district form their own mutual insurance institutions, which are supervised and regulated by the state. In American states, with the exception of Ohio and Washington where insurance in the state fund is obligatory, employers are free to insure in a state fund, a private stock company, a mutual company or to carry their own risk. Insurance generally frees the employer from further responsibility in regard to industrial accidents. All the claims of injured employees against the establishment have henceforth to be met by the insurance companies.

Germany was the first modern country to adopt the principle of compensation for industrial accidents on a national scale. The German Emperor, in his now famous message to the legislature, in 1881, recommended the making of national provision for sickness, industrial accidents and invalidity. In 1883 Germany passed a compulsory sickness insurance law, and in 1884 a compulsory accident insurance law. Since that time all European states have followed the example of Germany in making national provision for industrial accidents. Austria was the first to follow the example of her neighbor, passing a compulsory accident insurance law in 1887. Ten years later Great Britain passed a compulsory compensation law, leaving the matter of insurance to the discretion of the employer. In 1898 a similar law was passed by France.

The United States was the last of modern great nations to accept the compensation principle. Up to ten years ago very little was known in this country about the European compensation movement. Most people who gave the question any thought, believed that it would be a better policy to modify our liability laws than to pass workmen's compensation or industrial accident insurance laws.

New York in 1910 was the first American state to pass an effective workmen's compensation law; but a year later this law was declared unconstitutional by the Supreme Court of that state, on the ground that it constituted an unreasonable interference with the liberty and property rights of the individual. The decision of the New York court gave a great setback to the compensation movement in this country. The different states were anxious to pass compensation laws, but were prevented from doing so by the constitutional difficulty. It was evident that American courts would not compel employers to pay compensation for accidents which were not due to their

own neglect. An interesting compromise was adopted by New Jersey in 1911. Under the New Jersey law the employer is free to elect employers' liability or workmen's compensation; but if he elects employers' liability, he is not permitted to plead the defences of common law, that is, he cannot claim exemption from compensation on the ground that the accident was due to the negligence of a fellow-employee, that the injured employee assumed the ordinary risks of the trade or that the employee himself contributed to the accident by his own neglect. This compromise has already been adopted, with rather favorable results, in twenty-four American states.

With a view to forestalling the constitutional difficulties in the way of compulsory compensation legislation, a number of states have amended their constitutions. Amendments in favor of such legislation were adopted in 1912 in Ohio and in New York in 1913. As a result of the constitutional amendment New York passed a compulsory compensation law in 1913. The constitutionality of this law was again called into question as being at variance with the Fourteenth Amendment to the Federal Constitution. A short time ago the Supreme Court of the United States declared the New York law constitutional, its enactment having been justified in the interests of public health and welfare. This decision of the Supreme Court will remove most of the difficulties in the way of compulsory compensation legislation. The same day on which it handed down its decision in the New York case, the United States Supreme Court also upheld the constitutionality of the Washington compulsory insurance law which obliges all employers in certain industries in that state to insure their employees in a state fund. American legislatures, therefore, are not only free to enact compulsory compensation laws, but they may also compel employers to insure in a state fund.

From the foregoing brief outline of the compensation movement in the United States, it may be seen that, although this country was rather slow at first in taking up the compensation idea, the progress since 1911 has been very great. Within a short period of six years no less than thirty-five American states have passed compensation laws under some form.

But while the great majority of American states have accepted the compensation principle, we must not deceive ourselves into thinking that all the victims of industrial accidents

in this country receive compensation. Not more than 20 per cent of the reported industrial accidents are compensated in any American state, and the percentage of those receiving compensation is sometimes as low as 6 or 7. The elective character of most American compensation laws excludes large numbers. Many employers still prefer employers' liability to workmen's compensation. American states passing compulsory compensation laws have been compelled, on constitutional grounds, to limit their application to certain dangerous trades. Most of the laws exclude large classes of workers' such as those engaged in agriculture, domestic service and office work. Thousands of workers engaged in interstate commerce do not come under any compensation law whatever. We can, therefore, see that much still remains to be done before the American compensation laws approach perfection, before the principle of compensation for industrial accidents becomes effective, so far as American workers on the whole are concerned.

