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Laws Relating to the 
Liability of Employers 

To Make Compensation to their Employees 
for Injuries received in the course of their 
employment which are in force in other 





Printed and Published by L. K. CAMERON. Printer ,o the King's Most Excellent Majesty 


)N. Pri 

19 13. 

Digitized by tine Internet Arciiive 

in 2010 witii funding from 

Tine Law Foundation of Ontario & tine Ontario Council of University Libraries 




List of Persons Appearing Before the Commission 1 

Appendixes : 

L— Minutes of Evidence ( 1 2th-27th Sittings) 5 

IL— Mr. P. T. Sherman's Brief 620 

IIL — Mr. Wegenast's Answer to Mr. Wolfe 638 

IV.— Mr. Wolfe's Reply to Mr. Wegenast 666 

V. — Memorandum of The Bell Telephone Company 674 

VI. — Memorandum of Manufacturers and Employers of Waterloo 

County, Ontario 677 

VII. — Memorandum of Locomotive Firemen and Enginemen 680 

VIII. — Memorandum of Locomotive Engineers 682 

IX.— Memorandum of The Canadian Pacific Railway Company 682 

X. — Memorandum of Casualty Insurance Companies 688 

XL— Mr. F. W. Hinsdale's Suggestions 691 

XII.— Memorandum of The Trades and Labor Congress of Canada 694 

XIII. — Draft Bill of The Canadian Manufacturers Association 697 

XIV.— Letters filed by Mr. F. W. Hinsdale 721 

Index 729 

Errata 733 

Final Report 








To His Honour Sir John Morison Gibson, K.C.M.G., K.C., LL.D., Lieutenant- 
Governor of the Province of Ontario. 

May it Please Your Honour: 

I have the honour to report that I have concluded the enquiries which I was 
by Your Honour's Commission bearing date the 30th day of June, 1910, appointed 
to make " as to tlie laws relating to the liability of employers to make compensation 
to their employees for injuries received in the course of their employment which 
are in force in other countries, and as to how far such laws are found to work 
satisfactorily," and on the first day of April, 1913, I submitted to Your Honour a 
draft bill embodying such changes in the law as in my opinion should be adopted 
in this Province, and I now proceed to state my reasons for recommending that 
the draft bill should be passed into law. 

At the outset of the enquiry it was contended by those who spoke on behalf 
of the workingmen: (1) That the law of Ontario is entirely inadequate in the 
conditions under which industries are now carried on to provide just compensation 
for those employed in them who meet with injuries, or suffer from industrial 
diseases contracted in the course of their employment; and (2) that under a just 
law the risks arising from these causes should be regarded as risks of the industries 
and that compensation for them should be paid by the industries. 

With these two propositions those representing the employers expressed the'.r 
agreement, though it is fair to say that it was probably not intended to agree 
that compensation should be paid in respect of industrial diseases. 

Agreeing as I did with the contention of the workingmen there remained 
only to be considered in what form and by what means the compensation should 
be provided. 

For the purpose of reaching a conclusion as to this, and in obedience to the 
directions of the Commission, I made enquiry as to the laws in force in the principal 
European countries, in the United States of America and in the Provinces of 
Canada. I also visited Belgium, England, France, and Germany, and con- 
sulted those concerned in administering the laws of those four countrie?. and others 



qualified to judge as to whether they have been found to work satisfactorily. Much 
evidence has been taken bearing upon the general question, all of which appears 
in the appendix to my first interim report, dated the 27th day of March, 1912, 
and the appendix to this report. 

Before referring to the different systems in operation it may be proper to say 
that most of these laws, and perhaps all of them except the German, have not been 
in force long enough to enable a conclusive opinion to be formed as to their merits 
or demerits. 

There are two main types of compensation laws. By one of them the em- 
ployer is individually liable for the payment of it, and that is the British system. 
By the other, which may be called the German system, the liability is not individual 
but collective, the industries being divided into groups, and the employers in the 
industries in each group being collectively liable for the payment of the compen- 
sation to the workmen employed in those industries — practically a system of com- 
pulsory mutual insurance under the management of the State. The laws of other 
countries are of one or other of these types, or modified forms of them, and in 
most, if not all of them, in which the principle of individual liability obtains, 
employers are required to insure against it. 

Those representing the workingmen at the beginning of the enquiry appeared 
to favour the adoption of the British system. Mr. F. W. Wegenast, who represented 
the Canadian Manufacturers Association, strongly urged the adoption of the Ger- 
man system, and his view was supported by most of the other employers who ap- 
peared or were represented before me, and later on in the enquiry the representa- 
tives of the workingmen fell in with Mr. "Wegenast's views. 

There were, however, differences of opinion as to details. The employers 
insisted that a part of the assessments to provide for the payment of the com- 
pensation should be paid by the employees, and this was vigorously opposed by 
the representatives of the workingmen. The employers desired that no compen- 
sation should be payable where the injury to the workman did not disable him 
from earning full wages for at least seven days, and to this the representatives 
of the workingmen objected. The emplo3'ers also desired that, as the British act 
provides, an employee should not be entitled to compensation if his injury was due 
to his own serious and wilful misconduct, but the representatives of the working- 
men objected to any such limitation of the right to compensation. 

As stated in my first interim report, 1 had then come to no conclusion as to 
these matters, or as to what system of compensation I should recommend for 
adoption, nor had I reached a conclusion as to the industries to which the law 
should be made applicable, nor as to certain other details which I enumerated in 
my report. 

After the best consideration T was able to give to the important matters as to 
which I was commissioned by Your Honour to make recommendations, I came to 
the conclusion, to which I still adhere, that a compensation law framed on the 
main lines of the German law with the modifications I have embodied in my draft 
bill is better suited to the circumstances and conditions of this Province than the 
British compensation law, or the compensation law of any other country. 

I have had the benefit of hearing the opinions of Mr. Miles M. Dawson, Mr. 
S. H. Wolfe, Mr. P. Tecumseh Sherman, and Mr. F. W. Wegenast, all of whom 
have given special attention to the subject of compensation laws and industrial 
accident insurance, as to the operation of those laws, and as to the best form of 
compensation law to be adopted under the conditions which obtain in this Province, 


and also of hearing the opinions of Mr. James Harrington Boyd, who had a large 
part in framing the compensation law passed by the Legislature of the State of 
Ohio, and of Mr. F. W. Hinsdale, the chief auditor of the Industrial Insurance 
Board of the State of Washington, as to tJie operation of the compensation laws of 
those States, and also upon the general question as to the best form of compen- 
sation law for this Province. 

These gentlemen differed widely in their opinions as to the best form of 
compensation law, as will be seen from their testimony and arguments which appear 
in the appendices to my report, and from the memoranda submitted by Mr. Wolfe 
and Mr. Sherman, although they are practically unanimous as to the industries 
bearing the burden of the compensation, and, with the exception of Mr. Wegenast, 
they are all of opinion that this burden should be borne equally by the employer 
and employed. 

Mr. Sherman is opposed to the system of collective liability, which he character- 
izes as unjust because it imposes upon the individual employer the obligation of 
sharing the burden of accidents in other establishments than his own and, as he 
assumes, notwithstanding that by the introduction of the hest machinery and ap- 
pliances and safeguarding against accident he has reduced the number of accidents 
in his establishment to a minimum, he is placed as respects his liability to pay com- 
pensation on the same footing as an employer whose machinery and appliances are 
defective and who takes little or no precaution to guard against accidents in his 

If a uniform rate were payable by all the employers in a class or sub-class, 
regardless of these considerations, I agree that there would be the injustice which 
Mr. Sherman points out, but I have in the draft bill which I have submitted in- 
troduced provisions (sec. 71, s.s. 2 and 4) which, in my opinion, will provide against 
that happening. 

The arguments presented by ilr. Dawson and Mr. Wegenast, and perhaps those 
of Mr. Wolfe, in favour of the collective system are, I think, unanswerable if, as I 
believe, the true aim of a compensation law is to provide for the injured workman 
and his dependants and to prevent their becoming a charge upon their relatives or 
friends, or upon the community at large. 

It is in my opinion essential tJiat as far as is practicable there should be cer- 
tainty that the injured workman and his dependants shall receive the compensation 
to which they are entitled, and it is also important that the small employer should 
not be ruined by having to pay compensation, it might be, for the death or per- 
manent disability of his workmen caused by no fault of his. It is. I think, a serious 
objection to the British act that there is no security afforded to the workman and 
his dependants that the deferred payments of the compensation will be met, and 
that objection would be still more serious in a comparatively new country such as 
this, where many of the industries are small and conditions are much less stable 
than they are in the British Isles. 

This objection could, of course, be met by making it obligatory upon the 
employer to insure his workmen against accident to the maximum amount to 
which they or their dependants would be entitled under the act. but if insurance 
is to be compulsory I see no reason why the cheapest form of it — mutual insurance 
— should not be prescribed. 

I agree also with Mr. Dawson that the ultimate burden of paying the com- 
pensation under such a law as is proposed falls upon the community and that 


whatever the employer has to pay, whether directly by way of compensation, or 
if he insures against his liability by paying insurance premiums, forms part of 
the cost of that which he produces and is added to the selling price. 

Mr. Sherman's view is that insurance should be made compulsory "only if 
and when reasonably necessary in order to assure to the injured workmen the 
payment of their compensation," and that "in no event should those concerns 
that are amply able to carry their own insurance be required to buy insurance 
or contribute to a State scheme, for that," he says, "would be pure economic waste." 
I do not understand the latter argument or how there can be said to be 
economic- waste if the "concerns" he mentions are not required to do more than 
contribute with other employers to the payment of compensation according to the 
hazard of their respective businesses. I could understand that there might be 
economic waste if it were incumbent on such an emplo3'er to insure with a joint 
stock company which would require him to pay a premium sufficient to provide 
for the cost of securing the business' and a reasonable dividend to its shareholders 
as well as to indemnify against the risk undertaken. 

There was much discussion as to the basis on which the assessments to provide 
the compensation should be made. The German law provides for assessing only 
for the amounts required to meet the payments of compensation which fall due 
during the year next preceding that in which the assessments are made, with an 
added percentage to provide a reserve fund to meet deficiencies in the accident fund 
in the event of an unusual catastrophe or a depression in trade, but no assessment 
is made beyond that to meet the deferred payments of compensation, i.e., the 
paymenlts which are to become due in future years. This plan, popularly called 
the current cost plan, is that proposed by the Canadian Manufacturers Associa- 
tion, and Mr. Dawson favours it as not only expedient because it does not involve 
making the heavy assessments which would have to be made at the outset if the 
capitalized value of the deferred payments had to be provided for by the assess- 
ments, but also as "not unfair to the employers in future years, or economically 

On the other hand the current cost plan is vigorously denounced by Mr. 
Sherman, who contends that it is manifestly unfair to the employer of the future 
because it shifts upon his shoulders part of the burden of compensating for acci- 
dents which have happened before he became an employer, and that it results in 
low assessments in the early years of the operation of the law, and necessarily 
increases in the later years, until in a measurable period of time they become a 
burden too oppressive for the employer of the future to bear. 

In support of his view Mr. Sherman referred to the rates in Germany, which 
he said, "now average about double what they were at the beginning," and he 
added that "it is calculated that they will not reach their stable maximum for 
some twenty years more. How much more they will then be no one knows, but 
the majority guess is they will then double." 

Mr. Wolfe is equally emphatic in his condemnation of the current cost plan, 
and in addition to his oral testimony presented a table which appears on page 147 
of the appendix to this report, and which he contended demonstrates the accuracy 
of his conclusions. 

The views of Mr. Sherman and Mr. Wolfe were controverted by Mr. Wegenast, 
who contended that statistics prove that in some instances the stable maximum 
has already been reached and that there is nothing to justify the gloomy fore- 
bodings of Mr. Sherman as to the future. 


Mr. Wegenast's couiention is hardly supported by Mr. Dawson, whose opinion 
(page 455, appendix to first interim report) is that there will be an increasing rate 
"which is estimated to increase pretty rapidly for about ten years and then rather 
slowly and with increasing slowness for at least fifteen years longer, and if there 
is no improvement in the conditions relating to trade and industry, it will still 
very slowly increase for twenty-five years beyond that," 

I am not convinced that the German plan affords an adequate safeguard against 
the dangers which Mr. Sherman anticipates, nor am I satisfied that it does not do 
so. I have, therefore, concluded that the act should not lay down any hard and fasft 
rul^as to the, amount which shall be raised to provide a reserve fund and that it is 
better to leave that to be determined by the Board which is to have the collection 
and administration of the accident fund as experience and further investigations 
may dictate. I have therefore made provision in the draft bill to that end, by mak- 
ing it "the duty of the Board at all times to maintain the accident fund so that with 
the reserves it shall be sufficient to. meet all the payments to be made out of the fund 
in respect of compensation as they become payable and so as not unduly or unfairly 
to burden the employers in any class in future years with payments which are to be 
made in those years in respect of accidents which have previously happened," 
(sec. 70), and by authorizing the Lieutenant-Governor in Council if in his 
opinion the Board has not performed that duty to require the Board to make a 
supplementary assessment of such sum as in his opinion is necessfiry to be added 
to the fund, (sec. 90), and these provisions I deem essential to the safety and 
adequacy of the scheme of compensation for which the draft bill provides. 

I may here point out that the act of the State of Washington upon which 
the draft bill submitted by the Canadian Manufacturers Association, to which I 
shall afterwards refer, is modeled, requires that for every case of injury resulting 
in death or permanent total disability there shall be set apart out of the accident 
fund the estimated present value of the monthly payments to which the workman 
or his dependants are entitled, the total in no case to exceed $i,000. 

Mr. Sherman also takes strong grounds against the administration of the 
act being committed to a Board appointed 'by the State, his view being that such 
a Board will be influenced by partisan political considerations in practically all its 
doings. I have no such fear. Whatever else may he doubtful as to the workings of 
the act there is no doubt, I think, that the memhers of the Board appointed by the 
Crown will impartially and according to the best of their ability discharge the 
important duties which will devolve upon them in the event of the draft bill 
becoming law. Whatever may be the experience of other countries the experience 
of Canada does not justify the view which Mr. Sherman entertains. There are 
now two Provincial Commissions appointed by the Crown discharging very im- 
portant duties — the Ontario Eailway and Municipal Board and the Hydro-Electric 
Power Commission — and one appointed by the Governor-General also discharging 
very important duties — the Railway Commission of Canada. Whatever criticisms 
there may have been of the action of these Boards, no one, as far as I have heard, 
has ever charged or even suggested that any member of them has been actuated 
or influenced by partisan political considerations in any action that has been taken 
by him and I know of no reason why the Board which is provided for by the 
draft bill may not be expected to be as free from political partisanship as either 
of the Boards I have mentioned. 

I proceed now to state the general plan upon which the bill has be^n drafted. 
The bill is divided into Parts. In 'Fart" I the liability of employers "to contri- 
bute to the accident fund or to pay the compensation individually is dealt with. 


The bill does not provide for making all employers liable to pay compensation, 
but only those in the industries enumerated in schedules 1 and 2, and provision is 
made for industries enumerated in schedule 2 being added to schedule 1 when- 
ever the Board deems it expedient to add them. Schedule 1 includes all the 
industries which it is proposed by the draft bill of the Canadian Manufacturers 
Association to bring within the scope of the act, except those enumerated in 
schedule 2. 

The inclusion of railways in schedule 1 was opposed by the three principal 
steam railway companies and by some of the other railway companies, and I saw 
no reason why their wishes should not be met if by meeting them the act would 
not be rendered less beneficial to the employees and no injustice would be done 
to the employers in the industries included in the schedule. The draft bill has 
been framed so as, in my opinion, to work no injustice to anyone and not less 
beneficially to the employees owing to railways being excluded from the schedule. 

The only difference between the operation of the act as to industries in 
schedule 1 and those in schedule 2 is that employers in the former contribute to 
the accident fund and in that way pay collectively the compensation, while em- 
ployers in the latter do not contribute to the accident fund but are liable individ- 
ually for the compensation payable to their employees. In other respects the 
operation of the act is the same in both cases. The Board determines the amount 
of the compensation in both cases and its orders when filed in a County or District 
Court become orders of the court and may be enforced as judgments of it. 

The reasons for adopting the collective system have practically no application 
to railways, especially when, as has already been done in Ontario and will, I do 
not doubt, be done when the Parliament of Canada meets, provision is made that 
all sums payable for compensation shall form part of the working expenditure of 
the railway company, which is a first charge upon its revenues. 

It is manifest, I think, that schedule 1 should not include industries of 
Municipal Corporations or Commissions, Public Utilities Commissions, Trustees 
of Police Villages and School Boards, and they have therefore been included in 
schedule 2. 

Schedule 2 also includes the industries of telephone companies and navigation 
companies. These industries, like those of railway companies, are exceptional in 
their character, and the reasons for adopting the collective system have no appli- 
cation to them. 

In order that additional security may be afforded that the compensation to 
which employees in the industries in schedule 2 and their dependants may become 
entitled will be paid, provisions are embodied in the draft bill enabling the Board 
to require an employer in any industry included in the schedule to commute the 
v^eekly or other periodical payments of compensation, (sees. 27 and 28), and also 
to insure his workmen and keep them insured against accidents in a company 
approved of by the Board for such sum as the Board may direct. 

If it had been practicable to do so without impairing the efficiency of the 
collective system I should have preferred to include a larger number of industries 
in schedule 2 in order that with the two systems working side by side experience 
might demonstrate whether the collective system or that of individual liability 
was preferable, but I have not been able to satisfy myself that the exclusion from 
schedule 1 of any considerable number of the industries included in it would not 
impair the efficiency of the collective system, and I have therefore excluded from 


it only the industries enumerated in schedule 2. Altliough but a small number 
of industries are included in that schedule the operation of the two systems will 
afford some evidence as to which is the better. 

Another reason why it is not expedient to bring these omitted industries 
within the scope of the act is that by doing so the initial work of the Board would 
be very greatly augmented and the risk would be run that it would be so over- 
burdened as practically to paralyze its operations. It is, in my opinion, much 
better that if these industries are to be brought in that should be done later on. 

As what I have said has indicated, I have not thought it advisable at the 
outset to bring within the scope of Part I all employments. The principal indus- 
tries excluded are the farming, wholesale and retail establishments, and domestic 
service. There is, I admit, no logical reason why, if any, all should not be in- 
cluded, but I greatly doubt whether the state of public opinion is such as to justify 
such a comprehensive scheme, and it is probable that when the question of bringing 
these industries within the scope of the act has to be considered, it will be found 
that provisions somewhat different from those which are applicable to the indus- 
tries which it is proposed now to bring within it will be necessary. 

I have however made provision for bringing any of these excluded industries 
within the scope of Part I if and when the Board deems it proper to do so, and its 
regulation or order bringing them in is approved by the Lieutenant-Governor in 

The bill would, in my opinion, fail to do justice to a large body of em- 
ployees who will not be entitled to compensation under Part I, if it did not 
provide for a substantial modification of the common law as to the liability of the 
employer to answer in damages to an employee who is injured owing to the 
negligence of the employer or his servants. 

According to the common law it is a term of the contract of service that the j 
servant takes upon himself the risks incidental to his employment (popularly called/ 
the assumption of risk rule), and that this risk includes that of injury at thel 
hands of fellow-servants, (popularly called the doctrine of common employment).,' 
The doctrine of common employment is an exception to the general rule that the' 
master is responsible for the acts of his servants when engaged in his work, and 
has rightly, I think, often been declared unfair and inequitable. The reasoning 
upon which the exception was justified in the celebrated case of Priestley v Fowler 
does not commend itself to me as satisfactory, and I doubt whether if the 
question were to arise now for the first time the same conclusion would be reached. 
The case was decided at a time when very different views as to the respective 
rights and duties of employer and employed prevailed than are entertained at the 
present day, and at a time not far removed from that in which there was upon the 
Imperial statute 'book a law which made it a criminal offence punishable with 
imprisonment for " journeymen manufacturers or others " to agree together for 
obtaining an advance of the wages of themselves or of any one else, or for lessening 
or altering their usual hours or time of working. 

The unfairness of this doctrine has been recognized by the Imperial Parlia- 
ment and by the Legislature of this Province in the enactment of employers' 
liability acts which have modified it but to a very limited extent. 

In referring to the legislation of this Province my reference is to the act 
called the "Workmen's Compensation for Injuries Act, which is erroneously so 
styled, for it is really an employers' liability act. 


In my opinion there is no reason why this objectionable doctrine should not, 
as one of the provisions of Part II of the draft bill provides, be entirely abrogated. 
The draft bill also provides for the abrogation of the assumption of risk ruk. 
The rule is based upon the assumption that the wages which a workman 
receives include compensation for the risks incidental to his employment which he 
has to run. That is, in my judgment, a fallacy resting upon the erroneous assump- 
tion that the workman is free to work or not to work as he pleases and therefore 
to fix the wages for which he will work, and that in fixing them he will take into 
account the risk of being killed or injured which is incidental to the employment 
in which he engages. 

Another rule of the common law is unfair to the workman. Although the 
employer has been guilty of negligence, if the workman has been guilty of what 
is called contributor}^ negligence and his injury w£is occasioned by their joint 
negligence the employer is not liable. The injustice of this rale consists in this, 
that though the employer may have been guilty of the grossest negligence, if 
the workman has been guilty of contributory negligence, however slight it may 
have been; and his injur}' was occasioned by the joint negligence, the employer 
is not liable. 

It is proposed by the draft bill to substitute for this rule that of comparative 
negligence as it is called, and provide that contributory negligence shall not be 
a bar to recovery by the workman or his dependants but shall be taken into 
account in the assessment of damages. 

That in making these recommendations I am not advancing any novel proposi- 
tion is shown by the fact that what I propose should be done in this Province 
has already been done in some of the States of the neighbouring Republic, and 
that the rules which it is proposed to abrogate or modify no longer meet the 
requirements of modern industrial conditions and are unjust as applied to the 
complex relations of master and servant as now existing, and to the use of com- 
plicated machinery and the great and dangerous forces of steam and electricity 
of to-day is the generally accepted view, and was the unanimous opinion of the 
Employers' Liability and ^Yorkmen's Compensation Commission of the ITnited 
States (Report of Commission, Vol. I, pages 1,213 and 1,214). 

Having outlined the provisions of the draft bill I have submitted to Your 
Honour and stated my reasons for recommending their adoption I proceed to a 
consideration of those provisions of the draft bill submitted on behalf of the 
Canadian Manufacturers Association and which, I assume, embodies its views as 
to the form which a proper compensation law should take, which differ from 
those of my draft bill, omitting such of the points of difference as I have already 

The compulsory provisions of the draft bill of the Association apply only io 
industries in which three or more persons are regularly employed, but the option 
is given to employers in industries in which less than three persons are employed 
to come under the provisions of the act. The application of the act is not so 
limited in my draft bill, but provision is made (sec. 73) that the Board may 
withdraw or exclude from a class industries in which not more than a stated 
number of workmen are employed, and that an employer in any industry so with- 
drawn or excluded may nevertheless elect to become a member of the class to 
which but for the withdrawal or exclusion he would have belonged. 

In my opinion it is most undesirable that there should be any such limitation 
of the application of the act as the Association proposes. As I have already pointed 
out, it is to industries in which a small number of workmen are employed that 


the provisions of such an act are peculiarly applicable — as to the small employer, 
to prevent his being ruined as the result of an accident in his establishment, and as 
to his worlanan to insure that he will be compensated if he meets -with an accident. 

I am very doubtful whether it is desirable to adopt the provisions of sect;ion 
73 of my draft bill. My object in introducing them was to make easier the work 
of the Board at the outset, and not with any idea that the power would be 
exercised except as a temporary expedient to lessen the work of the Board in the 
early stages of the administration of the act. 

The proposition advanced on behalf of the Association in the early stages of 
my enquiry, that employees should be required to contribute to the accident fund, 
has apparently been abandoned, as I do not find in its draft bill any provision of 
that kind. I find in it, however, a provision (sec. 43) that the Board, if satisfied 
that in any employment the workmen are " desirous of an increase in the scale of 
compensation and are willing to pay the necessary increase in premiums, may by 
order sanction any such increased scale and may provide the method of collecting 
the increase in the premiums from the workmen in such employment." 

In my opinion it is not desirable to complicate the act by the introduction 
of any such provision. It would not, I think, be taken advantage of by workmen, 
and it is difficult for me to understand exactly what it means. Is it intended 
that it shall be applicable to a single establishment or only to a class? Are the 
workmen to be unanimous, or can the power which the section confers be exercised 
if a majority of them desires an increase in the scale of compensation on the 
prescribed condition? If the workmen must 'be unanimous, the section. I have 
no doubt, will be a dead letter. If it is intended that a majority shall sui5Bc-€, me 
provision is, in my judgment, highly objectionable. Sub-section 2 of the section 
seems to be inconsistent with sub-section 1 or incomplete, in not providing that 
if the employer pays the increased premium he may deduct it from the wages 
of the workmen. 

The mode in which the assessments are to be collected proposed by the 
Association differs somewhat from that provided for by my draft bill. The mode 
which I provide for is, I think, the simpler, 

I do not like the term " premium " which is used in the Association's draft 
bill to designate the rate at which the employer is to be assessed. I prefer the 
terminology which I have used. What is levied by the Board is not a premium 
but an assessment. 

The draft bill of the Association has but one schedule of industries to all of 
which the act applies, and it makes no provision for abrogating or modifying the 
rules of the common law as to employers who are not within the scope of the act. 
How my draft bill differs from this will be apparent from what I have said in 
dealing with the general plan upon which it has been drafted. 

By my draft bill (sec. 60) the Board is given exclusive jurisdiction as to all 
matters and questions arising under Part I, and subject to its power to rescind, 
alter or amend any of its decisions or orders, its action or decision is final and is 
not subject to appeal. 

It is difficult to understand from the Association's draft bill what the juris- 
diction of the Board is intended to be. Section 21 provides that the Board shall 
have jurisdiction to enquire into, hear and determine all matters and questions of 
fact and law necessary to he determined in connection with compensation payments 
and the administration thereof and the collection and management of the funds 


This language would confer on the Board a rather limited jurisdiction and 
probably, judging from the provisions of section 23, less than the draftsman 
intended it should have. The decisions and findings of the Board upon questions 
of f act are made final and conclusive, but on questions of law an appeal is allowed. 

In my opinion it is most undesirable that there should be the appeal for 
which the draft bill provides. A compensation law should, in my opinion, render 
it impossible for a wealthy employer to harass an employee by compelling him to 
litigate his claim in a court of law after he has established it to the satisfaction of 
a Board such as that which is to be constituted, and which will be probably quite as 
competent to reach a proper conclusion as to the matters involved, whether of fact 
pr law, as a court of law, 

' I may point out that section 23, which allows an appeal from the decision of 
the Board on "questions of law," appears to be inconsistent with section 22, 
for in the determination of the questions enumerated in that section which are to 
be deemed questions of fact it may be necessary to decide questions of law, and 
I confess that I do not quite understand what kind of questions, if those enum- 
erated in section 22 are eliminated, it is intended to make appealable. 

In a note to section 22 it is stated that " it is submitted that it would not be 
wise to entirely shut out appeals and place in the hands of the Board the sole 
right to interpret the act ... . and the right to define its own jurisdiction." 
What danger is to be a'pprehended from conferring these rights I do not under- 
stand, nor do I see what questions as to tiie construction of the act are likely to 
arise other than those enumerated in section 22. 

In my judgment the furthest the Legislature should go in allowing the inter- 
vention of the courts should be to provide that the Lieutenant-(Tovernor in Council 
may state a case for the opinion of a Divisional Court of the Appellate Division 
of the Supreme Court of Ontario, if any question of law of general importance 
arises and he deems it expedient it should be settled by a decision of a Divisional 
Court. Although I say this my judgment is against the introduction of any such 
provision, as it is probable that if any form of appeal to an appellate court is 
allowed, a defeated litigant will have the right to take his case to the Judicial 
Committee of His Majesty's Privy Council. 

Section 10 of my draft bill, which deals with the case of sub-contractors and 
is applicable only to industries mentioned in schedule 2, is taken from the British 
Compensation Act. As the Association's draft bill does not provide for individual 
liability in any case, no provision corresponding to section 10 is found in it. 

Sections 66, 67, and 68 of the Association's draft >bill deal with the case of 
sub-contractors. They are, in my opinion, unnecessary and undesirable. 

The draft bill of the Association is made to apply to the Crown. My draft 
bill is not. Apart from the question of the jurisdiction of a Provincial Legis- 
lature to affect the Crown as represented by the Dominion, it is in my opinion 
inexpedient that the act should apply to the Crown. It would be quite anomalous 
to group the Crown in respect of road-making, for instance, with other road- 
makers, and to make assessments upon the Crown as in the case of private persons. 

I have no doubt that in case of injury to an employee of the Crown, for which 
if his employer were a private person he would be entitled to compensation, 
the Crown would make the like compensation to him and avail itself of the services 
of the Board for the determination of the amount and nature of the compensation. 

The Association's draft bill (sec. 4) disentitles the work-man and his depend- 
ants to compensation if his injury was, in the opinion of the Board, intentionally 


caused 'by the -workman, or was due wholly or principally to intoxication or serious 
and wilful misconduct on the fiart of the workman. My draft bill provides that^T 
compensation shall not be payable where the injury is attributable solely to the 
serious and wilful misconduct of the workman unless the injury results in death j 
or serious disablement. 

The provisions of section -i of the Association's bill are, in my opinion, 
objectionable. There is no need for the provision as to intentional injury as an 
injury purposely caused to himself by a workman is not an accident, and com- 
pensation is payable only in cases of accident and industrial diseases. In addition 
to this the definition of " accident " in the interpretation section of my draft bill 
(sec. 2) makes this abundantly clear: nor is there any reason for introducing a 
reference to intoxication, the provision as to serious and wilful misconduct being 
sufficient to cover any case in which drunkenness ought to bar the right to com- 
pensation. Section 4 applies whatever may be the result of the injury. The 
corresponding provision of my draft bill, following the British Compensation Act, 
does not apply where the injury results in death or serious disablement. 

By my draft bill, following in this respect the British act. industrial diseases 
are put on the same footing as to the right of compensation as accidents. The 
Association's bill applies only to accidents. The diseases to which the act is to 
be made applicable are six in number and are enumerated in schedule 3 to my 
draft bill, but power is given to the Board by its regulations to add to the schedule. 
It would, in my opinion, be a blot on the act if a Avorkman who suffers from an 
industrial disease contracted in the course of his employment is not to be entitled 
to compensation. The risk of contracting disease is inherent in the occupation he 
follows and he is practically powerless to guard against it. A workman may to 
some extent guard against accidents, and it would seem not onlv illogical but 
unreasonable to compensate him in the one case and to deny him the right to 
compensation in the other. 

The last point of difference 'between the two draft bills to which I shall make 
any detailed reference is that as to the scale of compensation. 

The scale of compensation proposed by the Association is in my opinion based 
upon a wrong principle and will not afford reasonable compensation to the injured 
workman and his dependants; and indeed I doubt whether, if it were adopted, the 
workingmen would upon the whole be in a much better position than they would 
be in without the act, especially if the changes in the common law which I recom- 
mend are made. 

A just compensation law based upon a division between the employer and the 
workman of the loss occasioned by industrial accidents ought to provide that the 
compensation should continue to he paid as long as the disability caused by the 
accident lasts, and the amount of compensation should have relation to the earnino' 
power of the injured workman. 

To limit the period during which the compensation is to be paid regardless 
of the duration of the disability, as is done by the laws of some countries, is, in 
my opinion, not only inconsistent with the principle upon which a true com- 
pensation law is based, but unjust to the injured workman for the reason that if 
the disability continues beyond the prescribed period he will be left with his 
impaired earning power or, if he is totally disabled without any earning power 
at a time when his need of receiving compensation will presumably be greater than 
at the time he was injured, to become a burden upon his relatives or friends or 
upon the community. 



A uniform rate of compensation which has no relation to the earning power 
of the workman, except as the Association's bill provides, for the purpose of 
reducing the rate of 50 per cent, of his wages is, in my opinion, also incon 
sistent with the principle upon which a just compensation law is based, and un- 
fair, and a most undesirable mode of fixing the amount of compensation. 

Not only is the scale of compensation proposed by the Association open to 
these objections, but the amount of the compensation is so small that only the lowest 
paid workman would be compensated to the extent of 50 per cent, of the loss of 
his earning power. 

The case of an unmarried locomotive engineer earning $150 a month, not an 
unusual wage for the engineer of a passenger train, may be taken to illustrate the 
effect of the Association's proposition. All that he would be entitled to if perm- 
anent disability resulted from his injury would be $20 a month, or less than 
14 per cent, of the loss of his earning power, except in the rare case of his 
being rendered completely helpless and requiring constant personal attendance, 
and in that case his compensation would be double that amount. 

There are other provisions which in my judgment are still more objectionable. 
The limitation to $1,500 of the amount of compensation in case of permanent 
partial disability is, I think, unreasonable, as is manifest from the illustration 
just given. 

The payment of lump sums is contrary to the principle upon which com- 
pensation acts are based and is calculated to defeat one of the main purposes of 
such laws — the prevention of the injured workman becoming a burden on his 
relatives or friends or on the community — and has been generally deprecated by 
judges in working out the provisions of the British act, and was condemned by the 
Association itself in the memorandum which it submitted, and which appears in the 
appendix to my first inferim report (pp. (57-69). 

The proposition that the maximum compensation in case of the loss of a 
major arm shall be $1,500 besides being open to the objection I have just men- 
tioned would be most unfair in the case of a labourer, to say nothing of the 
skilled artisan. 

A more unjust and, as it appears to me, extraordinary proposition is that 
contained in clause (c) of section 31, which provides that in the case of temporary 
disability no compensation shall be payable unless it results "in the diminution of 
daily earnings to the extent of at least fifty per cent " ; and as far as I am aware, 
and as I should expect, there is no precedent for it iu the legislation of any 
country. As far as I have been able to ascertain, the furthest that any country 
has gone in that direction ds to provide, as do the Washington act (s. 5, clause d) 
and the law of Norway of July 23rd. 1894, amended by acts of December 23rd, 
1899, and June 12th, 1906 (art. 4, par. 2b), that no compensation shall be pay- 
able unless the loss of earning exceeds five per cent. In my opinion there is 
no justification for any such exception even if it is limited as in the Washington 
and Norway laws. 

The scale of compensation which I propose was strongly objected to by the 
Association as being unfair to the manufacturer, and as imposing upon him a 
burden that would handicap him in his competition with the manufacturers of 
the other Provinces and of other countries, anrl would tend to divert manufactur- 
ing from this Province to other Provinces in which less onerous laws are in force. 
It was also urged that the scale of compensation is higher than that of any other 
country. The last objection, if a valid one, means that there can be no progress 


beyond Uie point whicli iias now been reached by the country whidi h;is provided 
the highest scale of conii>onsation. for it the objection is valid arf to the proposed 
legislation it wu-.^J be au eqtiaily valid objection to any incivase in liie compen- 
sation proposed lor the country which now provides for the highest scale. The 
question, in my oj>ini.iii. is nui what o:iior rv)uiiirics ha\c done, but does 
justice demand shouhl be done. 1 have no fear that if the bill should beconi.; law 
it will handicap the manufactureis of this Province as the Association appears to' 
think that ii will, w ibai ii will divi-ii manufacinring from the I'rovinee. There 
has been in force for some years in the adjoining Province of Quebec a compen- 
sation law which imposes upon employers greater burdens than they are subjected 
to by the law of this Province, and yet it iias not been suggested that any such 
results as are prophesied by the Association have followed from the enactmeut of 
the Quebec law. 

In order that it may he seen whether the division of the burden between the 
employer and workman is unfair, it may be well to point out how it will be 
divided under the provisions of the proposed law. The workman will bear (1) 
the loss of all his w^ages for seven days if his disability does not last longer than 
that, (2) the pain and suffering consequent upon his injury, (3) his outlay for 
medical or surgical treatment, nursing and other necessaries, (4) the loss of 
45 per cent, of his ^vages while his disability lasts; and if his injury results in his 
being maimed or disiigured he must go through life bearing that burden also, while 
all that the employer will bear will be '.he payment of 55 per cent, of the injured 
workman's wages while the disability lasts. 

The burden which the workman is required to bear he cannot shift upon the 
shoulders of any one else, but the employer may and no doubt will shift his burden 
upon the shoulders of the community, or if he has any difficulty in doing that 
will by reducing the wages of his workmen compel them to bear part of it. 

It is contended that it is unfair to require the employer to pay compensation 
during the lifetime of the workman because in many cases it will mean that the 
workman will receive compensation for a period during which if he had not been 
injured he would have been unable to earn w^ages. Xo doubt that will be the 
result in some cases, but on the other hand the workman loses any advantage he 
would have derived had he not been injured from an increase in his wages owing 
to an improvement in his position, or to an increase of his earning power, or to 
a rise in wages from any other cause because, except in the one case of a workman 
who is under the age of twenty-one years wdien injured, the compensation is based 
on the wages the workman was earning at the time of his injury. 

It must also be borne in mind that the workman is required, as the price of 
the compensation he is to receive, to surrender his right to damages under the 
common law, if his injury happens under circumstances entitling him by the 
common law to recover or, if he would be entitled to recover only under the 
Workmen's Compensation for Injuries Act. his right to the like damages as he 
would be entitled to at common law limited, how^ever, to an amount not exceeding 
three years' wages or $1,500, whichever is the larger sum. 

According to the testimony of Mr. Wolfe (page 141), and there is no reason 
to doubt the accuracy of Jiis statement, in Germany no less than 84 per cent, of 
the accidents incapacit'dis the W'orkmcn for less than fourteen weeks. 

The nineteenth r-ssin- of the Minister of Labour of France shows that the 
number of declared mitigmts in that country in the year 1910. after deducting 
those which occas.'^at the ■ incapacity of four days or less, and omitting those 
2 L. 


which happened in mines, mining and quarries, was 412,278, and that of these 
1,650, or a little more than one third of one per cent., were fatal; 5,452, or about 
one and one third per cent., resulted in permanent disability, and 399,769, or 
about 97 per cent., resulted in temporary incapacity lasting for more than four 
days, and that in the remaining 5,407 cases, or about one and one third per cent., the 
results of the accidents were unknown. 

In Great Britain the duration of disability in the cases terminating in 1908 
was as follows: 

Less than two weeks . 11.2 per cent. 

From two to three weeks 27.3 per cent. 

From three to four weeks 18.4 per cent. 

From four to thirteen weeks 37.7 per cent. 

From thirteen to twenty-six weeks 4.1 per cent. 

Over twenty-six weeks 1.3 per cent. 

(24th Annual Eeport of the United States Commissioner of Labour, Vol. II, 
pp. 1,525-6). 

Similar statistics for Ontario are not available, but it may, I think, fairly 
be assumed that the great bulk of the accidents for which compensation would 
be payable under the proposed law will incapacitate the workman for short 
periods — 84 per cent, probably for less than fourteen weelffi — and that the fatal 
accidents and those causing permanent disability, total and partial, will be 
comparatively few. If this assumption is warranted there would appear to be 
not only no reasonable ground for the apprehension of the Association that the 
employers will be unduly burdened with payments for compensation continuing 
during the lives of permanently injured workmen, but it is certain that under 
the proposed law as to the vast majority of accidents in every case in which 
there could be recovery at common law or under the Workmen's Compensation 
for Injuries Act, the workman will be worse off than he is at present, and his 
loss will be a direct gain to the employer, amounting annually to a very large sum. 

My conclusion is that for all these reasons there is no valid ground for the 
objections of the Association to the scale of compensation which I have proposed. 

