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III

THE EFFECT OF THE WAR ON SOCIAL

INSURANCE AND PENSIONS

No other form of insurance was receiving more attention preceding the war than the so-called social insurance. In many respects, all forms of insurance are social, and the term "social insurance" does not mean the same thing in all countries or to all students of insurance. It may be defined in a general sense to include all those kinds of insurance which have for their purpose the securing of social benefits as contrasted with benefits to the individual and which, therefore, have in their conduct a large degree of governmental participation, either as minute supervision, or as a form of insurance transacted in part or in whole by the government. The specific forms of insurance usually included under the term "social insurance" are workmen's compensation for death or injury while in employment, unemployment, sickness and old age insurance. For the purpose of this discussion of the effect of the war on social insurance, allowances for the family of soldiers and sailors, and pensions will be included.

GROWTH OF SOCIAL INSURANCE

The great development of social insurance during the last quarter of a century has been due to a number of causes.

In the first place, there has been an undoubted development of what may, for lack of a better term, be called a social conscience; that is to state, society has increasingly realized that in the operation of the prevailing economic system, certain costs are entailed which are properly social costs instead of individual costs, and that principles of justice dictated that such costs should be borne by society as increased taxes to pay in whole

or in part the cost of old age pensions, invalidity, and compensation insurance. Or the cost may have been met by an increased price for the goods and services produced by those who benefited directly by the particular form of insurance.

In the second place, the growth of representative government in most of the leading nations and the increased political power of the wage earners have furthered the development of social insurance.

In the third place, social insurance has shared in the scientific development of business. By this is meant that in the improved organization of business the importance of the rôle which labor plays has come to be recognized, and it is good business to conserve and protect this labor force.

In the development of social insurance the governments have had a large part and, strange as it may seem, at first thought, this form of insurance has had a much more extensive development in the European nations than in the United States. In the latter country, both on account of a persisting individualism and the relatively higher wages and greater opportunities for the wage-earning class, the adoption of social insurance has lagged behind that of Europe. In the Australasian countries, on the other hand, where industrial development has been even more recent than in the United States, such insurance has had a greater development. This is probably due, primarily, to the better organization of the labor class which has made possible the exertion of a strong influence on governmental policy.

EFFECT OF WAR ON SOCIAL INSURANCE

The war is having both positive and negative effects on social insurance. In the former respect, it is causing an increased participation by the governments in certain forms of this insurance, especially that having for its purpose the aiding of families of those directly engaged in the service of the nation. If, as seems probable, one result of the war will be to give the wage earners an increased influence in government, it may be expected

that this form of insurance will have a marked development at their hands.

The brunt of the actual warfare is being borne by this class in society, and it may well happen that they will insist that the particular society or nation "saved" by their sacrifices shall bear the cost, and it may also well happen that the social aspect of producing goods and services will be emphasized if the political power rests after the war more largely in the hands of

the masses.

On the other hand, there are certain negative effects of the war on social insurance. Owing to the staggering costs of the war, every nation has been compelled to increase taxes and call upon its citizens to loan their funds to the government. This has been true not only of belligerents, but also of many neutrals, and has necessitated the strictest economy by the nations, so that accustomed expenses have been curtailed. It has been a question of finding new sources of revenue, reducing wherever possible expenses and postponing plans for additional outlays. Social insurance has thus suffered, both because plans for its extension have been curtailed in many cases, and also because there has been an abandonment or modification of plans of it actually in practice.

The enormous increase in the cost of living has affected sickness, old age, workmen's compensation, and family allowances. The sums granted by the original acts often are pathetically small under the prevailing high level of prices.

A discussion of the status of social insurance under war conditions in the leading nations will show how it has been affected.

SOCIAL INSURANCE IN THE UNITED STATES

It has been stated that in the United States certain forms of this insurance have had little or no development. This statement applies particularly to old age, sickness, and unemployment insurance. Whatever of health insurance there is, has been a matter for the individual to transact with the ordinary private

companies. The same is true of a large amount of personal accident insurance, while unemployment and old age insurance have had no special application. Compensation insurance laws are in force in a large majority of the states, all except five of them having some form of compensation insurance for workmen injured in the course of their employment. Likewise, the federal government has a similar law for certain classes of federal government employes or those engaged in interstate commerce. There has been no disposition to abandon these plans of insurance, although the great increase in the cost of living makes the awards, either granted by the award boards or established in the law, of much reduced value to the recipients.

There has been, however, a large extension of the activity of the federal government in providing allowances and other assistance to the individuals and their dependents because of their enrollment in the service of the nation. In the part of this study devoted to marine insurance, the provision or allowance made by the federal governments to officers and men of the navy who lost their lives or were captured has been discussed.

War Risk Social Insurance

However, it is in connection with the second amendment to the War Risk Insurance Bureau Act, passed by Congress October 6, 1917, that the most important government assistance is granted.

This comprehensive act provides for life insurance, which has been previously described, for allotments and family allowances, and for compensation in case of death or disability. The allotment and allowance are compulsory as to wife, a divorced wife who has not remarried and to whom alimony has been decreed, and to a child, and voluntary as to any other person, with certain minor limitations. The monthly compulsory allotment has a maximum of not more than one-half the pay, but not less than $15. Any additional sum from the monthly pay may be deposited to the credit of the enlisted man, who receives

interest on it from the government at the rate of 4 per cent. In addition, the government may pay, upon proper application by the enlisted man, to his family or beneficiary a sum not to exceed $50 per month, the particular sum depending upon the number and degree of direct relationship of the dependents or beneficiaries. For this purpose of family allowances, two classes are established: Class A includes the wife and children, and Class B includes the parent, brother, sister, and grandchild. Under certain limitations, both a divorced wife and an illegitimate child are included under the provisions for the allowance. Dependency is the test to be applied in determining the right to the allowance.

Compensation is also provided “for death or disability resulting from personal injury suffered or disease contracted in the line of duty by any commissioned officer or enlisted man, or by any member of the Army Nurse Corps (female) or of the Navy Nurse Corps (female) when employed in the active service."

If death results, the compensation granted varies from $25 a month for a widow to $47.50 a month for a widow and two children, with an additional $5 a month for each additional child up to two. If there is no widow, but dependent children, the compensation for one child is $20 a month, for three children. $40 a month, and $5 per month for each additional child up to A compensation of $20 a month is established for a

two.

widowed mother.

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Certain other allowances are made, as, for example, $100 for burial expenses and the return of the body to the home. The allowance to the widow or widowed mother continues until remarriage and to the children up to the age of eighteen years or marriage. The term "widow" for this purpose is defined as who shall have married the deceased not later than ten years after the time of injury." This limitation was imposed to guard against an evil which was present in the pension systems of the United States. There have been examples where old soldiers, receiving a pension, have been married by those who seemed to be chiefly interested in the pension.

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