CINCINNATI, OHIO.

OCTOBER 13-14, 1910.

Introductory remarks by JAMES HARRINGTON BOYD, Chairman.

The Employers' Liability Commission of Ohio was appointed by the Governor on or about July 1, 1910, to inquire into the question of employers' liability and other matters.

The Commission met and organized August 5, 1910. The individual members from August 5 until September 2-3, spent their time in investigating the history and operation of the acts for the compensation of employes injured in industrial accidents, which have been in operation in the European countries from three to twenty-seven years We have investigated also the results of the investigations of Employers' Liability Commissions of other states, to-wit: New York, Massachusetts, Wisconsin, Minnesota, and Illinois.

I think there is one other state which has a Commission which we have not yet investigated, and that is New Jersey.

We have also investigated the results of the Pittsburg Survey made through the Russell Sage Foundation Fund, of all the industrial accidents of Allegheny county, Pennsylvania, from June 30, 1907, to July 1, 1908. We have also reviewed the history of industrial insurance by professional scholars and economists. These investigations were reported by individual members of the Commission at our meeting in Columbus, on September 3, 1910, and plans were then made for putting into operation a scheme for our investigation at our next meeting at Columbus, on September 22 and 23, 1910. This plan for securing information and the holding of public meetings is now being carried out.

These investigations show, for example, that the Liability Insurance Companies doing business in New York collected in premiums during 1906-7-8, $23,523,585, and they paid out in settlement of suits, $8,559,795.

From these figures it follows that on an average only 36.34 per cent of what employers pay in premiums for liability insurance is paid in the settlement of claims and suits. In other words, for every $100 which the employers pay out for protection against liability to their injured workmen less than $37 is paid to those workmen; $63 goes to pay the salaries of attorney and claim agents, to the cost of soliciting business, to court costs, to the costs of administration, and profits.

It is further shown that the injured man must on the average pay out of this 36.31 which he gets, 26.3 per cent to his attorneys and this too where recoveries are large. The recovery in that investigation averaged over $1,500, and even in that instance the injured party must pay out 36.31 per cent of what he gets to his attorneys. Less than 25 per cent of what the employers pay out ever reaches the hands of the injured workman.

During the year of 1887, under the operation of the German Insurance Law there were 106,001 accidents among 3,861,560 workmen. Now of these accidents 15,970 of these injured persons were incapacitated for work for more than thirteen weeks. I want you to fix that in your minds for that is the fundamental principle in the German law; a sickness of thirteen weeks is regarded as sickness, but when over thirteen weeks it becomes an accident whether injured or sick. 19.76 per cent of these 15,970 or 3,156 were due to the fault of the employer, according to the German experience; 25.64 per cent of these 15.960 or 4,094 injuries were due to the fault of the injured; and here is the fundamental point -51.60 per

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cent of those 15,960, or 8,720 injuries, were due to the inherent dangers of the industries.

The Australian tables, on the average, attribute 70 per cent of industrial accidents as due to nobody's negligence but to trade risks. The tables of Wisconsin and Minnesota Labor Department ascribe 40 to 50 per cent of all industrial accidents as due to nobody's negligence, but to trade risks.

That during the years 1906-7-8 there were reported 414,681 accidents to the nine principal companies issuing employers' liability policies in New York State and payments were made in 52,427, or one payment was made for every eight accidents.

We are therefore led to these general conclusions:

1. That only a small per cent of workmen injured by accidents of employment receive substantial compensation, and therefore, as a rule, they and those dependent upon them, are forced to a lower standard of living and are often compelled to depend for support upon public and private charity.

2. That the present system is wasteful, being costly both to the State and the employers, the compensation to the victims of accidents being inadequately small.

3. That the present system is slow in operation, and necessarily causes great delay in the litigation and settlement of cases.

4. That the present operation of the laws fosters antagonism and strife between employes and employers.

Now gentlemen, I wish to supplement the written statement by two statements for the purpose of assisting if possible to focus your minds on the real propositions, as the Chairman of this Commission understands them. Let us assume for the sake of the argument that the German statement about the number of per cent of accidents that can be attributed to the employer wholly is true, and that is the best evidence we have which is based upon millions of accidents, viz: That 19.76 per cent only of the accidents that occur in industrial operations are attributed solely and wholly to the fault of the employer. Now, everybody understands in those cases the injured party has a remedy if he can prove his case at common law, and that on account of the common law defenses the assumption of risk, contributory negligence and fellow servant rule, he cannot recover in any of the other 80 per cent of those cases. In other words, in 80 per cent of 100,000 cases of accidents the injured party does not have an action at law. What is more, and what the public do not seem to understand and nine-tenths of the lawyers, that the common law does not presume to furnish any remedy except to those accidents in which the employer is wholly liable. How can it then furnish any remedy for the injuries of the 400,000 annually occurring in this country. Now, as students in the High School, we have all read about the battle of Gettysburg in which, in three days 40,000 were killed and maimed in one long battle. Now then let me show you what it means in this dreadful situation that is facing this country. Suppose you had a battle of Gettysburg in every month in every year, then you would kill and maim just the same as you do in our 90,000,000 of people in our industrial operations; and of the 400,000 of people the common law is not presumed to furnish any remedy.