I have, however, upon further consideration come to the conclusion that as 
the purpose of the proposed law is to protect the wage earner there is no reason 
why highly paid managers and superintendents of establishments, to which Part I 
is applicable, should be entitled to compensation out of the accident fund to an 
amount greater tban the highest paid wage earner would be entitled to receive, 
and I therefore recommend that the draft bill be amended by adding the follow- 
ing to sub-section 1 of section 39 : 

"But not so as to exceed in any case the rate of $2,000 per annum." 

If no such limit is prescribed the result would be that the small employer, 
in the case of an accident happening in another establishment to a highly paid 
official, would be unduly burdened. I propose $2,000 as the limit because that 
sum is probably the maximum amount earned in a year by the highest paid 
wage earner. ^ ^^ 

The only remaining provision of the draft bill to Vo^g ^ I shall refer is section 
68, which provides for a contribution by the Provinc^'^j^rher^^^^* ^^ defraying the 
expenses incurred in the administration of the act. j.j^^^ the"^^ ventured to sug- 


gest what this contribution should be but, in my judgment, it should be a sub- 
stantial one. The effect of the proposed law will be to relieve the community 
from the burden of maintaining injured workmen and their dependants in cases 
in which under the operation of the existing law they are without remedy, and by 
the transfer from the courts to the Board of the determination of claims for com- 
pensation, which will lessen very much the cost of the administration of justice. 

There is one matter which should be pro^-ided for for which provision has 
not been made in my draft bill. No provision is made for contribution by employers 
in the industries mentioned in schedule 2 towards defraying the cost of adminis- 
tration. TJiis was an oversight, and I recommend that a section be added to the 
bill providing that "the employers in industries for the time being embraced in 
schedule 2 shall pay the Board such proportion of the expenses of the Board in 
the administration of this part as the Board may deem just and determine, and 
the sum payable by them shall be apportioned between such employers and assessed 
and levied upon them in like manner as in the case of assessments for contributions 
to the accident fund, and all the provisions of this part as to assessments shall apply 
mutatis mutandis to assessments made under the authority of this section." 

It is the purpose of my draft bill to empower the Board in determining the 
proportions of the contributions to be made t-o the accident fund by employers to 
have regard to the hazard of each industry, and to fix the proportions of the 
assessments to be borne by the employer accordingly, and not to require that the 
proportions for each class or sub-class should be uniform; and also to permit the 
Board, if in its opinion the character of any class of industry justifies that being 
done, to require a larffcr contribution to the reserve fund by the employers in any 
such class than is required from employers in other classes. 

The bill as drafted will, I think, accomplish this purpose, but if any doubt 
is entertained as to it, the bill can be amended by the addition of a section ex- 
pressly so declaring. 

I may be permitted to say, in conclusion, as the United States Commissioners 
said with reference to the bill drafted by them, that I submit the proposed law 
'''not believing that it is the most perfect measure which could be devised nor the 
last word which can be said upon the subject, but as the result of careful investi- 
gation and the best thought of the Commission and as constituting at least a step 
in the direction of a just, reasonable, and practicable solution of the problem with 
which it deals." 

I regret that some of its provisions do not commend themselves to the judg- 
ment of the Canadian Manufacturers Association, and on that account I have, 
since my last interim report, again carefully and anxiously considered those which 
are objected to and the objections that are urged against them, as well as the pro- 
visions of the Association's alternative proposition, but have seen no reason for 
doubting the correctness of the conclusion to which I had come, the results of 
which are embodied in the draft bill. 

In these days of social and industrial unrest it is, in my judgment, of the 
gravest importance to the community that every proved injustice to any section 
or class resulting from bad or unfair laws should be promptly removed by the 
enactment of remedial legislation and I do not doubt that the country whose 
Legislature is quick to discern and prompt to remove injustice will enjoy, and 
that deservedly, the blessing of industrial peace and freedom from social unrest. 
Half measures which mitigate but do not remove injustice are, in my judgment, 
to be avoided. That the existing law inflicts injustice on the workingman is 


admitted by all. From that injustice he has long suffered, and it would, in my 
judgment, be the gravest mistake if questions as to the scope and character of the 
proposed remedial legislation were to be determined, not by a consideration of what 
is just to the workingman, but of what is the least he can be put off with; or if 
the Legislature were to be deterred from passing a law designed to do full justice 
owing to groundless fears that disaster to the industries of the Province would 
follow from the enactment of it. 

All of which is respectfully submitted. 

W. R. Meredith, 


Dated at Osgoode Hall, Toronto, 

the 31st day of October, 1913. 

List of Persons Appearing before the Commission. 

12th— 27th Sittings. 

Ballantyne, Mr. A. W... Counsel for Casualty Assurance Companies, Toronto, 187, 208, 

300, 304, 315, 384, 444, 527, 528, 532 

Bancroft, Mr. Fred' Vice=Pres. Trades & Labour Cong, of Canada, Toronto, 47, 48, 

68, 83, 93, 238=245, 256=275,297=315, 344, 360=366, 375, 389=406, 446=469, 

491=505, 511, 516=521, 525=536 

Best, Mr. W. L Legislative Representative Brotherhood Locomotive 

Firemen and Engineers, Ottawa, 348=362, 376, 377, 536, 611 

Britnell, Mr. A. E Britnell & Co., Stone & Builders' Supplies, Toronto ....515=519 

Burgess, Mr. J. W Ex=Pres. Trades & Labour Council, Qalt 20 

Burke, Mr. J. T Chief Inspector of Factories, Ontario, Toronto 481,482 

Carter, Mr. F. C Counsel for the T. Eaton Co., Ltd., Toronto 533, 587, 

588, 610 

Cease, Mr. D. L Editor " The Railroad Trainman," Cleveland, Ohio . . . 376=402 

Clarke, Mr. Charles C.P.R. Engineer, London 251 

Detwiler, Mr. D. W The Oberholtzer Shoe Co., Berlin 31 

Dilworth, Mr The T. Eaton Co., Ltd., Toronto 30 

Doggett, Mr. J. W Representative Amalgamated Society Carpenters and 

Joiners, Toronto.. . .61, 63, 118, 489, 513, 514 

Dolph, Mr. C Mgr. Metal Roof Sheeting Co., Preston 22 

Gallagher, Mr. W. E.. .Vice=Pres. Trades & Labour Council, Berlin 16,17 

Gander, Mr. George ....Pres. Builders' Exchange, Toronto 499, 512=519, 592=597 

Gibbons, Mr. Joseph. ..Representative Trades & Labour Congress of Canada, 

Toronto ....48, 108=121, 143, 150, 163=165, 181=187, 246, 252, 256, 257, 
387=389, 457, 463, 489, 500, 503, 521=536, 565=589, 593-618 

Gofton, Mr. Samuel Pres. Trades & Labour Council, Berlin 18 

Goldie, Mr. A. R Goldie, McCuIloch & Co., Gait 13-15 

Greutzner, Mr. Adolph . . Furniture Co., Preston 24 



Halford, Mr. H. J Rep. Trades & Labour Council, Hamilton 47 

Hall, Mr. J. Harvey .. ..Rep. Order of Railway Conductors, Toronto 245,247, 

263=273, 364=374, 403, 423, 467, 530=537, 571=587 

Hall, Mr. Z. A Manufacturer, Preston 25 

Harris, Mr. Samuel . . . .The Harris Lithographing Co., Toronto 511, 554 

Hellmuth, Mr. I.F., K.C. Counsel for Railway Companies, Toronto 49, 50, 

188, 222, 238, 239, 252, 253, 256, 260=275, 294, 296, 482, 498, 505=511, 

527=535, 540, 553, 567, 582=590 

Hinsdale, Mr. F. W Chief Auditor Industrial Ins. Com., Olympia, Wash.. 277-348, 

368=376, 402, 404, 407=409, 441, 467=480 

Hibner, Mr. D Furniture Manufacturer, Berlin 28 

Hobson, Mr. Robert Gen. Mgr. The Steel Co. of Canada, Hamilton 32=46 

Kennedy, Mr. William -..Rep. Trades & Labour Council, Gait 18 

King, Mr Foreman Metal Roofing Co., Preston 15 

Kingston, Mr. Q. A Union Trust Co., Toronto . . .370, 371, 456, 467, 517, 520, 521 

Kribbs, Mr. W. A Planing Mill, Hespeler 20=22 

Lang, Mr. Q. C. H Pres. Lang Tanning Co., Berlin = 5=7, 32 

Lawrence, Mr. Calvin. . .Rep. Brotherhood Locomotive Engineers, Ottawa 249, 250, 

461=465,529=535, 581=611 

Lucas, Hon. Mr. 1. B., K.C, M.L.A. .Markdale 527, 537 

MacMurchy, Mr. A., K.C. Solicitor C. P. R., Toronto, 128, 131, 141, 152=186, 223, 238, 

246, 274, 410=443, 506, 507, 541, 543, 564=617 

Maloney, Mr. John Representative Bro. Railway Trainmen, Ottawa. . ..348, 367, 

376, 403, 404 

McCarthy, Mr. D.L., K.C. Toronto 247, 482=494, 508, 526=541, 587=617 

McCulloch, Mr. C. R Pres. Ont. Engraving Co., Hamilton 38 ,41, 45, 47 

McKinstry, Mr. A. E Gen. Supt. International Harvester Co's. Works 35=40 

Meredith, Mr. H. T Representative Ry. Trainmen's Union, Toronto.. 162, 466, 467 

Merrick, Mr. J. Q Secretary Employers Ass'n, Toronto 515 

Neely, Mr. Charles H Gen. Manager Ocean Accident & Guarantee Corp., 

Toronto 348 


Pannabaker, Mr R. Foi .aes & Co., New Hamburg 23, 24 

Pattinson, Mr. George, M.L. A.. Woollen Mills, Preston 8 

Ritchie, Mr. Charles, K.C.. Counsel for Casualty Ass'ce. Companies, Toronto.. 229, 237, 

241=245, 253 

Sass, Mr. W. T Mgr. Interior Hardwood Co., Berlin 29=31 

Scellen, Mr. J. A Counsel for Waterloo Co. Employers Ass'n, Berlin. 240=241 

Sherman, Mr. P. T Counsellor=at=Law, New York City, N.Y 188=240 

Studholme, Mr. Alan, M.L.A., Hamilton 38=47 

Trowern, Mr. E. M Secy. Retail Merchants Ass'n, of Canada, Toronto . . 50=63 

98, 247, 248, 296, 297 

Wegenast, Mr. F. W Counsel for Canadian Manufacturers Ass'n, Toronto, 148=158, 

160, 169, 178=187, 232=238, 253=291, 316=324, 331, 342=345, 367, 370=376, 

387, 401=446, 465=519, 533=618 

Wellhauser, Mr. Adam S. .Secretary Trades & Labour Council, Berlin 26, 27 

Williams, Mr. S. J Williams, Greene & Rome, Mfrs., Berlin 9=13 

Wolfe, Mr. S. H Consulting Actuary, New York City, N.Y 128=187 

Woodland, Mr. C. W. I... Joint Mgr. Employers Liab. Ass'ce. Corp., Toronto 162, 182 



Taken before the Commissioner 


Workmen's Compensation 


The Libkaky Hall, Berlin, Ontario. 

Frulaij, 19th April, 1912, 8 p.m. 

Present: Sir William R. Meredith, Cottnnissioiier. 

Mr. Gf. C. H. Lang: Mr. CoinmissioiuM-, we citizens of Waterloo county are verv 
much pleased that you have nia'le it convenient to give us an 
opportunity of ]>laiin.u- our viev\-s before you as to workmen's com- 
pensation, and the bill u])on which you are at the present time engaged. 
This gathering here is composed ot employers and eni])hivees. and T think 
every municipality in Waterloo county is represented. We thought Waterloo 
county, being the industrial centre of Canada, woidd l)e a fit and proper 
place to hold an investigation. Since this importnnt subject has I)een under 
investigation many of our citizens i]i this commnnity have given it s«me con- 
siderable thought. Within the past few weeks we had with us Mr. Harrington 
Boyd, of Toledo, who I believe was the framer of the Ohio act. which act 
appears to have given fairly good satisfaction at least, and a re])ort of his 
address was pul)lished in the (hrily press hei'(% so tliat considerable informa- 
tion has gone al)road to tlie public. We hope that you may find a means of 
framing a bill which will be fair to the employers and will be also a pro- 
tection to the employees and those dependent upon them. \ will call upon 
some of the employers and employees who are here to place thcur views before 
yoQ so tliat you may be aide to judge wliat are the requirements of our 
people, or what they wish for. 

The Commissioner: Mv. Lang, and gentlemen, — T could not think of dealing 
with the question, the consirleration of which has been entrusted to me bv 
the Government, without getting the opinion, of lioth the employers and the 
employed throughout the Pro\iiUH's. and. as ^fr. Lang has well said, there is 
no part of the Province which is more alive to this question a'ld in which 
there are more interests in ]ir()])ortion to the ]iopulation than in this city 
and county an-l in the neighboring towns. The work to be done is an im- 
portant one. The old ideas with regard to the relations of employer and 



emi^loyee are changing, and I am glad to say it is recognized that the 
present laws, so far as they provide for compensation to a workman who 
is injured in the course of his employment, are behind the age, and that 
the employers are quite agreed that a change is necessary in that respect. 
The thing is to determine what is best and fairest to be done. A law that 
is unjust to the employers or that is unfair to the employees will not be 
satisfactory. AVe must endeavour, as far as practicable, to arrive at what 
wall be a fair Bill to the employer of labour and to the man who labours. I 
hope too that there will be something like permanence, or a promise of per- 
manence at all events, in a measure that I expect to be able, after full con- 
sideration, to submit to the Government for their consideration. I think it 
would be most unsatisfactory that there should be agitation, a feeling that 
things were not right and a desire to change. It is much better that the 
employer and employee should now arrive at a fair and reasonable solution, 
if at all possible, and endeavour to put upon the statute book a law that will 
be fairly permanent. Nothing in this world is permanent, everything 
changes and probably everything may be improved, but as far as practicable 
I think we ought to endeavour to put upon the statute book a law that as 
far as accidents are concerned at all events, shall regulate for years to come 
the relations between employer and employee. 1 1 am not here, however, for 
the purpose of expressing my views; at present, indeed, I have no views. I 
am here to get information. I want to hear everybody who feels he has 
anything to say, I have made an interim report to the legislature. I was 
sorry that I could not submit a measure iliat could have been considered by 
the legislature during the session, but the more I got hold of the question 
the more I became impressed with its intricacy and its importance. So 
many questions have arisen that it would have been folly on my part to 
have attempted to formulate any measure and submit it during the present 
session. It is my intention some time during the year to cross the water 
and examine at first hand the working of the laws in Germany, in France, 
and perhaps in one or two other countries that have had laws of this kind in 
force for a number of years. In Germany a very serious attack has been made 
upon the law by a gentleman who has held high office in connection with it. 
Others, with diametrically opposed views, say that tliere is very little in Dr. 
Friedensburg's objections. I feel that it would be well therefore for me to make 
inquiries on the spot, and so be in a position as far as possible to judge for 
myself upon which side the truth is. I will be very glad to hear now any- 
body who desires to express his viows upon the subject. 

Mr. Lang : I, like many of those present here, have a good deal of hesitation in 
speaking upon such a broad subject. It is such a big study, and the more 
I think of it the mere there seems to be in it. There are only a few points 
on which I would care to speak, and one is that I believe a fund for the 
purposes of compensation should be raised by levying a tax on the employers 
of five or more persons. I think this levy should be made annually. From 
what I can gather so far, I think if another means were adopted a great 
fund would be created at first that perhaps would not be necessary, and I 
do not believe, from what I know of it, it would serve any good purpose; 
but the annual tax I think the actuaries state would increase. I notice 
what some of the employers are doing, and the means they are taking to 
counteract^ — that is, they are getting together and pro^ading means to avoid 


accidents. I just received a circular to-day from a Tanners' Association 
where they set forth means of avoiding accidents by hoods, covers, screens, 
and nets, and drawijig attention to dangerous appliances. I believe 
if there v\'ere an annual assessment or tax for this particular purpose the 
manufacturer would be very careful to keep those rates down. It would be 
to their own interests and they would watch out where they could make 
improvements, and accidents would be prevented. I think in that way 
many accidents would be prevented. I also think in the event of an acci- 
dent or death the widow and family should receive a fair proportion of the 
earnings which the husband or father was making. With a man earning 
$600, at the rate of $12 a week, I believe his widow should get $300 annually 
anyway, and that amount should be paid to her annually as long as she lives. 

The CoiiMissioxER : And does not marry again. 

Mr. Laxg : And does not marry again. I believe in Germany they hold out a 
bonus for the widow to . marry again. I think they give her 
three years' allowance if she remarries. I believe also that this 
insurance fund or compensation fund should be handled by a com- 
mission appointed by the Government with as little politics to it as possible, 
possibly along the lines of the Railway Board. I believe a high class man 
should be appointed to that position such as a High Court Justice, and 
salary should not be a question. I do not think employers or employees or 
the public generally would hesitate on that point. I believe they would be 
willing to pay a large salary, a salary of say $10,000 or $15,000. I think 
if three honourable men were appointed, say a High Court judge, and pos- 
sibly a business man and a working man, one of whom at least would be a 
disinterested party — a professor or someone of that kind — it would be suffi- 
cient, and those three to administer the fund. The expense of administra^ 
tion. I think, should be borne by the Government because as the matter now 
stands it would be a benefit to the whole community. Many cases would be 
kept out of court and there would not be the lawsuits, and there would be 
perhaps less work for some of the judges. In any event I do not think the 
cost of administration would exceed the cost of administration by the courts. 
I have also a note that a question comes up in the minds of some people 
that the payments to the beneficiaries should commence at once after the 
accident; and the question if there should be a waiting period: and if the 
employee should contribute. I do not think the employee should contribute 
towards the compensation ; Init there may be something in the waiting period 
of several weeks, and that perhaps the hospital bills and so forth should be 
paid. I think in that particular case the contribution should be made, 
because, while it is not a general thing, it would avoid many cases of claims 
which are verv^ trivial. In fact, there are many factories which have their 
own benefi.t associations in order to overcome difficulties of that kind. I am 
sure that the employer and the workman whose interest it is in the mean- 
time would have to pay out considerable money. You can all understand it 
would cost considerable money, but the law is going to be made am^way, and 
as it is for the benefit of the community, we would have to bear that. How- 
ever, I believe very strongly in the current payment, that is in the annual 
payment or the annual collection of the tax that would be required in order 
to make that compensation. 

I would like to call on ^Ir. George Pattinson of Preston, who 

:\rixuTEs OF evtdexce 

is an employer and manufacturer, as well as a member of par- 
liament. He may not perhaps want to express himself so fully, but 
he is a good fellow and he will have something of interest to mention tliat 
will perhaps be new. I haven't the slightest doubt that all the members of 
parliament have been studying this question for some time. 

Mb. George Pattinsox: Sir William and gentlemen, I am sure with the gentle- 
men present, I have a great deal of pleasure in meeting Sir William 
upon tliis occasion, because this is a question in which we are all 
interested, and I think perhaps the more we look into it and the more it is 
studied the deeper the interest becomes. I came here to-night somewhat 
in the same position as Sir William himself, and with the object of listening 
and learning, because in a small degree perhaps I may have to be connected 
witii any measure that may be placed upon the statute book and for that 
reason I want to get all the information I can. However, there are 
some general things I may say that have occurred to me upon which I 
think it is fair to speak. It certainly is a fact that the matter is of vita\ 
importance to both the employer and the employee, the one is just as much 
interested as the other. I think I may add to this, sir, that it should be 
of almost equal importance to the State, because the State should be in- 
terested in any matters that would prevent accidents or in anything that 
may alleviate the suffering that occurs from all accidents. I think the three 
are interested, but to the greatest extent perhaps the employer and the 
employee, and any bill that may be brought before the House, or any law 
that may be made unless it is thoroughly satisfactory to these people, will 
not have the desired effect. I think it is becoming a recognized prin- 
ciple that manufactured goods should bear the cost of not only what it takes 
to make them, and the wear and tear upon the machinery that is making 
these goods, but to a certain extent the wear and tear upon the employee 
who is engaged in making these goods. That assumes in some businesses 
a very serious risk. For instance in mining the risk is much greater 
than what it is in some other manufacturing places. Railroading 
is a very dangerous business, and the risk is very great. I 
tliink that the cost of any product should to a certain extent 
include the charge that would compensate for the wear and tear upon the 
mechanic as well as upon the machine. We all recognize that we have to 
meet in figuring up our costs, the wear and tear on machinery and plant. 
Now, to have that satisfactory there are different elements that enter into 
the subject. There is the question of who is responsible for the risk. I had 
a great deal of pleasure in listening to Mr. Harrington Boyd, and in listen- 
ing to the tables he quoted, and I followed him as closely as I could, and T 
think the assumption that he makes clearly shows that these are divided 
into three classes. First of all there is the liability of the employer, who 
perhaps is to blame for want of proper protection, or for not being strict 
enough in seeing his rules carried out, because people are lax and will run 
into danger unless held back with a firm hand. There is then the liability 
of the servant or employee, Avho may be responsible perhaps from negligence 
and carelessness; we know that has happened. In our daily vocations by 
coming frequently in contact with danger we seem to forget the danger that 
is all about us. Then there is the common danger that can be attributed 
neither to the employed nor the employee, or, as Mr. Boyd clearly put it, 


the danger tliat is due to the risk of manufacturing, a danger that is always 
and everywhere present and not in manufacturing establishments' only. 
There is risk in everything; it is larger in manufacturing establishments 
because there is greater danger. The question is how to meet these risks. 
I think, as Mr. Lang has said, tliat a scheme should be provided to pay and 
to pay liberally those people who have either suffered temporary suspension 
from work, or who may be disabled for life; a scheme that will be fair and 
at the same time be a preventative. I think anything I have read in con- 
nection with the scheme in Germany would indicate that there is a disposi- 
tion for a great number of people to come witliin the workings of the Act 
who perhaps were never intended to come within that act. It is the same, 
sir, with the fraternal societies, and one of the factors that keeps the fra- 
ternal societies in the shape they are is the interest that every individual 
member belonging to that fraternal society has to see that the society is 
not imposed upon. In saying this I do not want to cast the slightest sus- 
picion upon any working man, in saving that they might be inclined to come 
in and remain a permanent charge upon the society any more than any 
other class of people would do, but it is part of human nature. It is being 
found so in Germany, and tiie gentleman who was president of the senate, 
refers to it upon several occasions in his pamphlet that has just been issued. 
I think the employee's interest is the greatest means of prevention. Let him 
have an interest as he has in the fraternal society, and by that means you 
will make possible the working out of the act, difficult under any conditions, 
but impossible without his interest and co-operation. By interest I mean a 
monetary interest, an interest not as large as that of the employers, the manu- 
facturers, upon whom I would place the larger share, but some proportionate 
interest. I think a great many people, a great many mechanics, when they 
understand this matter aright will feel that in this way they would not be 
coming in as a privileged class, but that whatever was coming to them was 
coming as their right, and the compensation, whatever it might be, they had 
helped to pay. me say again it should be very much less than what 
would be paid by the employers, but it should be such as to give them a 
standing and a feeling that whatever they claimed they were claiming as a 
right, and that it was not given to them as a pension, or as something that 
they had not earned; they could then look their fellow-men, their employer, 
and the world in the face, and say : This is what we are entitled to. 

These are just a few remarks that I thought I would like to make; as I 
said, I came to listen. The question is so broad that if I were to go into details, 
I would perhaps be saying something that would be much better said by 
others present. I am glad to have had the opportunity of meeting these gen- 
tlemen here, both employers and employees, and I hope that as a result of the 
investigation, and with the co-operation, because there must be co-operation, 
of both employers and employees, such a law will be framed as will be a 
credit, sir, not only to the efforts that you have put forth, but a credit to the 
Province of Ontario, and if it is I am sure it will bring untold blessings to 
thousands of homes in this district where that law may have jurisdiction. 

Mr. S. J. WiLLiAiis : Sir "William and gentlemen, I am very pleased -to be here 
this evening to give my endorsement to a scheme for the com- 
pensation of workmen, and I congratulate the Government on their 
selection of Sir \Yilliam as the man who will frame this bill ; that the 


will be eminently fair we all know. Any one who has watched his career 
for so many years will feel sure that our interests and the interests of the 
labour people will be in safe hands. I do not want to speak as an employer 
of labour, but four-fifths of our people are women, and they require care and 
compensation the same as the men, ' In our industry and allied industries 
there are not very many accidents. I have never known of but one death, 
and that occurred in our own factory about twenty-five years ago. There 
have been many accidents, but few serious ones, but all the same they require 
some protection. In speaking of the question of compensation, and who 
should be assessed, I may say I am in sympathy with the thing throughout. 
I believe that the employer should bear the brunt of the burden; 
that the Government should bear the expense of administration so that 
the law shall be administered properly: and that the lalx>ur people should 
bear a portion of it so that we should be assured of their assistance in 
the prevention of accidents as far as possible. My experience with the 
labour people is that they do not want to be patronized ; they do not want 
to accept anything that they are not justly entitled to, and I know that when 
this matter is put before them properly that they will feel, if they are going 
to be as it were the ones to watch our interests and their own, that a small 
contribution from them will be on the right lines. This will lead, to my 
mind, to accident prevention and to the use of safety devices which are most 
essential in every business where there is machinery running. Xo matter 
how small or trivial the machine may be it should be protected, if it is pos- 
sible to protect it, and I think that the one who should give the ideas for 
the protection of that machine is the one who works it. If they are con- 
tributing to a certain extent to the fund they will watch and see that the 
machine is protected and that careless people are disciplined for being care- 
less and bringing upon themselves an accident for which co-workers will 
have to bear part of the expense. I feel sure from my experience that the 
labour people will bear their share willingly, and that they do not want any- 
thing but what they are entitled to. In doing this they are safeguarding 
the lives of others. It' is a small matter to scrap machinery, but it is a very 
expensive matter to scrap your employees. There is a very large investment 
in employees by every factory and by every manufacturer in the world, and 
that must be preserved. The earning power must be preserved as far as 
possible. We must have co-operation and the hearty co-operation of labour 
in order to preserve this. Then in taking care of the ones who are left, there 
should be a good and fair compensation to the widow and the children. "We 
are all to-day, I may say, feeling very kindly towards each other all over the 
world after this terrible accident of the Titanic. There is nothing that 
brings us so near to each other as accidents to our fellow-men, and if it hap- 
pens in your own factory you feel it just as much or a great deal more than 
you woulfl with this terrible catastrophe that we are hearing the details of 
to-day. In speaking of the benefit societies, we have in our factory, and have 
had for years, a benefit society which has been a great success. The con- 
tributions are very light. There has been a great deal of good done to those 
who have been sick or injured, and the benefit society has been run and ad- 
ministered entirely by the employees. The firm has nothing whatever to do 
with it in any shape or form. We made them a small contribution a number 
of years ago and since then we have had nothing whatever to do with it. 

\voKKMbLN"s ro:\[rKNsA'ri().\ commission. n 

There is no otlicer iior anybody in it eonnected with our company. For 
several years we sent a eoUeetor around to rolleet these dues from the people, 
both men and women, but we found that they resented the collector runnin*^' 
after them all the time. About a year and a half ago the committee decided 
that they would, with the foreman's consent, have this dechicted from the 
pay-roll every two weeks, as we jiay every two weeks. Since that 
has been done there has never been a complaint. The society has 
grown, and last year was the must successful in its history. There 
never has been a tH)ni}daini. That proves to us that when 
the labour people are given a fair rhance to contribute, if it is a reasonable 
one, they are quite willing to bear it. and they have never said a word and 
have entered no protest at all. The largest contribution from any employee 
is 10 cents per week, $.") ))er ycai-. and the largest com})ensation is $7.50 per 
week for the tirst eight werks and half of that for the next four weeks. It has 
proved eminently satisfadoiy to the employees, and the j)ntitf of that is the 
growth of the society. 

With this compensation act 1 i)resumc the benefit societies will l)e done 
away with largely, but it (X-curred to me that if it was decided that a waiting 
period was desirable that the l)ene(ii societies could possibly be maintained 
for the collection of that fund with a ])ossible ."iO per cent, reduction from 
what it is to-day of the amount that is assessed. I feel that there should be 
a classification of manufactureis. Wo would not like to he classed with the 
more hazardous risks, because we have few ai-cidents and no deaths that T 
have ever heard, except the one which occurred a good manv vears ago 
through- a girl's foolishness in pulling another girl's dress under the table 
and making her believe that her apron or something had caught in the shaft- 
ing and slie got down under the table to do this. In those days the girls used to 
wear their hair down their backs, and this caught in the shaft and pulled 
her under and she died in the course of a week. She completely exonerated 
us as far as she could, said it was her own fault, but all the same the pall 
of that accident has hung over us all who have been connected with the 
plant. We have tried as far as possible to protect ottr machinery, and will 
accept from any one suggestions for the protection of any piece of machinery 
we have around the place. I am sure the employees will all welcome an 
opportunity to make this a success when they consider how small the contri- 
bution will be for them to be made part and parcel of the act. As to the 
question of the court administering this fund, T agree with Mr. Lang's sug- 
gestion, hut I would like to go a little fitrther and throw out another sug- 
gestion. AVhen it comes to the report of the accident and how this court i3 
going to get its evidence, it will naturally come from possibly three different 
sides. There will be the doctor in attendance, the employer, and the one 
wiio is injured. Now, if the court sits a number of miles away from here 
there may be some question if even all three of the people will cover it when 
it is brought to the .jitdge, if it be a judge who is the chairman. Then if 
you had someone whom they could send out to a place like Berlin to investi- 
gate the accident, taking these reports and getting details, and then make a 
strict investigation of the piece of machinery on which that accident oc- 
curred, in a very short time that man would become an expert in all classes 
of machinery and would tell them how to protect it, with the help of the 
one who is workino- the machine. Otherwise the court will not be able to 


order that intelligently. We want prevention, and the way to get prevention 
is to have somebody who has seen a similar accident and knows how that 
machine sliould be protected. Then those machines and the preventive de- 
vices could be photographed and afterwards printed and distributed to all 
the manufacturers throughout the Province, and they then would get an idea 
of how to protect all classes of machinery so as to preserve the lives of the 
people and stop maiming them as is being done to-day. I believe this would 
lead to a great good, this expert assistance coming from a man of that kind. 
There are a number of gentlemen here whom I presume wish to speak, and I 
am very pleased to give way to them. 

The CoMiiissioxEE : Just bearing upon the question of contribution by the work- 
ingman, how do you meet this argument : ISTo scheme of compensation pays 
more, in the case of permanent disability, than 50 or 60 per cent, of the 
wages, and it is said that the workman contributes the other 50 per cent, 
or the other 40 per cent.; he bears that himself. Nobody proposes to in- 
demnify him fully for the loss due to injury. What do you say to that 
argument? Has it force, or how do you meet it? 

Mb. Williams: Do 5'ou mean the workman bears one-half? 

The CoMinssiON^ER : He bears one-half of the burden. He is maimed and he is 
totally disabled; he does not get his wages; he does not get more than 50 
or 60 per cent, in any way; the balance he loses. It is said that he is a con- 
tributor to the extent of that loss, and that that is a safeguard on his side 
against his wittingly incurring danger. 

Mr. Williams: Well, Sir William, does he always bear all that? Supposing it is 
due to negligence on the part of this man? We have to pay just the same 
if he is a negligent man you see. 

The Commissioner : Let us take a case that is not complicated by negligence. Sup- 
posing a man without negligence on his part is injured, and totally disabled. 
All that any law would propose to give him at the utmost would he 50 or 
60 per cejit. of v.diat he was earning at the time the accident happened. 
Now, he loses the balance of that for the remainder of his life or for as long 
as he would be incapable of working, and the argument is that in that way 
he contributes very materially. 

Mr. Williams: Yes, it is true he does, but he is contributing all the time, for he 
has created a fund for taking care of himself hy doing this. Is there no 
risk that he should take as well as the manufacturer? 

The Commissioner: Does he not? The argument on the other side is if you were 
paying him full compensation for the injury there would be more force in 
the contention that he should contribute, but you are only paying the half. 

Mr. Williams: Of course I am saying now he should have a fair compensation. 

The Commissioner : I do not think any country has gone higher than 60 per cent, 
of the earning capacity of the totally disabled workman. I am only just 
asking the question. That is an argument that has been used and I want 
to know how you meet it. 


Mr. Williams: Well, I do not know that I can answer that at the present time 
without giving it some more thought. 

The Commissioner : I will be glad to get the answer at any time. 

Mr. Williams: I will be glad to do so. 

Mr, a. R. Goldie: Mr. Commissioner and gentlemen, I feel a good deal of diffi- 
dence in following the speakers who have already presented this 
case, and I do not want to say anything more than just on one 
point really, following the line of Mr. Williams. First of all I think that 
as a manufacturer a reasonable compensation act would appeal to me very 
strongly. I have had a little experience in handling a body of men, and if 
there is any one distressing thing in that experience it is the uncertainty of 
not knowing what to do when a man is injured. Unfortunately I have had 
the experience of one man being killed while I have been in my present place. 
It was entirely owing to his own negligence, but at the same time, as Mr. 
Williams has said, it was a most distressing experience, and the inability to 
decide what was the fair thing to do afterward was one of the hardest things 
I think I have had to do. I believe most employers want to be fair, and I 
believe that most workmen want what is just, but the uncertainty of not 
knowing what is fair and what is just is a very hard question, and if any Act 
lays down definitely what shall be done under the circumstances it clears the 
air of a great deal of misunderstanding. The point I would like to mention 
is the practical experience that has been had in our company with a benefit 
society very similar to the one Mr, Williams mentioned. In fact if I am not 
mistaken the society was modeled after ours. Ours has been in existence I 
think for thirty or thirty-five years. Of course it is a benefit society for 
sickness as well as for accident. It is entirely voluntary on the part of the 
men. The company contributes a very limited amount every year in two 
lump sums. The company takes no part at all in the management, and the 
men as I say contribute voluntarily, and the membership consists of about 
three-fifths of the total employees. That society levies a tax of 10 cents a 
week on each member, and at the end of the year pays a dividend, dividing 
up any surplus, except a small amount with which to start the new year, so 
that it brings it down to about 7I/2 cents a week. Out of that they pay $4 
a week sick benefits for thirteen weeks, 25 cents a day for thirteen weeks, and 
35 cents a day for the next thirteen, and 25 cents a day for the next twenty- 
six weekS; making a compensation for one year from the day of sickness or 
accident. One point that probably has been a debatable point is the 
question of a waiting period. I had a talk yesterday and this morning 
again with the present president of the society who has been in our employ 
and was one of the first members of the society, and he said that at the 
beginning of the society they paid from the date of taking the sickness or 
the date of the accident, and it nearly wrecked the society. A man who 
was slightly indisposed would always stay off a week to get the week's benefit. 
I will not say always, but enough to make it a serious question. What they 
do now is this, I understand: It is entirely on the men's own initiative, a 
man that is one week ofl: or less than a w^eek gets no benefit; if he is two 
weeks off he gets one week; if he is three weeks off he gets two weeks: and 
then if he is four weeks off he gets the whole four. In that way it cuts out 
trivial accidents and trivial sicknesses. There are a number of benefit societies 
3 L. 


in the factories in Gait, I tliiuk probably most of them are almost exactly 
Che same as this. This same gentleman, the president of the society, stated 
that the local lodges have the same provisions. Now then, the proposition, 
as I understand it from your preliminary report, sir, is to have 
the compensation paid out of a collective fund assessed on all the industries, 
the industries being grouped in classes according to their risks, so that any 
individual employer does not directly pay for the accidents in his own in- 
dividual factory. If that is the case I would make one suggestion, basing 
it on my experience with the society in my own company, and that is this : 
This fund will have to be managed from a central place. A great proportion 
of the accidents are minor accidents. I did not look up the statistics, but 
just roughly I would judge 80 per cent, anyway of accidents are of a com- 
paratively minor character, and it will take as long for a commission or an 
expert at a dist-ance to sift out and adjust minor accidents as it will for 
major accidents. Wliat I would suggest would be this, that for minor acci- 
dents or accidents in which an employee is otf say up to four weeks, should 
be handled by an individual association in each individual factory under 
the regulation and control of the same commission that has the larger fund, 
and that this association or benefit society, or whatever you call it, take 
care of all the accidents not over four weeks; that the compensation be 
decided on by the commission, what is fair, and that an assessment be made 
equally upon the employer and upon the employee to cover these minor acci- 
dents, and that the assessment for the major accidents, anythinij over the 
four weeks, be entirely on the employer. I put the proposition up to the presi- 
dent of our society to-day, and I asked him if he thought it was a fair pro- 
position, and whether the workmen as he knew them would be willing to do 
that. Of course it is the opinion of one man, but of one who is in touch very 
largely with the men in our factory, and in touch with a number of lodges, 
and has a pretty fair opinion of what the men are thinking, and after 
thinking it over he said most decidedly he would consider it was a fair pro- 
position. He said that first of all he would want to feel that he was con- 
tributing something to what he was getting back, and it would give him h 
feeling of independence that he would not otherwise have. That is only tho 
opinion of one man, but I am giving it to you as he expressed it to me. Thi> 
taking care of the fund locally wonld clear the way at the central office by 
taking out a great deal of the work, and if the workmen were interested tc 
the extent of contributing half they would see that the fund was adminis- 
tered wisely. In fact from experience with our employees I would not hesi- 
tate to give the management of the fund to the employees, and there would 
be a tendency to see that there was no shirking. Then it would give them 
a feeling of responsibility and it would encourage them in using safeguard* 
and in asking for more. ^ly experience with regard to safeguards has been 
that in a good many cases an employer will put on a safeguard and that the 
workman will take it off if it is a little harder to work the machine, and ho 
takes the risk. I go round my own factory very often and make them put 
back guards that have been taken off. I cannot find out who takes them off. 
but they are off, and I think it would tend to get away from that if the men 
felt they had more of an interest. This, Mr. Commissioner, is the suggestion I 
would make, that the minor accidents be handled locally, and that any ex- 
tendincr over four weeks be handled by the commission. That four weeks i> 


just a figure, but that would cover a great many of the cases, and that any- 
thing that extends over that be then taken care of by the central fund, with 
the management of the local society largely in the hands of the employees. 

The Com:missionf.r : If anything like that were done I suppose it could be made 
optional with the employers and the employees in any particular establish- 
ment to do what you suggest, Mr. Goldie. That is, not to make it compul- 
sory, but if any factory where the employer and the employees were willing 
that that should be done, it might be done. 

Me. Goldie: Well, of course that would be one way, but I did almost think as I 
look at it now that it would be a wise thing to handle that part of the fund 
that way and make it compulsory. I think it could be left optional with the 
employees and the employers as to whether that society should cover more 
than bare accidents. 

The Commissioner : But suppose it was limited, as Mr. Lang has suggested, to an 
establishment employing five, you couldn't apply it ver}'' well. 

Mr. Goldie : There might have to be an association grouping all the small indus- 
tries into a group in a municipality. That is of course one objection to the 

Me. King: Mr. Commissioner, and gentlemen, the factory which I represent is 
the Metal Shingle Siding Company of Preston. The employees in that 
factory have for the last six or seven years been covered by accident insur- 
ance of one kind or another, but for some reason or other accident policies 
did not appeal to them, and about a year and a half ago they decided to form 
a benefit association like that which has been described by the gentleman 
who spoke before. This at the present time is working to the satisfaction of 
the men. For the upkeep of this benefit the men pay into the association 
15 cents per week. The remuneration to them in case of sickness is $5 per 
week for the first twelve weeks and $3 per week for the second twelve, and 
this seems to work out to the satisfaction of the men. I do not know that 
I can add anything further. 

