pertains to recovery from injury. He receives for the risk that he assumes by entering into that employment, the same proportion as the employer, and consequently as it is stated, it should be borne by the employer and employe. It comes from the employe's wages and in purchasing the product on which he is engaged, he contributes more than once. In other words, the employer contributes once and the workman contributes from his wages and he also contributes when he purchases the product on which he is engaged, either directly or indirectly. Has the gentleman considered the fact that the workman contributes twice, where the employer contributes once.

MR. SCHMIDT: It is no more unfair for the employe than it is for the employer, because the employer assumes the risk of investment while the employe assumes the risks of the danger of the employment that he accepts. Therefore, I think if one is paying twice, I think they are both paying twice. The employer by paying out of his pocket to contribute to this fund and his investment, and also the employe by contributing part of his wages, and contributing his efforts to produce the goods.

MR. CHAIRMAN: I would like to ask one question, Mr. Schmidt, let us take the accidents which we all admit are due to the inherent risks of the industry, not to the employe or employer, would you recommend an insurance plan or a compensating plan against this liability?

MR. SCHMIDT: I would, yes, sir.

MR. CHAIRMAN: How would you recommend that the fund be raised to take care of that liability?

MR. SCHMIDT: I would rather have time to think it over.

MR. CHAIRMAN: Would you give us an answer tomorrow?

MR. SCHMIDT: Yes, sir, I would.

MR. CHAIRMAN: All right.

MR. CHAIRMAN: The Commission will be pleased to hear from Mr. Wood Walter of the Cincinnati Milling Machine Company.

MR. WOOD WALTER: Mr. Chairman, I have no expert or scientific data or testimony to offer on this question. I simply have a few observations that may throw light upon the solution of a problem, that to this country is new, and which without doubt is possessed with a great many perplexities:

GENTLEMEN: In response to your invitation to present our views on the subject of "Employers' Liability and Workmen's Compensation Laws", we beg to submit the following:

In looking at this subject broadly, we assume that it is universally agreed that every employer of labor desires to be humane in his treatment of injured employes, provided he can do so without being subjected to imposition, injustice or exorbitance.

The end of all legislation on this subject should be to secure justice with equal consideration of the rights of employer and of employe.

The general liability of the employer has from time to time been increased under the process of modification of the common law, yet, in justice, that liability must always rest upon his misconduct, and at the same time ought not to overlook the misconduct of the injured person.

The Employers' Liability Law as it now exists in the State of Ohio, known as the "Norris Law" (in common with legislation on this subject as now generally existing in the various states), is objectionable both to the employer and to the employe, because, first of all, it entails great waste, and the cost of operation under this law is uncertain and burdensome with only a small percentage of final direct benefit or compensation to the injured employe.

The settlement of disagreements between the employer and the employe under the operation of this, and laws in other states of the same kind, leaves

behind it a spirit of mutual antagonism, since such settlements are ordinarily only effected through litigation or through compromise with a third party - the liability insurance company.

The "Norris Law" in the State of Ohio is unfair to the interests of the employer, since it taxes him with a liability not necessarily based on any misconduct on his own part and deprives him of the ordinary grounds of a just defence.

While there is no question but that better legislation than exists today in this State covering this subject could be enacted, yet it is obvious that the whole question demands serious, scientific and expert investigation, in order that the new legislation may fully meet modern conditions with equal justice to employer and employe.

Assuming that the first purpose of such legislation must be to secure this equal justice between employer and employe, it is of the greatest possible importance that such legislation should be uniform throughout the several states. It is obviously unfair and disastrous to lay a special burden upon an Ohio enterprise through compulsory legislation, while a competitor of the Ohio enterprise in another state is free from this burden. This would only tend to weaken this Ohio enterprise, and to this same extent react against the welfare of the Ohio workmen.

It is true that the compensation to the workmen might well be made a necessary part of the cost of the operation of an industry to be recovered through the selling price of the product, thus putting the burden upon the community in general, but it is apparent that such an arrangement would have to be national in its scope, affecting the cost of that product in whatever State it may be manufactured.

It would therefore seem that such legislation looking toward compensation of the employe for injuries received, must rest primarily upon federal statute in order to secure uniform application throughout the several states.

Because of the complexity of the problem, we deprecate hasty legislation of any sort. We believe that your honorable Commission should be given ample time and funds for an extended study of this subject.