Now there is one other point which I want to present to your mind. I think I could present some statistics from the German experience which would serve to help to focus the thing which we are trying to correct, which the legislature has placed the duty on us to endeavor to correct. It will surprise many of you to learn that Bismarck put the German scheme of insurance through the Reichstag in 1883, and that followed a long political social fight, fifty or sixty years. Now that law will be in operation twenty-two years down to 1905 inclusive. During those twenty-two years under this insurance plan in Germany, they paid out

$802,000,000 to injured persons. There are three kinds of relief, sick relief for thirteen weeks; accident relief after that for all parties injured, and old age and invalidism relief.

Now the total sum of $802,000,000 for twenty-two years, you can remember that now in the sick insurance the employe pays two-thirds of the cost of insurance, and the employer one-third. In the case of accident insurance, the employer pays it all. In case of old age and invalidism the government pays first fifty marks, that is $12.50 in each instance, and the balance is divided equally between employer and employe. Now I come to my point. Then in the sick insurance during that period-that is of the $802,000,000 paid out, $555,000,000 were paid on account of sickness insurance, and of that the employe paid twothirds and the employer paid one-third. Out of the $802,000,000 the employer paid $424,000,000. The employes paid $377,000,000 and the Imperial Government paid fifty marks in each instance of old age and invalidism, and the cost of administration.

CHAIRMAN: The Commission will be pleased to hear from William Schmidt, Jr.

WILLIAM SCHMIDT, JR.: The first question is: "What is your opinion as to the fairness of the law in this State with regard to liability of employers for accidents to their employes? What, if any, are your suggestions as to the amendment of the law?"

Now, in answer to that first question we think the present laws of Ohio are unfair because they impose liability on the employer without regard to the nature of the hazards of the employment. The present laws of Ohio impose no incentive upon employes to perform their duty of exercising reasonable care, but allow an employe to recover even though the employe himself is guilty of negligence. In addition, the law makes all questions for the jury, with the result that for the same kind of an accident with an equally serious injury, there are all kinds of verdicts, high and low, and an employer has no way of measuring the cost of industrial accidents in his cost account in determining what the goods may cost him. The Employers' Liability Law of Ohio should be amended by imposing liability on employers for negligence in the discharge of his primary duties or organizing his factory and furnishing and keeping in repair his machinery and prescribing reasonable rules and regulations. At the same time the employe himself should not be allowed to recover for his own negligence when the employer has used reasonable care. The Matthews law has unwisely extended the employers' liability without the same time putting some restrictions upon the measure of recovery and thereby imposed great hardships upon the employers, particularly upon the small employers.

Your second question is: "What is your opinion of the operation and adequacy of the labor law of this State in relation to the prevention of accidents, and what, if any, are your suggestions for its amendment in that regard?”

In some respects the laws of Ohio are not adequate to cover the prevention of accidents in some kinds of hazardous employments, but the trouble is not with the law, but in carrying out the law. The factory inspectors should be men of highest grade of intelligence, who thoroughly understand the operation of dangerous machinery, and who should go to employers in an absolute spirit of fairness, and point out specifically to the employers wherein they could provide means of preventing accidents. Our suggestion for the amendment of the factory laws of Ohio is that the factory inspectors should not be appointed because of their political party, but should be selected after open competitive examination, and the examinations should be of such a high standard as to secure men of the highest intelligence and the highest integrity of character to discharge the duties in factory inspection. These factory inspectors also

should have adequate compensation because you cannot get good men to discharge these duties on the miserable salaries now provided for the payment of factory inspectors. These factory inspectors should be absolutely impartial and their appointment should not be dictated either by employers' or employes' associations or by laboring men or labor organizations. It should not be a qualification for the appointment whether they are Democrats or Republicans, but they should be allowed to hold their office during good behavior and they should not be appointed unless proven by competitive examination to be of the highest and best character, and sufficiently educated in a practical way to understand their business, so that when they did inspect a factory, they would suggest in a reasonable way the proper precautions for the prevention of accidents.

Question number three reads: "Is the court and jury system for fixing the responsibility for industrial accidents now existing in the State satisfactory in its operation? If you answer no, state why."