The Commissioner : Well, Mr. King, that would not take care of the more serious 
accidents as it strikes me. Supposing a man is permanently injured it would 
not take care of him. You only provide, as I understand it, for 34 weeks. 

Me. King: 24 weeks, yes. 

The Commissioner: Supposing a man is totally disabled or is killed? 

Mr. King : You see this is a benefit society amongst themselves and their liability, 
of course, would end at the expiration of the time. 

The Commissioner: Do I understand that an employee gives up his right to be 
compensated if he is totally disabled in consideration of the benefit he gets, 
or has that question never arisen? 

Mb. King: Well, it seeme satisfactory to the men. 

The Commissioner : I suppose you have never had an accident the consequences 
of which have lasted longer? 

Mr. King : We have not as vet. no. 


Me. W. E. GrALLAGHER : Mr, Commissioner, and gentlemen, I did not expect to 
be called on to say anything, and I feel that I am not in a 
position, not having the information, to express a very intelligent 
opinion on the matter. From what I know and from what I have 
read of Mr. Boyd's speech, and the gentlemen that have spoken to-night, it 
seems to be a very important question. I came merely to get information, 
and as the former speakers have all been along the lines of the manufac- 
turers, I have been able to get a lot of information that I consider of in- 
terest to the workinguieu whom I represent. 

As far as a benefit society goes I do not see how that could have any 
bearing on a compensation act to be enacted by the Government. There 
are advantages, but they are all optional, and when you come to take the 
workingmen into consideration and make that compulsory, and levy a tax on 
them they would consider that it was a kind of imposition, I believe. I am 
only speaking from my own general impression of the workingmen. I do 
not think there are many of the workingmen who have given this question 
very serious consideration. Personally, I believe it is a great advantage to 
both the manufacturer and the workingman and I am very anxious to see it 
come to something, and I hope that it will be something definite and satis- 
factory to both parties. I tliink there are great advantages in it to 
both the manufacturer and to the workingman. I believe at the present 
time that numbers of manufacturers now carry some insurance on their em- 
ployees in insurance companies, and with the settlements that are made with 
their employees I think they must be disappointed. They pay for protection 
to a certain extent, but it is left to the insurance com.pany to convince the 
court that it was the man's negligence, and quite often they convince the 
court that it was. However, I do not think the employer is altogether free 
from responsibility in that respect. If a manufacturer or an employer has 
a man that is negligent on a machine of any kind where he is liable to be dis- 
abled, I think he is doing both himself and the man an injustice if he leaves 
him there. He should be taken off there and a man put on that is careful, 
because he will only educate the careless man to a certain proficiency that he 
may get disabled. Then he does himself the injustice that he loses the man, 
and the man may be loses the power of an arm or a leg, and I think the em- 
ployer is still responsible to a certain extent in that respect. 

I think the workingmen in general are all independent enough to want 
to feel that they are not getting anything for nothing, and I think they 
would be satisfied to contribute to some extent, but they must be educated to 
the idea that they are getting a better compensation than they were formerly 
under the insurance companies in which their employers mostly carried 
policies. Then I think when they realize that fact that they would only be 
too glad to go in and co-operate with the Government and the employers to 
bring about such an end. But as to making it in the form of a benefit 
society and making it a compulsory assessment I believe personally the work- 
ingmen would resent it. Some of the earlier speakers gave me the impres- 
sion that the State would derive certain benefits. I think myself that they 
would. There are widows and children who are left unprotected, and if 
they are not in a position to take care of themselves they must necessarily go 
to some charitable institution which is kept up by the State, and that would 

: be one reason why the State would benefit. Then the manufacturers I 


believe would beiietit in tlii^ way, if a man meets with an accident and it is 
put into the hands of some person else to make a settlement for the smallest 
possible sum. it is financially his business, they are going to make it very 
low; and it is not only going to hurt the man, but it is going to hurt the 
manufacturer, because it creates dissatisfaction amongst the remainder of 
his employees, and at the same time the employer himself is disappointed at 
the settlement. He may be paying to the extent of a thousand dollars, and 
he would be only too pleased to see the workingman get the full amount of 
what he was paying for, but he does not. I consider, therefore, that 
a law like this would be a great benefit to the manufacturers and to the 
workingmen. There cannot be any question in the workingman's mind but 
what it would be a great benefit to him. There would be no necessity of 
going to law and losing what little prospect there was of getting something, 
and I do not doubt if the workingman became acquainted with the details, 
of course the details would have to be drawn out before them to keep them 
educated, but I believe they would take a great interest in it, and do any- 
thing in their power to co-operate. 

The CoiMMissTONER : I may express this opinion. I quite sympathize in what 
you say about the duty of the employer to try and make his men more 
careful ; but take a man who is working on a machine, and he thinks he 
knows all about it, and the employer says to him, ''You are not careful 
enough, you must get out," would there not immediately be trouble in that 
factory ? 

Mr. Gallagher : "Well, as far as that goes there might be trouble that way. He 
might resent that. There are people that will overestimate their ability in 
running machinery; you often find they do it, and that is one case where the 
workingmen in general have to suffer for an individual. Just while I am on 
my feet, one of the speakers mentioned about employees taking the guards 
aff machinery. I was just thinking after he mentioned that what would 
be the object of them taking those guards off, if it was not to increase the 
output of the machine, or to work to better advantage. It would necessarily 
mean he was taking that guard off for some certain purpose, and the manu- 
facturer should appreciate that the employee is interested to that extent that 
he is taking that guard off that machine to increase the output of the 
machine, or something to that effect. 

The Commtssioxer : The weak spot in that is that sometimes he takes it off 
because the work is easier. Then if a man is doing piecework he can do 
more work. There is no doubt that happens, and it seems to me that if 
the workmen generally would insist upon their fellow- workmen being reason- 
able about these things, and careful, and discountenance those things, that 
would help a great deal both the employer and the man himself who gets 
hurt. I have seen a good deal of that in cases that have come before the 
court. Men have been injured and the evidence has disclosed that the man 
was careless. I am afraid the workingmen do not sufficiently realize that 
they owe it to themselves to discountenance carelessness on the part of their 
fellow-workmen. Perhaps it takes a good deal of courage to do that, but T 
think it would be in their interests if they did. However, that is by the 


Me. Sam. Gofton : I was not expecting to be called on to-night. I am not a 
speaker. I do quite a bit of thinking, but when it conies to 
expressing my thoughts I am almost lost. I have heard a few 
of the speakers to-night, and what I have been thinking is this: 
It is a very good act to take hold of. I have always thought that a 
man should have some protection, especially in these manufacturing places. 
Of course, as some one said, there are places where they have protection by 
way of insurance, but at the same time it does not concern the men in the 
factories when they are at their work and when they get hurt. Mr. Williams; 
said to-night he thought the employees should contribute something towards 
this. I am really of the same opinion, for this reason, that I think thev 
will be more careful themselves and there will not so many accidents happen. 
The workingmen I think are independent enough to think if they do not 
contribute anything they have no right to receive it, but still after they get 
hurt or disabled then is the time they want to have something. They 
forget that part, where if they contribute to it they will not think about it 
afterwards; but they think, well, I have helped and I am getting my own 
back, and the man that is not hurt when he sees his neighbour hurt will say, 
" I have done something to help my neighbour." That is my view in having 
the employees contribute part of it. As I said before, T can't iu.«t express 
my thoughts. 

The Commissioner : You are doing very well. 

Mr. Gofton: So I will not take up any more time. 

Mr. Wm. Kennedy: Mr. Commissioner, and gentlemen, I did not expect to be 
called on to give any information on this particular subject. I 
came here more vdih the idea of getting a few suggestions that 
might be educational, for one must more or less receive some 
benefit when a discussion takes place. I suppose it is the inten- 
tion of the Government to try to frame up a law that will meet the views 
of tlie different classes of people. Of course it is almost impossible, I 
believe, to frame a law that will satisfy everybody. There will be more or 
less dissatisfaction all along the line possibly, but the idea, I expect, is to 
satisfy the greatest number possible. Well, I classify the accidents to a 
certain extent under three headings. An accident sometimes is unavoidable 
owing to the lack of necessary collective information or expert information. 
It cannot be avoided until experience gives people the necessary knowledge 
to avoid it. Then there i.s the accident that is entirely avoidable and the 
! employer is altogether responsible. Then there is the accideiit caused by the 

carelessness of the individual employee. Now, the question in my mind is 
how can we determine the responsibility. It appears to me the cost of this 
measure is the thing that is sticking the people, that is, the parties who are 
interested in it. Of course I am speaking merely as an individual and not 
as the mouthpiece of a great number of men, but I speak as an individual 
and must expresss my individual opinion. The first thing necessary is by 
expert statistical evidence to determine the responsibility, and of course that 
may take time. Then there should be workingmen represented on this 
board in some way. I do not think the workmen want something for 
nothing; I believe they are all willing, if they understand it. to pay for what 


they get, bur it is a question of whether they are responsible for the 
accidents to the extent that they are called upon to pay. That is where the 
trouble is going to come in my opinion. Some want the employers to pay 
all. I have heard workingmen state they wish the employers to pay all. 
Well, of course they are in the position of the employer who wants possibly 
the workingraan to pay all. But my opinion is I would have to have, if I 
was to give an intelligent view as to the cost, such evidence that would con- 
vince me as to where the responsibility was, and distribute the cost according 
TO the responsibility. If, for instance, five per cent, of the accidents were 
attributable or traceable to the carelessness of the employees they should pay 
five per cent, of the cost. If ninety per cent, of the accidents upon inves- 
tigation were found to be placed to the credit of the employer they should 
pay ninety per cent, of the cost, and if five per cent, of the accidents was 
entirely unavoidable the State should pay that part of the cost. That is the 
way I look at it. Of course the parties who would possibly administer the 
affairs would consider that. Xow, as to localizing the distribution by the 
local manufacturers I think as far as the working man is concerned that is 
altogether wrong. In my opinion there should be an independent com- 
mission appointed by the Government who would be strictly independent as 
far as either employee or employer is concerned, and they should investi- 
gate all cases, and the Government should handle all the money. How they 
collect it of course is merely detail that must be worked out in the framing 
up of the law. 

As to the compensation in itself I take the view that if a man is totally 
disabled owing to the fact that the employer has been rather neglectful in 
protecting machinery, or hiring men who are not competent to do the work 
and therefore through some peculiar blunder on the part of this particular 
workingman other workingmen may be totally disabled, I think there 
should be the full liability. They should get, in my opinion, when the 
evidence was taken up, in case of death and if the man was in complete 
health, (and they could find out very easily whether he was a healthy man 
or not), if he was killed at the age of 20, and the general record of a man's 
life we will assume is 50, that man should get, or his family at least should 
get, as much as that man's earning capacity was until the time of his death. 
If upon investigation they found out that the employee himself was respon- 
sible then I do not think he should get that amount. As far as the amount 
and how it might be regulated as to those things, some insinuate (it isn't an 
insinuation possibly either) that a lot of workingmen might try to slip 
in on the game and try to get paid for an accident that did not really occur, 
or frame up something of that kind. I have found in my experience with 
workinginen, while I will admit there are some who would possibly do that, 
the percentage is so very small it should not be taken into consideration. In 
fact, those individuals are possibly well known, especially if they are work- 
ing in a large concern. They are so well known that they would be easily 
detected. While the fraternal organizations work on the principle of a 
waiting period I believe in case of accident, which would be investigated 
right there and then possibly by the employees and the employers, and if it 
is found that the accident was serious enough to lay him off for a week, his 
pay should start right away and there should not be any waiting period what- 
ever, because in my opinion the percentage is so small of people who try to 


frame up a job, especially if the pay was slightly under their earning 
capacity, it would hardly be worth while taking notice of. As far as my 
personal opinion is concerned that is all the information I can give. 

Mr. J. W. Burgess : Mr. Commissioner, I came up for information and education. 
I certainly have listened to it so far with a great deal of plea- 
sure and as my minutes are limited to catch my car I will 
have to cut short my remarks. I certainly fall in line with Mr. Lang. 
He was ,the only man who said that the manufacturer should bear the 
brunt of those benefit societies. Now, I am in favour of compensation to the 
workingman. By making inquiries from men from other countries where 
compensation is in effect and they belong to some fraternal organization it 
has a tendency to create a laziness, and I do not like lazy men, and more- 
over I don't believe in the employers paying it all. They said the employees 
were contributing willingly. I work for men who are sitting in this room 
where I was forced to pay whether I wanted to or not, and it was on a very 
small wage too. I believe if the employee is forced to pay this he must have 
the remuneration in the pay envelope that is due him. This talk of paying 
a man 35 cents a day out of the benefit society if he mee^s with an accident, 
why, at the present prices of butter and such like it wouldn't buy butter for 
the table, and it is an injustice I think. With regard to men taking guards 
off machinery, the way the manufacturers are at it to-day, specializing 
everything — ^they specialize men on a machine and then when the next man 
comes along he has got to do the same or get out. and if the guard is in 
the way. he has got to do something or lose his job, and he may possibly 
take the guard off. I don't know of any case where it was done. Now, 
Mr. Commissioner, I am in favour of compensation, but I believe in both 
parties contributing to it. 

Mr. W, a. Kribbs : I am like a great many more here, I came to hear what was 
said instead of to make any suggestion. At the present time the 
way the Act is, most employers have insurance by which when an accident 
occurs the men are paid a certain amount. In all the accidents I have had 
in my woodworking establishment the companies have been lenient with them 
in minor accidents. They have paid their wages and also their doctors' 
bills. Sometimes' the companies have not gone quite that far, but I have done 
it myself, so that any man that has been hurt in our shop has been paid his 
wages and his doctor's bill. I don't know whether the new Act will be 
according to the German law, or if it is according to the German law, 
he will be in as good a position as he is to-day for minor claims, 
but where a man is injured badly or permanently injured and goes to the 
courts, and has to go to the courts, I do not think that he is 
getting justice. I do not think the workingman can get it or does 
get it, and the amount of money he gets allowed him, a great deal of it 
is eaten up by expenses in one way and another. I think the Act at the 
present time should be repealed and something new instituted whereby the 
workingman would get what was due him without any expense to him, and 
then the employer would know what he has to do, and wlien a man is injured 
what he will have to pay, or what the Government will tax him. If it is 
done on the German plan he will know then about what amount of money 
he has got to pay each year. As T understand it the German law will cost 


the manufacturer two and a half per cent, on his wage hill. The insurance 
to-day in our line — I don't know what it is in the iron works — the wood- 
working line is one per cent, on the pay sheet, the amount of wages that we 
pay each year. It shows that the manufacturer is going to pay a great deal 
more money, and I have not heard of a manufacturer that is objecting to 
pay that extra money to help the workingman. But there is one feature 
that I do not know will work out right unless the Government appoints a 
commission that will not be changed and that cannot be used as a political 
football. An Act that can be changed by either political party at every 
election 1 do not think will be satisfactory to either the workingman or 
to the employer. I think it should be something permanent. The Gov- 
ernment should appoint the best men they can possibly get at no matter 
what expense, and take it out of politics altogether, and make it as the 
Eailway Commission is, so that it shall not be changed every time there is 
an election or any agitation. There is another thing I want to 
say a few words on, and that is the removing of guards from machinery. 
I know in my shop, and I know in every shop I have been in, the manu- 
facturer tries to get the best guards that he can for his machines. The wood- 
working plants I think are the most dangerous. In my own shop I have 
gone to the expense of buying the best make of guard? for every machine 
we have got, and if you go through the shop one man will have it off. Now, 
you say "what is that guard off for ?" " Well, it was in the way ; I don't 
want the guard." I put up a notice that no machine must be used without 
the guard on. In a few days the notice was gone. The factory inspector 
comes along and says, '^ Where are the guards? There they are hanging 
on a post. \Y[mt are they there for? Why don't you discharge the men?" 
Well, you go to discharge a man and you will lose half your men. I dis- 
charged a man for that reason and two men left that I couldn't spare very 
well. You will find in every shop when you have dismissed one man, other 
men will take up his cause and leave too. The guards are there for every 
machine and they will not use them. When an accident happens the guard 
is always off. Whether it is put on after the accident happens I don't know. 
I have never seen any of the accidents happen myself, but I am of the 
opinion the guardswere not on when the accident happened or they wouldn't 
have happened, especially on a shaver and buzz plane, and on the saws. 

As to the employees paying a part of the indemnity I myself think that 
is what it should be. Employees will stand by one another and when an 
accident happens you can't say unless you are a witness at it how it 
happened. They won't tell you. I know in one case I tried my best to find 
out whether a guard was used or not. Nobody knew. The guard was 
shoved into its place when I saw the machine after the accident. Nobody 
would tell whether it was on or off, and I couldn't find out. Now, if the 
employees pay ia small amount they would see that their brother employees 
used the guard and would do their duty. Accidents often occur from men 
being careless, and if they would pay a small amount I think they would see 
that every one was using these guards, or see that they could not get 
injured. They would be more apt to look after each other and see that 
there was no injury caused. Then on the other hand I know of cases — I 
will not say all workmen are like this; it is a very small percentage — if an 
accident happens, a small thing that would not lay them off from work. 


when they know they are going to get their pay and their doctor's bill paid, 
they will lay off for two or three or four weeks, when the doctor has told me 
himself they should not be off more than one week or less. Now, that was a 
case that happened at my own place, where I inquired from the doctor. I 
did not think the man injured was so bad, and the doctor was surprised 
that he was not back at work. He was laid off nearly four weeks and the 
medical man said he should not have laid off more than one. I do not think 
there are very many like that. On the other hand, while there may be si 
few of the workmen who will do that, there are manufacturers who will not 
provide guards; they will not provide anything. On the one hand you may 
have some of the workmen who will not do their duty, and on the other you 
will find manufacturers the same. It is not all the faidt of the workingman. 
We have manufacturers I know that will not provide proper appliances. 
They say the men will not use tliem, and a great many of the men will not, 
but if this act should be passed whereby each man would be assessed accord 
ing to his wage bill at 21/0 per cent., you will find a lot of men are going to 
throw off these guards because a man can do more work on any machine 
that T know of without the guard than with it. The guard is a hindrance 
to a man getting out work, but I do not know of any case where a manu- 
facturer has crowded his men so that the man had to throw off the guard to 
get out the amount of work. I do not think that ever happens. It has nol 
to my knowledge. If this act is passed one thing they should have is factory 
inspectors who would compel every man to put on guards wherever it is 
possible to do so. How to get over the men not using the guard is a thing 
that I cannot very well tell you. I know in my own shop I tell them to usf' 
them and they use them three or four days and then they are off again. You 
have got to keep continually after them, but I do not know in what way you 
could frame a law to compel these men to use these guards. A great many 
of the accidents which happen I know are the fault of the men, and othei- 
accidents are the fault of the manufacturers for not having the machines 
properly guarded. I have nothing more to say only this, that whatever 
Act is passed I am sure the manufacturers and the workmen and the Gov- 
ernment will try to make it satisfactory to everybody. I hope the Govern- 
ment will put it in such shape that it cannot be used for a nolitical footbnl' 
at every election. 

Mr. C. DoLPii : Sir William, and gentlemen, from what little thought I have given 
to this matter, and what I have read, and from what I have 
heard here to-night. I would like very much to say that T think 
in the framing up of this act provision should be made to try 
and lessen the expense. From what I have heard from speakers who have 
given this matter a ^reat deal of attention I (believe they contend it is 
possible to reduce the expense by 50 per cent., and if that is po3,sible that 
subject should at least receive 50 per cent, of the attention. We know 
there are many sides to the problem which has to be solved, and we recog- 
nize it is a very difficult matter to frame up an act which will deal justice 
to all people. At the same time in gathering information as we have been 
doing here to-night it .seems to me that Sir William should be able to recom- 
mend something which would to a very large extent meet the case. As J 
am verv desirous of catching this ten o'clock car T do not think I fihould 


detain you very long with any remarks, but I would again repeat I would 
like to see very much the attention paid to this matter which should be paid. 

Mr. Pannabaker: I do not know that I can add very much to what has been 
said to-night. There are a few points however which I might emphasize. 
I think you must not forget that while there are maniifacturers or em- 
ployers who would take advantage of their employees there are no doubt 
employees who would take advantage of their employers, and the number 
of employers as compared with the number of employees is a very email 
minority. There are so many employees that if one in ten or one in one 
hundred was disposed to be a little fraudulent or disposed to take advan- 
tage, the total number in cur Province of Ontario would be quite an insig- 
nificant number, and it seems to me from the study I have made of the sys- 
tems of compensation in other countries it has been in the minor cases of 
accident where a great deal of the fraudulent work has been worked out. 
If a man loses his hand it is easy to determine that his hand is lost, but 
if he is suffering from some little accident it is more difficult to determine 
to what extent he is injured and to what extent he may play upon his 
minor accident. So it is upon the small accidents where apparently the 
safeguard of the law must be brought to bear in order to protect tlie manu- 
facturers and make a fair and square deal for both. I know the great 
majority of employees are just as anxious to have a fair and square Act 
between themselves and the employers as the employers are on the other 
hand. This act, a« I see it, can be handicapped to such an extent that what 
we would save in lawyers' fees now would be eaten up by an army of officers 
and clerks in administering the fund at headquarters, and it appears to me 
a reasonable thing that if a good part of the minor cases of accident com- 
pensation could be dealt with locally, as has been suggested by some of the 
gentlemen, that it would relieve to a great extent the exxpenses which would 
be involved if all the details of settling minor cases, as well as the tnore 
serious ones, were dealt with at headquarters or the head office. The sug- 
gestion is that if minor cases not involving incapacity for more than a cer- 
tain limited time could be dealt with locally, this objection would be 
averted; that is, the expense of a large staff at headquarters to administer 
the act and to distribute the compensation might be avoided by allowing 
local institutions of some description, such as I believe exists in Germany 
(perhaps not for that purpose, but in some such way) under proper super- 
vision to distribute the funds in minor cases. But one thing I would like 
to say, and that is, there should be no room for quibbling between the em- 
ployer and the employed; that there should be some definite stated compen- 
sation arranged so that there would be no cause of friction arising when an 
accident occurred, and that in minor cases as well as in more serious ones 
some definite amount of compenisation would be provided for by the act 
so that there would be a. fair understanding between the interested parties, 
and then no room left for a lot of litigation to arise afterwards in the 
settlement or adjustment of any case. I do not know that I have mucli 
more to say. I would like to see the elimination of all necessity for litiga- 
tion, and not as in the case of Germany where the employees have the right 
of appeal to two or three tribunals. This has multiplied very seriously the 
work at headquarters, and, as I read from Dr. Friedensburg's books, has 
necessitated an enormous staff of officers and clerks to carry out the act. 


The Commissioner : I would like to ask one question. You speak of certainty 
as to the amount. How would it be possible to have certainty where 
there is partial disability? 

Mb. Pannabaker: The only way I see in that case would be a certain percent- 
age of the wages. 

The Commissioner : It must be regulated according to the extent of the injury ? 

Mr. Pannabaker: Certainly. 

Mk. Adolph Gruetznek: I think most of those who have spoken had an idea 
that they . might be called upon, which in my case, sir, has not 
been so. Had I known that my name would have been called 
upon I might have gathered a few thoughts, which I did not do. I am 
quite in sympthy, I think, with what I understand from the manufac- 
turers here this evening, that something more satisfactory should be done. 
We are all under certain expense in paying to insurance companies, and 
then when an accident occurs it really does not go to the party who meets 
with the accident, and we would much rather pay and have that money go 
direct to the party who is injured even if it costs us a little more. I do Hot 
think that there is any one who would regret or grudgingly pay a little 
more, for we are all anxious that those who are injured or perhaps totally 
disabled should be looked after and that their families should be provided 
for. How to get after and make it fair for all, the more a person begins to 
think about it the more it seems a difficult matter, because we know, those 
who have quite a number working for us, that while we may be as careful 
as we can possibly be we find that we get conditions where it is all in vain. 
To give you an example, I advertised for a first class man to run a certain 
machine. I got an application from a man and hired him to come right 
on. He started in the morning, but soon showed that he could not 
run that particular machine. I left in the morning, and the superintendent 
told him that he wasn't satisfactory on this machine ; in fact, the man proved 
to the sui3erintendent that he did not understand the machine at all. He 
then said he could run a saw, and he begged that he should remain at this 
saw until I came home, as he had not sufficient means to go back to the 
city. The superintendent allowed him to go and work at this saw, a little 
sliver came loose and got into the saw and wedged his saw. He grabbed the 
saw with both hands and tried to shove the saw through, and a neighboring 
workman grabbed him by the collar — ^he reached over and grabbed him by 
the collar and gave him a jerk and pulled him oflE, and said, "If that Baw 
had started your fingers would have been off both hands." Now, 
that man had only been in there a couple of hours when this happened. He 
told us he was a first-class man. This was three years ago, and he asked 
$2.50, and I agreed to give him what he asked. Then I had another man 
who answered an ad. in the paper, and I cautioned him; I said, "I wouldn't 
for anything have an accident, and I will tell you it is a buzz planer and 
very dangerous. I have a guard and I want it kept on, but I want a man 
that understands it and a man that can run that buzz planer all day." He 
said: "I am your man. I have worked at it for three or four years, and I 
will take my own chances; I will run the buzz planer; I am not afraid of 
that." I said, "all right." I went through the shop one day and I saw 


him cutting, and as I went past him he turned his head to look and watched 
me until I got to the door. Then I said to him, "See here, when I came 
in you looked up at me, and when I went out I saw you looking this way 
and that way. I know where I am going and I would much rather you 
watched your work, because if not you might have your hand cut off," and 
he said, "Thank you; I will do as you say." The superintendent Warned 
him along the same line. Shortly after this, one morning before eight 
o'clock, he came up to the superintendent and told him he had his fingers 
all off. Now, there was a guard there and he was cautioned. We did every- 
thing in our power to prevent such a thing. I do not mean to say that 
workingmen are all like that. Of course a machine may break. I have Been 
a knife fly out of a machine, it went through the floor and struck the post 
and went into this post about an inch. The men told me that there were 
about half a dozen men between the post and the machine from which this 
knife flew, and if any of these men had been in line they believed it would 
have gone through two or three of them. Well, if any of those men had 
been hurt certainly their wives and children should be protected. So that 
it is a very difficult matter to say that the manufacturer should pay the 
entire loss. If one of the men had been between that machine and the post 
and had been killed I would not like to say but that the firm was respon- 
sible, and I would like to see such an arrangement as we are speaking of, 
that he should be paid the entire loss ; but where a man whose carelessness 
allows a knife to be put in improperly gets hurt I do not see that the man 
should be paid the entire loss. In such a case it would be a great kindness 
of the firm to pay fifty per cent, to his family if that were sufficient in some 
way to keep them respectable. Since I have been looking into this during 
the last few days, and from the little that I have read, I have concluded to 
give it considerable more thought, and I will be pleased to hear when some- 
thing definite has been drawn up and I hope that it will prove satisfactory. 
The one great danger I see is that it may get into the hands of politicians 
and those anxious to become politicians. There might be the danger in 
that direction of promises being made to either party that would not be 
fair and just. 

Mr. Z. a. Hall: I rather think I am too young in the manufacturing business 
to give any special idea on this act which is being framed. I have always 
thought though thfit the old act was rather a misnomer. It was 
considered a Workmen's Compensation Act, but I think a better name for 
it would have been "The Solicitor's Compensation Act." At the present 
time we know that all manufacturers carry a line of accident insurance, 
and the labouring man who wants to get compensated, if he does not settle 
peaceably but wants to go to law about it, is up against not an ordinary 
solicitor or lawyer, but is up against the solicitor for the insurance com- 
panies who has made a special study of that line, and the solicitor whom 
the workman employs is certainly not in a position to take charge of a case 
against an insurance company. I believe in many cases that the working- 
man would fare very much better if he settled with the manufacturer rather 
than go into litigation. So far as any act which may be put upon the 
statute books hereafter, I believe one thing in connection with it 
should be a definiteness which is not in the law at the present time. I 

' quite agree too with a point that Mr. Pannabaker brought up that there 


should be 'a specific remuneration for certain charges and certain accidents. 
Take for instance your accident insurance policies, which we all carry to a 
'. larger or smaller extent; tlie loss is assessed there, and there is no doubt 

; about it. I do not know whether that could be incorporated in the Work- 

' men's Compensation Act, but it certainly is very definite. Now, in con- 

nection with the management of these funds and who is to pay them, I 
believe the manufacturer should pay them. I believe the man who is work- 
ing for you — and I do not say this in the way of any reflection at all — ^is 
the best convstructed machine you have in your shop, and while we as manu- 
facturers do not propose to own them or anything of that kind yet we repair 
the ordinary machines that are broken, and we repair them at our own 
expense, and I ibelieve the manufacturer in whose employ a man is hurt 
should be the man who should pay the bill. I have not given this very 
much thought. In fact I did not know I was coming here until just a few 
minutes before the court came along. I have listened with a great deal of 
' pleasure to the remarks that have been made, and only wish that I could 

have known more of this earlier so that I could have thought something 
about it. I think the Government has made a very wise choice in the selec- 
tion of Sir William Meredith as the commissioner. We have been accus- 
tomed to look upon Sir William Meredith as a man who is absolutely 
honest and absolutely straightforward, as regards both manufacturers and 
I workingmen, and any person who should, I might say, be so unfortunate 

^' as to come before him in another way. I do not think I have anything 

further to say, but I hope this law will be sufficiently definite and euffi- 
f cientl}'^ simple and sufficiently straightforward so that the workman will get 

his dues, 

Mr. Adam S. Wellhauser: My fellow workmen have pretty nearly covered the 

ground, especially Mr. Kennedy. He has voiced their views very well. It 

• is only natural for the manufacturers to state that there are a lot of em- 

l ployees that are very negligent. Now, that may be the case. However, 1 

believe that every workman knows that in nearly every factory he has seen 

guards put on after accidents happen. I know of more than one case where 

I guards have been put on after the accidents happened. I remember one in- 

[ stance a matter of ten or eleven years ago, where a young lad fell out of n 

I two-story building, and he has never been able to work at that trade pince. 

and all he got for that was his wages, $1 a week at that time. Now that 

would hardly pay his board. I believe the time is ripe for a compensation 

act, but the money should come from the employers. It is only too true 

what the last man stated that the workman is one of the most necessary 

machines he has in the factory. Without him he can practically do nothing. 

and if he can afford to repair his other machinery he should also repair the 

human machinery. Some have stated that perhaps the German law would 

perhaps be a good one. I do not believe that would be a good one at all, 

because they only pay after the fourth week. 

The Commissiooner : The thirteenth week. 

Mr. Wellhauser: So much the worse. I believe a man who is hurt needs the 
money the first week when there is nothing coming in but there is more 


~ ■ — — ■ " ■— ■ — ■'■■1 

The Commissioner: They have auother fund which provides for him for the 
thirteen weeks, a sick fund, and that is contributed to by both the workman 
and the employer. 

Mr. Wellhausek: I believe they have a private fund, but in this town the work- 
men have private sick benefit associations and the like. However, that 
should not be mixed in with the compensation act because it is their own 
money. They have a perfect right to draw their own money at any time, 
just the same as if I belonged to a fraternal association. That has nothing 
to do with the Compensation Act. We have those workmen's organizations 
and they pay as high as $7 a week for thirteen weeks, but that should not 
be mixed with this. In this case where a man is hurt he should be paid 
from the day he is hurt, providing the doctor should give a certificate 
weekly. The benefits should commence from the very first week. The 
certificate could be signed by the local doctor and sent to the commission. 
I do not believe in what someone has suggested that a local board Would 
be better. I believe that would entail more expense. I believe a local 
doctor's certificate would be all that is necessary. Let the local doctor 
examine the man and send it to the commission. I think a commission 
of three should be enough. 

Now, as to payments. Some say the workmen should pay 50 per 
cent, and others 25 per cent. I believe the statistics show that twenty-five 
per cent, of the accidents are due to negligence by the workman. However, 
I think that is not quite a fair estimate. I imagine it should be lower than 
that; that 25 per cent, was probably found from the records of the court 
where the workman has had a very poor show, has been up against the same 
kind of attorneys as this man referred to, and had to fight the very best 
legal talent with his limited means, and for that reason I believe they get 
25 per cent. Perhaps if he had a fair show it would be down to 10 per 
cent., or lower. Assuming that ten per cent, would be a fair esti- 
mate the workman should only pay ten per cent., providing he is entitled 
to the same amount of benefits as his wages. Unless he is entitled to that 
should he lose half or twenty-five per cent, of his wages? Should the 
benefit be that much lower he should pay nothing to this fund because he 
is then contributing twenty-five per cent, of his wages already, which is a 
fair estimate. I hope you will quite understand what I am trying to get 
at. If he loses any part of his salary that part is contributed, which is 
enough. Some former speakers have referred to paying two and a half per 
cent. I do not believe they would have to pay two and a half per cent., be- 
cause two and a half per cent, seems to be very high according to the acci- 
dents in' this great manufacturing centre. If the manufacturers pay three- 
quarters of one per cent. I believe it would cover all the accidents that occur 
around here, and pay them pretty fairly at that. Of course some of the 
accidents that occurred were fatal, and you might say it bears heavily on 
those families that get very little. You can't blame the manufacturer for 
it. It is the court that does it, and their good legal talent. There Vvas 
something else I was going to refer to but I have forgotten what it was. 
However, I think this should almost cover it. The workingman should 
either get his full wages from the day o£ the accident, or not contribute. If he 
should get three-quarters of his salary he should not contribute one cent 


'because then he is contributing twenty-five per cent, alread}'. I believe 
that some employees take guards off machinery, especially when they are 
on piecework. Piecework was only invented to drive men and for no other 
• reason. It may be all right, I have been working on piecework in our 
business, and it is all right for there is no machinery, but in some instances 
where a machine is dangerous, piecework should be done away with, because 
a man will naturally try to earn as much as he can in such hard times as 
at present and where the cost of living is so high, and a man has to work 
day after day to stop even, and he will remove almost anything to try and 
make some more money. Now, why not have some of those obstacles re- 
moved, and then if the man removes the guard let him be fined say $1 for 
each offence, or something like that, and you will soon teach him not to 
take the guard off. It will perhaps stop the speed, but that is the employer's 
loss, if he works on day especially. 

Mr. D. Hibnek: Mr. Commissioner, and gentlemen, in considering what has been 
said I do not know that I can add very much, only this, that 
I think it would be only fair that each employer and employee 
ought to contribute a certain share to the fund that is to make up the 
indemnity that has to be paid. As a mechanic myself I believe the mechanic 
or hands in the factory would get more or less careless, it would 
put them more on their guard, particularly those that are not quite so 
fortunately gifted as to be practical mechanics. The better man alongside 
of one of those men would naturally help to educate him and try to help 
him along, if only to protect their own interests. Iliere would be an 
interest at stake and human nature would naturally point that way. You 
know, sir, under the present conditions in the labour market for the last 
couple of years there are any amount of inquiries at the offices of the dif- 
ferent departments. You know, that the rural districts are deserted. The 
young people are all drifting to the towns and the cities. They go to a 
factory, say in Hanover, and they work alongside of a machine, and once in 
a while only on a buzz planer. A man from there comes to Berlin and 
inquires at a furniture factory, or some other factory. He ig asked, " What 
have you been doing?" ""Well, I have been running a bow machine." "I 
don't need one of that kind, but I could use a buzz planer." He then says 
he has run a buzz planer, and tlie chances are he is hired and he goes to 
work, and what is the result? 

He may be spared, possibly, and he may not, and therefore I say the 
men hiring out in some cases are not honest to themselves. If they were 
all honest I do not think there would be so many accidents, but they just 
like to make as much money as they possibly can even though they stretch 
the truth to some extent. I know it has been the case in our factory, and 
I am pretty sure I am safe in saying it has been the case in other factories. 
Human nature makes them try to get after as much money as they can 
possibly make, and more particularly in the busv times when workmen are 
so urgently needed and yon cannot get help. Tlierefore T think that the 
mechanics and all those working in the factories ought to be assessed a 
certain per cent., just enough to put them on their gnard, and let them 
understand that they have a partnersliip in the transaction. It has been 
mentioned that this commission should not be a political organization. I 


quite agree with that. I should say, pay the price and get the best talent 
for a chairman that Ontario has got. I would say one of the High Court 
judges would be the best one to act as chairman, and let them appoint a 
second man amongst the labourers or mechanics, a good practical and 
thorough mechanic who knows all the ins and outs, and is fair and square, 
and then let those two appoint a third man, or whatever arrangements could 
be made. In that way I think that this commission would be out of politics 
altogether and that is where it ought to be. As Mr. Kribbs has mentioned 
here let it be without any political reflection. I know during this last local 
election it was said that Sir William was taking evidence, and all this, that, 
and the other thing, and he will report. Well, that is all right. I believe 
the Government is trying to have something to protect the workingmen, and 
I think they ought to be protected, but I do not think it ought to be mixed 
up in politics. It would be the worst thing that could happen. We do not 
know when the local House will change and there will be wrangling and 
uproaring about this question. I do not know that I can add very much) 
more, sir. You have certainly got a lot of information. Berlin, 
and more particularly the county of Waterloo, is the manufacturing hub 
of Ontario, we claim, and I am sure I am speaking for myself and for the 
manufacturers and for the mechanic? working in the factories when I say 
we are certainly delighted with your visit to Berlin to get the necessary in- 
formation. We have a limited insurance and it costs us so much a year, but 
I don't know but what we have paid a good deal more than our help ever 
received. If my memory serves me aright in New York State I think they 
paid out to the insurance companies about $"23,000,000, and all the money 
I believe that has been paid back is about $7,000,000. Now, that is unfair 
at the present time. As has been intimated before a man can get anything, 
particularly when it gets up to quite an amount, he has to fight for it. In 
some places if a man gets hurt to-morrow or in a couple of days (with all 
due regard to the legal fraternity) there will be some lawyer after him, and 
he says "Mr. So-and-So, I hear you got hurt?" "Yes."" "How did it 
happen ?" "Well, so and so." "Indeed, what are you going to do about it ?" 
"Oh well, the boss says he is going to use me all right, he is going to pay 
my doctor's bill and pay my wages and all that." "But that is not going 
to put back your finger that you lost down there, and you have got a pretty 
good thing, and you had better get after some damages." Of course he is 
working for himself. Now, that is the big trouble, and I am glad to see 
that the Government is taking hold so as to do away with it and put the 
money where it really belongs. It is certainly very unfortunate if any one 
should lose a finger or a hand, and I believe that man ought to be com- 
pensated, and I am sure if the manufacturers and those working in the 
factories stand together, each one havin? the aim and object of doing what 
is fair and square between man and man that all concerned will be satisfied, 
and that of course makes us feel better all round. I thank you for your 
Mr. W. T. Sass: I clo not know that T can add very much to what has been said 
to-night. It appears to me that as far as avoiding accidents is 
concerned the workingmen themselves can do more than anybody else. The 
employer usually has to take a man as he represents himself, and has to take 
4 L. 


whal he tells him for grauted, as the truth. In a great many instances, as 
has been said, they want to get started in a factory, and naturally they think 
it is an easy job and sometimes it is. Now, in cases where men come in and 
they are given an opportunity I think it is only fair to the workingmen 
generally that they should stand by one another, and where they see that a 
man runs a machine in .a careless way it is not only to their interests, but 
to the interests of everybody generally that they should point it out. Every 
mechanic who has been working for years on a machine knows the dangers, 
and knows how to handie it, and if he finds a man who wishes to have an 
opportunity of getting along in the factory and improve his position he can 
in many instances avoid an accident by telling him how. But oftentimes 
they feel that a man who comes in as an inexperienced man is a cheap man 
and they say we won't help him, no, we want experts, and they are not to be 
had. The manufacturing industries of Canada are growing at a rate faster 
than mechanics are made. As has been said here by several it has been 
specialized, and mechanics generally are not learning their trade to-day as 
they did years ago, and I believe the workingmen generally can help in this 
way, and do more towards avoiding accidents than any one else. I believe 
that so far as the workingman is concerned that he should be taken care of. 
Speaking for our own firm — and I have been practically a workingman 
myself and have always worked with machines and things of that kind up 
until a few years ago — we never belonged to an employers' liability, for this 
reason, that we did not think it was a fair proposition, and when I say this 
about men not being fair to one another it is not because we don't want 
them to have all that is due them. If any one is hurt he should really have 
what is coming to him and not pay it to the lawj'er, but we must guard 
against that which makes men careless. You know when a man does no1 
pay for anything he is apt to get careless, more or less. He is not interested. 
But if you belong to a business and have money in it you are interested in 
it to a greater extent than if you had nothing in it. I think every one 
would be. So it is with the workingman. If we as a whole contribute to 
an accident policy of that kind which helps one another every one is inter- 
ested. I think it should be mutual and fair, and that each one should pay 
a certain amount towards that which is fair to both. I believe in the 
centralizing of a fund and that if each community would appoint an execu- 
tive to take care of minor accidents and report to the commission it would 
be a benefit generally, and it would not involve the expense it would other- 
wise. Tjet the labour organizations appoint a fair honest man, and probably 
a manufacturer, and a disinterested party soleeted by the two. and let them 
take care of the minor accidents. In some of these cases where there is 
insurance to be paid it is oftentimes abused. I have worked in factories 
since I was thirteen years old practically, and T have known of 
a great many cases where men belonging to accident insurance 
societies abused them when an accident happened and the benefit 
was larger than their daily pay. and therefore it has hurt them 
to a great extent. The same thing happens with fraternal societies. 
So T believe where the men pay to a thing of that kind they 
are more nj)^ to caution and warn those who put themselves in as being still 
incapacitated by the accident, when they are practically able to go to work. 