Many years of experimentation and investigation preceded the adoption of the system now in vogue in Germany, which is commonly held to offer the most satisfactory solution of this complex problem.

It is of course, a question whether compulsory insurance or indemnity, with trial denied and liability fixed, based upon no misconduct on the part of the employer, will prove constitutional in this country.

Statistical data seems to demonstrate that employer and employe contribute about equally by their action to the causing of preventable accidents. The State is interested to the degree that it must maintain charitable institutions for the benefit of the injured employe, who goes now without compensation, but who, under new legislation, would receive it.

Therefore, it is our opinion that under such proposed new legislation the employer, the employe, and the State should all three contribute to the fund from which the injured employe shall be compensated.

A strong feature in the proposed legislation should be legal provisions which shall establish such industrial conditions as shall tend to prevent the occurrence of accidents, thus making the zone of preventable accidents an ever decreasing

one.

"Prevention is better than cure." The prevention of an accident is the prevention of loss to both employer and employe. It is far better that the fund should be spent in preventing the accident rather than in compensating the

employe after the accident has occurred. The German custom in this regard might well be taken as a basis of procedure.

The basis and rate of compensation to the injured employe is of course the crux of the whole question. This must be made fair to both employer and employe, so that while it properly compensates the employe, at the same time it does not place an unjust burden and tax upon the employer so that the industry shall suffer, in the permanence of whose welfare inheres the permanent best interests of both the employer and the employe.

It is greatly to be desired that the unbiased and scientific investigation of this complex problem by such constituted bodies as your own, will lead to a fabric of national legislation which shall be uniform in its provisions throughout the several states, and which shall at the same time, provide full compensation to the injured employe without working injustice to the interests of the employer. To this end it is advised that your Commission co-operate closely with any similar bodies which may be at work on this problem in other States.

MR. WINANS: I would like to ask Mr. Wood Walter, what in his opinion has done the most in the past to prevent accidents? You can apply that to steam railroads or any other class of industry.

MR. WOOD WALTER: What has done the most?

MR. WINANS: Understanding that accidents have decreased from year to year, and especially steam railroads, and I think the same will apply to every other industry.

MR. WOOD WALTER: I presume it is due to the laws as well as the increasing tendency of employers to study their industries and to improve conditions in their shops and to prevent accidents in same.

MR. CHAIRMAN: Have you any suggestions to offer?

MR. WOOD WALTER: I think much can be done to further that cause and I think that ought to be done, and I think the museums of safety as now organized should be further extended.

MR. WINANS: What would you consider to be the most advanced step in the future to further prevent accidents as a suggestion on your part.

MR. WOOD WALTER: I think that is a matter for investigation. What we have considered most important is the furthering of the inspection system, more scientific investigation as to safety devices.

MR. WINANS: I am going to ask you a direct question, but I am not going to insist upon you answering. Don't you believe that our liability laws of this country have had as much to do with preventing accidents as any other laws that have ever been passed by placing the responsibility upon the employer?

MR. WOOD WALTER: I consider that possibly the placing of the responsibility upon the employe and employer, together with scientific study of ways and means would greatly add to the present methods.

MR. WINANS: We have not added anything to the employe. My question is this, is it not a fact that the effect of our liability law, both State and national, has had as much to do with preventing accidents as any other statute ever passed?

MR. WOOD WALTER: That may be true. When we come down to the employe we have done nothing to add additional burden upon him. I think every employer desires to prevent accidents, because every accident is a big loss which he has to pay, and should be very much awake to prevent accidents. I think his responsibility under the law is an additional inducement. I think much could be done in studying ways and means. There are a great many accidents which today we put in the unavoidable class-we may be able to put in the preventable class.

MR. WINANS: I would like to ask you, Mr. Wood Walter, is it not a sufficient burden on the employe when he suffers an injury and takes his chances

of death, isn't that sufficient incentive for the employe to warrant him to exercise as much care as possible to prevent accidents.

MR. WOOD WALTER: I am not talking about the respective share of the employe and employer, I am arguing if we can enact legislation which will compensate the employe in all cases, whether either by negligence or no negligence, and add to that a scientific and modern method of studying ways and means of preventing accidents, we will then have a better condition than we had before.