The court and jury system for fixing responsibility for industrial accidents is not satisfactory in its operation. Courts are sometimes too technical, these technicalities resulting in injustice both to the employer and the employe. The jury system is not satisfactory because juries are largely moved by passion and prejudice in reaching verdicts.

Your fourth question is: "Are you in favor of a system under which all accidents to employes shall be compensated for without regard to negligence, but under which the compensation paid shall be limited in amount? Please state reasons for your answer."

In our opinion the only solution of the problem of industrial accidents in hazardous employments is a fair workman's compensation act in which recovery should be denied to an employe where he has recklessly brought on the injury on his own shoulders. The compensation for industrial accidents should be paid to the employes except where the accident has been brought about as above indicated, and the compensation should be measured in part as to whether the accident was the result of negligence on the part of the employer, or whether it came about notwithstanding reasonable care on the part of the employer. In other words, the amount of recovery should be absolutely limited, but the recovery should be graded, taking into consideration whether it was brought about by the negligence of the employer, the combined negligence of the employer and employe, the sole negligence of the employe when such negligence was not absolutely reckless, and in all cases the compensation should be absolutely fixed for amounts depending upon the nature and the extent of the injury. These recoveries, however, should be at a lower figure because if fixed absolutely by law, then the entire amount paid would go to the injured employe and be paid with a certainty and within a reasonable time, and therefore, a small amount paid under such a law would net the injured employe much more than a larger recovery where the recovery was a matter of uncertainty. These amounts also should be so limited as not to throw upon the employer a large increase in his cost account, because to do so would put the Ohio employer at a disadvantage with the employers in other states where similar laws did not exist. In framing such a law for Ohio before all the other states had adopted a similar law, the same should be framed on most conservative lines, in keeping constantly in mind the competitive conditions. To provide for too large an amount of recovery and thereby too greatly enhance the cost account, will result in putting the Ohio manufacturer out of business and losing employment for the men themselves. To largely increase the cost account of the Ohio manufacturer is also to restrict his production in competition with others and thereby reduce the number of employes in Ohio.

Your question number five reads as follows: "If you are in favor of such a plan are you of opinion that the expense should be borne by the employer or shared by employer, employe and State?"

A workman's compensation act should be based upon the compensation being paid jointly by the employer and employe. It should be in the nature of insurance wherein the employer paid his share of the premium and the employe paid his share of the premium. To throw the entire burden upon the employer is to encourage negligence upon the part of the employe. A law providing for workmen's compensation should provide for the creation of a fund jointly by the employer and employe sufficiently large to cover the costs of industrial accidents and it should be made so high that the employe would not only look out that he himself did not bring about an accident, but to furnish him a strong motive to make prompt reports of other employes who were conducting themselves negligently. The law should then provide a means of compensating the careful employe by having returned to him any surplus left from the fund which was not necessary to meet the cost of industrial accidents. In this way there would be a strong incentive on the part of every employe to conduct himself with care and to see that every other employe working about him did likewise.

Question number six reads: "What is your experience as to the value of relief associations of employes?"

Our experience as to the value of relief associations of employes is limited to sick and death benefits. This association is purely voluntary and as a result only about one-third of our employes are members of this association. Our firm has made two large contributions to the fund, the first contribution to help start the organization and the second contribution to make up a deficit. The principal of the relief association might well be extended to make such association compulsory and have the funds contributed jointly by employer and employe, and to provide not only for death and sick benefits, but to provide for workmen's compensation in case of injuries with proper legal restrictions thrown around to prevent the abuse of such an organization, either by the employer or employe, and to make the membership in such an association and the payment or tender of payment of the compensation to be fixed in the rules of such association, full payment to the injured employe and full discharge and receipt to the employer.

MR. ROHR: In question one, I believe that the gentleman had reference to an employe's negligence debaring him from recovery. Might I consider it that where an employe had given notice to his employer that certain portions of his machine on which he was engaged in operating were defective, and the employer instructed him to keep on, that the defect would be remedied, would that bar him from recovery?

MR. SCHMIDT: That is a hard question to answer. It could be construed in so many different ways. The courts would not look at it in the way that the employers or the employes would. If the machine was defective and the employe knew that it was defective and the employer had not time, and they sometimes do not have, to see how serious the defect was, and if the employe continued at it, I think he is more negligent than the employer is.

MR. ROHR: In answer to question five, which reads: "If you are in favor of such a plan, are you of opinion that the expense should be borne by the employer or shared by employer, employe and state?" If I understood the reading of Mr. Schmidt's paper, he put the question squarely, that it should be borne by the employer and employe, and it should be made sufficiently high that the employe would be very careful that he would not become injured. Now in regard to that, the workman assumes the entire risk of protection so far as it