COMPENSATION AND BUSINESS ETHICS 1

The tendency to widen the scope of compensation and to standardize the laws to a scale of compensation that will protect the injured and his dependents from pauperism is largely due to the fact that business has found it surprisingly easy to adjust itself to the new conditions. Those who feared that so conservative an extension of public control would prove disastrous strangely under-estimated the resourcefulness of American business men. The industry that has gone into bankruptcy because of the weight of enforced compensation has still to be heard from, neither has any state suffered from the terrified flight of capital to states where such laws do not yet obtain. On the contrary, the persuasive pressure of the laws has stimulated new and universally welcome practices that have actually increased the prosperity of business wherever they have been adopted. The ablest and most resourceful of our business men have proved that just and certain compensation, like high wages, where these are accompanied by executive efficiency, not only provide the greatest incentive against malingering on the part of the workers, but pay large cash returns. And this

1 From article by Robert W. Bruère. Harper's Magazine. 131: 210-19. Tuly, 1915.

demonstration that reasonable social demands justify themselves on economic grounds is profoundly modifying the ethical postulates upon which American business has heretofore been usually conducted.

An illustration in point may be found in the recently published records of the Wisconsin Industrial Commission which administers the compensaton law of that state. The moment public opinion in Wisconsin decided that injuries to wageworkers must be charged in the cost of production, precisely like injuries to machines, employers were immediately stimulated to take every precaution against accidents. Individual employers retained safety engineers, and the Industrial Commission created a staff of experts in accident-prevention which was put at the service of all the employers of the state. The results have been such as would have been called utopian and impossible a few years ago. A steel company has made a reduction of 68 per cent in its accident record since 1910. A large stove manufacturing concern during the past two years has made a reduction of more than 65 per cent in the number of days for which compensation has had to be paid. A cokeand-gas company, whose industry has always been regarded as "extra hazardous," reduced the cost of compensation in 1914 under 1913 about 65 per cent. Out of two hundred and fortyfive industries employing two hundred or more wage-workers each, two hundred and nineteen have so greatly reduced the time lost on account of accidents that the average during the year ending July 1, 1914, was less than one day per employee a year. This means less than 30c on $100 of pay-roll for compensation and medical service. And the measures required to produce these amazing results are so simple that it seems unbelievable they should never have been adopted before compensation identified the economic with the ethical motive.

The manager of a foundry sent for one of the commission experts. He said that he had had to lay off thirty men in a single day because of burned feet; burned feet seemed to be the will of God with respect to the men who worked in that foundry, and it seemed unfair to him that the law should require him to pay damages. The expert suggested the purchase of a lot of foundrymen's shoes and their sale to the men at cost. After six months the records showed a reduction of 85 per cent in the burns suffered in that foundry.

What ecstatic preaching and profession of abstract brotherly

love had not been able to accomplish in thousands of years the compensation law accomplished in three years by allying the economic motive with socially advantageous aims. It is not that manufacturers were less well-intentioned before the law was enacted; only they had never before been spurred to inquire whether their own interests could be safely reconciled to the interest of their neighbors in this matter of accident prevention. In this particular field, at least, it has been proved that human conservation through the normal channels of enlightened business may do more to prevent poverty than all the charities in the world can do to remove poverty, once poverty has been allowed to become a fact.

And in its bearing upon the future development of business practice, an incident in this work of accident prevention is quite as rich in promise as the resourcefulness of the business men who have demonstrated that safety can be made to pay. Out of five years' experience in the industries which have made the largest reductions in accidents, says the supervising expert of the Wisconsin Commission, has come this striking fact, that not more than one-third of the reductions actually made have been accomplished or could have been accomplished by the use of mechanical safe-guards, while two-thirds of the reductions have been brought about through the organization, education, and active cooperation of the wage-earners themselves.

By far the most important feature of organized safety work [this expert writes] has been the workmen's inspecting committees. In each department three rank-and-file workmen are usually appointed to serve two or three months and are authorized and encouraged to make a thorough inspection of their department once a week, or at least once a month. In many plants they also investigate serious accidents.

I have made a careful investigation of a number of plants in which workmen's committees have been appointed, and in every case they have been successful. The experience of all factories with which I am familiar reveals the fact that from 90 to 95 per cent of the suggestions which these workmen's committees make are practical and are accepted by the company. The eight hundred workmen serving on the committees of the Chicago and Northwestern Railroad during the first three years of safety work reported more than six thousand points of danger, with suggestions for their removal. All but two hundred of these suggestions were found to be practical and were adopted by the officers of the company.

This demonstration of the executive and inventive ability