They do not care to contribute to anything whicli is unfair. 1 might state 
just a short time ago, in fact not six months ago, we hired a man to run a 
buzz plane. That is the machine that has been talked of as rather 
dangerous. We hired him as a competent man, and he started but only 
worked a few days when he had an accident. It was practically nothing 
more than a scar. I was away when it happened, and they said you had 
better not work on this machine until Mr. Sass comes. "Oh well," he said, 
"I am myself to blame, I can do that." The man was put off the machine, 
and tlie next morning I asked him was he hurt much. "Oh no," he 
answered, "It was my own fault, and I am getting along all right, and I 
want to work.'" "Very well," I said, "but you had better work on some 
easier job where you will not have any pain through working." Well that 
was all right. At noon he got worse, and I said, "You had better stay at 
home." "Oh, but I can't afford to." "All right," I said, "we will take care 
of you." We always paid men up to this time, not belonging to the em- 
ployers' liability, during the time they were off. Well, it wasn't long before 
the fellow came around and he wanted some ready cash. It was against 
the principles and we said we would help him along and pay his board. Oh 
no, he wanted the money, and he had a wife in Guelph he wished to bring 
in. We said we would pay the expenses. "Oh no, I want the money; I 
want $25, and I want it right away." We got suspicious and we said vve 
wouldn't do that. But we would pay all the expenses and give him $10 to 
come to Berlin with his wife. Well and good. He wouldn't do that, and he 
said he must have it. We refused him, and the next morning before 8 
o'clock we had a letter from a lawyer that we had better settle with the man 
that was hurt at our factory. Now, we considered it very unfair to our- 
selves when we consented to take care of the man that he should take such 
means of making something out of nothing, so to speak. We got a second 
letter from the same lawyer, and we explained the matter to him, that we 
wanted to be fair, and we believed we had done what was fair to the Jnan. 
Well, he stopped me on the street and said he wouldn't take $500. I 
might say as far as the part that was off his finger was concerned he could 
take that much off all his life and if he got $500 every time he wouldn't 
need to do anything any more. It was that much of an accident. Now, in 
regard to the policy, it should be on the line that each one should contribute 
a certain amount, and make it on a fair basis. 

Mr. D. W. Detwiler: It is certainly a very interesting subject, and we all 
wonder now why this matter wasn't taken up earlier. There is no question 
but it is one of the most important that is before the country. I just want 
want to make a few observations. The accounts that Mr. Williams and Mr. 
Goldie gave of the working of their benefit societies gave me an idea. I 
think Mr. Williams quoted 10 cents a week as the contribution of their 
hands, and Mr. Goldie 714 cents a week, which included sick benefits as 
well as accident benefits. I was sorry they did not give us the proportion 
that was paid out for sick benefits to that of accident benefits. However, T 
came to the conclusion that for minor accidents the contributions would be 
so very light that there could be no possible objection to a society of that 
kind being kept up and the minor accidents taken care of locally and so 
relieve the commission of a great amount of work and burden. Further 


than that I think there is no question but that the manufacturers are all 
ready to share the large proportion of the burden of the major accidents. 
That is all I have to say at tliis lat^ hour. 

Mk. Lang : All the gentlemen who have given evidence before you are, I think, 
workingmen (with possibly the single exception of myself), who started in 
to work at a dollar a day or less. We are all of one kind here. Those who 
are employers now were employees at one time. I thank you gentlemen for 
your presence here, on behalf of the Manufacturers Association who called 
this meeting, and who asked the Commissioner to give us a hearing, which he 
has kindly done and has listened to us so patiently. I hope he will return 
home with information that will be useful and help him to frame such a 
Bill as you desire. 

The Commissioner: I am sure I am very much obliged to the gentlemen for the 
information they have given me; it will certainly aid me, although there 
are some differences of opinion. I will be very glad to hear by letter from 
anybody who desires to supplement what has been said. I will be glad to 
hear from Mr. Williams, who was not quite prepared to answer a question I 
put to him. It was not fair, perhaps, to expect an immediate answer. If 
he will give me an answer in writing I will be glad to get it. It is a hard 
enough job anyway, and I want all the assistance I can get from all quarters. 
I presume that everybody will not be satisfied with any measure that is 
proposed; the only thing will be to have the most satisfactory and the 
fairest all round that we can get. 


The Court House, Hamilton, Ontario. 

Tuesday, 30th April 191?. 8 p.m. 
Present: Sir William R. Meredith, Commissioner. 

Mr. Robert Hobson: We understand, sir. the case of the manufacturers was pretty 
thoroughly laid before you in Toronto, and we are willing to rest our case 
as put before you at that time, but we thought it only right that we should 
come here to-night and meet the labour men and answer any questions they 
might have to raise. Speaking for myself and my company T would say 
that we should be very glad indeed to see a compensation act whereby all 
employees should receive some benefit in case of an accident, whether it was 
due to their negligence or the negligence of the company, but we feel that the 
employees as well as the employer should be interested in providing for 
those benefits. We believe that if the employee is interested, a? well as the 
employer, that it would tend to create a general carefulness throughout the 
plant, and if an employee saw another employee taking unnecessary chances 
and risks that he would call his attention to it, and also call the attention 


of the employer to it as well, and he would also suggest safety devices, and 
on the whole we would all be benefited by it. There is nothing so distressing 
as an accident in the plant. I know I speak for ourselves, and I think 
I can speak for the manufacturers generally here in the city, when I say 
that we try whenever there is an accident to do everything we can to help the 
iniured party whether he is to blame, or whether the company is to blame. 
I know in our own case we had an accident here which was tried before Mr. 
Justice Teetzel, and he commended us very highly for the manner in which 
we had looked after the man. We were not in any way responsible for the 
accident, but we got him into a private ward in the hospital and we had a 
trained nurse there with him, and paid his wages all the time he was off, 
and we were prepared to give him employment just as soon as he was able 
to come back to work. The man was not well advised and brought an 
action against the company, I am sorry to say, and we settled, and the 
judge commended us very highly. We try in every possible case to make 
a reasonable settlement with the man, and I believe that is the feeling of 
the manufacturers generally throughout the city, but we certainly think 
the employees as well as the employers should be a party to this agreement. 

The Commissioner: The employees generally are very much opposed to that. 
At Berlin the only thing I heard said favourable to it was that if it was a 
voluntary contribution it would be all right, but they would not be content 
to have a compulsory contribution. I asked Mr. Williams who was there 
what answer he had to the argument that the workman does contribute under 
any scheme that would be proposed, because no one proposes to pay full 
wages or full indemnity. In no country is it more than 50 or 60 per cent. 
Does he not bear tlie other 50 or 40 per cent., or whatever it is, himself ? Is 
that not a pretty strong incentive to save himself, in addition to the desire of 
every man not to hurt himself? There are very few men who wilfully hurt 
themselves I suppose. Men working, especially in industries like yours, 
get accustomed to these things and they take chances. 

Mr. Hob son: No doubt. 

The Commissioner: Not with any idea of an accident or getting any claim, but 
they take chances they ought not to take. 

One of the questions is whether there should be a waiting period. A 
great advantage of the waiting period as suggested is that you would get 
rid of a great many small cases, and if the waiting period was a week or 
ten days, or something like that trivial accidents would not be claimed. 
The workmen of course object to that, but it obtains I think in nearly every 
country where there is a compensation law. It obtains in England. 

Then what do you think of the suggestion which was made in Toronto 
that the industries should be classified? Would there be any difficulty in 
doing that in this province? 

Me. Hobson : I do not think there would be very much difficulty about it. Then 
we would be a check on each other. If we had more accidents in our 
company than other steel companies I have no doubt we would be checked 
up by the other companies who would be bearing an unfair proportion by 
reason of our negligence. 


The Commissioner: What do you think if an employer neglects to conform to 
the law in providing safety appliances and an accident happens and ho 
makes a claim on the fund, of giving the right for the fund to claim from 
him additional contributions? I think most of the laws have provision of 
that kind. In some the man is given his common law remedy, where the 
employer has been recklessly careless. 

Mb. Hobson: Well, is it the proposition that the employee should have the right 
to enter action under the common law as well as the other? 

The Commissioner : That is one of the subjects to be discussed. What is thought 
by some is that as the compensation will be paid upon a very liberal basii^^ 
and negligence left out, it might not be unreasonable to do away with 
the common law •action. My experience is that there are very few cases 
in which there is any recovery in common law, — I do not think one in h 
hundred, — so that there would not be much given up. 

Mr. Hobson : I am afraid if the man is allowed to bring an action at common 
law that we would still have that serious trouble of the men being ill 
advised. I have made settlements with my men and they were absolutely 
satisfied with the settlements we had made, and we paid them the money 
and took their releases, and afterwards had actions brought against us. 

The Commissioner : There is no doubt there are difficulties of that kind. 

Have you any view as to how far the operations of the Act should 
extend, whether it should take in all the employees, no matter in what 
walk of life, or whether it should be confined to what might be called the 
hazardous industries? 

Mr. Hobson: I am not speaking now for any person but ourselves, but I would 
like to see a compensation act that would give the men some benefits, no 
matter what positions they occupied. 

The Commissioner: Of course in a small concern if you had every employee 
there would be a great difficulty in getting hold of the people to collect the 
tax, and it would involve a good deal of expense, but on the other hand it 
would be a very unsatisfactory thing if a man in your establishment is 
hurt for him to be compensated, and a man next door in a small place i> 
hurt and he is not compensated. A law of that kind I should think would 
cause irritation. These are some of the questions outside of the general 
principle that are very important to be considered before a scheme is 

Then, shall the people in commercial businesses be brought in? 

Mr. Hobson: I would make it from the farmer up. 

The Commissioner: Perhaps if you represented a farming constituency in the 
legislature you would hesitate to say that. 

Mr. Hobson: I hope some day, sir, when I have got a little bit older and accumu- 
lated some of my earnings that I will be able to go onto a farm myself. 

The Commissioner: AVcll, in most of the countries they have not brought in 
the farmer. In England they do. In Germany I think it is limited to 
farming industries where motive power is used. In the North West provinces 


they have excluded farming. Of course they are all farmers there. 
However, it is a strange thing that the statistics show that there are moro 
accidents in the farming industry than even in railroading. T would not 
have thought that that was so. 

Mr. a. E. McKinstry: I do not know that I have any original thoughts on the 
subject, Sir William. I have thought that any scheme, or any plan 
that might be put into operation, should aim first at the pre- 
vention of accidents. It seems to me that is the prime thing 
to be accomplished if we can. In our own business, and I am speaking only 
of our own business here, we classify accidents roughly into three classes. 
They can fall into three classes. In one we find the accident is due to some 
fault of the company; that is, it could have been prevented by some safe- 
guards or some prevention if we had been wise enough to foresee it. The 
second class of accidents is due entirely to the carelessness of the man or 
the employee in failing to use the appliances provided for his safety, or 
through his awkwardness, or through his inattention to his duties. The 
third class is simply accidents; you can hardly put them in either one of 
the other classes. I think I am within the mark in saying that within the 
last year we have spent about $10,000 on safeguards and devices to make 
our plant as safe as it is possible to make it. We have safety committee> 
in all the departments of any importance, three men in each department 
Every week they have an hour of the company's time, on full pay, to go 
freely about the department in which they work in order to make sug- 
gestions and recommendations to me as to what they think should be done, 
and I find that after we spend all the money that is possible to spend, and 
do everything that we can see to do to reduce the number of accidents, 
yet there are still accidents happening. Accidents still happen, and I know 
to stop them or reduce them we must have the co-operation of the men : 
that is necessary or we cannot stop a certain percentage of them, which 
is a very considerable percentage. I think that is one of the big features 
to aim at. Then I should hope that we might be able to define clearly the 
iiabilit}'; that is to say, that we might fix something in this Act that 
would be accepted as final without recourse to common law. I think if that 
is not done we will fail to escape the injustice and the expense that is now 
brought about by bad advice from some of the legal fraternity, which I think 
it is very important to get away from. I do not mean to reflect on the pro- 
fession as a whole, sir, but I think all employers of labour recognize that 
as one of the features involved in this thing. Another point that seems to 
me of importance is the administration of it. In the administration of 
our small affairs we have found a good many pretty solid problems, nnd 
it seems to me unless that part of it is very carefully safeguarded there will 
be a large proportion, or a considerable proportion, of the money collected 
used up in the administration of the act instead of going directly to the 
beneficiary to whom it should go. It seems to me important that it should 
reach the injured man and his dependants as quickly as possible and with 
as little diminution as possible. I think we all agree that the principle 
is right. We haven't any quarrel with the principle. We believe it is 
right, and what we are interested in is getting at a workable basis. 

TiiK Commissioner: Is there much piecework in yoiir factory. Mr. McKinstry? 


Me. McKinstey: Yes. 

The Commissioner: Does that not tend to cause accidents in the hurry to earn 
a little more pay than if they were working by the hour ? 

Mr. McKinstky: I do not'believe I can answer that denfinitely; I can give you 
my impression. I do not believe that it does. 

The Commissioner: Would it not be natural that a man would work a little 
harder than if he were working at so many cents an hour, and if he had a 
, device that was in the way of his doing a little more work that he would be 
more likely to throw it aside? Would that not be human nature? 

Mr. McKinstry: That might be human nature, but I have never had exi>erience 
in a shop where piecework did not obtain. 

The Commissioner: It is not all piecework. 

Me. McKinstry: I say I do not believe that is measurably true, because in the 
department where we have the largest amount of day work we have the most 
accidents, and strange to say in all our departments we have I believe the 
largest number of accidents in our shipping department, in the warehouse. 

The Commissioner: How do your men compare as to intelligence? 

Mr. McKinstry : I think very fairly. 

The Commissioner: It would not be because they are less intelligent? 

Me. McKinstry: I think not. 

The Commissioner : What particular problems come up in your administration ? 

Mr. McKinstry : Well, we practically recognize the principle of workmen's com- 
pensation in our scheme. Wlien it was inaugurated we did not require a 
man to sign away his legal rights. When he was injured he still had the 
same privilege to go up town and bring an action against the company that 
he had before. We simply said to him, here is what we have to oifer you: 
this is what we have to give you under the circumstances ; and the man was 
at liberty to either accept that or to stand on his other rights. If he 
accepted our proposal and took what we had to offer, then he signed a 
release and relinquished his other rights, and I think our biggest difficulty 
has been right in that one feature. 

The Commissioner : Is there much difficulty in ascertaining when a man is 
really injured, and the extent of his injury? 

Me. McKinstry: I think not. 

Mr. Hobson : I do not agree with you there. I have found it pretty hard to find 
out how badly a man is injured. 

Mr. McKinstry: Well, you have to be governed by some one's judgment in 
matters of that kind. 

Mr. Hobson : We have a surgeon out at our plant every day, and we are guided 
largely by what he says, and if it comes to suit we always find that that 
man was very much more injured than we had any idea of. 



Mr. McKinstky: If a man is disposed to be fair, as he is in the biggest majority 
of eases, it is a matter easily settled and determined. 

Me. Hobson: If a man wants to be fair. 

The Commissioner : Where a man is always advising with men about accidents 
he is apt to take a little too light a view of the injury. That has been 
my experience with regard to men who are in the position of medical 
advisers for large corporations. They always minimize, or most times they 
minimize the extent of the injury. It is human nature, I suppose. 

Me. Hobson: I think you are quite right. A claims agent does probably take 
too light a view of the man's sufPering. 

The Commissioner: When a man is injured, is there any waiting period, Mr. 
McKinstry ? 

Mr. McKinstry : No sir, he draws the benefits from the start. 

The Commissioner : Have you a first-aid ? 


Mr. McKinstry : Yes, we have a first-aid building on the plant, and we have 

a first-aid man who stays there all the time, and we have a doctor who 
stays there from seven o'clock in the morning until ten or ten thirty, and 
then he comes up town and makes his calls, and comes back in the after- 
noon about one or two or when he can get back, and stays the rest of the 
afternoon pretty well. 

The Commissioner: How many men have you? 

M'E. McKinstry : Two thousand and forty. 

The Commissioner: Coming back to that matter of the administration, ought 
it to be a very expensive thing ? 

Mr. McKinstry: No sir, it should not. 

The Commissioner: I do not know whether you gentlemen are sufficiently 
acquainted with our municipal system to say whether that could be used 
in the collection of the tax, especially if it has got to be extended to all 
employers of labour, where the employer did not send it in. That is the 
principle in most of the States where they have adopted it. They know 
the amount of the tax and they send it to headquarters, but I fancy with 
a smaller concern it would be diiferent. It would be slow and I do not see 
why that should not be put upon the tax-roll and be collected just like 
any other tax. 

Mb. Hobson: Is that on the pay-roll? 

The Commissioner : That is the system that has been universally adopted. 

Me. Hobson : I think, sir, if you require a declaration as to the amount of the 
wage sheet or pay-roll, we practically give that where we insure with the 
insurance company. We practically give a declaration as to that. 

The Commissioner: There would be no difficulty with a large employer in 
collecting it. The difficulty would be if it was extended to small employers, 
a man employing two or three hands. They would not be as prompt to 


pay. Take the small employer employing one or two men, would it be 
practicable to use the municipal machinery, if he did not pay the tax, to 
collect it with his other taxes? 

Mr. Allan Studholme: I do not know that I sliould be one to answer a direct 
question like that without knowing more about it. I do not think it would 
make any diflPerence whether a man employed one or a hundred. If a man 
goes into business he has got to insure his business, if he is a business man. 

Fhe Commissioner: It is the collecting of the money. They would not be as 
likely to pay as the larger ones who would send their money up to date. 

-Mr. Studholme: You mean for the State insurance? 

The Commissioner: Yes. "\Miat is submitted, and as far as I have heard from 
the workingmen they approve of it, is a scheme by which all the 
employers of labour, within whatever class is ultimately determined, are 
asse^ed to pay for the cost of the compensation. That is based upon the 
pay-roll, and has regard of course to the relative risk of the industry. Then 
if it was' made general and applied to all employers of labour I think you. 
would have to have some machinery for collecting it. and it occurred to me 
that in small places, or in fact in all places, where the man did not pay in time 
send the amount of his tax to the collector and put it on the roll and let it 
be collected with his other taxes. It would be cheaper than the admin- 
istrative body sending out somebody to collect it, or suing them for it. 

Mr. C. p. McCulloch : Would it not be feasible, Sir William, to send the money 
through the banking institutions? 

The Commissioner : There are some men who will not pay. 

-Mr. Hobson : Make it the same as any other tax. 

Me. McCulloch: Your idea is economy of collection. 

Mr. Hobson: That is the idea, so that the man will get as much money as 
po.?sible, and get it as quickly as possible at the time he needs it. 

The Commissioner: If you load down the thing with a lot of machinery it will 
break down. If it is made a piece of machinery to find positions for a lot 
of fellows it will not be satisfactory. 

Mr. McKinstry: I should think that plan would be feasible. I think a large 
proportion of the tax would be remitted without difficulty, and the remain- 
ing portion that is tardy could be reached that way more economically than 
any way I know of. 

The Commissioner : Dealing witli the case where an employer works with his 
men, in one case they allow him to come on the fund if he contributes, if he 
includes his wages on the pav-roll. That does not seem unreasonable, does 
it? ■ 

Mr. McKinstry : I would not think so. . 

The Commissioner : You see there is very little difference between the employer 
and the employee as far as financial standing is concerned in many of these 
cases. Because he happens to be the boss he may not make as much as the 


man that is employed by him, and a man who is an employee if injured is 
compensated, and the other man if injured in the same accident is not 

Mr. Hobson: It could be incorporated in the act that a man should register m 
that you would have a record. 

The Commissioner: Probably there would be the same default. The law- 
requires partnerships to be registered and a great many of them will not do 
it. I think it could be worked out in that way so that the bulk of the taxes 
could be collected. Of course there might be some loss. 

Now, is there any danger in this system of current cost, as it is called, 
of unloading on the future, loading up the future with claims? For 
instance, take the case of a man who has half a dozen accidents in his 
establishment : under the present law he would have to foot the bill for all 
that himself, but that is continuously being paid by the body of the manu- 
facturers as long as the thing continues. The man may go out of business 
next day; he may only contribute his first payment. I suppose all that was 
considered before the manufacturers assented to the proposition that they 
should be as a body taxed for all of them. T do not see how that could 
be guarded against. 

Mr. Studholme: Does the State come into the thing at all? 

The Commissioxek : The proposition from, the labour men in Toronto, and the 
proposition from the Manufacturers' Association is that the State administer 
the fund. 

Mr. Studholme: It does not meet any of the losses? 

The Commissioner : It does not meet any of the losses. 

Mr. Studholme: I should think in a case of that kind it might easily be taken 
care of by the State, because it would be one of those things which would 
be a little diflBcult. If he does not pay, then of course it comes into the 
other fellows to pay it, and who should be better able to pay in a case of 
that kind than the State. That is getting it from everybody. Of course 
there would not be many of those, but there would be some. 

The Commissioner: I fancy it would not amount to a great deal. What do you 
say, Mr. McKinstry? 

Mr. McKinstry: I do not think it would be large. I cannot see any particular 
danger in it, although I confess that I am not as well informed about that 
particular feature as I might be. 

The Commissioner: A great deal of care will have to be taken in framing it. 
You will have to start with, a provisional tariff for your initial contribu- 
tion, and then a great deal of care will have to be taken in 
fixing the relative proportions to be paid by the different industries in the 
shape of this tax. That will require a great deal of very careful consider- 
ation by experts. Now, in a large number of the industries I understand 
the suggestion is they should be grouped. There is the woodworking 
industry, and the steel industry. Mr. McKinstrv would perhaps come in 


Mr. McKinstry: No, we would come in the agricultural class. I presume the 
grouping would be determined by the hazard. 

The Commissioner: I thought Mr. Wegenast would have been here. His idea 
is that the metal industries, and such like large groups, would be formed, 
with the ultimate idea of associations being formed as exist in Germany, and 
that they would look largely after their part of the service. 

Now if this scheme is going to be carried out, somebody will have to 
be got pretty soon, to formulate a tariff, because that is a very important 
consideration. Wliether it would be better that I should report mthout 
waiting for that to be done, and leave that to be done after the scheme is 
adopted, if it is adopted by the legislature, might be worth consideration. 
I should think it would take some time to work it out. 

Mr. Hobson : Have the accident insurance companies not worked that out pretty 
thoroughly ? 

The Commissioner : Well, I suppose they have, but I would not care to go to 
them for information ; they are hostile to any scheme of this kind. In 
the States of Ohio and Washington, and I suppose in all the States — but 
those are the two I know most about — they have a tax upon the industry. 
There will have to be a great deal of latitude upon that, to readjust the 
classes if necessary. I think the main thing to be got at is, after we have 
adopted the principle, as Mr. McKinstry has said, that we should not waste 
any more money than is actually necessary in administration and to get the 
money as quickly as possible. 

Mr. McKinstry: That is true. 

Mr. Hobson : Mr. McKinstry, in your experience, would you say there were 
more accidents in large establishments according to the number of men 
employed ? 

The Commissioner: What do you think about that, Mr. Studholme? 

Mr. Studholme : I do not think I could answer that right off. You say, sir, there 
are more accidents on the farm. Well, that is an eye opener to a great many 
people, until you commence to sit down and think what the farmer is up 
against. In many the percentage would be very much more than you would 

The Commissioner: I think you would have to examine those statistics care- 
fully, because there might be a great many minor accidents. 

Mr. Studholme : If you take a large factory and a small factory, you must take 
into consideration the care that each of those men has taken in guarding his 

Mr. Hobson : Bo you not think the larger the establishment the more competent 
the force of mechanics and foremen they have? 

Mr. Studholme : I would not think so. 

Mr. Hobson: Is it not more important that they should keep their machinery in 
good shape? 


Mb. Studholme: It just depends what the firm is after? If it is a firm that is 
after dividends then they don't care. If it is a firm that looks after their 
employees tlien it is different. One factory uses everything that it is 
possible for money to buy for the purpose of saving human life, and ac- 
cidents seldom occur, and in business where that is not done there are acci- 
dents all the time. 

Me. McCtjlloch : It is a matter of organization isn't it? 

Mr, Studholme : It seems to me even if you take your statistics you would want 
to know exactly what care was being used and whether the machinery was 
guarded at all or not. You see that steel plant in Chicago where every- 
thing is guarded that it is possible to guard, and in other places no guards, 
no anything at all. So you see even if you took them to-day and grouped 
them, you would want to know if a firm is using any precaution at all, or 
what guards they are using, or if they are working rough and ready and 
taking chances. That is what you are trying to get at, you see. For 
instance, take the cogs on a machine; I saw a man crushed to pieces just 
because he had a loose smock which caught in the cogs, when even a piece 
of wire or a tin over them would have prevented an accident. In some 
factories care is taken in this way and in others it is not. If you take the 
number of accidents then you want to know what position that factory or firm 
was in. 

The Commissioxer : Take the thing you have just spoken of, Mr. Studholme, 
where the workman was seeing that every day, would there be any reason 
why he would not communicate that to the employer? 

Mr. Studholme: They might communicate it a hundred times. Here is the 
trouble: you have got to take that chance to hold your job, or let your 
wife and family starve, or quit your job. 

The Commissioner: Do you think it would mean that? 

Me. Studholme : I know it does. I have worked in a place, and we have had to 
run out of that place because they had an inexperienced man working an 
engine on the railroad. He would let the water out of the boiler, and the 
boss would run and pull the fire out, and then we would go back to work. 
They said. Why don't you quit? Well, that is all very well, but it would 
leave your wife and family unprovided for. They paid a man $1.25 to run 
an engine and boiler and to do two men's work besides, and he would throw 
on a big fire and the first thing the machine would be going to beat the band 
and we would go up on the Grand Trunk and watch it go, and the boss 
would run down and stop the machine to save the price. Then another 
man goes into a factory, and there is a notice there, "This firm not res- 
ponsible for accidents." If I were killed there I wouldn't get anything, 
and a man says, '^What do you go there for when that notice is there?" 
The fact is I have got to go. You can kick till you are sick and tired of 
kicking. If you can fix it yourself, fix it ; and if you can't, let it go. Now. 
the men are up against that all the time. A man has got to work and take 
his chances. 

The Commissioner : I was asking Mr. McKinstry a question, and I will ask you. 


Mr. Studholme. Do you think piecework causes more accidents than would 
occur with the men working by the hour? 

Mii. Studholme: There is another proposition, I have worked piecework the 
greater part of my life, and I might not be so hungry to make a dollar but 1 
would have a little care as far as possible to save a limb or life, but another 
fellow is so anxious to make it, or he may be on a poor job where he haa^ 
got to take chances. The job may be poor and he needs the money, and he 
takes chances, and he might have a good reason for it. It might be on a 
poor job that you would kill yourself to make an honest living out of. 
These things crop up, and you would want to know why these men do that 
before you could condemn them for doing it. Men often do foolish things, 
but if he stops and goes down to get the man to stop the machinery he loses 
ten or fifteen minutes, and he takes a chance. He has got that much work 
to do and he cannot waste a minute in doing it without taking it from his 
work. Of course every trade might not be like that. In some places they 
take it as a floor with so much space and they have got to turn out so much 
work, and if they do not turn out that much work you are not wanted. 
You are simply given so much work to do, and if you cannot do that in 
time then you have to go, because you are using the space and not turning 
out work enough. There are so many of these things come up against a 
man in these places, and he has got to do it and take chances, and he does 
take chances that he has no business to have to take. That is the propos- 
ition he is up against, so that when a man tries to figure out it is careless- 
ness, he must take that into consideration. I saw a man myself condemn a 
worker for doing a certain thing and five minutes afterwards lose his own 
hand in a piece of machinery. A man got his fingers cut, and he came 
blustering and complaining because he had done a thing he should not have 
done. He took the guard off, and he said anybody can do this thing, and he 
himself had his hand taken off. You see those things happen right along. 
He was annoyed because the man got caught, and he deliberately got caught 
himself. He would not have got caught possibly if he had not been annoyed 
and angry at the other fellow. Of course those things are things that are 
going to occur all the time, I suppose, but the question is to guard the 
machinery and prevent accidents. There are so many people under the 
impression that so far as a workman is concerned he would sooner lose n 
finger or an arm and get compensation than he would save his finger or his 
hand and work. I never saw a man in my life like that, never, and there 
are mighty few that would do it. I would sooner have my fingers thar 
your steel plant or foundry. Mr. Hohson. 

The Commissioner: In the stress of the work a man takes chances, and he is 
hurt that way. I suppose there are very few men who Avil fully injure them- 
selves ? 

Mr. Hobson: I think that is true, and the more intelligent a man is the less 
likely he is to do it. 

The Commissioner: The only thing I recall being mentioned where a man 
injured himself was in military service. That is the only thing T have 
heard of, except very rare instances. 


Mb. Studholme: Now, a man may refuse to do a thing and the foreman of that 
place even call him down, and call him a coward, or say he is afraid, daring 
him and he will do it himself and possibly will do it right, and another man 
may get caught. There is a lot of that, and there is no business to be. If 
a man that overlooks carefully his foundry or factory and finds his foreman 
doing such a thing, because he is really daring the man to do something he 
is doing himself, he should be discharged. Some men will not do it, but 
another man does and he loses his hand. Some places they pull off a belt 
while the machine is running, and a man should sack a foreman if he does 
these things. Some places they will not do these things, and that machine 
has got to stop before the belt is taken off; they are not to touch it; but 
another place you have got to do it all the time for they won't stop for yon. 
There are lots of those things cropping up all the time. 

You see the position I am in. We have discussed this question for 
years at the trades congresses, and we understand the British law and the 
German law fairly well, and also the plans that the Provinces have been 
working out. Now, the Trades and Labour Council instructed the execu- 
tives of the vairous sections to take this matter up as soon as the matter was 
ready, and to be on the job, thinking Toronto would be the headquarters, 
and you have heard the men there, and they have handled the whole case. 
Now, they sent to the executive of the Trades and Labour Council here 
their documents, and the executive here went over them and considered 
the position taken by the Toronto men was satisfactory. They got the 
Trades and Labour Council to endorse it, and it stands in that position. T 
was not here at the time. So that Hamilton stands in the same position a« 

The Commissionek : They put their views in writing? 

Mr. Studholme: Yes. I have here a statement which I may as well put in. 
(Hands copy of statement to Commissioner). 

The Commissioner: The principal point of diiference is as to whether the em 
ployees should contribute anything. 

Mr. Studholme: I can speak on that, because in our discussion it was brought 
up, and we absolutely say no. We do not look at the firm at all; we look 
upon the businesss. That business has got to carry fire insurance, and has 
got to allow for depreciation, and all that, and we take the position that 
that business — not the firm — has to carry the risk. We are not saying any- 
thing about the man or the firm, but the business should carry that the 
same as it carries every other risk. Then we have another good reason for 
that. You take the average worker and he is carrying more to-day than he 
can possibly carry. He is up against a proposition. He has got to insure 
his little furniture, and he has got a home and he has got to insure his home, 
and then he has got to go into the fraternal society, and he has his organiza- 
tion, and he does not seem to have anything to contribute. We think the busi- 
ness should carry it. 

The Commissioner: Some people seem to think that the collective economic 
loss cannot be escaped, and that this tax put upon the manufacturers the 
manufacturers must get in some shape or other from somebody else, ^t 


has to be borne by the industry, and if he cannot get it from the man he 
sells his goods to where is he to get it? The suggestion is that ultimately 
it may have the effect not perhaps of reducing wages, but of preventing 
increases in wages if too heavy a burden is put upon the manufacturer. 

Me. Studholme: We speak from experience. Take the majority of industries 
and they are making good dividends and laying by money. Just take the 
steel plant. They are making a million and a quarter to the good and they 
do not consider that a good season at all. 

The Commisssioxee : Mr. Hobson has just been telling me they are having a lean 

Me. Hobson: Mr. Studholme forgets how much money we have invested. 

Me. Studhoijvie : You have not invested a dollar for every hundred you have got. 
There comes tliat proposition, Mr. Commissioner. The manufacturers as a 
rule never were doing as well in their lives as they are to-day, and the farmers 
never were doing so well, but the worker is not doing as well as in times 
past. Simply because he is making a little more there is no man will start 
to .argue that a dollar is producing a dollar's worth of goods to-day. It is 
not producing 50 cents worth of goods, and if he only gets live cents or ten 
cents or twenty-five cents increase he is up against it. Everybody unloads 
on the worker and the worker cannot unload on anybody. Take the manu- 
facturer. If his goods cost him more he has got to unload on the men he 
sells to; there is no question about that. Then take your grocers and 
butchers, and they raise their prices and the worker has to pay. 

The Commissionee : Do you think, Mr. Studholme, that the only man who works 
is the man who works with his hands? 

Me. Studholme: Why no, I don't care whether a man works with his brain or 
his hands. If a man is receiving a salary and wants an increase he has 
got to fight the boss for it. He comes up to the boss and says, "Here, 
Mr. Employer, my dollar is cut down to fifty cents and I am up against it. 
It is cut down fifty per cent, in purchasing the necessaries of life. My 
landlord has put $6 a month on me." I have known cases where they stuck 
$10 or $12 on him. He says, "Here is the fix I am in. I am doing the same 
work and I am getting the same money." '^ell," the employer says, "J 
am very sorry but I cannot do anything for you because I can get another 
man of your kind for the same money. It is a matter of business." Look 
at the position the man is in. 

The Commissionee: Does not the logic of that mean if you put upon the manu- 
facturer so much more he will take it out of you in the long run? 

Me. Studholme: No, not necessarily. Let me take my friend here where he has 
a million and a quarter. He can give up a little of that dividend. 

The Commissionee: Supposing he will not do it? 

Me. Studholme: We have got to make him. The law will have to come in here 
and say, Mr. Man, if you refuse to treat your men as a man ought to he and 
pay him a decent wage we will put more succession duty on you. 


_ — — — — — \ 

The Commissioner : That is when he is dead. 

Mb. Studholme: If you can catch him dead, why not catch him alive; why not 
catch him before he dies ? 

Mr. McCulloch : Mr. Studholme referred to the fact that the workman was 
held up by having to pay an increased rental of say $10 a month more than 
he had been paying. Now, it is not the manufacturer Avho is responsible 
for that position, it is the landlord. Then the landlord will argue back, 
"I am paying now infinitely more for bricklayers and mechanics than I did 
years ago, and for that reason the increase is made." It is not caused by 
the manufacturer but really by the land owners. 

Mr. Studholme: You can catch him by single tax. You can catch the landlord 
easier than anybody. 

Mr. McCulloch: Is that not the solution of your difficulty? 

Mr. Studholme: No. 

Me. McCulloch : I think it unfair to say that the manufacturers are responsible 
for the increase of rentals. 

The Commissioner : I do not think that is what he said. 

Me. Studholme: I do not want to put all the sins on the manufacturer for a 
moment, only I say the manufacturers are doing well to-day. 

The Commissioner : You must not, Mr. Studholme, claim to be exempt from the 
ordinary frailties of human nature. Every man will put it on, he will 
want more wages, he will want more rent, and he will want more for his 
goods if he can get it. 

Mr. Studholme: And if he is an honest man that is what he will have to get. 
If I were working at my trade 1 could not pay my honest debts and then I 
would be blacklisted at the grocery store. 

Mr. McCulloch: How much would you get now a week? 

Mr. Studholme : By the organization of labour right in this city where the manu- 
facturer never made so much in his life, for working ten hours we get $2.50, 
and he cut us down to $2, and the landlord was sticking it on. 

Mr. McCulloch: What are they getting now? 

Mr. Studholme: $2.25 a day is all they can get. If they do piecework they 
make more. 

Mr. McCulloch: $5 a day for piecework? 

Mr. Studholme : No, no man in the city makes $3 a day. Now, that is the 
proposition, when the landlord is putting up the rent and the butcher is 
charging you more, and the grocer. Look at that stove factory business 
some years ago, and that is why 1,500 men are working in the United 
States that ought to be working in the city of Hamilton. 

Mr. McCulloch : With reference to that stove proposition, are there not an 
5 L. 


, . ■ — . I 

immense number of stoves shipped into the Xortli West and cutting the 
manufacturer out of that market? 

Mh. Studholme: That is the nuinufacturer's fault. Tlie manufacturer over there 
in the United States found they were getting more here than he was and 
he started shipping the goods himself. 

Mr, McCullocii : How many years ago would that be ? 

Mr. Studholme: About twelve years ago. 

Mr. McCulloch : Conditions have changed now, of course. 

Mr. Studholme: They never made enough stoves to fill the North West. 

Of course, Mr. Commissioner, you have been up against it long enough 
to know that there are hundreds of propositions, and very seldom do two men 
have exactly the same idea. 

The Commissioner: No, unless it is a party question. 

Mr. V : I thinjc we are agreed upon one point, ^Ir. Studholme, that we 
want to see the workmen compensated ? 

Mr. Studholme- Certainly. 

Mr. Hobsox : It is the method of raising that money to compensate them. 

Mr. Studholme : The principle is all right, too. Nobody wants to see anybody 
crippled or hurt. We have got to put our hands in our pockets to help some 
unfortunate devil that is up against it, and then it should come down to 
that social business. The manufacturer should be perfectly willing if it 
is possible and practicable first to use every precaution. An ounce of pre- 
vention is better than a pound of cure, and while it costs money it saves 
money. Now, we are fighting for shorter hours. If you take Germany, for 
instance, you find in the last hour, whether it is before closing time or meal 
time, the accidents are three or four times more than they are in any 
other time during the day. It shows the man is getting tired. Take from 
eleven to twelve and from five to six. There they find it does not pay to have 
the long work-day because it costs too much money. 

The Commissioner: There was something said that was very unsatisfactory, from 
your standpoint, as an explanation as to how that happened. 

Mr. Studholme: From the German standpoint? 

The Commissioner: Yes, somebody discussing it. Yon arc putting it because 
the man works too long? 

Mr. Studhome: Yes. 