MR. CHAIRMAN: We will be pleased to hear from Mr. S. P. Eagan, of the Fay & Eagan Company.

MR. EAGAN: Mr. Chairman I have prepared just a few brief replies to the questions which you have on this form.

In answer to that first question, and I presume you are familiar with it: "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?"

In my opinion the present law of the State of Ohio is unfair for the following

reasons:

If the aggregate loss caused by industrial accidents is to become a part of the cost of the product to be paid for by the consumer, any movement looking toward the permanent establishment of such a policy must recognize two essential elements:

1. Equalization of the burden;

2. Rendering indemnification certain.

Under the present law an employer might suffer a heavy loss, which by reason of competition he would not be able to include in the price of commodities, but which he would be required himself to bear.

The present Ohio law increases the cost of liability insurance to the employer and guarantees the employe nothing except the right to maintain an action.

When we consider that 24 per cent of the employers employ ten men or less; 25 per cent more than ten or less than twenty; 31 per cent more than twenty or less than fifty; 5 per cent more than fifty or less than 100; 7 per cent more than 100 or less than 200; 5 per cent more than 200 or less than 300.

That only three per cent employ more than 300, it must be apparent that a very ordinary industrial accident would not only involve the manufacturer in endless litigation, but also that it might mean ruin to him and inadequate compensation to the workmen.

The present law leaves open the possibility of diverting into improper channels the amount which is actually expended, and which would in justice go to the employe.

In many cases, the employer might be held for substantial amounts, aggregating $12,000 in a single case, but in only a small percentage of the cases would the compensation be just or fair.

The present law encourages and fosters the contingent fee system and in most cases a very large and unreasonable part of the amount awarded to the claimant would go to the attorney.

It does not lessen the strenuous efforts put forth by indemnity companies to drive a hard bargain.

Compensation should be proportioned to the actual financial loss to the injured, and the unit upon which the right to recover is found should be the actual wage, the current earnings of the workman.

This system means economy in administration, the liability is certain, the amount readily ascertained, while under the present law the liability of the employer in most cases is a difficult matter to determine.

Under the present law juries will give all sorts of verdicts, sometimes absurdly low, and other times probably unconsciously high.

It goes beyond all reasonable requirements and awards damages to an employe who may have co-operated with his employer in the breach of duty. Section 6245-3 provides that any contract between employer and employe exempting the employer from liability is void.

The relation existing between employer and employe is not completely defined under the present law, while all prior laws and decisions pertaining to this very question are either repealed or inapplicable and it does not limit the rules of liability to industrial occupations.

It extends the doctrine of superior servants to employes of other branches where no such relation exists, irrespective of the duties to be performed.

Question 2-"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?"

Answer: The present law is adequate for the prevention of accidents. We would suggest that the State might profitably establish in connection with the factory inspection department a museum of safety and sanitation where modern methods and up-to-date appliances could be seen and inspected. Question 3-"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."

Answer: Libraries have been written for and against the present court and jury system for settling disputes, and while it is perhaps generally conceded that both parties to any action are seldom satisfied with the decision or verdict, nevertheless when considered with the right of appeal, it would seem difficult to find a better substitute.

Question 4-"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."

Answer: I am in favor of a system under which all accidents to employes shall be compensated for, under which the compensation shall be limited in amount and definitely fixed. I believe the question of negligence should be entirely eliminated, and further, that every employe should be held responsible for his willful acts. The actual remittances to the workmen would be greater and the burden could, under wise laws, be more equitably distributed and the tendency toward prolonged litigation reduced to a minimum.

Question 5-"If you are in favor of such a plan, are you of opinion that the expense should be borne by the employer, employe and the State?"

Answer: I am of opinion that the expense should be borne by employer, employe and State.

In several foreign countries employers are given the opportunity of contributing to insurance taken by their workmen, not merely to the amount of their own liability, but for their benefits as well. In these cases the employer contributes not only to the burden of the total cost of insurance, but when the loss is indemnified by the fund, he escapes further liability as his contributions pay for the insurance requisite for his own burden.

The State itself sometimes contributes in the form of subsidies or otherwise, the principles upon which these are based, being, first, supervision along with an administrative subsidy is more economical than any other method and is justified on the same grounds as supervision of other branches of business, if insurance is effectual it will give relief to an amount greater than its cost