrongful act or default of employer. This they believed would only be re-enacting the employer's liability act as part of the workmen's compensation act and would be more of an incentive to attorneys to litigate in a larger number of cases, on the chance of securing the higher benefits than the existing election, which tended to prevent litigation somewhat. Therefore, to prevent these abuses without preventing recourse to those old remedies in cases where they were really appropriate and at the same time without inflicting any real loss upon the workmen, the committee recommended the repeal of section 1 (4), which gave the court power to assess compensation after unsuccessful suit under the employers' liability act of 1880 or at common law and the adoption of provisions enabling employers to apply to the judge for a stay of any such suits (commenced or threatened) on evidence that the workman had an adequate remedy under the workmen's compensation act; also, that a plea to that effect might be made available as a defense to suits under the employers' liability act of 1880 or at common law. This would leave it open to the court, if it thought the workmen's compensation remedy inadequate or that there was good ground for a suit at common law or under the employers' liability act of 1880, to refuse the application or, if it thought otherwise, to stop the suit. 1899 1900 1901 1902 1903 1904 DEFENSES OF FELLOW-SERVANT NEGLIGENCE, ASSUMPTION OF RISK, AND CONTRIBUTORY NEGLIGENCE. The committee said that the principle of the workmen's compensation act was essentially different from that on which the old remedies were based, and that it had largely superseded the old remedies and would in future entirely supersede them; that it was, therefore, undesirable to bring those old remedies into more active operation, which would result from any attempt to abolish the doctrine of fellow-servant negligence, and so forth, and that so doing would open the flood gates to a stream of litigation without affording any more effective remedy than now provided by the workmen's compensation act. They therefore recommended leaving the common law and employers' liability act unchanged, on the expectation that they would gradually cease to be used. The wisdom of this is illustrated by the home office returns of the figures for death, which is more likely to result in suit than less serious injury, given in the following table: AVERAGE DAMAGES IN CASE OF DEATH UNDER EMPLOYERS' LIABILITY ACT AND AVERAGE COMPENSATION UNDER WORK MEN'S COMPENSATION ACTS, 1899 TO 1904. The average amount of lawyers' costs was approximately £25 ($122) under the employers' liability act and £13 ($63) under the workmen's compensation act. ARBITRATION AND LITIGATION. The committee inquired as to how far criticism of the act was justified on the score of litigation and how far it was due to preventable causes. They found that the vast majority of cases were settled by agreement, without litigation. Secretaries of the leading trade unions gave details showing that many unions had all accidents reported, and settled the bulk of the cases for the men without any cost, and that some cases of difficulty were settled by their lawyers. The use of lawyers varied somewhat in the different trades, as did the arbitration and court cases, the latter being covered in most trades by 5 to 10 per cent of the cases. In the South Wales Miners' Federation (130,000 men) the number of court cases was said to be "infinitesimally small," and then were cases only where a question of principle existed to be settled, or a dispute as to facts, although there had been several disasters in the trade. Employers' associations and mutual insurance associations corroborated the trades union testimony that 95 per cent of the cases were settled out of court. Other insurance societies and two leading railways said that only 1 per cent of claims were arbitrated, the rest being settled by agreement. The secretary of the Cotton Trades' Insurance Association (formed after the 1897 act) said that his practice was to settle with the trades union secretaries; that he had only 1 per cent of cases in court, and that only two cases had been brought under the employers' liability act of 1880, and those in the first year of the association's existence; that it was in the nonunion trades that men went to attorneys, who ran up the costs. The limitations of employment covered by the acts were found to be responsible for most of the litigation. In 1902 forty-three appeals out of ninety-five turned on the question as to whether the employment was or was not within the act. The committee felt that the inclusion of all building operations under the act, even the small builders, would obviate litigation arising out of the limit to over 30 feet in height, the requirement of scaffolding and the employment of machinery, etc., and that the removal of the 20 feet deep limit from quarries and the removal of the special requirements as to laundries would also obviate litigation. Definitions which had also caused litigation were considered, such as "accidents arising out of and in the course of the employment." No change as to these was recommended, however, as they had been so often judicially passed on and were best left to the courts. The committee had no recommendation to make as to factories proper, railways, or mines. As to constructive factories, although the House of Lords' decisions had modified the difficulties as to loading and unloading on docks, the committee recommended that employment on wharves, quays, and warehouses be specifically stated in the act, covering also the incidental machinery or plant, and they recommended a change in the definition of engineering. The committee drew especial attention to the fact that in the one district (the Durhain coal mining district) where under second schedule (1) a committec of employers and the men had been formed and exercised their statutory power of arbitration, a most excellent example of satisfactory reduction of litigation was shown. It resulted in the benefits being paid automatically, even the committee having, during five years, to pass only on 205 cases out of 28,000 non-fatal cases and on 204 out 664 fatal cases, while of these only 29 non-fatal and 27 fatal cases were taken into court, and some of those were accidents in which the men's own committee told them they had no case. Arbitration Provisions. It was found that the arbitration by the system of commitee of employer and workman (second schedule (1)), which, however, had not been extensively used, had been most successful where used, practically rendering the operation of the act automatic, nor was there any complaint of the provision (2), that the parties appoint a single arbitrator. But the provisions (2) and (3) for use of the county-court judge or his appointee as arbitrator, had resulted in the arbitrations thereunder being practically county-court trials somewhat simplified; however, no recommendation was made to change that. A strong recommendation of change was, however, directed to the cause (second schedule (8)), as to registration of memoranda of agreements, with a |