The Commissioner: The idea of this man was that on a ]iarticular day be had 
been drinking too much beer the day before ; and another idea was that when 
it was getting near the time for quitting the workman was a little more care- 
less. That was the way it was put. 

Mr. Studholme: I am not speaking on that subject; I am taking the German 
history of the case. The writer T am speaking of takes every working day 


and shows in every instance it is always the same, that it is the last hour 
of the time before quitting when the accidents occur, and it has got to 
such an extent that the firms have recognized it and have shortened the 
, working day. 

The Commissioner: Do the statistics since show a decrease? 

Mr. Studholme: Certainly, a decrease immediately on the shortening of the 
hours. That case you are talking about is only the blue Monday case 
where a man stays at the bar too long and on Monday he is under the 
weather and also following a holiday. But it is only ten per cent, that comes 
to work Monday morning unfit. They haven't the money to spend. If 
you figure it out you will find there is not ten per cent, that come into your 
factory under the influence of liquor.. 

Mr. McCulloch : I believe that is perfectly true. He would not be kept if he 

Mr. Studholme: So that as I have always said for the sake of ten per cent. I 
do not think the other 90 ought to be punished. 

The Commissioner: Has any other gentleman any view to express? Have you 
anything, Mr. Halford? 

Mr. H. J. Halford: I am not in a position to say anything. The views of the 
Council as put in were simply endorsed. 

MtK. McCulloch: Have you thought of the constitution and the character of the 
Board of Commissioners? 

The Commissioner: They would have to be all of blameless character. 

Mr. McCulloch: Of course we would like to express the view that the matter 
should be removed as far as possible from political control. I think in 
the interests of the people it should be a big man who is appointed or chosen 
for that position. It seems to be the view of Mr. Studholme, and I am 
sure it would be acceptable to the public in general. 

Mr. Studholme: It may be that somebody who has made his pile would give the 
balance of his life to that work. 

The Commissioner : I think you will find as a rule, Mr. Studholme, if it is not 
worth paying a man for his service it is not worth having. 

Mr. Studholme : I do not care what you pay a man if he is worth it, but of 
course in some cases it is looked upon as a social service. Men sometimes 
make a hobby of it. 

The Commissioner: You will probably find he is somewhat of a crank. You 
must have level-headed men wherever they are got from. 

Me. McCulloch: If he wished to remit his salar}' it could be received back into 
the treasury. That is always open to him. 

Mr. Ba^tcroft: We had in Toronto last week Mr. Charles LeGrosse, and we 
were sorry he could not stay long enough to have an interview with you. 


> — _ . ♦ 

He corroborated our position that the workmen in Germany did not contri- 
bute to accident insurance. 

The Commissioner : I think they contribute to sick insurance which includes 

jMe. Banckoft: But the principle in Germany is that it is not a contribution to 
the accident fund from the workmen. 

The Commissionek : It does not make much difference if you kill a man how 
you kill him. The money comes out of his pocket. During the first 
thirteen weeks there is no claim upon the accident fund, but during those 
thirteen weeks the man is provided for out of a fund to which he con- 
tributes. It provides against sickness as well as industrial accidents. 

Mi{. Bancroft : And non-occupational accidents. The occupational accidents were 
covered incidentally because the legislation was there. 

The Commissioner: You see, Mr. Bancroft, if there was not that other fund 
there would be thirteen weeks during which there would not be any com- 
• pensation at all. 

Mr. Bancroft : That is not the British act. If he is of! two weeks then it dates 
from the beginning. 

The Commissioner: The great point in that is not so much the question of the 
money, but it would save an enormous amount of labour in administration 
as to trivial accidents which would perhaps lay a man off a day or two. I 
fancy most employers are decent enough when that happens not to dock tiie 
man's wages. 

-^ ' You gentlemen apart from that one question about the contribution are 

apparently of one mind. ^ 

Ml!. Joseph Gibbons: I see very clearly where it is to the benefit of the manu- 
facturer as well as to us, because these insurance companies are not in the 
business for their health. They have men out to secure the business and 
they have to be paid, and the manufacturer must pay it all. That is one 
time they are the consumer, they pay for everything. 

The Commissioner: I am very glad to have met the gentlemen here to-night, 
and I think we have heard something that is worth studying. 



The Legislative Building, Toronto. 

Tuesday, 6th August, 1912, 11 a.m. , 

Present: Sir William R. Meredith, Commissioner. 'I' 

Mr. F. N. Kennin, Secretary. 

The Commissioner : Since the last meeting of the Commission the Secretary has 
received from the Canadian Pacific Railway Company a memorandum of 
their views upon the subject of workmen's compensation. 

Mr. I. F, Hellmuth, K.C. : I represent the railways, the Canadian Pacific, the 
Grand Trunk, the Canadian Northern, and the Michigan Central and the 
Pere M^arquette. I only desired to say to you, Mr. Commissioner, to-day, that 
we understand you are going across the water and are there going to make 
further enquiries and investigations into this matter. If the railway com- 
panies can be of any possible service in providing sources of information 
that would be of value or of interest to you, they will be very glad to do 
so. Of course they do not wish to burden you with the information of mere 
advocates, or anything of that kind, but there are certain men both abroad 
and in England who have given study to this matter from an impartial 
standpoint, I believe — that is impartial both so far as the employer and 
employee is concerned — and we would be very glad to put them in touch 
with you, I daresay a considerable number will be seeing you without nny 
assistance on our part, but if. we could be of any assistance in that way we 
would be ver}^ glad. You have seen from our memorandum presented, 
which you have referred to, that the railway companies do not take 
quite the same view in regard to state insurance as some of the continental 
countries have taken, referring perhaps to individualistic compensation 
rather than state, but it is not on that account that the suggestion is made. 
The suggestion is simply that we could, we think, perhaps help in some way 
your hearing the views of those who have looked at it from another or other 
standpoints than the continental standpoint — that is, those men who have 
taken other opinions — and, if you would allow us, when you are over there 
we might suggest to you some of these men who might seem worthy of your 

The Commissioner: I would be very glad to get from you, or from Mr. Mac- 
Murchy, on anybody else representing the companies any names you would 
suggest as persons who ought to be seen. I will not, of course, promise to 
see them. 

Mr. Hellmuth: We would not ask anything so unreasonable, because you might 
have a great many more names suggested than it would be possible for you 
to see. 

Then there is one other matter, and that is that when you return we 
might be allowed to present some evidence ; not a great deal, but one or two 
men perhaps from the Fnited States who have studied this question pat- 


ticularly, and again I say not advocates; and, perhaps, we might be per- 
mitted to make some aiguments with regard to the system after you return. 
That is all I have to say to-day, Sir William. 

The Commissioner: There will be meetings held after I get back and an oppor- 
tunity given to present any views. I will hear any evidence pertinent to 
the enquiry. 

Mr. Hellmuth : Mr. MacMurchy may possibly be on the other side, but if not we 
will find some firm perhaps that we can communciate with, such as Blake 
and Eedden. 

The Commissioner: If you write me direct, care of the Bank of Montreal, in 
London I will get the letter in due course. 

Is there anybody here representing the Eaton Company? 

Mr. Dilworth: Yes, I was sent up here to see what was wanted. I haven't any 
information myself. 

The Commissioner : Notice was sent to the Eaton company, and also to the Simp- 
son company, on account of something Mr. Shepley said to* me as to their 
views on the subject of compensation. I was in hopes that somebody from 
one or both of these companies would be here to state what their views are, 
as to whether they should be brought under any law such as is suggested, 
and whether from their standpoint there is any objection to this system of 
collective insurance. Are you in a position, Mr. Dilworth, to give us any 
information on the subject? 

Mr. Dilworth : I am not in a position to give any information on it at all. 

Mr. Wegenast : The T. Eaton Company are members of our Association, so far as 
the manufacturing end is concerned. 

The Commissioner: I suppose there are more employed outside of the manufac- 
turing departments than inside? 

IMr. Dilworth: A few, yes. There are about 13,000 altogether. 

The Commissioner: In Toronto, or in all the establishments? 

Mr. Dilworth: Montreal, Oshawa, and Toronto, not including Winnipeg. There 
are about 4,000 in the factories. 

The Commissioner: You have factories in Oshawa and in Montreal? 

Mr. Dilworth: Yes. 

The Commissioner: Have you any system of insurance of your employees by the 
company ? 

Mr. Dilworth : Not that I know of, sir. 

The Commissioner: Is there any one here from the Simpson company? 

The Secretary: I notified the company, but apparently there is no one here re- 
presenting them. 

Mr. E. M. Trowern: I represent the Eetail Merchants" Association. I have come 


for information rather than to give information. I wanted to find out 
where we are going to be in this thing. 

The Commissioner: This is not the place to get information, this is a receiver. 

Mr. Teowern : It is a difficult thing, from the way I view it. Of course we have 
had no information given us, only what we have seen in the press and 
from the labour organizations, and they seem to have set out a pretty full 
contract here, if it goes into operation at all in anything like the manner it 
is set forth by them. If it is I am afraid it is going to bring a good deal 
of hardship upon a class that 1 feel quite certain you want to get informa- 
tion from. A moment ago we were hearing from Mr. Eaton's representative 
about 12,000 employees. Of course those are divided. Those workers in the 
factory who are engaged in manufacturing are in an entirely different posi- 
tion to tlriose who sell goods. The sales people and the working people are 
two entirely distinct classes. The salesmen come under my jurisdiction as 
secretary of the Retail Merchants Association, and they are a very extensive 
body of people. 

The Commissioner: They would be rather surprised if you told them they were 
not workers. I understand what you mean. 

Mr. Trowern : I am designating them under a term that is understood. I suppose 
they are as hard a working class as any. In regard to this matter of in- 
surance : to begin with, allow me just to make some remarks on the sugges- 
tions of the labour organizations. I do not know how far you have received 
them, or how far they have been received, but it says the Act shall cover 
all employments and all the employees of the Province. Of course that 
takes in salesmen as well as saleswomen and clerks. Then it says that 
compensation shall be given for all injuries received arising out of and in 
the course of emplo)Tnent. l^hat is pretty sweeping. Then that compensation 
shall be given to those who are disabled, or those who receive their injuries 
arising out of or which are the result of being engaged in a specified occu- 
pation, the said disablement or injuries being regarded in the nature of 
occupational diseases. To ray mind that is very sweeping. Then the entire cost 
of compensation shall rest on the employer. That is a little socialistic to my 
mind. Then in the case of an injury resulting in death the dependants, as 
outlined in the British -act. and the State of Washington act, shall be the 
beneficiaries, with the expenses of the funeral as outlined. The doctrine of 
negligence on the part of employee or employer, fellow-servant or otherwise, 
shall have no place in the new legislation. To my mind that is too drastic 
altogether. Then there shall be State insurance in connection with the com- 
pensation act. That divides the thing into two classes. 

The Commissioner: Not two classes. That is not what they mean. They mean 
that the State shall manage the funds; collect and manage the funds. 

Mr. Trowern: Does that mean that it would be taken out of the hands of the 
ordinary accident company and put into the hands of the Government? 

The Commissioner: It means that if that plan were carried out, or rather the 
plan suggested by the Manufacturers Association, and, I think, concurred 
in by those who represent the labour organizations, that an assessment, varying 
according to the risk, to cover the compensation to be paid for all accidents, 


should be made upon all employers by a Board appointed by the Govern- 
ment. If the accident happened, say, in a retail merchant's establishment 
he in his class would be assessed for the proper proportion of that loss,, 
as well as the loss in other industries, unless they were classified, when 
each class would bear its own. 

Mr. Teowern: Would it be possible to leave us out of this thing as a class? 

The Commissioxer : That is one of the things to be considered. How much worse 
off would you be than under the present law ? 

Mr. Trom'^ern": In this way, if it were compulsory that every merchant should have 
his employees insured 

The Commissioner: That would not be in it at ail. Supposing they were divided 
into classes all they would pay would be compensation for injuries in that 
class. If the injuries were few the compensation would be small. As it is 
now the small retailers are subject to the common law of liability; they 
manage their own businesses; and if any accident happens they would be 
liable probably under common law, unless it was due to negligence of the 

Mr. Troween: Of course I am just taking this memorial as a basis for my state- 
ments, and where they are asldng to have that left out it puts the responsi- 
bility absolutely on the employer, and I can see so many complications. Of 
course I am simply here to present them to you, and if you gain any light 
from any views I may have, representing the retailers, I sliall be glad. 

The Commissioner: I am saying what I say merely for the purpose of drawing 
out 3'our views. 

Mr, Trowern : I would like you to do that, because the general public do not seem 
to know anything about this matter yet. 

The Commissioner: Do you know how many employees there are engaged in the 
industries you represent? 

Mr. Trowern: I could get you that. 

The Commissioner: Can you give us a rough guess now? 

]\Ir. Trowern : Speaking of Ontario alone, taking fifty thousand merchants some, 
on an estimate, would have one hundred, some fifty, some twenty, some ten, 
and some two. -Give them five each. 

The Commissionkh : Would that not be a large average? There are a great many 
who have only one. 

Mr. Trowern : I was taking five, because it is a very small business that would be 
operated with less than two. 

The Commissioner: That would be two hundred and fifty thousand. I am speak- 
ing of th^ country stores, and so forth. 

Mr. Trowern: You couldn't run any kind of a store unless you had one or two 
employees, and then there is the man himself. Suppose you give them 


1'he Commissioner: The employer does not count, you know. Giving them three 
would mean one hundred and fifty thousond. 

Mb. Trowern : That would be, I think, the lowest estimate. 

The Commissioner: Are there any statistics? Does the census report contain any 
statistics as to those? 

Mr. Trowerm : Unless I can get it from Ottawa, I don't know. I notice that the 
Government in the last census counted horses and cattle and sheep, but 
they never counted the merchants. 1 asked tJiem if they would put a line 
in their columns showing whether it was a retail merchant or not, and they 
promised they would do it, but 1 have not had an opportunity to see whether 
they did that or not. The only way I get at it is through being the secretary 
of the Betail Merchants Association, and our association reaches all over 
the Dominion. "We have branches all over Ontario, and I estimate by the 
number of merchants there are in each place. 

The Commissioner : "Wliat proportion of them do you think are members of your 
organization ? 

Mr. Teowerx : A large proportion of them. 

The Commissioner : Of the urban ones, I suppose. 

Mr. Trowern : Well, we have a lot of places where there is a merchant by him- 
self, and they are merchants just the same as those in a large city. The 
difficulty I see to provide against would be this : take butchers, for instance, 
whose deliveries on Saturday nights are very extensive in some cases, and 
they have men or boys to do that work who work in other places. 

The Commissioner : The British act excludes casual employees. Probably those 
you speak of now would be under the British act classified as casual, and not 
within the act. 

Mr. Trowern: I think it would be necessary to have that provision put in this, 
because there are a great number of those casual employees who come in 
from time to time. For instance, you take the employing of clerks where 
the custom amongst a great many merchants is simply not to engage 
him by the week but to engage him by the day for a few days, to see how he 
makes out. He may not be satisfactory by the end of the day and they get 
rid of him. Now, if anything happened to that employee during the day I 
am afraid we would get into a complication. 

The Commissioner : What has been suggested is that a contribution would be based 
upon the ' wage-roll of the establishment as between tlie different industries, 
and if the retail employees were in a class by themselves for all the acci- 
dents that happened in that class the compensation would be levied by a 
rate upon all the members, or all the employers, in that class. 

Mr. Trowern : Those who had very few risks would be subject to being assessed 
with those who had a considerable number of risks. For instance, take a 

The Commissioner: It would be possible to make the rate of the butcher higher 
than that of the dry goods man or the grocer. That probably would be done 


if such a system were adopted, just as in a powder business the rate is higTiei 
than in other manufacturing industries. 

Mr. Tkowern: Of course it would be necessary to know that point, because there 
are some retail lines of trade where there are very few chances for injury, 
and in others there are a great many. Take a boy who goes out on a grocery 
cart delivering groceries, you never can tell when that boy is going to come 
back, or whether he will- ever come back; whether the horse will get smashed 
up or what will happen. There are so many tilings liable to run into him, or 
the boy may be careless, or he might be driving a horse he never had out 
before. There are so many different things of that sort. 

The Commissioner: Do you know what proportion of the members of your Asso- 
ciation insure against accident? I suppose very few. 

Mr. Trowern: Oh, there are quite a number who insure. 

The Commissioner : In the larger establishments ? 

Mr. Troween: In various establishments, both small and large. Of course in the 
retail lumber business every one of the employers insures his men. That is 
the retail lumber men. 

The Commissioner: That is about as dangerous an occupation as in any class? 

Mr. Trowern : Yes, I guess that would be one of them. 

The Commissioner: Unless, perhaps, the drivers of these delivery wagons. 

Mr. Trowern : Then, of course, all these coal drivers would come under this. 

The Commissioner: I thought all the coal men in the town were wholesale men 
and would not rank as retailers. 

Mr. Trowern: They are all retailers. 

The Commissioner: Do you call Elias Eogers a retail man? 

Mr. Trowern: Yes, and the Standard Fuel. They are all retailers. There are a 
few who are wholesalers exclusively, who do nothing else but sell to the 
retailers, but all the coal men are retailers here. Is there any specific place 
in which the thing has been worked out? 

The Commissioner: Well, in Washington they have an act, but it does not ex- 
tend to clerical employees, or employees in shops, I think. It would extend 
to some of the branches of your organization. 

Mr. Trowern : In Quebec, I understand, the retail men are left out of the opera- 
tion of the act. 

The Commissioner : And the farmers. 

Mr. Trowern : That was our view. It seemed the complication would be so great 
when you come to go into the whole problem. We would prefer to be left 
out of this thing altogether if we could. 

The Commissioner: Would it not be anomalous to have next door a smaU manu- 
facturing establishment with the employee insured and your employee not 


insured ; would that uot cause friction ; would a man not want to know how 
it was his neighbour was insured and he not insured? 

Mr. Trowerx : Well, it appears to me as far as I have sized it up that the labour- 
ing men have asked for this, and if they want it I certainly would like to see 
them get it, but we have not asked for it. 

The Commissionee : But you represent the employers, not the employees. 

Me. Trowern : Yes, but it is the employers who have got to pay, and they are the 
chaps I am looking after. The tendency is, I regret to say, to drift uncon- 
sciously into a socialism that sooner or later has got to be checked. That 
is my opinion. Everything seems to be drifting along socialistic lines, and 
these people work so smoothly that the first thing we know we are landed 
into socialism. 

The Commissiojter : Whai do you call socialism? Was your Association not 
brought into existence for the purpose of taking as much as you could out 
of the public? 

Mr. Trowern : Oh no. Sir William. We are probably the hardest worked and the 
poorest paid crowd of the whole lot. The facts go to show that the retail 
man is the poorest man of the whole lot. As a class they have more money 
invested and get least out of it. However, I am just making that remark 
now. It may be I may think a little differently from some men, and I like 
to say what I think at all times. I do not like to wait until the thing 
happens. That tendency to socialism has got into the labour part}% into the 
city council, into the Government, and it is getting into everything, and 
somebody h^s got to be the bell sheep. 

The Commissioxer : What do you call socialism? 

Mr. Trowern: It is an indefinable term. I like to put the word theoretical in 
front of it. I do not think it has ever been defined, but I define it by class- 
ing all sorts of things in it in which the Government is asked to take care 
of the people instead of the people being asked to taJce care of themselves. 

The Commissioner : You apparently include in your definition public ownership. 

Mr. Trowern : Yes, certainly. In England, in New Zealand, and in other places 
from which I have the privilege of getting correspondence that does not 
generally come to the city clerks, I find through the merchants that in 
these things where there has been so much taxation that they are turning 
back again. All these things, gentlemen, come back onto the highly assessed 

The Commissioner : Do you think the retail merchant would be much better off 
if the waterworks were managed by a private company? 

Mr. Trowern : I think we would have better water to-day. We are having the 
diluted sewage of the bay put into our stores, and the dust blows into 
our stores, and it is all over the counters, and we are hearing now about 
fruit being exposed. The city is talcing action in that matter, and yet we 
are compelled to take diluted sewage, and breathe dust into our lungs, and 
then we are asked to maintain consumptive hospitals and all that sort of 


thing. For mj'self I do not think that any corporation could conduct the 
waterworks in a worse condition than is being done now. However, that 
is apart from the point I wanted to discuss. This is going to come to the 
front sooner or later, and somebody has got to take it up. The merchants 
are the people on wliom it has been forced, and they have had to take it up. 
I just want to see, of course, where we are going to land in this thing ; if 
we are to be the victims to pay to protect people who ought to protect them- 
selves. Is it an incentive to be careful, if a man feels he is insured by the 
State, and that his employer is forced by law to insure him? 

The Commissionek : If an employee is injured in the course of his employment 
is it not reasonable that the business should bear the burden of compen- 
sation ? 

Me. Troween: Yes, if it can be shown that the employee was doing his best and 
did everything that he possibly could to protect himself. We had a case 
here not long ago where a chap was working in a butcher shop. He had 
been out the night before and felt a little good, had not just got himself 
straightened up or settled down, and happened to get his finger in the way 
when he came to use the chopping block; it was no fault of the employer, 
none at all. I am inclined to think that you must look at this thing from 
the standpoint of removing responsibility from the individual ; the very 
minute you begin to remove responsibility from the individual then you 
are beginning to make that individual careless. If this measure is going 
to generate more carelessness then it is wrong; that is where our great 
trouble is now; people do not seem to be earnest enough in their work. It 
is difficult to get a boy whose mind will be centred on his work; it is baseball 
or something else ; every merchant will tell you that. *» 

The Commissioner: Don't you think that most people do not want to get hurt? 

Mr. Teowerx : Yes, I do, but on the other hand there is a lot of accidents caused 
by carelessness and negligence. If you make the employee feel that 
the employer is going to be responsible anyway, the question is just how 
far that is going to go. Take the people who are insured in life or in 
accident insurance, they insure to protect themselves fearing that they may 
meet with an acident, because accidents are happening all the time. 

The Commissioner: Did you ever know anybody to risk life or limb because he 
had a life policy or an accident policy? 

Mr. Trowern : I don't think so; they insure themselves fearing that something 
may happen. 

The Com:missioner: Is that not an argument against your proposition that if 
employee were insured he would take more risk? 

Mr, Trowern : No. I don't think so. Here you are not making him a party to it 
at all, you are forcing him to take this. The clauses that are set out here 
in the labour people's document is all I can discuss, because I supposed it 
was like injuries resulting in death. They say that the doctrine of 
negligence on the part of the employee or employer, and of fellow-servant, 
shall have no place in the new legislation. T think that is a very serious 
thing — a verv serious thing. 


The CoMMissioxKK: Tliat practically is the law in Great Britaiu. oxeejit as to 
gross negligence. 

Mr. Tkowerx : I am a Britisher and ilescended for a thousand years from 
British stock, but there are some things over there that I am not at all in 
favour of,, and particularly this sot-ialistie wave that is sweeping over 
England to-day ; 1 am opposed to the whole things and this has the look of 
that sort of thing. I must say what I think. Suppose you take thu retailers 
and divide them into classes: a drug clerk is running a greater ri-k than a 

The Commissioxeu : You mean his customer is. 

Mr. Trowern: He is himself. Suppose for instance a young drug student, not 
knowing the ditference in drugs, by some mistakt' mixe- something which 
will explode — a thing he is quite liable to do. 

The Commissioner: Would it not suggest itselL' thai he should uoi Iuim' Ihmmi put 
in a position of that kind by his employer? 

Mr. Trowern: You must teach these boys some way and some how. The public 
have got to be experimented upon, unfortunately. 

The Commissioner: It is quite possible that if an inex|n'ri(,'nitMl buy had not been 
warned against a dangerous article in a drug esiablishmciit, and were 
injured by it, the employer would be liabhi under the law as it stands. 

Mr. Trowern : That is if he had not been told about it, but if he had been told 
about it and took no heed then in that particular case under this new law 
all the merchants in that class would have to i)ay. or he assessed, for the 
negligence of that boy. 

The Commissioner: Do you not think that would be almo>t infinitesimal taking 
the whole of them? There are \ery few such cases amongst all the 
druggists, and it would not be a very serious thing to compensate. 

Mr. Trowern: I am looking more at the principle than at the amount. 

The Commissioner: Then you may say perhaps that this i-^ the socialistic side of 
it, but if a man or boy is injured he becomes probably a charge upon the 
public, and that means more taxation to the retailer. 

Mr. Trowern: Certainly. 

The Commissioner: So that he pays indirectly. 

Mr. Trowern : Of course the consumer has to pay everything in the end. 

The Co:mmissioner : Then you should not object. 

Mr. Trowern : We may as well admit it. 

The Commissioner: The shoulders of the consumer are slrong. 

Mr. Trowern: It is the unfairness of the thing that T am trnng to avoid. You 
take ;i small step and then you are going to take a big one : it is what this 
may lead up to that I am trying to discover. As T take it we are here this 
morning to ask questions and find out what we can : T can i-ome to no con- 


elusion, and I cannot do any more than ask questions, and endeavour to 
answer any questions that I can. There has got to be some settling down 
on this subject after awhile. Could we go anywhere to discover just how 
this thing would pan out in the end; you say in England it is in operation? 

The Commissioner: No, that is individual liability, not collective; it is a very 
wide liability there. The doctrines of common employment, and of assumed 
risk have been abolished; practically all accidents that arise out of and in 
the course of employment, unless due to serious and wilful misconduct of 
the employee, are compensated, and even in that case are compensated if 
the result is death or serious and permanent disablement; dependants 
are provided for even if the injury was due to the serious and wilful mis- 
conduct of the workman. 

Mk. Teowern : This, you say, is in operation in Washington ? 

The Commissioner: They have a law in operation in Washington, although not 
like the British law; it is a kind of mutual assessment limited to certain 
branches of industry. In Germany they have had it for years. There has 
been published a statement of the result of the operation in Ohio and in 
Washington, and perhaps Mr. Kennin could let you see these. 

The Secretary: I will be pleased to put everything at the gentleman's service. 

Mr. Trowern : Because we have had no precedent to go by, and it is all the more 
necessary to watch very closely to see where we are going to land. I am not 
myself much in favour of taking individual responsibility and placing it 
in a collective way on the community: I have hardly yet got to that stage. 

The Commissioner: As the law stands, Mr. Trowern, take a man in a small way 
in business, if an employee is injured in such circumstances that there is 
liability at common law, or under the Workmen's Compensation Act, he 
may perhaps be ruined, while under this system the loss would be dis- 
tributed over all engaged in the same business. There have been some very 
serious cases where there has been liability ; there have been cases where the 
man in business in a small way has been completely ruined by the burden 
that has been cast upon him. 

Mr. Trowern: Is there any evidence to show that the present accident insurance 
companies have fallen down? 

The Commissioner: The trouble about accident insurance companies is that so 
little of the money paid ever reaches the men who are injured; only a very 
small percentage, some say only about sixteen per cent. 

Mr. Trowern : If that is the fact would it not occur to you that the difficulty must 
lie in the administration of the system and not in the system? 

The Commissioner : There is so much expense, so much litigation ; that is one of 
the difficulties. 

Mr. Trowern: Because if these people are legitimately in business and are per- 
forming their duties as they ought to do, why can they not do it? I am 
not trying to defend them in any shape at all. I have not discussed it with 
them, nor have T ever had an accident insurance policy on my life, or any- 



thing of that sort, but just looking at it from the standpoint of the way I 
look at other matters. If the Grovernments are not able to force those com- 
panies to do the right thing, how can they by any possible means undertake 
to operate a thing themselves? That has always been to my mind a weak 
spot in public ownership, amongst other things. If a civic government 
cannot insist upon private corporation living up to a duty that it is 
supposed to do, and is required by its license to do, and is incorporated to 
do, do you think the Government itself can do it? 

The Commissionee : Have you been awake for the last ten years in Toronto? 

Me. Teowekn: Yes, very much so. 

The Commissioner: Have you found any evidence of difficulty in making com- 
panies live up to their contracts? 

Mr. Troween: I do not think there has been a desire to. I think the main dif- 
ficulty has been an endeavour to harass them as much as possible. I cannot 
conceive for a moment of a law-abiding country, a country with good laws, 
many of them, such as we have, not being able to enforce a law. If a con- 
tract is entered into between a corporation and a civic government and it is 
a poor contract it is not the fault of the system; it is the fault of the men 
making the contract. ]\Iy experience with the railway people is that instead 
of pulling them up before the Eailway Commissioners and going at them 
with hammer and tongs, I can go and see the right people, lay the case clearly 
before them and give them a chance. I have had a good deal better treat- 
ment than I would have had in any other way. Those companies are in 
addition to making money trying to serve the public and trying to take care 
of their clients: If you have enmities existing, as you have between the 
City Council and the Eailway Company, and quarrelling all the time, no 
settlement can be made; that is where the trouble is. If in some way the 
existing law could be made to protect the working man under a proper 
system, it seems to me it would be a better way. We know well enough if 
you take most of these co-operative life associations and co-operative fire 
associations, and so forth. Take the Ancient Order of United "Workmen 
to-day — a splendid body — yet look at the difficulty they have got into with 
their rates and assessments, simply because they started off believing that 
they could do a business that requires years of study and thousands of 
dollars of capital. People require to put almost a life study into it, and 
they believed they could do that business as well as those people; look at 
the result. That is the way that most of these co-operative things end: 
must end eventually, collapse. I remember joining the A. 0. H. W. some 
forty-five years ago; had I remained in paying the assessment right along 
up to date I would now be asked to pay higher assessments, and what 
protection would my family get? 

The Commissioner: You will find the same experience in insurance companies. 
I know of one case where a man was insured and I think he has paid now 
about twice what could be got in the event of his death, and he has to keep 
on paying. It was a very faulty plan, no doubt. 

Mr. Teowern: Yes, I have a case of that kind in my own family; but take the 
average insurance company, and it seems to be fulfilling its duty. 


The Commissioner: Have not the mutual insurance companies been pretty suc- 

Me. Troween : They are put on a different basis. They are practically mutual to 
outward appearances, but are properly officered and properly looked after. 

The Commissionee : They are officered by men chosen by the members of the 
Association ? 

Me. Teoween: Yes: 

The Commissioner: I suppose there is not a better insurance company than the 
Ontario Mutual in the Dominion of Canada. 

Me. Teoween: They have skilled insurance men at the head of it. 

The Commissioner: Undoubtedly. 

Me. Teoween : So that their system of operating would be along the line of the 
regular company. I would like, if you have not seen some of the reports 
of the collapses that are taking place in London, England, in Australia and 
in New Zealand dn this public ownership thing, to show you some literature 
that you cannot buy so that you may see the other side of the story. 

The Commissionee : Is it so bad that it cannot be exposed for sale? 

Me. Teoween : It has not been exposed for sale for the reason that there has been 
so much public talk about the success of these things. If you write to the 
Secretary of State in New Zealand and ask him the real facts, no doubt he 
will give the facts as they appear to him, and as they have passed the 
various councils, but he does. not give you the facts as they apply to the 
municipalities in which they have been operating, to the merchants who 
have to pay the tax, and to the fellow who is right up against it. The 
merchants of the city of Toronto pay 45 per cent, of the taxes of the entire 
city, and any aditional liability loaded onto them is a serious thing. Those 
merchants in Australia are the people from whom I get my information : 
it is of an entirely different character from what you will see usually. 

The Commissionee : How does this Association of yours get properly officered ? 

Me. Teoween: It is not operated just simply for health and for religion, you 
know; they elect their officers and employ them. 

The Commissioner : They elect very good ones, do they not ? 

Me. Trowern: I am not in a position to make any statement in regard to that. 
When will this be closed? 

The Commissioner : Not before late in the fall, anyway. 

Mr. Teoween: This is my first look into this proposition, and from what I can see 
and hear I do not like the look of it at all. 

The Commissioner : I am going across the water to make some enquiries on tlie 
spot as to the working of the laws in European countries. I expect to 
return early in November aiid to have sittings after that. T want to get in 


my report in time for the uext session of the Legislature, so that they will 
liave it if they desire to legislate. 
Mr. Teowekx : lu the meantime I suppose you have no objection to letting me 
look at some of the literature ? 

The Commissioner : I am sure Mr. Kennin will be glad to let you see any of the 

Mr. Trowerx: Because I can see as far as the retail men are concerned that end 
of it has got to be dealt with a little differently from the way you deal with 
the Manufacturers Association or the Trades and Labour Council. 

The Commissioner: There are some organizations of employees in these retail 
establishments, some labour organizations; for instance, you have the 
Garment Workers, I suppose? 

Mr. Trowerx : That is the journeyman tailor who works for the merchant tailor. 

The Commissioner: Working outside? 

Mr. Trowern : Some inside and some outside. 

The Commissioner: Is there any organization of the clerks in mercantile houses? 

Mr. Trowern : I do not know of one in existence now ; there used to be. In some 
of the lines of retail trade they employ their own operators, such as manu- 
facturing furriers. Mr. Dineen has a large number of employees working 
for him. Then you have the merchant tailors. 

The Commissioner: That branch of the concern would come in as a manu- 

Mr. Trowern: There would be a fine line to draw as to who is a manufacturer 
and who is a retailer. There are the three divisions, the retailer, the whole- 
saler and the manufacturer. The Assessment Department determines a 
retailer by the largest portion of his buisness beins: retail. The largest 
portion of Mr. Dineen's business, or Ryrie's business, or Seller-Cough's 
business, or Fairweather's is retail ; it would be a difficult thing to put them 
under manufacturing. The Eaton people and the Simpson people are really 
retailers and would come under the retail class. 

'Sir.. Doggett: Our friend has told us that this is moving around socialism. I 
would like to ask him if ho knows that the Eetail ]\Iercliant-s Association 
insures their people again.^t fire, and insures their plate glass windows and 
their horses? Is that not moving around socialism? 

Mr. Trowern : The distinction I make is that the plate glass company makes a 
business of that; they do not come to me on any pretext that they are going 
to benefit me, they are figuring -it out in cold dollars and cents. They say : 
If you will insure your plate glass with me we will take your risk; you pay 
us a certain sum of money. They estimate that their risks divided up will 
net them a certain profit so that they can divide it amongst their share- 
holders. These shareholders may be workingmen. and most of them are. 

The CoM^nssiONER : The difference is that the State says to the emplover: Wo 
6 L. 


will undertake your risk if you pay us a certain sum; we have no profits to 
divide among the shareholders. 

Mr, Trowern : Then you are making the State rich and the people poor. 

The Commissioner: The State does not get anything out of it. 

Mr. Trowern: I would like to know one State where it has been run on business 
lines and run successfully. Eemember we get a whole lot of stutf told to us 
that is not based on facts at all, and when we start to dig into this thing 
and discover the conditions, they are entirely different from what we have 
been told. For instance, take the Post Office. 

The Commissioner: You are striking at the foundation of all government. The 
Grovernment manages the biggest business in the nation. 

Me. Trowern: Unfortunately they do not manage it as business people. 

The Commissioner : They manage it pretty well as a whole. 

Me. Trowern : Take the Post Office that is held up to us by nearly everyone as 
being a magnificently operated proposition. Why, the electric light, the 
sweeping of the floors, the boxes that are manufactured to carry letters 
around in, are charged up to public work; not a nickel of those expenses is 
charged up to the Post Office. Do you know of any business corporation 
anywhere in Canada which does not charge to a department exactly what a 
thing costs and shows it in the statement; do you find any corporation 
hiding a great portion of the cost in another department? We have got to 
look at these things exactly as they are; I am not here to do anything but 
simply give you my views. These private corporations in the insurance 
business are run by men who have had years of experience; they know their 
business and how to operate it. It is the duty of the Government to see 
that those people carry out what they claim they are going to do and to 
protect me, but when it comes down to the Government going in and oper- 
ating these things, then you are going to load this country down with 
burdens it should not bear, as they have done in England in a large number 
of boroughs. When you are in England I would like you to see some of 
the secretaries of the Eetail Merchants Association; I am sure they will 
give you some information. I will be glad to give you some names and 

The Commissioner : How is it that with such defective systems you carry a letter 
to New Zealand for two cents, and if it is an express parcel it will cost you 
probably two dollars? 

Mr. Trowern: I am claiming now the Department should bear the cost of the 
Department. No matter what the Post Office Department costs, every dollar 
in connection with it should be charged up to that Department and not 
loaded up onto the public service; if the letters cannot be carried for two 
cents it should be more. We know well enough that to-day all the people 
who send letters are paying for the service of those who are sending out 
catalogues and mail order parcels and all the rest of it. If you were to give 
tbe people who pay postage on letters an opportunity you would— according 
to their own figl^res — reduce the cost of letters and increase it on parcels 


and other things. We arc uuw making' an imostigation oi' that whoh- 
subject; tlie more we dig into it the more we find. The poorest operated 
thing I know of is the Government Post Office. Then 1 turn aronnd and 
look at every Department of tlie Government, and what do I luid? Who 
are the poorest paid men? You have got gentlenicn in this buikling wlio if 
they were outside in private service would be getting twice as much as they 
are; their services are not recognized. They are kept there from year to 
year, and because they are poorly paid, not getting what they ought to get, 
they are going out and crying down the fellows on the outside and are 
making them do things cheaper. If labour goes up I have to throw up 
both my hands, for everything goes up. 

Thp: C0MMI^■S10XEK : You seem to he worse than the socialisi--^; you are against 

Mr. Troweex : Xo, 1 am not. 

The Commissioner: Except the Eetail Association. 

Mr. Trowerx : I want to show you that it is a very broad question we are going 
into: when you touch on one thing you tip down one thing and tip up Bome- 
thing else. 

The Commissioner: I am afraid it will be a hard thing to meet the views of 
the retailers if you represent them. You seem to be very hard to please. 

Mr. Trowern : Xo, I am very easy to please, that is the difficulty. I am point- 
ing out that because we have gone into other things which were supposed 
io be good and it has turned out that they are not good and are not as 
they ought to be. I think that when I am asked I am justified in pointing 
out to you the condition of affairs. 

The Commissioner: You must increase your confidence in your fellow-man: you 
have no confidence in him at all. 

Mr. Trowern: Oh yes, so nuich so that I think a number or most of these private 
corporations are not as bad as they are painted, so I must have Bome 

]\rK. Doggett: The gentleman has stated and I think it is generally admitted, 
that under State insurance for W'Orkmen's compensation, the risks in the 
Eetail Merchants Association are very low, while in the building trades and 
foundries, the risks are very much higher. The position is that in Tor- 
onto every year there are hundreds of men in the building trades and other 
industries who are meeting with accidents. When one of these men meets 
with an accident and there is no insurance and no money coming in to their 
families, they invariably and inevitably throw themselves on the little 
retail merchants' stores where they have been doing their business. It 
means that the retail merchants are getting hit very hard if they cannot 
collect their bills from these men. In my opinion the retail merchants 
want to get right into tliis thing body and soul, then there wouldn't be so 
many of them going to the Avail. 

Mr. C. Lawrence: This gentleman has said that public ownership or anything 
run by a Government, w^liich is the same as public ownership, has not been 


a success and lias not been run on business principles. I can cite him a 
couple of instances to the contrary. In the city of St. Thomas the water- 
works are run by a commission of three; the mayor is ex-officio a member, 
the other two are elected by the citizens. Since they have taken over 
the waterworks in the city of St. Thomas they are not only supply- 
ing the citizens with a good deal cheaper water but a good deal 
better, and they are making a success of it. They are turning over a 
lump sum into the City Treasury every year of something like $7,000 or 
$8,000. A small place of 15,000 inhabitants gets that clear profit, end 
cheaper water than you can get in Toronto or in any place I have ever 
been in. 

