§ 7. The compensation plan in America. Under the practical operation of the law of employers' liability in force in any American state until 1911, a very small proportion of the workers injured while at work were legally entitled to any indemnity, and a still smaller proportion could succeed in recovering any substantial amount. Employers, and the accident companies with which employers insured, either compromised the claims for small amounts or fought in the courts the claims of those who refused to compromise. If the court awarded damages, large or small, a large part of the proceeds went for legal expenses. Only a small proportion of the total costs to employers went as benefits to the victims of accidents. It appeared, in an extensive investigation of the business of the large industrial insurance com-ponies, that but 28 per cent of the premiums paid by employers were paid to workmen as indemnity.

Between 1911 and 1921 the laws have been changed to some extent in their application to selected occupations in at least forty-three states and territories of continental United States, (covering all but five of the southeastern states, which are distinctly agricultural). Seventeen states had, in 1921, state insurance funds, and in six states (Nevada, Ohio, Oregon, "Washington, West Virginia, and Wyoming) they were the only insurance agencies allowed. This remarkable development has been largely actuated and guided by a comparatively small group of socially minded non-working-class citizens rather than by either employees or organized workers. It is an encouraging example of what can be done by skilful methods, when conditions are ripe, in furthering righteous social legislation without the use of money or of corrupting influences.

Fig. 1, Chapter 24.—Workmen's compensation laws in U. S. and Canada, 1921. Adapted from the map published by the American Association for Labor Legislation.

§ 8. Standards for a compensation law. The standards which, in detail, in one jurisdiction or another, have already been attained, and which are the provisional ideals now sought by reformers, may be briefly stated as follows. All employments should be included, although as yet there are various exceptions, such as farm labor and domestic service, employers, with but few employees (the number excepted being from one to five), and non-hazardous employments. Compensation should be granted for all injuries, suffered in the course of employment, that cause disability beyond a definite waiting period of from three to seven days. Compensation should include medical attendance for a limited period, and two thirds of the estimated loss of wages for disability, either total or partial, during its continuance; and, in case of death, funeral expenses, and from one to two thirds of the estimated wages to the widow (or dependent widower) and children, or to other dependent relatives. To secure the full benefit of the plan it must be made the exclusive remedy, replacing entirely the old remedy of suits for negligence. The employer should be required to insure his risk, and general sentiment is moving rapidly toward the plan of a state insurance bureau as the exclusive agency. For the administration of the system, an accident and insurance board should be created in each jurisdiction. Experience shows the importance of careful attention to numerous other details, and many amendments will be made as the needs become manifest in practice.

§ 9. Old-age and invalidity pensions. Insurance to provide pensions for old-age and permanent (partial or total) disability is in nature but an extension of the insurance against accident and sickness. In a relatively small number of cases accidents result in permanent disability, and it is both illogical and inhumane to limit, arbitrarily, the compensation in such cases to a certain period, as two or three years, as is done in many compensation laws. The disability due to advancing years is in nature a chronic illness, inevitable, sooner or later, to all who survive. The movement to provide some indemnity in such cases has been rapid in European countries, doubtless because the problem was a very pressing one where the average earnings are low. In Germany and Austria this development has been more in connection with other forms of insurance; in Denmark, Great Britain, and France it has had more the aspect of an extension of poor relief. In the United States little has been done to provide for these great needs. Massachusetts in 1907 authorized savings banks to sell insurance and old-age pensions to those who applied. An increasing number of corporations, especially railroads, are adopting a pension system for men growing old in their service; but nothing had been done of a general public nature toward compulsory and universal protection against these misfortunes until the enactment of the federal law, in 1920, establishing compulsory contributory old-age and invalidity insurance for the employees in the classified civil service, now half a million in number.

The following table shows the situation in some of the leading countries:

Old-Age and Invalidity Pensions Voluntary.

Belgium, 1850, 1903 (voluntary except for miners). Italy, 1898, 1907 (all wage-earners).

Compulsory.

Belgium, for miners, 1868.

Germany, 1889, 1899, 1911.

Austria, 1889 (miners only) ; 190G (office employees).

Denmark, 1891, 1908 (non-contributory).

France, for seamen, 1850, 1881; for miners, 1894, 1905, 1907 (non-contributory, all indigent citizens) ; 1910 (contributory, all workmen and employees; was voluntary by laws, 1850, 1886).

Great Britain, 1908 (non-contributary, old-age pensions, granted by the government).

Sweden, 1913 (universal, contributory).

§ 10. Life insurance for wage-earners. Life insurance for salaried men and the higher paid wage-earners is provided in many cases by the regular reserve companies, but only a small proportion of the fifteen million "ordinary policies" in force touch the mass of the wage workers. The assessment companies (including fraternal orders), with something like nine million certificates in force and collecting about $150,000,000 annually from members, likewise serve mainly either the elite of the wage workers or the farmers and the business men of the small communities. But the greatest increase of life insurance for wage-earners has come of late in the form of "industrial policies" (for less than $1000 each), of which (in 1919) there were forty-four million in force, three times the number of "ordinary" policies. The premiums received were $225,000,000, of which $181,000,000 were either paid to policyholders or added to reserves (ultimately for the benefit of policyholders). There are, of course, a good many cases (the number undeterminable) in which two or more of these assessment and industrial policies are held by one insured person, and many other cases where the insured is a minor. But the figures show, nevertheless, that provision of a minimum of life insurance is becoming well-nigh universal among wage-earners. This result, surely desirable, is due in large part to the active efforts of solicitors of the companies working on commission. The cost of doing business, or deduction (about 20 per cent) from premiums paid, is perhaps not too much to pay for this educational work in the formative period of popular insurance experience. Less gratifying is the thought that these policies provide in most cases quite insufficient indemnities for the surviving members of the family, the proceeds frequently being barely sufficient for funeral expenses ("grave-yard insurance"), and in the great majority of other cases the meager proceeds quickly disappear, unwisely invested or foolishly spent, leaving the family quite unprovided for.

An admirable plan that is making very rapid progress is "group insurance," issued by the regular companies to industrial establishments, covering all the persons in their employ during the year. In 1919 there were more than six thousand of these group contracts in force. This is but one of the ways in which private employers are now increasingly providing insurance for the survivors in the families of their employees. The ideal to be looked toward is a general plan that will make possible universal and adequate life insurance for all income-earning members of the community.2