Another instance; they took over the electric light and gas plant. 
A\'hen they took over the gas plant the company was furnishing the city 
gas for illumination purposes at $1.45 and for fuel at $1.20. The citizens 
arc given both now for $1, with ten per cent, off for cash if paid by the 
25th of the month. I did not intend to say what I am saying when \ ' 
came here. It is on account of the stand this gentleman has taken that the 
trade-unions are being pressed into this movement to get something of 
this kind. The gentleman himself is a trade-unionist . although he will 
not admit it. He belongs to an organization which is a good deal more strict 
and is a close corporation. I belong to an organization but not a close 
organization; he belongs to the Eetail Merchants Association. The dif- 
ference between his trade-union and other trade-unions is this: they get 
an -article and set their o^vn price; if you buy you must pay that price. 
Trade-unionists have their labour to sell and they sell it at the place 
where they can get the most profit; they ask for a certain wage, and if they 
cannot get that they must take what they can get. This gentleman prac- 
tically admits that they will get a boy who is not accustomed to a horse and 
send him out on a rig; the boy has never driven that horse before; the 
shop keeper does not know whether the boy or the horse will ever come 
back again. Should that be allowed to exist; would it exist if some insur- 
ance association like this is started? It certainly will not; the employer 
will see to it that the boy or the man who drives the horse, is accustomcl 
to driving horses and is competent to take care of it. Let me just say ft 
few things, not many. As representative of the Brotherhood of LocomotiA e 
Engineers, I appeared before you at your first meeting and stated our 
ideas on this question. They have taken this up in the United States, ii^ 
I told you at that time. I understand there is a bill in the American 
Congress; it has not yet become law but it is along that same line. The 
law over there as to interstate commerce is different from what it is here 
where most of our railroads come under the Dominion Government. It 
is on the same principle as this gentleman is disapproving of; it pays, as I 
understand, a certain percentage of a man's wages, the employee's wages, 
if he gets injured or is killed, for a certain number of years; there is n 
minimum amount, and a maximum amount. I do not know whether you 
have a copy of that law or not? 

The Commissioner: Yes. 

Mr. Lawrence: Then there is something which we like — it does away with liti- 
gation. As you stated a few minutes ago, only a very small part of the 


money gets to the beneficiaries, about 37 per cent, according to statistics 
gathered over there. Litigation is something that we want to get away 
from. If we can get sometliiug where a commission will be appointed to 
look after things, to see that no fraud is permitted to exist, and that 
the employee or his benefioiary gets what is coming to him; that is what 
we want. 

The Commissioner: What is your attitude to-day, Mr. Wegenast: 

Me. Wegenast: I do not think I have any reason to change my attitude, Mr. 

The Commissioner: I do not see what advantage there would be in a two or 
three days' discussion of your brief. 

Mr. Wegenast: I would be very sorry to inflict any discussion on you that was 
not of some value. 

The Commissioner : Your brief is a very elaborate production and presents all 
the arguments from your standpoint. 

Mr. Wegenast: Yes, but there are a number of points I would like to mention 
specially; there are a number of aspects of our suggestions in the construc- 
tive part of the brief I should like to put before you. 

The Commissioner : Well, I suppose you had better go on. I am very glad to 
hear you, but I only want to hear you as Commissioner, as far as I may 
think it of advantage to the enquiry. I am sure you do not wish to spin 
the thing out. I think you intimated in a letter to me that you had 
something bearing upon the enquiries I am going to make, and I would 
be very glad to hear you on that. I do not wish to stop the flow of your 

Me. Wegenast : I would be very sorry to think that I was using eloquence or 
any other form of verbosity that was not to the point. My idea was to 
go into some of the details of this statement. I need not say that the 
matter is so complex that there are a score of aspects of the subject on 
which there is room for endless discussion. 

The Commissioner : The first thing is to settle the principle. 

Mr. Wegenast: If we can assume that the principle of collective insurance is 
settled then of course it will eliminate a good deal. 

The Commissioner : Nothing can be taken as settled. 

Mr. Wegenast: If that is not settled then I shall be glad to reinforce that to 
some extent. 

The Commissioner: Have you not done that in this brief? 

Mr. Wegenast: The birief is a brief. It is not my fault it is so long; it is a 
brief so far as anything can be on this subject. I think, Mr. Commissioner 
well knows that it is not possible to do justice to a subject like this without 
taking some time. 


The Commissioner: Then I think we had better go on and hear what you want 
to say. 

Mr. Lawrence: I intended to mention this subject of mutual insurance. The 
Locomotive Engineers have mutual insurance; for $1,000 it only costs me 
$18 or a fraction less to carry it for a year. 

The Commissioner: Entering at what age? 

Mr. Lawrence : At any age up to 50 years. There is not an insurance company 
that I can get that for less than $41 something. 

The Commissioner: That would be at your present age? 

Mr. Lawrence: At any age from twenty-one years to fifty; they do not take them 
in after a certain age. 

The Commissioner: Surely it does not cost $41 to insure for $1,000 at the age 
of twenty-one. 

Me. Lawrence : No : I am giving an average. On the average in a company it 
would cost $4], while at the same age in our association it is a fraction 
less than $18. 

The Commissioner: I suppose your otficers are paid salaries? 

Mr. Lawrence : Yes. There are no such large salaries as the insurance companies 
pay their agents. They get three per cent, for collecting, and forwarding 
to the head office. They have men employed in the head office, a president 
and secretary-treasurer, and other employees, to run the business of tlie 
association. They are paid wages equal to the position, not starvation 

The Commissioner: What proportion of the locomotive engineers are insured? 

Mr. Lawrence: In the neighbourhood of 6'2,000 or 63,000 belong to the insurance, 
and there are in the neighbourhood of 73,000 in the association. 

The Commissioner: And the ten thousand would probably be made up of the 
younger men? 

^Ir. Lawrence : No. most of the young men come in and take out a policy. I 
will have to make an explanation as to that. Years ago our policies 
allowed them to join the organization without taking out a policy of 
insurance; about twelve or fourteen years ago it was thought better to 
revise the by-laws and compel every person who came into the organization 
to take out a policy. That explains why there is that number belonging to 
the organization who have no insurance; they are all locomotive engineers. 

The Commissioner: How many are there outside of your organization? 

Mr. Lawrence: I could not answer that. 

The Commissioner: Have you the larger number in the organization? 

Mr. Lawrence: Oh, yes. 

The Commissioner: There must be a considerable number outside? 


seventy-five engineers and I suppose there must be between fifty and sixt} 
not in the organization; probably five or seven per cent, in a good many 
places — sometimes a good many more who do not belong — I can not say 
for sure. 

The Commissionek : How do you manage about non-union labour? 

Me. Lawrence : They can run an engine without belonging to the organization : 
that is the reason I say this gentleman, the Secretary of the Eetail 
Merchants Association, belongs to a closed shop. 

^Ie. Troween: I do not think a statement like that should be made. Ours is not 
a closed shop. 

Mr. Lawrexce: They practically compel in some places every retail man to 
belong to the Association. 

Mr. Trowern: Oh no. 

Me. Lawrence: I want to tell you of some co-operative associations which have 
been organized and they have had hard work to buy supplies form the 
wholesale houses. 

Mr, Trowern: You mean co-operative stores. 

Mr. Lawrence: Yes, simply because they claimed if they sold to the co-operative 
stores the retail men would not buy from them ; if that is not trying to make 
it a closed shop I don't know what is. Just recently, I know, a co-operative 
store has been organized. I do not belong to it and have no stock in it. They 
are making a success of it, although the officers have told me that they have 
been turned down by some of the wholesale houses and have had hard work- 
to get started. If that statement does not bear out the one I made I 
don't know what will. . .--* 

Mr. Trowern: Were those Commissioners you spoke of in St. Thomas elected? 

Mb. Lawrence: Two of them were elected, one elected each year for two years, 
and the mayor was the third. 

Me. Trowern: Are they paid? 

Me. Laweence: They are elected. 

Me. Teowern : It is this voluntary service that is up against us. Here are a lot 
of co-operative people get together and want to run their own shop, working 
for nothing, and competing with the clerk and the merchant and other 
people who want to make a living and live in the community in a proper 
way. I claim all these co-operative concerns, and all these institutions that 
are trying to work for nothing, are detrimental to the State. 

Mr. Lawrence : I want to tell this gentleman that these co-operative stores pay 
better wages than the retail merchants. 

Me. Teowern: You can't tell me that. I know they are the greatest fraud that 
exists on the face of the earth. 

Me. Lawrence : Your association is doing its best to clean them out. 


Mr. TroweivN: We will clean them all out before we stop, too. If you have any 
money in them take it out. 

Mb. Bancroft : I am sorry I did not hear Mr. Trowern's statement this morning, 
due to the fact that we have not all our own time at our disposal, but I 
think some of his remarks are not altogether correct. If the Ketail 
Merchants Association do employ labour there is no reason why they should 
not come under any compensation act in any community and bear the same 
burden as everybody else. There is a difference between the Eetail 
Merchants Association and the trade-unions. The Eetail Merchants at 
one of their conventions here criticised very severely the wholesalers who 
would sell directly to the consumer, practically cutting the retail merchant 
out of his distribution of the commodity whereby he makes his living. We 
have had the argument placed before us for a long number of years where 
a workman was working at a trade, and a machine was invented to lesson 
the cost of production, and making for more efficiency in industry, and the 
workman claimed he would he thrown out of employment, that he was 
ignorant. That was the criticism that was levelled at us, because after the 
invention of machinery would come about and the workman would be dis- 
placed, and the workman who claimed he was suffering an injustice because 
he was displaced by a machine was criticised as being ignorant and stand- 
ing in the way of human progress; but when the retail merchant finds a 
wholesale house selling cheaper to the consumer direct, as an organization 
they won't stand for it for a moment. The retail merchant must take 
out his middleman's profit; that is one reason for the high cost of living 
to-day. The retail merchant all over the world is gradually being forced 
out of existence because he is not producing anything and in some cases is 
absolutely of no use to the community in this day and generation. The 
Eetail Merchants Association has been against the co-operative store for 
what reason? Because it is a cheaper distributing agency, and is a benefit 
to the people. I would suggest that when the Commissioner goes on .his 
trip that he ask some of the stores over there about the battles they had with 
the retail merchants before they gained a foothold. Mr. Maxwell, the 
President of one of the co-operative stores, who was over here told us that 
years ago wlien he was in the Scottish Wliolesale Co-Operative Apsociation 
they could not buy a beef in Scotland at all, that they had to go direct to 
the farmer. So the retail merchant does not stand in the same position 
as a member of the trade-union, not by any means. The trade-unionist 
is open in the market for his wages, and the retail merchant is trying to 
stamp it out completely. I do not know much about these things but I do 
believe that e^ery employer in the Province of Ontario should come in under 
this act. 

Mn. Trowern: It sliovvs the great necessity of havinij: thi.'^ whole subject properly 
aired and the people ]5roporly educated up to all the facts; there are two 
sides to the story. I am not going to argue it out with these gentlemen this 
morning. These gentlemen are charging us with things we are not guilty 
of, but I hope, no matter which way the Commissioner reports or what the 
Government may adopt, this question will be thoroughly fought out. The 
whole public will have to poo both sides of it; the issue is between the in- 


dividual on one side and the socialists on the other, and I hope the individual 
will be successful. 

The CommissiOjStek : Now, Mr. Wegenast. 

^Ir. AA'egenast: At the former session I went over a sketch or condensed summary 
of my brief, and discussed one of the twelve principles I put down. With 
regard to the second principle enunciated, namely, that the professional 
risk theory should be recognized and that employees should be compensated 
regardless of negligence, I desire to emphasize this, that while we admit 
that principle we do not admit it without qualification. I have stated it 
in my brief, and simply wish to emphasize that we consider there are two 
qualifications that must be recognized, and if those qualifications are not 
recognized so far as we are concerned the principle falls to the ground. 
These two qualifications are, first, that the individual employer should not 
be liable for damages for something not his fault. The British act is 
based on the principle of extending the personal liability of the employer, 
and we entirely disagree with the application of the principle of profes- 
sional risk in the British act. The British act is virtually an attempt to 
operate a socialistic principle with individualistic machinery. We cannot 
overlook the fact that this is a form of what is sometimes called socialism. 
The principle of professional risk means the employer or the State loads 
itself up with a duty which primarily should be perhaps thrown upon the in- 
dividual, but which the individual from improvidence, or whatever may be 
the cause, has omitted to make provision for. We say if the principle of 
professional risk is recognized it must be recognized with the qualification 
that the burden should not be thrown upon the individual employer. Then 
again there is the obverse side, that the employee himself should not be 
entirely relieved from the results of his own wrong doing. 

With regard to the sixth principle I desire to point out that if there is 
left outstanding any common law liability, or any other liability than that 
covered by the compensation act or compensation s^'stem, it will mean the 
employer will again be called upon to insure. So long as there is an out- 
standing liability against the employer which is not covered by the com- 
pensation system there will be forms of insurance which he will be solicited 
to take, and which indeed many of them will take. The logical solution is 
then for a further extension of the system which will enable him to secure 
similar insurance for that liability, and our contention is that all these 
liabilities should at once be included in the act, leaving no outstanding 
liability on the part of the employer. 

The CoMMTSStoNEE: Has anyone taken the trouble to make any enquiries as to 
the cases in which recovery at common law has been had? My experience 
would be that it is almost a negligible quantity. 

Mr. Wegenast: I think perhaps that is true. 

The Commissioner : I can count on my fingers the number of cases that have 
come under my observation where there has been any recovery outside of 
the Workmen's Compensation Act. There are two or three cases T have 
in mind where there was common law recovery. 


Mb. Wegenast : 1 think that is true, and I think the i^ercentage in England where 
recovery has been made is comparatively small, and yet a considerable 
nnmber. \\hat I desire to point out is not so much the probability of the 
woi-kman succeeding in recovering, as the apprehension 

The Commissioxei: : That is not the object of my observation. The thing cuts 
both ways, one on which you would address me, and the other is that it 
would take very little away from the workman. 

Mr. Wegenast: Yes. and then 1 desire to mention the other side of it, that it is 
the apprehension of the employer that he may still be liable, whether that 
apprehension is well founded or not. That is what I desire ix) call atten- 
tion to. 

The CoMMissroxER : Does the recent act passed at AVashington not do away with 
common law liability? 

Mb. Wegenast: Yes. There is a clause to which we do not take exception — in 
fact we advocate it — under which the employer who does not provide proper 
safeguards, or otherwise is negligent, is penalized, but the fine goes into the 
common fund, not into the pockets of the workman. 

I have only this further observation to make in answer to a question 
raised by you, sir, at one of the sessions on the question of whether 
the workmen should contribute to compensation funds if he was not com- 
pensated to the full extent of his loss. There are a number of answers that 
can be given to that question. One of the most obvious is this, that the 
workman if he had not been injured would not probably have drawn full 
wages for the rest of his life. I think in fact two thirds wages would be a 
generous estimate. A workman who is injured, say at the age of twenty- 
five, would not expect in the natural course of things to draw full wages 
for the rest of his life for three hundred or more days of the year. 

The Commissioner : Is there anv system where the compensation continues during 

Mr. AVegenast: Yes. 

The CoMMissioxEn : I think most of them are for a limited term of years. 

Mr. Wegenast: No, I think not. There are systems in the United States which 
adopt six or eight years, but the European systems run for life, I think, 
almost entirely, both in the case of complete incapacity and in the case of 
the Avidow of the person killed. 

Mr. Bancroft: Take Great Britain. Is it not true that the full liability can be 
changed into n Post Office annuity? The employer has a chance to do that. 

The' Commissioner : That is very much opposed. 

Mr. Eanoroft: T think in the State of Washington it is $4,000. 

AfR. Wegenast: On the bafiis of compensatinfr a workman fully, in so far as it 
is possible to do so from a pecuniary standpoint, he would never sret one 
hundred per cent, of his wages. 

\Vl)1;KMEN"S COMrE.N^Ai'iDN ID.MMlSSiUN. 71 

TuK Com MISSION EH : Nobody propose? iii any country, us I uiulcrstciud, to pay 
liim full wages. 

Mk. Wegenast : 1 think ihere is one instance of full wages, and thai is in (Jermany 
where the man is incapacitated and also requires personal attention, for 
instance a man paralysed. 1 think in that ease they pay one hundred per 
cent, of the wages, but that is paying something more tlum he would have 
earned if he had not been incapacitated. Then there is another answer to 
the argument, and that is under present conditions, even where there is 
strictly a legal liability on the part of the employer, no court attempts to 
give a man anything like the full wages he would have earned to the end 
of his days. 

The Commissioxek : J do not see much reason for discussing that aspect, because 
nobody proposes that. 

Mr. "Wegenast : You raised the question at one of the meetings. 

The Commissioner: What I have said more than once is that the workman in my 
view does contribute because he does not get the full wage but only a per- 
centage of it, varying, T think, from fifty to sixty per cent. Fifty per cent, 
generally, and sixty per cent, in some cases. 

Me. Wegenast : iMy answer to that would be if he receives two-thirds of his wages 
he does not contribute. 

The Commissioner: Wliy not? 

Mr. Wegenast: Because that other third he would never have got under any cir- 

The Commissioner : Wliy not ? 

Mb Wegenast: He would have had holidays for one thing. He would never, even 
if he had never been hurt, drawn full pay. I think seventy-five per cent. 
would be an outside estimate of what a man would earn for his full wage 
capacity to the end of his days. I think two-thirds probably would l)€ a 
fair estimate. 

The Commissioner : That is not accurate, I think, because in estimating the allow- 
ance it is the average earning that is taken, and that would take into account 
the possibility of sickness and holidays. 

Mr. Wegenast : I am assuming a basis of one-half wages or two-thirds wages. 

The Commissioner: It is the average wage; it is not the full wage that he would 
have earned if he had worked every hour of the year. 

^Ir. Bancroft: It is the average wa ire of the last three years. 

Mr. Wegenast: My point is if lie had gone on working he would never have gone 
on earning money at the rate he did for those three years. We can be pretty 
certain that that three year estimate would be a full earning estimate, and 
very little or no allowance would be made for holidays. 

The Commissioner: The result of the accident inay be to kill him ahead of his 


s — ■ 

Me. Wegenast : Even then you must estimate on the basis of wages, and I am 
assuming it would be on the basis of wages, whatever qualification of that 
basis is incorporated in the act. 

The Commissioner: If you want to make an Act unpopular you want to make it 
so that every employer can deduct so much every month or every week from 
his employee's wages. ^Vould that not be a source of continual friction — 
the very thing that is most important to avoid? 

Mr. Wegenast: I had thought of replying to that later on, but I may say apart 
from all logic a system of insurance as broad as that which we propose would 
meet with very strong opposition throughout the Province on the 
part of employers unless the employee contributes. For the last few 
months I have been travelling throughout the Province collecting some 
data which I propose to submit later. I was surprised and not a little 
gratified to find the unanimity of sentiment in favour of the general 
features of the proposition which we have placed before you, that 
is, the Government's Commisision, the mutual fund, and the rest 
of the general features. But there is one question which comes up, I was 
going to say almost invariably, but perhaps hardly that — it is this: how 
are the worlcmen going to contribute to this, are we going to pay for all 
these accidents and they not pay? The Government will find, apart from 
all logic, that there would be a great deal more opposition to the introduc- 
tion of an act without contribution by the workmen than to one with con- 
tribution by the workmen. 

The Commissioner: You ask the workmen to contribute to the compensation for 
injuries, forty-five per cent, of which are due to the negligence of the em- 
ployer ? 

Mr. "Wegenast: 'No. 

The Commissioner: The number of industrial accidents due to the fault of the 
employer is what? 

Mr. Wegenast: It runs from twenty-five to thirty per cent. 

The Commissioner: You are asking him to help the employer to pay that? 

Mr. Wegenast : To the extent of twenty-five per cent. 

The Commissioner: Wiliy should he? 

Mr. Wegenast: Because he is being compensated for accidents which are due to 
his own negligence. 

The Commissioner : That would be very few of the cases. 

Mr. Wegenast: It amounts to between twenty-five and thirty per cent. That is in- 
volved in my qualification of that second principle. 

The Commissioner: If that is so, why not set one ofF nfrainst the other? He ougM 
not to contribute a shilling towards bearinGT the burden of accidents due to 
the negligence of the employer. 



Mk. WiiGENAST: Yes. 

TuE Commissioner: If 2o per cent, represents that and he is compensated for 'Zo 
per cent, of the accidents due to the negligence of the employee according 
to the statistics, one washes the other. 

Mr. Wegenast: But the idea is to compensate the workmen for accidents due to 
the negligence of the employer and for those due to the inherent risk of the 

The Commissionek: I do not see why that should not be borne by tJie industry. 

Me. Wegexast: The employer as representing the industry should bear those two 
parts, but there is no justification in natural justice or logic 

The Commissionek : I think your logic is weak. If we start with the proposition 
that 50 per cent, of it should be borne by the industry through the em- 
ployer he will take care he does not pay it out of his own pocket. Then you 
have 20 or 25 per cent, for which the employer is not now liable, and if you 
make the workman contribute to that 25 per cent, for which the employer is 
liable he gets practically no benefit from the 25 per cent, for which he :is 

Mr. Wegexast: He is getting that. 

The Commissioner: Surely you should set off the advantage he gets against the 
disadvantage of the other. 

Mr. Wegenast : I do not see where tiie disadvantage is. He is getting it in every 
ease. He is getting the 25 per cent, and he is getting the 50 per cent., and 
. 'he is also getting the 25 per cent., and the proposition of the representati/es 
of the labour interests is he shall not pay for that 25 per cent. Xow, I say 
there is no justification for that. I did not intend to go into this. There 
is no justification in logic or natural justice or otherwise for the proposition 
that the employer should pay, or, if you like, the community should pay, 
for those accidents which are due to the negligence of the workmen. 

The Coi[MissiONEE : That deserves a little more consideration. It is very easy to 
say " an accident due to the negligence of the workman," but everybody 
admits our law is all wrong on the question of contributory negligence. It 
is all wrong to say because a man that is injured has in some way contri- 
buted, it may be very slightly, to the happening of the accident, he must 
be deprived of any compensation. That law is being abolished in most 
civilized countries. It has never been the rule of the Admiralty. There 
where an accTdent occurs and both ships are at fault the loss is borne 
between them. 

TklR. Wegenast: Does that not go to the question of the proportion, not to the 
principle ? 

The Co:^r:\rTSsiONER : What I am gettingr at is there are very few cases in which 
with a just law the workman would be deprived of his right to recover on 
the ground of contributorv negligence. 


'Shi. Wege^t.ast: My investigations lead me to believe that there would be more than 
25 or 30 per cent. 

The Commissioner: I should not think so. Where the accident is wholly due to 
the negligence of the workman, probably it would come within the exception 
in the British act, but under our law, as I am pointing out, if the workman 
ha,s contributed even slightly to the accident, where it would not have hap- 
pened but for his negligence, he is deprived of all compensation. 

Mr. Wegenast : I am thinking of the accidents where a man is perhaps a little the 
worse for liquor, or where he puts his hand where he has no business to put 
it. I am not speaking of the cases which arise because of the strenuousness 
of the work and the mental fag attendant upon it, where his mind is moment- 
arily called away from his work. 

The Commissioner: Juries as a rule pay no attention to defences of that kind. 
Nine times out of ten where the jury thinks the accident was entirely due 
to the negligence of the employee the employee recovers. 

Mr. Wegenast: If that were the case there would he no occasion for passing a new 
law. We are going on the assumption that where one accident is compen- 
sated or was compensated in the past, half a dozen will be compensated now. 

The Commissioner : No, the law is necessary because a man is driven to an action. 

Mr. Wegenast : Surely there must be some qualification to that. 

The Commissioner: Your experience must teach you that juries do not favour the 
defence of contributory negligence. 

Mr. Wegenast: My experience is that the Courts of Appeal regularly upset the 
verdicts. Whatever may l^e the fact it does not go to the principle. 

The Commissioner : A principle is not worth discussing, much less fighting for, 
unless there is something substantial behind it in dollars and cents. 

Mr. Wegenast: I must ask my submission to stand, that whatever are the pro- 
portions, and T think it is more than 30 per cent., of accidents caused 
by the negligence of workmen, thai a proportion corresponding to that 
should be charged to the workmen. 

Mr. Bancroft : Is it not true that the employers used all those arguments against 
the Washington act, and after eight months there were only thirty-four who 
did not carry out their duties? There were twenty-five hundred employers, 
and many of them used the same arguments, but there are only thirty-four 
who refuse to come under the provisions of the Act, and eighteen settled 
the matter after seeing the Attorney-General, and the others are coming 
into line. 

The Commissioner: You are speaking of the State of Washington? 

Mr. Bancroft: Yes. 

Mr. Wegenast: It is compulsory, except where a man wants to bring an action as 


to the constitutionality of the Act; he must pay in whether he wants to or 

Just before leaving that question of compensation in full 1 desire to 
call your attention, sir, to a reference in Dr. Zacher's article of which 1 
gave you a partial translation in part, referring to that very argument. He 
places it upon the same ground as I have, that the workmen would in no 
case, or in very few cases, earn full wages to the time of his death, and the 
other arguments that I have mentioned. 

The Commissionee : One moment there. Would not any scheme involve the 
readjustment of the compensation according to circumstances from time 
to time, as under the British act? 

Mr. Wegenast: Yes, I would think so, but I am not thinking of that so much 
as of this: A man is incapacitated; m the natural course of things he 
would have stopped working when he was perhaps sixty or sixty-five years 
of age; he gets compensation to his last day. He would not have worked 
all that time; he would not have worked during the time of non- 

The Commissioner: I think I have seen a good many men working in the ditch 
over sixty-five. 

Mr. Wegenast : You must grant that what I say is to some extent true. Besides 
that what the employers will be asked to furnish would be not only com- 
pensation against accidents, but also compensation against non-employment 
and compensation against old age. 

The Commissioner : Not if the compensation is based upon the average earnings 
of previous years. 

Mr. Wegenast: Take a man who has been earning two dollars a day. You pay 
him if he is incapacitated, we will say^ one dollar a day. Now, he gets 
That till he is sixty-five, seventy-five or eighty years old. In the natural 
course of things he would not have earned two dollars a day for all that 
time. He might have been killed or otherwise injured. He might 
have been injured outside of the employment altogether. What the 
employer would be asked to do under a non-contributory scheme would 
be to insure that man not only against the result of occupational injury 
but also against non-employment for the rest of his days, against accident 
from any other reason, against old age, and against invalidity. 

The Commissioner: You have injured the man; why should all these prob- 
lematical things enter into it, that he might possibly have been injured in 
some other way if he had not been injured in that way? The man was 
all right until he got hurt in your establishment. 

Me. Wegenast: We are not only asked to give him what he ha.s lost, but a good 
deal more. 

Mr. Bancroft: The average life of the working classes in Europe is less than 
fifty years. 

The Commissioner: But a man who is a pensioner lives for ever. 


Mb. Wegenast: That is the practical point 1 have in my miud. 

With regard to the eleventh principle I have this submission to make, 
that the compensation should be on the wage basis or on the earning basis, 
1 have no quarrel with that, but it should not be in accordance with the 
principle that has been embodied in some Acts in the form of an anatomy 
schedule, so much for an eye, so much for a tooth, and so much for a 

The LummioSIonek: 1 i^iippose ihe argument in favour of that is it makes certain 
the amount of the compensation. 

Mr. Wegenast: Yes, that is quite true. 

The Commissioner: The most logical nation, the French, have adopted that. 

Mr. Wegenast: I would not like to admit that; I thought the Germans were. 

The Commissioner : Oh no. AVhere socialism exists can there be any logic ? 

Mr. Wegenast: However, my submission is that the general principle should be 
embodied in the act of compensation according to wages or earnings, and 
that the matter of working out an anatomy schedule, if one is worked out, 
should be left for more careful consideration by the Commission. 

The Commissioner: Dealing with that matter, how is it that some insurance 
companies have adopted that principle in their accident policies? 

Mr. Wegenast: Because it costs less. 

The Commissioner: It costs less to you people then? 

Mr. Wegenast: Yes, I think so. 

The Commissioner: Then why are you kicking against it? 

Mr. Wegenast : Because we do not tliink it is the right way. Then there is this 
further: I am submitting in one part of my brief that the basic idea 
of the whole scheme is not to be an application of the old theory of the 
Anglo-Saxon law, the wergild theory, whereby a man was allowed to wreak 
so much vengeance on the man who injured him, or to collect so much 
money from him. My idea is that the idea of workmen's compensation 
or accident insurance is not to commute the vengeance which the workman 
is entitled to against the employer, but to provide a competence for the 
injured workman or his dependants, and apart from any other consideration 
1 shouki be glad to see the act consistent in that respect. Some represent- 
atives of the labour interests will discover probably that it would work out 
in some phases so as to make it slightly cheaper for us, that a man who 
has no dependants in the first place will receive no compensation. At 
least nobody will receive compensation for the death of a man who had no 
dependants, and again that a man wlio is after his injury able to earn more 
than he did before will not receive compensation, or not continue to receive 
compensation. For instance, take the ordinary case of a farmer's boy 
having his hand taken off by farm machinery, lie goes to a business college, 
or goes to school and enters a profession where he earns far more than he 
would have on the farm. We do not consider there is any reason why that 
man should remain a pensioner on the fund for the resc of his life. 


The CoAiMissioxEu: What do you say as to the proposition that there is uo 
ditfereiiL-e in the i>ritK'iple as to bearing tiie burden in the ease ol' human 
nuK-hinerv than there is in the ease of deatl maehinerv r 

Mn. Wegenast: I have dealt with that in my brief. 

The Commissioxek : Is that a falhicy? 

Mr. Wegexast: It is a half truth, which is >ouierinies worse than a fallacy. It 
is true in a sense, hut that is one of the very ihiiiu's that I have a^'ainst the 
professional risk theory. 

The Commissioner: Xow, you have had ten men doing \)\ manual labour a woi'k 
that afterwards is done by a machine with one man. The machine is 
broken. AVhose loss is that? Who pays'r 

^Ik. Wegexast : The employer. 

The Commissioxer: Ten men did that before. They aiv injured. Whose loss 
ought that to have been ? 

Mr. Wegex'ast: Yes, but the machine does not go out to the saloon and take a 
drink. T am taking thai as a type. A nuichine doe« not voluntarily do 
anything. A machine is not ca])able of being negligent. Further, the 
machine is not human; it has not any self-respect to maintain: it has 
not to be taught the duty of being careful. 

The Commissioner: That perhaps tolls against you. You have brought an active 
intelligent man who guards himself against accident, and the inachine 

!Mr. Wegex'ast : If he is a machine man there ought to be no impediment put in the 
way of his being raised to the level of a more careful man. 

The Commissioner: Would you think that anything but a small percentage, 
where the workingmen are intelligent and anxiotis to do tlte best for them- 
selves and the employer? 

Mr. Wegexast: From the experience which I have had. and I might sav T have 
had a good deal of experience myself in managing work of all kinds, nnd 
I have not referred to it because it is not my business to present mv own 
views, but that experience and the brushing np I have received during the 
last four or five months in connection with my investigations throughout 
the province leads me to believe, and confirms my belief, that a great many 
more than the proportion of accidents we bave discussed arc due absolutely 
to the negligence of the workmen. I am not si>eaking of inadvertence, I 
am not speaking of the cases where the workmen Iiave l)een partially 
negligent, but cases where the workmen have been injured bv their own 

The Commissioner : Give me a typical case. 

^Ir. Wegenast: I have a good many in my records. ITere is one: a nnm 
is working a machine, he has been told time and ao-ain not to ]iut on 
the belt when the saw is running and he deliberately docs it. 

The Co:\rvrissioxEPt : Whv does he do it ? 
7 L. 


Me. Wegexast : I tliiuk the idea in your mind is that it might be to facilitate the 
work. The employer however does not want his work facilitated in that 
particular way, and if he has taken every precaution that the man should 
not do that, how can you impute it to the fault of the employer? 

The Commissioner: Take an employer who says: Don't put on that belt when 
the machine is in operation. The man obeys instructions. The employer 
finds that the work is not as far ahead as he would like. The man prob- 
ably goes at the end of the week. 

Mr. Wegexast : That is not the general experience. I can say that with absolute 

The Commissioner: I do not mean that is a deliberate thing. The employer 
protects himself very naturally against what he thinks would be his lia- 
bility by telling the workman not to put on the belt when that saw is 
in motion. 

Mr. Wegenast: No, that is not even typical. The ordinary run of employers 
throughout this Province — I am not speaking of large corporations, but the 
ordinary run of employers — are extremely sensitive, not only in regard 
to the pecuniary feature, but in regard to the personal feature. They are 
extremely sensitive about an accident happening in their factories. 

The Commissioner: Where is your foreman? 

Me. Wegenast : He may be there, but a foreman cannot stand everywhere at once. 
Then there is this feature which illustrates what I have just been 
saying, or at least it is a sidelight on it. In collecting the data I have 
collected during the past few months I have put this stock question : 
"What was the nationality of the man?" We find that the proportion of 
accidents happening, for instance, to Englishmen is very much more than 
to Canadians. 

The Commissioner: Is that because he knows it all? 

Mr. Wegenast: Partly that, and partly because he does not know it all. A 
question will arise whether an employer who employs Englishmen will not 
be obliged to pay a higher rate. Now, that is a sidelight on what I am 
contending. There the employer cannot be blamed. 

Mr. Bancroft : I just wanted to say this, that I wish Mr. Wegenast would bring 
up the other side too. It will necessitate another three days' sitting for 
us to answer him. There is an argument that he is not judged on what he 
does during the day under present day conditions. An employer may be 
sensitive about an injury, but the man is judged by the time sheet that he 
fills in and hands to the foreman, and the cost of the work. It does not 
concern the employer. The man is there to be efficient and to make profits 
for the employer, and he is judged by liis time sheet and not on whether 
he puts a belt on his wheel when the machine is going or not. Nov^^, if 
an engine that is not governed thoroughly was to run away and the fly wheel 
be burst, which a machine does sometimes, and creates an injury that no one 
is responsible for, it should be charged upon the industry. 

Mr. Wegenast : Another type of accident, and a frequent one, is where a man goes 


, . . ^ i 

out of his department and fools around another machine or perhaps tries 
to work around another machine, which he has perhaps been told repeatedly 
not to do. I could turn up dozens of cases of that kind. 

The Commissionek : What does he do it for ? 

Me. Wegenast : Out of wantonness more than anything else. 

The Commissioner: How does he get away during working hours? 

Mr. Wegenast : You can't tie a man up under present labour conditions, as you 
could once. An employer must take the labour he can get with all its 
peculiarities and idiosyncrasies, or go without. A man will not be bossed 
or controlled as he was ten years ago, and he will use his own judgment, 
whether he strays into the moulding shop or not. If you don't like it 
he goes somewhere else. 

The Commissioner: You had better let him go. 

Mr. Wegenast: They do, but when the orders are there to be filled it is some- 
times a diflScult problem. There are a great many industries running short- 
handed now in the city of Toronto, and all over the province, and a man 
who can work at all gets work, and sometimes it is not discovered how he 
is doing it until an accident occurs. 

The Commissioner: Have you any figures to show the number of accidents in 
a particular class of manufacture or generally, that have been due to intoxi- 
cation of the workmen ? 

Mr. Wegenast: I have no figures. I have a number of instances, but I have not 
covered the field sufficiently. 

The Commissioner : Do the reports of accidents that come into the Labour 
Department show that? 

Mr. Wegenast: I do not think so. Of course if the cause of the accident is the 
man's drunkenness it is shown. I came across one case last week in Owen 
Sound, in an iron foundry there; it was the only accident thev had in 
1911. The injured man was said to be a good man and to have worked 
for them many years, but that day one of the other men had smuggled some 
liquor into the shop. Owen Sound ds a local option town, and that mav 
account for that particular method of getting drunk. At all event.=! the man 
had smuggled some liquor into the shop, and this man was under the 
influence of liquor, and was injured. I think he fell downstairs and 
injured himself rather badly. 

The Commissioner: Generally they say a drunken man will not get hurt where 
a sober man would when falling down stairs. 

Mr. Wegenast: Perhaps this man was not drunk enough for that. I could 
give you a number of typical cases such as where a man puts his hand on 
a saw. 

The Commissioner: Surely that may happien to the most careful man. 

Me. Wegenast: No, not to the most careful. ' ' 


, , 

The Com:jiissionee : But surely that may happen without any serious fault being 
charged to the man. 

Mr. Wegexast: Yes, it might happen. 1 am not thinking of a case of inad- 
vertence. I have a case in mind where it was the purest sort of carelessness. 

The Commissioner : It seems to me, from what experience I have had in trials, 
there is not nearly enough care taken by employers in large factories to 
have oversight especially over the young and inexperienced men who are 
l)ut ujjon dangerous machines. 

Mr. Wegexast: I had my finger here drilled through with a button drill when 
I was a boy of about fifteen. I was laughing and chatting with a man on 
the next machine, and I was putting these buttons in, and the drill came 
down and it went through my finger. No amount of supervision on the 
part of the foreman would stop that. 

The Commissioxer : Perhaps not. These stamping machines where a very little 
motion on the pedal, or a man putting in his hand to take out a piece of 
tin, those are the most frequent causes of accident. Generally the 
evidence on the part of the workman is that the machine was out of order 
and tripped itself ; for the defence that the boy must have put his foot upon 
the pedal, which he might do quite unconsciously. 

Mr. Wegexast : I quite admit that. I am not thinking of those accidents. T 
would ascribe those to the inherent danger of the business. That reminds 
me of an accident of which I got particulars at Niagara Falls. A man 
there was working one of the punch presses in a jewellery factory and was 
changing the dies on a machine. The employer had put a very good type 
of guard upon that machine which would make it absolutely impossible 
for the punch to come down Avhile the dies were being changed. It was 
no trouble, or at least it only meant a moment for a man to put that guard 
on while the die was being replaced, but the man deliberately changed the 
die without the guiard. 

The Com:\[issioxer : Deliberately or thoughtlessly ? 

Mr. Wegex'ast: Deliberately. The factory is a small one and the manager gives 
personal supervision. The manager came out and caught the man changing 
that die without the guard and he instantly discharged him. Now, I 
think that is a fajir type of the action of employers in cases of that kind. I 
could tell an incident in Mr. Bird's factory, and he would know at once the 
condition. I think it is a fair type. Then speaking of accidents due to 
carelessness, if you will permit me, I remember when I was a boy about 
ten I went into a factory in the dark and wishing to see whether a certain 
saw was running I deliberately touched the saw. 

The CoMinssioxER : You must have been a very bad boy. 

Mr. Baxcroft: I think he is judging these things from the accidents he ha? had. 

Mr. Wegexast: I have numerous instances of these accidents. 



The Legislative Building, Toroxto. 

Tuefidaij, 6ili August, 1912, 2.15 p.m.. 
Present: Sir William E. Meredith, CoriDnissioner. 
Mr. F. X. Kennin, Secretanj. 

Me. Wegenast : I have a few instances of accidents before me. I do not know 
that they are of any real value, but they bear upon the discussion this 
morning. In Hespeler a man bored through his finger. He just wanted 
to see if the bit would cut flesh; he wanted to try it. That wras absolutely 
the case. Another one in the same factory working on a saw put his hand 
under the table to get out some sawdust, a thing he should not have done. 

The Commissioner : I suppose in the first case it would not be an accident arising 
out of his employment or in the course of his employment? 

Me. "Wegenast : Here is another one who sawed off part of his thumb. He does 
not himself know how he did it, nor does his employer. Here is a case of 
a fellow employee struck by a piece of wood from a saw operated by another 

The Commissioner: There is no reason why that man should not be compensated. 

Mr. Wegenast : Here is one where a man had three fingers cut off by a trim saw. 
He does not know how it happened, but he had no business to be at that 
saw; it was not his work. Then here is another one, a man working on a 
shaper who had his finger lacerated because the pattern wasn't in proper 
condition. It was his work to take care of the pattern. Here is another 
one, a man had the point of his finger taken off in scuffling. I do not 
know what machine that was. Here is the case of a man who had his 
head cut open by a board falling off a truck that he was shoving into a 
dry kiln. Here is the case of a man who had the end of his finger taken 
off by sticking his finger in the back of the machine. 

The Commissioner : There is a case in the last weekly note? of a workman who 
was expressly forbidden to get flint in a deep trench in a quarry which was 
known by the employer to be dangerous. His instructions were to work 
on the surface of the quarry. In disobedience to orders he worked in the 
trench where flints were more easily gotten, the earth fell in on him and he 
was killed. On a claim being made the County Court judge held that 
the accident arose out of the course of his employment. The Court of 
Appeal reversed the decision saying the evidence was clear that he was not 
employed to get flint in the trench, that he was expressly warned not to do so. 
He went into the trench to get more flints and so earn more money. They 
held it did not happen within the sphere of the employment. 

Me. Wegenast: Xow, we would compensate that man, partly because of the 
expense of deciding in individual cases the question of liability, or the 


t_ — __^ , _ — _— — ' 

question of whether he was entitled to compensation or not. I mean to 
say of course that is not really within the sphere of the employer's oblig- 
ations either individually or collectively, and we say moreover that if it 
should be determined that the employees are not to contribute it would be 
necessary for us, so far as we are concerned, to withdraw our acceptance of 
the second principle, that is the principle of professional risk, and to 
ask that the act cover only such injuries as occur because of the negligence 
of the employer or the inherent hazard of the business, and leave it for the 
Commission or tribunal to determine in each case whether it came within 
those bounds. 

The Commissioner: I should think that would be very unsatisfactory. 

Me. Wegenast: We think so too. 

The Commissioner: Perhaps I am not getting exactly your idea. If there 
was no fault whatever on the part of the employer and it was not an 
accident incident to the business, but due wholly to his negligence, perhaps 
that would be a different thing. 

Me. Wegenast: That is what we submit. Now, we think, looking at the problem 
as a whole, it would involve so much unpleasantness in each case that it is 
more desirable to compensate all, but that does not get away from the 
injustice of throwing the burden upon the employer entirely, and the 
obvious injustice of giving a man compensation when he is not deserving. 
I have a great many more of these notes, but I do not suppose it is 
desirable to take up time giving them. I have one right here before 
me of a man who had his arm broken in attempting to throw off the main 
belt, contrary to orders. 

Me. Banceoft : What Mr. Wegenast is giving us is the employer's side of the story. 

Me. Wegenast: These are from confidential information collected by me. 

Mr. Bancroft: If you want to put those things into the record we will have to 
investigate them and get the man's story. 

Mr. Wegenast : We would have no objection to that in some cases. We would 
ask the employers' leave to let you have the facts, but tliey are. got under 
such circumstances that there is no object in the employers concealing facts 
at all, and the only contingency that you have to reckon with is my exagger- 
ating them or falsifying them. 

Mr. Bancroft : The employer has a different idea usually from what the man has. 

Mr. Wegenast: This is not the kind of report you would get if there were a 
lawsuit on. In that case there is always room for a difference of opinion, 
but these are off-hand confidential reports as to how the accident really 
happened, and of course are reports of accidents the large majority of which 
never went to law. 

Now, in regard to the whole character of our scheme, which is in one 
sense a form of state insurance, I desire to point out that the whole trend 
of events in the United States, as in otlier countries, is towards the system 
that we propose as a final solution. In Illinois only a little over a year 
ago an individual liability law was adopted, and already the employers 



have made representations to the Legislature asking for some form pf 
collective liability. The Commission of Michigan anticipated a, demand of 
that kind, and gave leave to the employers to form mutual insurance 
societies. In both states the recent developments show that in all prob- 
ability a state insurance system will be adopted before very long. The 
same is true, with variations, of a large number of other states. I have 
here a recent report issued only a month ago, on the 10th and 11th July, 
a preliminary report of the State Bar Association of Indiana, v^hich con- 
tains one of the clearest summaries of the whole problem of workmen's 
compensation that I have seen. I think, Sir, you will be interested 
in looking over a couple of pages of the article. The rest of the book is 
of no value, but as a general sketch on workmen's comp'ensation I have 
seen no better, and the leaning is towards a system such as we propose. 

Me. Baxcroft: Indiana has no Compensation Act? It is purely an Employers' 
Liability in Indiana. 

Mr. "Wegekast: If there is any one point I would like to emphasize more than 
all others it is this, that so far as we are concerned these principles and 
our recommendations are interdependent, mutually dependent. We could 
not support the general proposition if any one of half a dozen or a dozen 
features were altered or were contrary to our ideas of the general scheme. 

The Commissioner : In other words, your propositions are like the laws of the 
Medes and Persians. 

Mr. Wegenast: Xo, not at all. They stand or fall together, is the idea I have 
in mind, in the essential features. There are a great many features in 
which our minds are quite open and as to which we are prepared to adopt 
any reasonable suggestion or compromise, but there are a number of main 
features which must be taken together, and the elimination of any one of 
these would mean, so far as we are concerned, that we could not support 
the general proposition. 

The second proposition, as I have already said, is dependent on certain 
qualifications, to our minds, and is also dependent on the acceptance of the 
sixth principle. We would not, in other words, accept the principle of 
professional risk if it were not proposed to make the remedy exclusive and 
relieve the employer from further litigation and further forms of insurance. 

The Commissioner: Will you repeat that, please? 

Mr, Wegenast: We would not accept the principle of professional risk, that is 
the principle of compensating in all cases regardless of negligence, if the 
employer' were to be left open to further actions and further litigation and 
further calls for insurance. That is the way our members look at it, 
practically. They say what is the use of going into this insurance 
scheme if we are to be liable to actions on the part of our employees 
outside of it. That feeling is very strong. On the other hand. I might 
remark once more there is a very marked unanimity in supporting a general 
scheme of having the whole thing handled by a Commission, and taken out 
of the courts. 

Then speaking of the fourth principle, that is that the compensation 
should be periodical rather than in lump sums, it is of course practically 


> • 

dependent on the adoi^tion of a state liability system. It is almost un- 
thinkable to introduce a system by which an employee who is injured would 
become a life beneficiary upon his individual employer. The attempt was 
made in tlie British act, and one cannot but be astonished that the British 
Parliament should not have more carefully weighed that feature of the 
Act. Under the British act, a domestic servant, a gardener, becomes a 
pensioner upon his or her individual employer. It is true there is a pro- 
vision for buying annuities, but it is not compulsory, and the facility is 
largely ignored. Only a few weeks ago a man was injured who was working 
for me. He happened to be working out of the course of his employment, 
but he had his arm taken oS. If we had a system of individual liability 
under a periodical payment plan that man would be left a pensioner on 
my hands for the rest of his life, and the rest of my life. Here again 
comes the obvious reflection that compensation under such a periodical 
pa3^nent system would depend on solvency, and, in fact, the existence of 
the employer. 

Then our recommendation — and this is a very important feature of 
our proposition and one which I desire particularly to place before 
you before your projected trip abroad — our recommendation of a 
State administered system is dependent upon the adoption of the current 
cost plan. In other words, if the current cost plan of insurance is not 
adopted or sanctioned, or in fact assured in the Act, we would contend 
and as far as possible hold out for permission to organize our own mutual 
insurance associations. The current cost plan presents to us two principal 
advantages. It saves us expense, it makes insurance cheaper at all events 
in the initial stages, and we believe a good deal cheaper at every stage. 
Then it apparently tends more than any other influence to lessen the 
accident rate. If we were concerned only with the latter feature we could 
well afford to form our own mutual insurance systems and shut out tliose 
members who were not careful, and thereby reduce the rate to the lowest 
minimum. If we were concerned only with the cheapness we could form 
our own societies and by careful selection reduce the cost very much. For 
instance, take the woodworking class. If planing mills were piU into the 
same class as furniture factories there is no doubt that the rate would 
be materially raised. If the smaller manufacturers are brought in in each 
class there can be no doubt the rate would he heavier than they would be 
in the larger and more highly organized industries, and for that reason 
we would wish to be left to organize our own societies and to leave the 
dearer risks, of course, to be otherwise insured, or under an individual 
liability system, not insured at all. 

I may at this point refer to a suggestion, little more than naive, on the 
part of the liability insurance companies in the United States, that State 
insurance institutions should be instituted, .but for the purpose of taking 
the risks which the stocks companies and the mutual companies will not 
accept. In working out our proposition, we naturally took the view that 
if the State or Province went into the insurance business that they would 
want the good business as well as the bad business, and we assumed that 
would appeal to you and to the Legislature. For that reason, and 
because we believe on the whole the adoption of the current cost system will 
tend to lessen the number of accidents, and tend to conserve the efficiency 


of labourers, we decided it would be better to go into an all-inclusive com- 
pulsory scheme. I think in that respect our stand is rather unique. I 
know no manufacturers' association in the United States has taken any 
such stand, but I think I can claim for ourselves that we have tried to 
make our propositions perfectly fair and open, and it is in pursuance of 
that policy that we advocate a compulsory system which will include all 
employers in their respective classes, instead of allowing them to insure 
themselves or form their own organizations. 

The Commissioxer : I suppose you have read this book you gave me? 

Mr. Wegexast : I have looked over it slightly. 

The Commissioner : There is one point they make here which is perhaps apropos 
of wdiat you have been saying. They say a hard and fast rule applying 
alike to all occupations and industries however diverse and however great 
the differences, and the amount of damages to which the particular employees 
would be entitled would vary so much, that in many instances it would 
create a great injustice. I do not know "whether that is founded on the 
hypothesis that there would be a uniform rate. 

Mr. Wegexast : I think that is likely. 

The Commissioxer : Then it says that a young man with Ms life before him 
might receive the same wages as an old man whose life is already spent, 
and to fix one measure for both would be an injustice. - 

Mr. ^YEGEXAST : That seems to be assuming a lump sum basis. 

The Commissioxer: If he only got his monthly or yearly compensation based 
on his then wage then the same principle would apply. That is the way 
it is now. Suppose you made the employer liable irrespectively of any of 
these common law defences all the man could receive would be the 
pecuniary loss he sustained by reason of the injury. I suppose that would 
take into consideration though the prospect of his having higher wages as 
he progressed in life in his occupation. 

Wr. Wegexast : That feature comes in more particularly where the injured person 
is an infant. 

The Commissioner: Xo, take a young man starting. He is probably a wiper 
in the shop getting very small wages. In the ordinary course of things 
he would get on to be a fireman, and then a locomotive engineer. Xow, 
all he would get would be compensation based upon the wage he was 
receiving as a wiper. That is the point these people are making. Under 
the present law if he was being compensated the jury would take into 
consideration what his probable earning power would be. That is at com- 
mon law. I am not speaking of compensation because that is admitted 
to be three years. 

Then this goes on to say, '^so it has occurred to some of your Com- 
mittee .... that any uniform compulsory plan could not be worked out, 
even if it were constitutional, to produce just results." That is an attack 
upon your scheme. 

Mr, Wegexast: Yes, it is pro tanto in favour of an individual liability system 


I- __— _— ^_^_^_^_^_ 

coupled with the principle of adjusting the loss in view of all these cir- 
cumstances you have mentioned. 

The Commissioner: It is against that plan, and then it is against your views 
about the employee contributing. It goes on to say, "The insurance of 
course is a charge upon the work manufactured or the service rendered and 
in the long run it is finally paid by the public using the product or receiv- 
ing the service. It matters not who pays it in the first instance, but it 
should be a matter of very great importance that the employee should be 
compensated and there should be no friction .... and employers will 
find it as necessary to insure their employees as their plant." 

Me. Wegenast : Of course that comes back again to the collective liability, or 
some other form than individual liability. 

The Commissionee : Still the basic principle, according to the view of this Com- 
mittee is, that the burden should be borne by the empoyer. 

Mr. Wegenast : That does not go far enough. It would be borne entirely . by 
the public if it were thrown on the workmen. The trouble is the workmen 
will not insure, and the employer having the facilities is supposed to do 
it for him. 

The Commissionee: Oh, I don't know. 

Mr. Wegenast: Now, the recommendation of the State system is also dependent 
on the adoption of our recommendation with regard to the personnel of 
the Commission. 

The Commissioner: In popular parlance you want the earth and a little more. 
Do you want to name the Commission? 

Mr. Wegenast: No, we do not want to name the Commission. It is a delicate 
subject to discuss, but my instructions are to place our views before you 
in such a way that there can be no mistake as to what they are. Our idea 
is that the Commission should in the first place be removed as far as 
possible from partisan influence. 

The Commissioner: Where is it going to live? In heaven? 

Mr. Wegenast: We say "as far as possible." We know there are Commissions 
in this country that are outside of politics, to use a popular expression. 
We know there are Commissions that are not outside of politics. We desire 
without analysing terms too closely to have this Commission outside of 
politics. I state in my brief it should be independent of the ExecutTve, as 
independent I may say as the judiciary. Apart altogether from our con- 
stitution there would be no thought of having the judicial functions under 
the control of the Executive, and our idea is that this body should be a 
quasi judicial body. It will exercise judicial functions of the gravest im- 
portance. Without elaborating upon the suggestion at all, we suggest that 
the head of the Commission might well be selected from the High Court 
juflioiary, and we submit that the rest of the personnel should be con- 

We go further, we suggest that the salaries of the Commissioners should 
be not less than $10,000 a year, and preferably more. It seems going a 


little far into detail, but I thiiik you will appreciate just what we have in 

The Commissioner: I suppose it follows that you would be quite willing that 
the salaries of the Commissioners should be part of the cost payable by 
those who contribute to the fund? 

Mk. Wegexast: We do to this extent — 

The Commissioner: Because, I fancy, any such proposition would not go down 
in this Province if the Province had to meet the expense, 

Mr, Wegexast : We say the Province should contribute a portion of the expense, 
approximately representing the cost of administration. We do not think 
the salaries of the local officials should be paid out of the provincial funds. 
We think they should be paid by the Commission out of the Commission's 
funds. It would be to the interests of the Commission to conduct the 
insurance business with the smallest margin of waste, and if the proper 
parties are selected I have no doubt that great care would be exercised in 
that regard. 

But what I was going to say is this, that if the Government 
appro)priates a certain amount as representing approximately the cost 
of administration, we would be quite willing to have a portion of the salary, 
or such portion as the Government thought it should not be called upon 
to pay, charged back on the general fund, or perhaps even the whole of 
the salary charged back on the general fund, if that were any object. We 
think that these men who will be handling millions of dollars of money 
will be in a position to save a great deal more than their salaries by 
careful management. 

The Commissioner: Let me see how far your proposition goes. It will be 
necessary probably that this Commission should be invested with power 
from time to time to change the schedule of rates. 

Me. Wegenast: Yes. 

The Commissioner: So as to adjust them according to experts' findings. I do 
not think any legislature would be willing to hand that over to a Commission 
without some control by the executive. 

Mr. Wegenast: Of course everything is in the control of the legislature, but out 
of the control of what is called the Administration or Executive. We would 
not want the fixing of the table of rates discussed in the Cabinet. 

The Commissioner: That would be opposed to every principle of responsible 
government, that a nominative body should practically impose a tax upon 
the people, 

Mr, Wegenast: I think not. The only tax they could impose would be the 
exact cost. 

The Commissioner: But the burden of distributing that or the distribution of 
that cost, is the important thing, and my own notion would be that any 
revision of that kind ought not to become operative until sanctioned by 
the Lieutenant-Governor in Council. 


Mil. Wegenast: What I would suggest, but nor having thought it over fully I do 
not want the suggestion to be taken as- final, I would suggest that the classes 
be fixed by the Legislature — that is the woodworking class, the agricultural 
implement class, and so on — but beyond that I think the matter of adjust- 
ing rates within the classes is a matter for the Commission. 

The Commissioxer : What possible partisan motive could come in in considering 
and determining any such question as that? I could understand tbat 
partisan considerations might come in in dealing with claims, perhaps 
favouring somebody that was a friend of the Government, or bad friends 
with the Grovernment, and it would be well that they should be outside 
altogether; but a large question such as I have suggested, and a very 
important question too, I do not see how partisan influences or considera- 
tions could enter into it. 

Mr. Wegexast: We are more afraid of partisan influence entering into the rates. 

The Commissioner : How so ? 

Me. Wegenast: Suppose you take the agricultural implement industry in which 
there are a number of large concerns. One prominent manufacturer said 
to me : '' I don't want to be put in the same class with so-and-so because they 
employ a great many foreigners." 

The Commissioner: In the same class of manufacture? 

Mr. Wegenast: Yes, but this one industry makes a practice of employing a great 
many foreigners, and the other plant has none. Now, he said to me — and 
this is one of the actuarial problems which will have to be taken up I 
suppose — " I don't want to be in that class." 

The Commissioner: You could not have a class based upon his notion. 

Mr. Wegenast: Now, that institution is a very powerful institution. 

The Commissioner: It would not be as powerful as the rest of the institutions 

Mr. Wegenast : But if these matters were discussed in the Cabinet there might 
be a stockholder of tliat Company in the Cabinet, or one close enough to 
the Government to make his influence felt, and I would answer your 
question by asking another question : What possible harm could uome by 
leaving this to a Commission of the type I have mentioned? 

The Commissioner: Because this would be an irresponsible body. Whatever 
Government is in power is responsible to the people. 

Mr. Wegenast: I quite recognize that, jDut the argument as to responsibility is 
quite as important in the case of the Uailway Board and in the case of 
the Hydro-Electric Commission. 

The Commissioner: But the Hydro-Electric does not do anything like this. It 
has an entirely different kind of work to do. I quite follow your argument 
as to the judicial side of it, that should be independent as the courts should 
bo. Tlie question of the employment of the stafF and all that should be 
in the uncontrolled discretion of the Board, but when you come to the 



question of determinmg the incidence of the taxation, at present I do not see 
how it would be justified to leave it to that Board without controlling that 

Mr. Wegexast : Of course the Board would be under this measure of control that 
the Commissioners would be removable from office. 

The Commissioner: That would be a pretty drastic move. The court never fixes 
the tax any man has to pay. 

Mr. "Wegexast : Xo, but it assesses the damages. 

The Commissioxer : I am with you on that. The Commissioners to be uncon- 
trolled in that respect would be my view. 

Mr. Wegexwst : When you come to look at the practical aspect the position is 
perhaps a little clearer. I have suggested in my brief that a rate should 
be levied during the first three or four years which would gradually build 
up a reserve fund and render it unnecessary to assess in anticipation of 
the year's outlay. I would like to withdraw that for another suggestion 
which appeals to me as being better. I would suggest that the Commission 
make first on the date the Act goes into force a preliminary assessment err 
the basis of as good an estimate as can be made of the year's outlay in 
the different branches, and then the fund raised by that preliminary assess- 
ment to pay all the claims for that year, but after that time to assess 
retroactively. You would have your fund to start out with without the 
Government putting up a large amount, as was done in the case of some 
Acts, and you would have the whole system worked out absolutely on an 
assessment basis. Xow, when you come to that where is the room for 
supervision on the part of the Executive? It is a simple matter of assess- 
ing the cost of accidents. 

The Commissioxer : Xo, that is not what I have been referring to. You have 
got your provisional rating, as you may call it, operative for the first year. 
During that year careful consideration will have to be given to making 
analyses, and to fixing the rates for the different employments. Xow, those 
rates must necessarily be subjeci. to readjustment as circumstances show 
that readjustment ought to take place, and Avhat I am suggesting is that 
I do not see at present how it would be proper to recommend that that 
first rating should become operative without the sanction of those who 
represent the people, or that any changes in the mode of rating, or in 
the classes into which the employers are divided, should be made without 
a similar feanction. 

Mr, Wegexast: I think you assume there a jnore diversified rating than we had 
in view. I see no reason why all the manufacturers of agricultural imple- 
ments should not be thrown into absolutely one class to begin with. 

The Commissiox^er : You would have the separate classes necessarily depending 
largely upon how far reaching your measure is? 

Mr. "Wegex'Ast : Our idea is when it comes to the end of the year the expense 
of compensating for accidents which have occurred in the agricultural 
implement class will be assessed on that class without discriminating. Our 


idea is that the special classification and "the rating within the classes may 
well be left to a later stage. 

The Commissioner: Assume for a moment such a concern as Eaton's is brought 
into it. They have clerical and manufacturing branches. Ther6 is a 
greater risk in some branches than in others. They could not all be lumped. 
You could not charge the same rate to provide compensation for a shop 
girl as for a man who was employed at a machine in the factory. 

Mr. Wegenast: I grant you there are difficulties there, and there will be diffi- 
culties no matter how the adjustment is made, but roughly my contention 
i.> that a concern like the Eaton Company should be divided up into its 
component parts. For instance the tailoring establishment, the establish- 
ment in which clothing is manufactured, should be rated with the clothing 
manufacturers. The retail end of it would go in with the retail dealers 
generally, if they were included in the Act, and so on with the other 
departments. The clerical end would be in with clerical labour, if that 
is included in the scope of the Act. It would have to be proportioned 
amongst those different departments. Eoughly I think that makes a prac- 
tical solution. We have the same thing occurring in a great many other 
manufacturing concerns. We have the same thing in the lumber business, 
for instance. I spent a day last week in Owen Sound, looking into the 
accident record of a number of companies there, and a number of new 
problems came before me. One concern there runs a very large planing 
mill. In addition to that it has a lumber yard, both wholesale and retail, 
and it has three saw mills, several lumbering camps, together with a couple 
of tugs to operate that end of it. Now, when I came to classify them and 
estimate the number of accidents in each department it was a very difficult 
thing to do, but there must be ways of doing it. It is a matter of segregat- 
ing them in some way. That is one of the difficulties iu the system. 
Under such a system where the cost is assessed on the persons in a class 
tliere is no room for any supervision of the rates. 

The Commissioner : Then your argument is destroying a proposition you assented 
to a moment ago, that there would probably be a necessity for readjust- 

Mr. Wegenast: Yes, but I think that is a matter for consideration after say at 
least a year's experience. 

The Commissioner: Oh, that may be. 

Mr. Wegenast : Anotlier point which strikes me, in which we are very much 
interested from the standpoint of accident prevention, is this: You put 
the different manufacturers of agricultural implements together and charge 
them all the same rate and one will say, "Why, we didn't have any accidents 
and look at that rate, and so-and-so had a lot of accidents, why should 
we pay that rate?" We are prepared for a good deal of irritation amongst 
our own members, but still, in the popular phrase, they have got it coming 
to them. If one employer has a great many accidents and another employer 
has not there is something wrong, and I may as well at this stage advert 
to a part of our proposition tliat I intended to mention later. On our 
part as manufacturers we propose to organize voluntary associations or 


- f 

sections, or whatever you like to call them, for the purpose of dealing with 
accident prevention within the different groups. I hope mj-self to organize 
the different industries represented by the Manufacturers' Association. 
Take, for instance, the furniture industry; I hope to call a meeting of the 
furniture men when the act goes into effect. I am advocating in the latter 
part of my brief that any such association may be empowered to appoint 
inspectors to be paid out of the general funds of that group, and possibly 
expert draftsmen of machinery. The association might make rules, and 
these rules might be sanctioned by the authority of the Board, the con- 
stitution of the association in each case being approved by the Board. The 
whole scheme would work out a good deal like the German system, with 
this exception, that instead of collecting the money the employers' associa- 
tions would simply exercise the other functions of the German associations. 
As an incentive to the organization of those associations and an incen- 
tive to accident prevention I think there can be nothing stronger than that 
discrepancy in the rates — that initial discrepancy- If the system were not 
to be conducted on the current cost plan of course the discrimination would 
be too violent. There is another case of interdependence. Under 'the 
current cost plan the rate vdll be very little higher than it is at present, 
and in some cases perhaps lower at the initial stage. The man who finds 
that he is paying for his neighbour's accidents may well consider that if 
we had not this scheme we would have perhaps another scheme under 
which he would pay a great deal more. 

The Commissioner : The railways are not in j'our association, I suppose ? 

Me. Wegenast : No. I would like to say in that connection in anticipation of a 
possible demand on the part of the railways, or possibly some other large 
institutions, to be excepted from the general scope of the Act, we submit, 
although it is not our immediate concern, that that would be inconsistent 
with the general plan. In that connection there are a number of phases 
to be considered which make it a matter of very grave consequence. 

The Commissioxer : If the scheme were made applicable so far as the question 
of liability, the Board determining the compensation to be paid, and requir- 
ing it to be paid by the railway company, would there be any objection to 
omitting them from the classes that are to contribute to the fund? 

Mr. Wegenast : Not from the Manufacturers Association, but I should think 
from every consideration, in view of the success of the whole system — 

The Commissioner ; You see the difference they will probably point out is that 
there are practically but three railway companies, outside of these surface 
roads and radials in the country, and that they are well able to pay all 
their liabilities. They may say that there is no object in compelling them 
to contribute to a fund as far as the workmen are concerned. 

Mr. Wegenast: I entirely and emphatically disagree with that; as I say, not 
only on behalf of the Manufacturers Association, but discussing the thing 
in a general way — I think there would be trouble with the Manufacturers 
Association too, if the railways were excepted from a scheme of that kind. 
I know of a number of large institutions who would also want to be excepted, 
who are also quite able to pay. There are a number of small railways 


which are not able to stand alone. There is this which Avas not sufficiently 
cons.idered, I submit, with perhaps some temerity, in the drafting of the 
Federal act of the United States. I think Mr. Dawson mentioned it to 
the Commission, but apparently it did not receive any consideration at 
all. If in the first place you allow any exceptions, as for instance a rail- 
way, that means that the railway runs its insurance system on the current 
cost plan, or that it capitalises. Now, I do not believe there is a single 
railway in this country or on this continent that would consent to capitalise 
its losses by setting up adequate reserves. They would say: "We are large 
corporations and we are solvent, and there is no necessity for setting aside 
this fund.'"' 

The CoiiMissioxER*: I do not think j^ou quite follow what I was suggesting. If 
the}^ are called upon as accidents happen to pay the amount assessed by the 
Board, what difficulty would there be about that? 

Mr. Wegexast : "Well, it would be a periodical amount, and your idea .is they 
would pay each year the amount. Xow, that would mean they would get 
off on a current cost plan to start with without the interdependence among 
the railways that exists aniong the different industries. 

The Commissioner: Is that not a concern of their own rather than of the other 
industries ? 

Mr. Wegexast: ISTo, it is a concern of the beneficiaries. Take any railway, no 
matter how large, it accumulates a class of dependants, and these dependants 
may live, thirty, or forty years after the accident has happened. 
The pensioners will therefore accumulate in numbers to say for thirty-five, 
or forty years, or a time when the dependants reach the peak load, as it 
were, and what is there to guarantee that that railway will be in existence 
and able to pay. 

The Commissioner: If they are weak sticks how much stronger do you make 
it by putting three weak sticks together? 

Mr. Wegexast : It is surely an axiom that three weak sticks will hold more than 

The Commissioner: Well, I don't know. 

Mr. Wegenast: There is a better answer. Take a concrete case of railways "A'* 
"B'^ and "C". Railway "A" goes on running for twenty-five years and then 
sells out to railway "B." It is hardly conceivable that the railway would dis- 
appear in its corporate capacity. It would be either merged in anotht^r 
railway or would be sold out to a new management. Xow, what provision 
can be made which will guarantee the dep'endants of a railway like, we 
will say, the Illinois Central, Avhich is in a chronic state of insolvency and 
receivership? What guarantee would the dependants of the Illinois Central 
have that their claims would be paid? 

Xow, there is one way of creating a guarantee, but the remedy in 
that case is worse than the disease, namely, to make the claims a lien upon 
the assets of the railway. 

T'HE Commissioner: There is no power to do that in this Province, with a 
Dominion road. 



Me. Wegenast: Then they would be up against it at once. 

The Commissioner: What they suggest is, I think, that they be left out entirely, 
left to their ordinary liability. * I understand from Mr. MacMurchy that 
they are content to abolish the defences of common employment, of assump- 
tion of risk, and of contributory negligence, and to foot the bills themselves. 

Mk. Wegexast: It makes an individual liability system of it with the circuity 
of obligation and liability, and it makes an invasion of the general prin- 
ciple. Otherwise I would have nothing to say. I should imagine the 
employees of the railway would have objections that do not lie with me 
to urge. My objection is if an exception is made with the railways an 
exception should also be made in the case of large industries, and the 
whole scheme would become honeycombed. 

The Commissioner: There are so few of these railways and they are such a 
separate class, as it were. There would be another difficulty in working 
it out, and that is these interprovincial roads, and men living in Quebec 
or in Xew Brunswick, or living somewhere else, and operating a train in 
Ontario. How are they to be dealt with? 

Me. Wegenast: We have that same difficulty. I suppose we have in the 
aggregate more employees affected that way than the railways have, men 
employed as travellers, or contractors and builders, and so on. The con- 
tractors and builders will have that come up, but there are ways of adjust- 
ing that simply by having the employees listed in one province or the 

Mr. Bancroft: The Illinois Central illustration would hardly be a fair one. 
For instance if a railroad in Ontario was in such a chronic state and were 
to be merged, if they came into a workman's compensation act and paid 
their taxation as every body else on a current cost plan, would not the 
taxation go on just the same if the railway were merged upon the total 
wage-roll during the year? What difference would it make? 

Mr. Wegenast : I am afraid Mr.. Bancroft does not realize where his remark tends. 

Mr. Bancroft: Tell us why any Ontario railway should not come under the 
same act as any Ontario industry? 

Mr. Wegenast : I do not see any reason. 

Mr. Bancroft: Will you point out the difficulties of the situation? 

The Commissioner: He is pointing out that if there were individual liability 
there would be a difficulty. 

Mr. Wegenast : I am pointing out it would be an evasion of the general principle 
if the railways were allowed to stay out of the act. 

Mr. Bancroft: Exactly. 

Mr. Wegenast: There is one matter that has been mentioned to me by Mr. 

MacMurchy which the railways seem to consider as being an obstacle to 

their coming under the act, and that is the provision of the Eailway Act 

which makes the railways liable for injuries due to their negligence. Xow, 

8 L. 


ray suggestion is that the Dominion Government probably would be glad 
to amend that section so as to overcome that difficulty. 

The Commissioner: What section are you referring to? 

Mr. Wegenast: I do not remember the number of the section. It makes the 
railways liable for negligence expressly. 

The Commissioner: There is something about oil cocks. 

Mr. Wegenast : No, it is a general provision imposing liability upon the railways. 
I should think the Dominion Government would be glad to amend that 
section by introducing a provision under which, if the Governor-General 
in Council were satisfied that in any Province adequate provision had been 
made under the provincial laws for dependants that section should not 
apply — 1 do not see any diificulty there at all. However, we are not con-i 
cerned with that except as it constitutes an invasion of our general proposi- 
tion, which we think is fair enough to include everyone. I cannot help 
thinking that the railways are not properly appreciating the diificulty atten- 
dant upon insuring against insolvencies. 

There are more than three railway.-. Take the Pere Marquette. It 
also is in a chronic state of liquidation. Would the employees of the Pere 
Marquette be satisfied to have that railway assume the burden of compensa- 
tion on the current cost plan without capitalization? There are only two 
alternatives, either each accident must be capitalized and a reserve set up, 
or there must be something of a lien on the assets of the company. 

The Commissioner: In other words you propose to put the buiden of compensa- 
tion payable by a company that is weak and breaks down upon the other 
railway companies? 

Mr. Wegenast: Yes, and perlmps to make the burden of compensation rest on 
all the railways collectively just as in the case of the manufacturers, on 
all the railways collectively on the assumption that if one railway goes 
into liquidation or goes out of business the rest of the railways will be 
there to gobble it up and continue its operations. That is much more 
certain than it is in the case of a manufacturing concern. 

The Commissioner: I should have thought that probably Avhat Mr. Bancroft 
suggested is much more likely. It requires legislation to allow another 
company to take hold of an existing one, and no legislature would allow 
that to be done without the new one assuming the liability of the old one. 

Mr. Wegenast : There is something in that. 

Mr. Bancroft: I think Mr. Wegenast pointed out, when you mentioned the 
matter of the law of the Modes and Persians, that they would like the 
weak manufacturers or the manufacturers who had a great number of 
accidents to be insured individually under a liability system, and the 
manufacturers who were strong and where accidents were prevented to pay 
insurance into mutual organizations, and so on. The arguments he used 
for the manufacturers it does not seem he would use for the benefit of the 
railways. The arguments he is using on behalf of the railways in the 
event of one railway being in a chronic state of insolvency and having 


to be merged in some other organization or some other institution, that 
they should assume all the liabilities, by legislation as you suggest, surely 
that argument would apply to the manufacturers also. That is what we 
are trying to get at, that where there is a manufacturer who is weak and 
may become insolvent that the fund shall be contributed to by the em- 
ployers as a class. 

Mr. Wegenast made many explanations that if it was not operated 
in one particular as he wanted, the whole thing, as far as they were con- 
cerned, would break down. That is merely saying if the case of the 
manufacturers is not placed in the legislation just as he has stated then 
they do not agree to the propositions submitted in any other way. 

Mr. Wegexast : It must be properly qualified. If we are not to have the advant- 
age of the current cost plan then we want to have the advantage of com- 
bining in our own Association. That is all I have to say with regard to 
that. I suppose it would follow that the railways would want the same. 

Mr. Baxcroft: There is a question I would like to have answered. In the event 
of the railroads being considered in this proposition, is it illegal to place 
a lien upon the propert}' of a Dominion railway? 

The Co:\tMissioxER : Yes ; the Province has no power. I think not. 

Mr. Wegexast: Then I point out in their practical outcome the twelve principles 
we have enunciated nearly all depend upon or point to such a collective 
system as we propose. In the matter of solvency, in the matter of periodical 
payments, in the matter of permanency, in the matter of economy, and 
so on, every one of them point in the direction of the collective system. 

■ As I have stated I have been out through the Province, and my 
assistant also, as time permitted, and we have tried to collect some statistics 
which we think would be of value to you or to the Commission in the 
framing of tlie rates, and possibly be of value in framing some of the 
features of the system. I made it a point to discuss the matter with the 
employers and, as I have stated before, witli scarcely an exception the 
system which we have proposed is endorsed, with of course these quali- 

In one of the sessions, Mr. Commissioner, you asked a question which 
I was to consider, as to wiiether it would be feasible or desirable to have a 
system of individual liability under which the employer would be induced 
or compelled to insure himself, and the employee subrogated to the rights of 
the employer as against the rights of the insurance company. There are 
quite 'a number of objections to that which arise in my mind. I mentioned 
one or two of tliem when the question was asked. In the first place it pre- 
serves the old element of wastefulness and circuity. 

The Commisstoxee : I do not think that wns mv question. I think it was that 
if the principle of the British Act were applied then what difficulties would 
there be, or what objections would there be to subrogating the workmen 
to the rights of the employer against the insurance company? 

Mr, Wegexast : That is leaving out altogether the question of the collective 


The C o:\imissioner: Supposing the legislature should come to the conclusion 
to copy the British Act in its main features, then one of the weaknesses 
of that act is, as it strikes me, that the only provision to secure the work- 
man is that in the event of insolvency there is a preferential lien for a 
certain portion of the payment. There is nothing to protect him even if 
the employer had insured. There is nothing to give him the right to say, 
"iSTow, I want the benefit of that insurance." 

Mb. Wegenast: Well, I do not know that I have any objection to that principle 
of subrogation as against a system under which there is no subrogation, 
but as against a system of collective insurance there are a great many. 

The Commissioner: That is not the way I asked the question at all. At least 
I do not think I had that in mind at all. 

Mr. Wegenast: I think I answered it would preserve the old circuity of liability. 
There are the two questions, whether the employer was liable to the work- 
man and then whether the insurance company is liable to the employer, 
because under the old state of things it is not the workman who is insured but 
it is the employer who is insured against the claim from the workman. Then 
if any system of that kind were adopted the next step in order would be, I 
presume — of course it would be compulsory insurance in order to secure 
solvency; a man would have to insure, and then the State would have to 
supervise the forms of policy, or in fact fix the form of the policy. 

Tpie Commissioxer: It does that now if it wants to. 

Mr. Wegenast : Xot in the case of liability insurance. It has not done so yet. 

The Commissioner: Perhaps it ought to. 

Mr. Wegenast: Then in the next place it would increase the cost, because the 
current cost plan could not be invoked, the business being fluctuating, 
and the task of supervising reserves and capitalization is one that is im- 
mensely more difficult than collecting insurance and disbursing it. 

The Commissioner : They do that now, if they like. 

Mr. Wegenast: That does not involve the dangers that compensation insurance 
does. It does involve this danger that when a man gets old and his pre- 
mium rate is high he may have to t-ake out new insurance, but in the case 
of compensation insurance an entirely new feature arises. The ^nan has 
become injured; he is drawing his pension: and the company out of which 
he is supposed to draw the pension goes out of existence. He cannot get 
any more insurance no matter what premium he is willing to pay. Then 
again that is true as against the employer. The company goes out of 
existence and the employer has no recourse. He has already paid for his 
insurance and the company is supposed to be paying the man, and when 
the company goes into insolvency the man falls back on the employer, and 
the employer pays twice. The whole system is anomalous and circuitous, 
and we have come to the conclusion that it cannot last; it cannot be per- 
manent. We think a change is imminent in the Old Country and also in 
the Provinces of Canada. It just occurs to me here to remark that in the 
case of one Province at least, in Quebec, I happen to know that the Govern- 


inent is watching the Ontario experiment, or proposed experiment, before 
making any changes in their own system. Let me poin,t out this also, 
that in a case of compulsory insurance with subrogation there would be 
the inevitable competition for business, and the stronger companies would 
probably get the better business. The weaker companies in competing with 
the stronger companies would probably have to reduce their rates when 
they were less able to do so than the stronger company, because of the 
inferior class of business, and as the business got poorer the ra,tes would 
have to be brought down to get more business, and the result cannot be 
anything else than insolvency. I have already referred to the distinction 
between the employers' liability insurance and accident insurance, and it 
appears to me the vast amount of confusion attendant upon this subject 
is due to the want of realization of that distinction. Under an individual 
liability system it is the employer who is insured, and the whole insurance 
is for the protection of the employer, and that is very keenly realized by 
our own members. I find throughout the province there is a great deal 
of dissatisfaction with the whole practice of liability insurance, and that 
is one of the features that has streiigthened our association in presenting 
the propositions we have presented. The more progressive employers uni- 
formly have dropped their liability insurance. In the first place they say it 
• costs too much, and in the second place they say their men do not get 
enough, and in addition they say it introduces an element of friction 
between themselves and their employees; and in a great many cases where 
the employers are really not able to carry their insurance consistent with 
safety they have dropped the insurance because of these objections. 

I just want to refer for a moment to an argument which has appeared 
in the press, particularly the insurance press, against the idea of State 
insurance in itself. While we realize that these arguments are quite legiti- 
mate, and that it is quite natural that the insurance companies, particularly 
the liability insurance companies, should take an attitude against State 
insurance, or collective insurance, or mutual insurance, we must recognize 
the source from which these arguments come, and must reckon with the 
natural bias which prompts them. The larger portion of these arguments 
are being circulated by a bureau of liability insurance men in Xew York 
organized, as I say, quite legitimately for the protection of their interests, 
but the arguments which they have advanced show on their face the natural 
bias which exists. 

The Commissioxer : They and Mr. Trowern will take common ground. 

Mr. Wegexast: Yes, I am afraid so. 

The Workmen's Compensation and Information Bureau of Xew York 
began a. very active campaign a year or so ago by publishing a pamphlet 
containing a translation of an article by Dr. Friedensburg which embodied 
some very caustic criticisms upon the German insurance system, and fell 
as more or less of a thunderbolt in this country and in England, where 
the State insuran(^e idea as embodied in the German system had been very 
much admired. It seems, however, to have occurred to the companies 
recently that the arguments of Dr. Friedensburg instead of being adverse 
to State insurance, were in reality arguments contending very strongly for 
state insurance. What he contended for was a greater measure of control 


on the part of the state and a more bureaucratic administration of the 
system. Outside of that he has nothing but the warmest praise for the 
accident compensation system of Germany under the Employers' Compensa- 
tion. His criticisms were levelled very largely at the other branches of the 
insurance, sickness, invalidity and old age insurance. The arguments of 
the liability insurance companies are very varied, and in a great many 
cases destroy one another. In the first place, of course, there was the 
argument that was advanced here this morning, that it means socialism. I 
do not want to enter into a discussion of that, but I think the form that we 
advocate is a little less than socialism, and more practical perhaps than 
any solution that has been brought forward anywhere. If it is socialism 
as Mr. Chamberlain said, and as Bismarck said in introducing the German 
system, we will have to let it go at that. I have an extract here of what 
Senator J. T. Clarkson said in discussing the question. He said: "Work- 
men's compensation on the German or Norwegian plan smacks of socialism. 
We are not ready to accept socialism, but should be ready to adopt any- 
thing good, though it be recommended by socialists. The English plan 
is individualistic." 

Then the complaint is made that the system is burdensome. In op- 
position to that we have the acknowledged fact that the individual liability 
system is immensely more expensive and that a great deal larger proportion 
of waste is incidental to paying the money to the injured man. You 
have pointed out that the money did not reach the injured man. There 
can be only one conclusion that either the workman would get less under 
an individualistic system, or the argument does not hold water. 

The Commissioxeh : I suppose everything will depend on an honest and intelligent 
administration of the law. Do these gentlemen you are speaking about 
say it is impossible under a state system? 

Mr. Wegenast: Their contention is that the chances are all in favour of the 
prostitution of the system to the interests of party politics. Now, we in 
this country liave made some examples, Mr. Trowern's remarks to the 
contrary notwithstanding, of fairly promising public ownership schemes, 
and the assumption is that this system will be managed as carefully as, 
say, the Hydro-Electric system has been managed, or appears to be managed. 

Mr. Trowern : Which we do not know anything about. 

Mr. Wegenast: Or promises to turn out to have been managed. 

The Commissioner: Mr, Trowern will not put it in the alternative form, but 
says no good thing can come out of Nazareth. 

Mr. Trowern: No, I am just waiting till I see the statement come out. 

Mr. Wegenast: With the special view to finding out how the systems of Ohio 
and Michigan were working out, I went over to those States in the late 
spring, and I found a condition of things there that I think demands 
your consideration. I found in both cases that the charge was 
made, whether founded or unfounded, that politics liad entered into it with 
respect to the appointments to the insurance boards, and the administra- 
tion. For instance, here is a characteristic paragraph from "American 
Industries " of April. Tbis is in reference to the Michigan act. 


"Even before the Legislature passed the act the Governor was besieged 
by political henchmen who sought to have him appoint certain persons 
whom they favoured to the salaried positions on the Industrial Accident 
Board that will administer the provisions of the compensation act. 
The names of some persons proposed by these politicians are known 
in Detroit and elsewhere in the state and the opinion is freely given that 
they are v^holly unfit to administer the tremendously important business 
that will come before the commission. Yet they are urged for appoint- 
ment simply because certain politicians seek to use their patronage, through 
the Governor, to repay political debts." 

Now, I find the same allegations made in Ohio. Whether they are 
true or not I am not concerned with, but they had this effect in both 
Ohio and Michigan, that employers generally refused to go into the system, 
largely, it is said, because of the personnel of the commission. Now, in 
view of that, you will understand the force of my contention as 
to the extreme importance of appointing a commission which will guarantee, 
as nearly as can be, efficient administration. The accident insurance com- 
panies, of course, claim, and they have no doubt some foundation for the 
claim, that they have had the experience to handle this business. That 
must be qualified by the consideration that their experience has all been 
practically under systems where it meant a fight for the workman to get 
his compensation. The writers and authorities on compensation admit 
imiformly that the subject is so very complex, and the factors entering 
into the estimation of risks are so complex that experience is varied. I 
have looked over with some interest a book forming part of the Journal 
of the Institute of Actuaries of England, which appears to be the best 
presentation in text-book form of the actuarial side of workmen's com- 
pensation on a capitalized basis, and a mere glance over the pages of that 
book will illustrate the difficulty, in fact the absolute impossibility, of 
anything like an accurate estimate of the cost of workmen's compensation. 

The Commissioner: Would you expect this from a mathematician: "It seems 
tolerably certain that the probabilities of bachelors and married men leav- 
ing dependants will differ materially." I suppose there are dependants 
who are not children. 

Mr. Wegenast: It sets forth that the factors entering into the subject of work- 
men's compensation are almost innumerable. In the first place the prob- 
ability of a man being married, the probability of his age, the probability of 
his having any children, the probability of the age of the children, and 
so on, £i,nd I think without being an actuary or a mathematician, 
one is not far out in making the statement that it is impossible with the 
data that exists in the world to-day to estimate correctly the cost of work- 
men's compensation. As I say the only other field for actuaries of exper- 
ience is in the matter of testing claims, and in the purely clerical end 
of the business. The problem is simply a problem of paying the claims 
for compensation where injuries arise and distributing the cost on some- 
thing like an equitable basis. 

In connection with the liability insurance business I may point out 
also that it is now becoming recognized that there are other fields of 
insurance open for the liability companies which promise more success and 


better results generally than the field of liability insurance. There is an 
article which I have here which I think you would find of interest 
from the Market World and Chronicle, a paper published in New York, 
a translation of a German article on the boundaries between private and 
social insurance. It is indicated there^ and I have seen it indicated in 
the press of other places, that the proper working out of a compensation 
system such as we propose, or in fact any system of workmen's compensation, 
will probably result in a demand for other types of insurance which work- 
men are not in the habit of taking out at present, and there is every 
probability that the result of workmen's compensation insurance will be 
to educate workmen into the idea of taking out other types of insurance. 

The Commissioner: Has that been the result in Germany? 

Me. "W'egexast: Here is a quotation from Bischoff, quoted by Dr. Manes. "It 
is a mistake to believe that we private insurers should be by any reason 
of our business interests particularly prepossessed against these new com- 
pulsory insurance projects. The experience obtained in Austria has shown 
that the minimum provision for the future to which the individual is 
compelled by law, in no wise satisfies the best elements of the class of 
higher private employees, but on the contrary, brings before their eyes the 
necessity of making adequate provision for the protection of their families 
by resort to a private insurance company. In Germany, again, as is well 
known, the State and commercial officials, whose pension rights are in 
general materially higher than those which the proiX)sed bill will grant 
to higher private employees count among the most zealous witnesses for 
life insurance." 

I am only speaking from hearsa}', but the appearances are as I have 
indicated, that workmen's compensation insurance instead of injuring the 
business of insurance generally will probably ultimately immensely benefit 
it, and this article I am referring to deals with what should be the proper 
boundary line between the field of private insurance and public insurance. 
The investigations which I have made throughout the Province and which 
I propose to continue in the fall have shown me this, and perhaps it will 
be of interest to you to see just what I have collected : 

Accident Schedule 
For accident occurring in 1911. 

Name of employer 

Name of injured person 

Occupation Asre 

Sex Nationality 

Rate of wages per day, or, if on piece work, average daily earnings 

(In case of fatal accidents) Particulars of number and age of children or other 
dependents and degree of dependency 

Nature of injury 


How accident happened 

Duration of incapacity 

Medical and surgical treatment required and cost or probable cost of same 
Remarks r 

Industry Scliedule 

Xame of firm 


Industrv' ' 

Average total number of employees, 1911, including officers and office staff and 
anv travellers on salarv 

Male Female 

Total pay roll for 1911, exclusing officers and office staff and Travellers $. . 
Total pay roll for 1911, exclusing officers and office staff and travellers $. . 
iNumber of employees or officers receiving wages or salary of $1,000 or over 

Classification of employees on basis of risk of being injured 

Liability insurance carried premium rate 

Number of accidents 1911 (This should include all accidents which laid any man 
off for even a few hours) 

(Particulars of each accident should be given on accompanying accident schedules). 

The Commissioner: What do you mean by this: "Classification of employees on 
basis of risk of being injured?" 

Mr. Wegexast: I generally ask the employer as to the different classes, and the 
hazard which they run. Take for instance, in an iron works, I put down so 
many on punch presses or hammers, so many in moulding shop, so many on 
lathe work, and so on. 

The Commissioner: I think you will have to elaborate that a little more. 

Mr. "Wegexast: It requires a great deal of investigation. In the wood-working 
establishments I asked how many men on the machines, and it enables 
me to form some idea of the proper class. For instance, if I find in an 
ordinary lumber mill and lumber yard they have half a dozen teamsters 
that means the lumber end of it predominates. Then there is the schedule 
I use for particulars of' each accident, but I have not covered enough 
ground to enable me to make up averages, but there is every indication 
that the cost of compensation on the current cost plan will be, under such 
a system as we propose, not any higher and probably lower than the cost 
under the present liability insurance system. 



The Legislative Building, Toronto, 

Wednesday, 7th August, 1912, 11 a.m. 

Present: Sir William E. Meredith, Commissioner. 
Mr. F. X, Kennin, Secretary. 

Mr. "Wegenast : Last night, Mr. Commissioner, I was going on speaking of the rates 
and stated that it would appear that the rates under such a system as 
we propose would be for some years probably within the present insurance 
rates. I have here a table of comparative rates gotten out by the Liability 
Board of Awards of the State of Ohio, which you will find of some interest. 
The chief significance of the table of rates to me is that the individual 
liability systems show a much higher rate than the Ohio rate, for instance, 
and higher in fact than the Washington rate. The policy of the Ohio 
State Insurance Department was also to make the rate so large that there 
should be not the slightest doubt as to its efficiency. Some statements 
were published some time ago in insurance journals purporting to give a 
sketch of the Ohio rates, and I have one here, from the Spectator, which 
probably you have seen in some form or other, but the rates are, in fact, not 
at all in accordance with that schedule. You notice there rates running 
up to $18. 1'hat is, of course, entirely absurd. 

The Commissioner: Yes, I have seen them. 

Mr. Wegenast: It is on the back of the pamphlet that you will find the com- 
parative table of rates. I want to refer also to the state of things I found 
in visiting Ohio in regard to the rates. The insurance institution is run 
along lines very similar to the employers' liability systems at present in 
vogue. If a man applies for insurance in a State institution he is asked 
to fill out a schedule of questions, the principal item of which is his 
accident experience for the past three years. On the basis of his experience 
and the general character of his industry he is quoted a rate. Now, accord- 
ing to our proposition such a system would not be called for, and would 
be undesirable. 

The Commissioner: As I understand it there would be no rate at all if your 
system were adopted. If you got a class say of manufacturers of agri- 
cultural implements they are assessed according to their wage-roll for the 
whole of the loss in that class. 

Mr. Wegenast: Quite so, and I just want to take advantage of the occasion to 
point out that probably there will be considerable criticism of our plan on 
the part of the liability insurance people, but that if tliere is any sucb 
criticism we are quite prepared to meet it and cope with it. I myself 
regard tiie plan under the Ohio act as a mistake, and while i)t is perhaps 
inevitable that under a sy.'stem such as that in Ohio where the state com- 
petes witb private companies that some such system should be adopted, I 
think it cannot be denied tbat it docs away to a very large extent with 


■ » 

the advantages which otherwise would accrue from a system of collective or 
State insurance. I found this condition of things: the liability companies 
being left in competition with the State system are cutting the rates below 
what any one, even an amateur in insurance, would consider safe. I made 
enquiries amongst manufacturers and found numbers of instances of this. 
In fact, I think the rule is probably as represented by the instances that 
I would like to refer to. In one case a well-known manufacturing concern 
which had been paying a rate of 35 cents on $100, being insured 
under the old liability system, applied for a rate from the state commission. 
They were quoted a rate of 65 cents. Now, that in the light of 
our knowledge of rates under an individual liability system, or at all events 
a system conferring the benefits of the Ohio system, must be considered 
a very low rate. The business was not a particularly hazardous one, but 
the rate is a very low rate. While it is higher than the 35 cents 
they had been paying before, the obligations under the new act, and the 
scale of compensation is of course very much higher. Now, the liability 
companies met that rate by quoting ithe same company a rate of 
28 cents. In another instance that I found the same afternoon in a 
large agricultural implement manufacturing works the company had been 
payirig a rate of 55 cents. They were quoted a rate by the Insur- 
ance Department of 85 cents, and the liability insurance companies met 
it by quoting a rate of 42 cents. Now, that cannot have any other 
result than to leave a large part of the insurance in the hands of the 
liability companies. The obvious question which arises is, how can the 
liability companies continue to do business under circumstances such as 
those? In the first place it is to the interests of the insurance companies 
to discredit the Ohio act as far as possible and to show they can do the 
business, and very large concessions could be made with that in view, but 
I found, singularly enough, right in Columbus an instance of the manner in 
which the companies work out the rates. I met a gentleman from Chicago 
who had been a member of the Illinois Commission which drafted the 
Illinois act, and he told me the rates which were being charged in Illinois 
by the liability companies were tremendously high; he gave such examples 
as 16 per cent, in the case of coal mining. That was an industry in 
which he was particularly interested. The other rates were correspondingly 
high, as I think you will see by reference to the tables. Now, the 
same company that does business in Ohio does business in Illinois also, you 
know, sir, the scale of benefits in the Illinois act are lower than under the 
Ohio act. It is quite obvious therefore that the Illinois manufacturers are 
paying the claims of the Ohio manufacturers. The conclusion is inevitable. 

Another mistake I think that has been made in the Ohio system, if I 
may refer to it by the way, is leaving a remedy to the workmen in the 

There is a provision under the Ohio act by which the employer still 
remains liable as at common law for his wilful acts, and those of his agents. 
That is taken advantage of by solicitors for business for the liability com- 
panies in this way: They point out that even if the employer does insure 
in the State system he is still liable for the wilful acts of himself and his 
agents, which is a very broad and vague term. The result is the further 

104 :\rixuTES of evidence. 

advantage to tlie liability iiisurancc company. The State Department, 
curiously enough, has met that by an opinion given by the Attorney-General 
to the effect that it is illegal for a man to insure himself against his wilful 
acts. So that the one anomaly follows the other. 

I have already referred to another alleged mistake in Ohio, and that 
is the personnel of the Commission. Another observation that I made in 
Ohio was in connection with the method of securing medical proof of claims, 
and in general the method of handling the doctor's end of the compensation 
system. It appears that the country is divided into distiTcts, and tlie larger 
cities divided into districts, and a doctor appointed for each district who 
acts for the Commission, and at the same time, of course, remains in 
private practice. I would like to submit that that plan would be inadvis- 
able here. I think under all the circumstances it would be well to leave 
the matter open for any qualified practitioner to act for the Commission, 
either in administering medical or surgical aid, or in making proofs of 
claims, or reports on claims. 

Xow, there are a number of odds and ends of observations that cannot 
be very well connected with any other particular department of the subject, 
but which are nevertheless importanc enough, 1 think, to present to you. 
One is this, that in assessing the cost of compensation on the current 
cost plan, and assessing a margin, however small, over that current 
cost to provide for a contingent fund or reserve for whatever purpose it 
may be designated. In assessing that margin the fund will in reality 
gradually be raised to the basis of a capitalized fund. If you continue 
assessing five or ten per cent, more than the current cost, and that current 
cost continues to rise from one-half per cent, or one and a half per cent, 
or two per cent., a time will eventually come when that margin will be over 
and above the capitalized cost, and the fund will go on accumulating to 
such proportions that it will eventually be in reality a capitalized fund. 
That is poiinted out by Dr. Zacher in the article of which I gave you a 
partial translation, given not by way of justifying that particular method 
of assessment, but simply by way of showing that the plan is consonant 
with solvency and perfect soundness in every respect. Then I might observe 
also in assessing on the cost plan it would be impracticable if not impossible 
to place the rates except at the initial stages in an act of parliament. 
The rate is given in the Washington act, it is true, but that is not in 
reality the rate which is imposed, as you may have observed from the 

The Com:\[tsstoner : I do not understand, except for the purposes of the first 
year what you want any rate at all for. 

Mr. Wegenast: That is just what I wish to observe. You have observed prob- 
ably the reference to " printers." 

The Commissioner: That is if the industries are classified. 

Mr. Wegexast: Quite so. In the report of the first eight months' operations 
of the act in Washington it is pointed out in Class 41, printers and pub- 
lishers, the preliminary call for three months at $1.50 a thousand has pro- 
duced a fund of $6,464.72, from which $717.3n has been paid out for 
accidents mostly of a minor character. At this rate the fund, barring 

, . , 

iiuusiial successive accidents, will last the printers five or six years without 
further assessments. That is a three months' assessment, which would be 
one-quarter tiie annual rate in tlie act, would last under the estimate five 
or six years. It is quite apparent therefore, that the rates given in the 
Washington act are not in reality the rates which are being levied, and 
that the system is a flexible system such as we propose. As I observed 
before I should anticipate a good deal of opposition and a good deal of 
criticism if such a schedule of rates was embodied in the act. It is in. 
one sense not our concern, but we are interested in having the act going 
into effect as harmoniously as may be, and it appears to be by placing in 
the act a schedule of rates it would be open to the criticism either that 
they were too high, or too low, or discriminative, or unscientific. 

Another point which has been touched upon by you at a previous 
session is the question whether the funds should be interdependent ; 
that is, whether in cases of serious accident in one class the funds of the 
other classes should be available. Xow, I see no objection whatever to that. 
It broadens the scope of the insurance, but does not vitiate the general 
operation of the act, because whatever advances are made out of the other 
funds can be repaid by future assessments upon the other classes. The 
Washington system has got into something of a tangle owing to the rigidity 
of their classification in that respect, and if it were not for the fact that 
the funds are paid out periodically there would be considerable difficulty 
in connection with the explosives class under the Washington act. 
You will remember the accident which was responsible for killing 
eight persons. The largest contributor to the fund had declined to con- 
tribute, setting up the unconstitutionality of the act, and the burden of 
the accident fell on two or three smaller explosives works. If it had been 
necessary for the State to set aside the capitalized value of those lives as 
it is in theory necessary under the act, there would not have been money 
enough in the class, but there has been so far enough apparently to pay 
for the current claims. 

I have made up a statement which may be of some value to you, Mr. 
Commissioner, giving the railways in operation in Ontario. 

Algoma Central & Hudson Bay. 

Bay of Quinte Eailway (operated by C.N.O.) 

Brockville, Westport & North Western. 

Canadian Xorthern Ontario. 

Canadian Pacific. 

Central Ontario (operated by C.N.O.) 

Gait, Preston, Hespeler & Berlin (Electric). 

Halnilton, Grimsby & Beamsville (Electric). 

Irondale, Bancroft & Ottawa (operated by C.N.O.) 

Kingston & Pembroke (operated by C.P.R.) 

Niagara, St. Catharines & Toronto (Electric). 

Michigan Central. 

Temiskaming & Northern Ontario. 

Thousand Island Ey. (G.T.E.) 

Toronto, Hamilton & Buffalo. 

Toronto & York Eadial (Electric). 

New York & Ottawa (operated by N.Y.C.) 


You will observe there are some eighteen railways operating in this 
province, four of which are electric roads. 

The Commissioner : A good many of them are a mere difference in name. They 
belong to the same people. 

Mr. Wegenast: I have noticed those that are operated by other companies. The 
Algoma Central is run under an entirely separate management. The Bay 
of Quinte is operated by the C.N.O. The Brockville and Westport is 
• operated independently. The Central Ontario is operated by the C.N.O. 
The T. H. and B. of course is operated independently, and also the Pere 

The Commissioner : Would your idea be that a railway employee, whether a train 
hand, or working in the shops, or doing clerical work, or a telegraph opera- 
tor, should all be classed together? _y 

Mr. Wegenast: That, of course, raises the difficulty which I alluded to yesterday* 
that in one railway certain branches may preponderate and make it inequit- 
able to have the assessments on the same basis, but those are largely, I 
think, matters of administration, and my submission is that those are 
matters which should be largely determined by the railways themselves. 
If the railways are pooled in respect of their injuries, the compensation 
of the injuries and the collection of the premium, the working out of the 
rates can be safely left with the railway under the supervision of the 
Commission. The railways would, no doubt, make suggestions and send 
their representatives to argue the matter and generally advocate their 
respective interests, but the v^^hole matter could very safely be left in the 
hands of the administrating Commission. You will observe that of 
all these railways there are only three which could be thought of as 
being allowed to administer their own compensation, the three larger rail- 
ways. In the case of some of the railways, for instance the Michigan 
Central, there is this objection that the management is outside the Province, 
and in fact outside the country. In the case of the Pere Marquette that 
objection is particularly pertinent. Just in this connection perhaps it would 
be very difficult, if not impossible, to govern the reserves and the assurance 
of compensation to the employees of a railway such as the Pere Marquette, 
because it would be quite possible for the Pere Marquette to sell out the 
whole of its Canadian railway without legislation. It is true the legis- 
lature, or rather parliament, might step in by remedial legislation and 
force an obligation upon the new road. 

The Co^mmissioner : T do not know how the Pere Marquette can sell unless its act 
of incorporation authorize- it to do so. 

Mr. Wegenast : I do not know that there is anything to prevent. I am speaking 
without having consulted the acts, but I do not know of anything to 
prevent any railway from selling out its assets. 

The Commissioner: Oh, it cannot do that. 

Mr. Wegenast: In any case thero is nothing to prevent the railway from handing 
over the operation of its road to another road, and the only way to insure 


- — . — — — — — — 1 

the compensation of employers would be to make the compensation a lien, 
say on the roadbed. 

The Commissioner: You cannot do that. 

Me. Wegenast: No, it would be very difificult. Besides, there is this difficulty, 
that the railways are qua railways under Dominion jurisdiction, while the 
compensation is being adminstered by the Province. It might be easy 
enough under some circumstances to persuade or to put pressure upon the 
Dominion Government, but there are circumstances which are imaginable 
where that would be difficult, and there would be the constant danger of a 
hitch between the Dominion and provincial authorities after the compen- 
sation pensioners had been accumulating for a period of years. 

I have a number of forms of reports. I do not remember whether I 
sent these to you on a former occasion or not. 

The Commissioner: Forms of what? 

Me. Wegenast: Forms of reports used in Washington for various purposes. For 
instance here is the report of the attending physician, the report of the 
employer, the report of the employee, claimant's proofs of death, and so on. 

The Commissioner: Those would probably be more for the Commission -when 
it was appointed. 

Mr. Wegenast: Then a number of placards in the interests of educating work^ 
men to the benefits of the act. I may say I have a considerable accumula- 
tion of material all of v^hich when it came in I thought should be submitted 
to you, but it has reached such immense proportions that I shrink from 
inflicting it upon you or anybody else. Most of it is quite apropos, and in 
fact important, but I suppose there must be a limit to the amount of stuff 
of that kind that can be used. 

Now, I would like to refer, and it is the last matter of any great 
importance that I have to-day to lay before you, to our proposi- 
tion of a first-aid fund. Assuming thait a period of two weeks were taken 
as a waiting period the workman would be thrown on his own resources 
for that one week. The medical expenses or the surgical expenses Just 
at the time when they were incurred and at the time when their cost 
should be met would be thrown on the employee. It is true in some 
systems proviision is made for medical expenses, but that, of course, 
invades the waiting period and forms a special feature, which we sub- 
mit could be dealt with by the device which we propose, namely, the 
first-aid fund. I think you have probably seen in the report which 
I have referred to of the Washington Commission a reference to 
this first-aid fund. You will remember it was proposed in the 
act to have a first aid fund to cover, I think, the first three weeks of the 
workman's incapacity. This fund was to have been raised by a contribu- 
tion of two cents per week per employee from the employer, and two cents 
from the employee; that is, it was to be raised by contributions in equal 
proportion. A good deal of opposition was encountered because the em- 
ployers in non-hazardous industries found that their contributions to the 
fund were to be just as large as the more hazardous industries, and owing- 
to the lateness of the legislative session the whole clause had to be elimin- 


aled in order to get the bill through. Now, the administering Commission 
speaks of that first aid proposition. I have the quotation in my brief and 
I will get it in a minute. However, the statement is made that the crying 
need under the "Washington system at present is, and the greatest defect is, 
the want of a first-aid fund, and the original proposition is being revived, 
of creating such a first-aid fund. Xow, our proposition would anticipate 
that want, and I would like to call attention to what I am saying in my 
brief (p. 158), and make one or two further suggestions. What I would 
desire to add is this, that so far as the manufacturers are concerned we 
are prepared to have the act contain a provision for a first-aid fund cover- 
ing say the first four weeks. We are prepared to go further than that and 
have a first-aid fund covering, as under the German system, a period of 
thirteen weeks, the question of the proper proportion of contributions 
being left open. One object to be attained in such a first-aid fund is the 
preservation of the existing benefit societies and benefit systems amongst 
the employees throughout the Province. I have, without going into the 
matter exhaustive!}^, collected a number of by-laws of these institutions, 
and I was rather surprised to find that' there is a comparatively large 
number of them in existence at the present time. Most of these societies 
are doing good work. At your session in Berlin and in Hamilton 
mention was made of a number of these, and I find throughout the 
l^rovince regularly in every town of any size there is a considerable number 
of them. Now, we believe that these benefit societies could be kept in 
operation by allowing them to administer the funds of the first-aid. All 
that would be necessary on the part of the Government Commission would 
be to divide their assessments into two parts for the purpose of raising 
the two funds, one fund to take care of injuries lasting beyond the period 
of four weeks or thirteen weeks, whichever period was adopted, and the 
other fund to cover the cost of first-aid and compensation within the period. 

The Commissioner : What do you mean by "and compensation within the period ?" 

Mk. Wegenast: If, for instance, compensation were allowed, we will say, from 
the first day of the injury, and the period were fixed at four weeks, a man 
would get his compensation, half wages or whatever the compensation was, 
out of that first-aid fund which would cover the first four weeks. Besides 
that the surgical and medical expenses would all 'fall upon that fund. 

Mr. Gibbons: How would you separate that from the sick fund? Your sugges- 
tion would only be in occupational accidents. 

Mr. Wi:gp:xast: That could be provided for by asking the treasurers of these 
societies to keep the funds separate. 

The Commissioner: According to these booklets you have handed in, one at all 
events, and probably all of them, provide like the German system both for 
sickness and accidents. 

Mr. Wegenast: That would be immaterial if a proper "division of the funds of 
the benefit society were made. That is, if the funds which were collected for 
the first-aid fund were kept separate and were separately administered. 
It is |x)ssible, in fact it is altogether probable, that the schemes of these 
societies would have to be revised. 


The Commissioner: \\hy not adopt the principle of these societies and cover 
both ? 

Mk. Wegexast : So far as we are concerned we have no objection. The only thing 
to be observed is it is a question of proportions of contribution. AVe have no 
objection whatever; we think it is tjuite feasible. 

The Commissioner: That is the only fund to which the workman contributes 
in Germany. 

Mr. Wegexast: No, the workman contributes to the three funds. 

The Commissioner: I am not talking about the others. I am talking about the 
subject we are dealing with. 

Me. Wegenast: Yes, that is so. The workman there helps to cover the first 
thirteen weeks by paying in proportion — 

A[r. Gibbons: The employer there pays 15 per cent., or did; it goes into all kinds 
of sickness, and non-occupational accidents; he pa3's 15 per cent, of all. 

Mr. Wegenast : Oh, no. 

Me. Gibbons: I think you will find the workmen's sick fund covers the first 
thirteen weeks, but the employer pays 15 per cent. 

Mr. Wegenast : Fifty per cent, now ; previously, 33 1-3 per cent. It worked out 
under the former system in this way that if you lumped them all and made 
a calculation on the basis of having them all under the same fund, the em- 
ployee would pay aljout 16 per cent, of the total accident compensation. 

Mr. Gibbons: If you figure that out and figure out the basis of the occupational 
accidents, and the amount that comes under sickness, w^ould not the em- 
ployer be practically paying the full amount for occupational accidents? 
The 16 per cent, that the employee pays would not cover those coming under 
the head of sickness, non-occupational accidents, and diseases. 

Mr. Wegenast: You are a step behind my calculations. When you lump the 
contributions and the compensation payments for sickness and accidents it 
is found they pay 16 per cent, of the cost; that is arrived at by taking the 

Mr. Bancroft: That is the way Mr. Schwedtman put it. What Mr. Gibbons 
is trying to point out is this, that the thirteen weeks, mind you, in a big 
industry with the slight accidents that happen, that don't run for thirteen 
weeks and are considered sickness, come out of the sickness fund. 

Mr. Wegenast : I am reckoning with that. If it were not for that the employer 
would contribute nothing. 

Mr. Bancroft : They all, or a great proportion of the sickness and accidents, come 
within that thirteen weeks; the employer contributes 16 per cent, for sickness 
and all, and would, when you take the minimum of accidents, contribute the 
whole thing. 
9 L. 


The Commissioner: What difference does it make? The question is whether 
that is a right plan. 

Me. Wegenast: I am quite willing to let it go at that. 

Mb. Bancroft : The principle established in Germany is that for accident com- 
pensation the employer bears the burden. 

The Commissioner: There is no use going outside the plain facts. They have 
a sick fund to which the workman and the employer contribute; that 
includes both for the period of thirteen weeks, for occupational and other 
accidents, and for sickness as well; is that not so? 

Mr. Gibbons : Yes, but it is safe to assume that there are ten or fifteen cases of 
sickness to one of accident, and if the employer pays to the ten cases of 
sickness and the employee only pays to one of accidents, it practically brings 
the balance around in favour of the employee, and the employer is paying 
the full cost of the accident. 

The Commissioner: Why are we concerned in that, if the principle is right? 

Mr. Wegenast: That is all allowed for in the calculations. 

The Comjiissioner : Is it expedient to provide for a period during which the 
workman should be protected against sickness and all kinds of accidents, 
he contributing 50 per cent., and the employer the other 50 per cent, cost? 
That is the proposition. 

Mr. Wegenast: That is, I presume, all provided for in the calculations. I have 
not investigated them, but it is certain that some percentage of the cost . 
of the accidents falls upon the workman. 

The Commissioner: Supposing after this waiting period has expired, if his 
accident continued he would have his wage, his proportion of the wage, 
from the time the accident occurred. 

Mil. Wegenast: Yes, falling entirely upon the other fund, upon the employer, 
as in the German system. The British system attempts to deal with that 
by simply cutting off the compensation for the first week, or for the first 
two weeks. It is said by the way, and seems to be admitted by every 
one except the labour representatives, that it was a mistake to shorten 
that period in the first place, and a mistake to cover up the one week's 
waiting period in cases of death. However that may be, the British act 
in fixing a period of even one week does, as compared with the German 
system, effect a contribution from the workmen. Our proposition is to 
stop that gap; to pay from the date of the accident, but to have that come 
out of a separate fund which would pay not only the compensation but 
the medical and surgical expenses as well. 

The Commissioner: That differs from the German system because the com- 
pensation does not come in upon that fund at all. 

Mr. Wegenast: Yes, I think so. 

Mr. Bancroft: That waiting period is entirely conditional. 


, , 

>[k. Wegenast: If a man is killed, his dependants fall at once upon the accident 
fund; if he is only injured, his compensation as well as his medical expenses 
are paid out of the sickness fund. 

The Commissioner : I should not have thought so. 

Mr. Bancroft: I thought you were speaking about Great Britain. 

Mr. Wegenast: That is substantially our proposition, whether you make it four 
weeks, or thirteen weeks, or any period, having proper regard to the division 
of contributions. Then- if the workmen feel like adding to that sickness 
insurance, we think that is none of our immediate concern. It is quite 
feasible, to my mind, to leave the administration of these funds provisionally 
under the supervision of the Commission, to these local benefit societies. I 
believe that it would stimulate the organization of such benefit societies 
and fill a place in the local body politic that should not be left void. If the 
privilege were abused in any particular case, or generally, the administra- 
tion of the fund could be withdrawn; it would be simply an annual affair. 
If the Provincial Auditor found that the funds had not been properly 
administered he would report to the Commission, and the Commission 
would withdraw the administration of the fund and administer it itself. 

Mr. Bancroft : Has not the British Columbia adt and the Manitoba act, as well as 
the Alberta act, specifically cut out the local benefit society to which you are 
alluding as part of the body politic. 

^Ir. Wegenast: And largely the British act. 

Mr. Bancroft: Certainly. 

Mr. Wegenast: It is considered one of the defects of the British aot; these benefit 
societies instead of being encouraged are discouraged and being gradually 
wiped out. 

Mr. Bancroft : Not so the workmen ; they are in accord with that, because they 
are compulsory. 

Mr. Wegenast: I am not concerned in the question of whether they are com- 
pulsory. I should think it would be in the interests of the workmen to 
have a compulsory benefit society under which compensation would be 
made for accidents from the first day, and out of which the cost of medical 
and surgical assistance would be paid; I do not see what possible objection 
can come from the workmen's side. I am not concerned with whether it 
is voluntary or not voluntary; that would be a matter largely for the work- 
men themselves to determine. If the workmen neglected to form these first- 
aid societies the Commission itself could administer the fund. 

Mr. Bancroft: I saw a big strike within the last five years in an Ontario town 
where the employees who worked in a big industry were not organized and had 
no trade-union, on account of the exorbitant fees that were taken from their 
wages for these benefit societies to which you allude. 

Mr. Wegenast : That would be a matter for the Commission. If any malfeasance 
were found I have no doubt the approval of the Commission would be 
withdrawn or withheld. 


Mn. 1)Ancroft: What protection has any man without an organization for making 
a protest against deductions from his wages? 

Mr. Wegenast: I coukl answer the question, but I do not think it is pertinent. 

Mr. Bancroft: That is why legislation is being put in force all over the world. 

Mr. Wegenast: It is purely optional. We think it is desirable that these benefit 
societies should exist, compulsory or non-compulsory. 

'J'liE Commissioner: How do they manage in cases where provision is made for 
medical expenses not exceeding a stated amount ; how do they work it out ? 

Mi;. : In Ohio they have given the doctor carte blanche more or less. 
My impression is he takes full advantage of it and puts in his bill accord- 
ingly. That is one feature we strongly object to. 

The Commissioner: I suppose that is one of the reasons why you suggest this 
other scheme? 

Mr. Wegenast: That is one of the reasons. Another reason is we want to have 
the workmen have a fund which will be directly responsive to malingering 
and fraud on the part of the workmen. 

The Commissioner: Supposing a workman says: "I belong to a fraternal organiza- 
tion and that provides for all I need; I do not want to pay for anything 
more " ? 

Mr. Wegenast : That same argument would apply if the workman said : "I am 
insured against an accident," as a good many are. 

The Commissioner: A man is in a benefit society and in the case of sickness, 
which would include an accident whether occupational or otherwise, he 
gets a certain sum. 

Mr. Wegenast: What I am submitting, of course, is that the scheme of these 
societies would have to be reformed; if the period were four weeks then 
the society would probably be reformed so as to omit the period of the 
four weeks. 

'J'he Commissioner : It is very probable that the effect of what you suggest would 
be to put these societies out of business. 

Mr. Wegenast: No. 

The Commissioner: You are suggesting a means to avoid that, but supposing 
that there was nothing done such as you suggest, the effect would be to 
put them out of business, wouldn't it? 

Mr. Wegenast: I don't quite see the bearing of your question. 

The Commissioner: Supposing you were taking from the workmen compulsorily 
60 much to provide against sickness, what reason would he have for joining 
the society and paying for a similar provision? 

Mi;. Wegenast: If the funds were administered l)y the State institution he would 
be deprived of the incentive. 


•^ ^ — — — — = i 

The Commissioner: I do not see how you could work the other; it would be 
too complicated. 

Mr. Wegenast: I would like my submission to stand; if you should think of it, 
we could further substantiate it. 

The Commissioxer : While I am not expressing any opinion, tentative or other- 
wise, as to this narrow adaptation of the German system — do you agree, 
Mr. Bancroft, with Mr. Wegenast that during those weeks the compensation 
as well as the provision for sickness fplls upon the fund? I did not so under- 
stand until Mr. Wegenast stated it. 

Mr. Bancroft: We are in this difficulty that we understood from the beginning 
that this was a compensation act to deal solely with accidents and injuries 
arising out of and in the course of the employment of a workman in an 
industry, the industries covered to be specified in the act. We didn't knoM- 
that we were entering into any sickness proposition. 

The Commissioner: That is a subject that might well be considered in connec- 
tion with it. 

Mr. Wegenast: I do not want to be understood for a moment as proposing sick- 
ness insurance. 

The Commissioner: This would be practically sickness insurance. 

Mr. Wegenast : No, I am proposing as far as we are concerned to cover the 
accident insurance by that particular mode. 

The Commissioner: Oh, I do not think there would be any use at all in that. 

Mr. Wegenast : We are willing to cover the medical and surgical expenses in that 
way; the matter of sickness insurance is a matter for the workman them- 

The Commissioner: Would it not be a much more sensible thing and less com- 
plicated if you had this waiting period and the cost of medical attendance 
put upon whoever has to bear the burden of the compensation, the burden 
of providing for the workmen during the period that he is not entitled to 
compensation ? 

Mr. Wegenast: That is to put everything on the employer. 

The Commissioner: AVhoever bears it. 

Mr. Wegenast : There is one of the difficulties of your argument. When it comes 
to close quarters on the question of who bears it then we shift it over to 
the long suffering public. 

The Commissioner : If you are right in your view that 20 per 'cent, or 25 per cent, 
of the cost of compensation should be borne by the employee, if you have 
faith in that, then there is nothing in your objection. 

Mr. Wegenast : My proposition is this, as I said before, there are three ways for 
the workmen to contribute; one a direct contribution, of say, 25 per cent., 
in which case probably the accidents should be compensated from the firsr 
day, giving due consideration to the existence of a waiting perdod to obviate 


i_ _ — — 

frauds ; the second method is through the 'agency of a firsit-aid fund, or under 
suoh a fund as in the German system; the third method is by reducing the 
scale of compensation. 

The Commissioner: I should think, speaking subject to a possible change of 
view, that it would be far preferable to scale down the compensation than 
to have the irritation of a forced contribution from the workmen. 

Mr. Wegexast: I would like to make my position clear on that, because I am 
definitely instructed as to that feature. I am instructed to say that we 
would rather compensate the workmen on a scale of 60, or 65, or 66 2-3 
per cent, with contribution, than on a scale of 50 per cent, without contribu- 
tion, and that even if the contribution meant that the total cost would be 
higher for the employer. I am convinced it will cost us more if the workmen 
contribute tlian if they do not; but those are my instructions. 

The Commissioxer : I do not understand that; why will it cost you more? 
Mr. Wegenast: Take it this way, if the workmen contribute and the scale of 

compensation is made 60 per cent, of the wages a man who is getting $2 a 

day will get $1.20 a day compensation. 

The Commissioner: If you mean the compensation will be higher because he 
contributes, I understand that. 

■^^^. W?:genast: No, he will get $1.20. Of that the workman will contribute, we 
will say, 25 per cent, or one-quarter. That is 30 cents. 

The Commissioner: "What I do not understand is how if somebody else helps 
to pay the com] ensation it is going to cost you more. That is a novel 
proposition to me; how is it possible? 

Mr. Wegenast : I am just attempting to show. 

The Commissioner: Surely it is self evident that it cannot be so. If I assess 

you to pay the compensation surely it does not cost you more if he pays 

part of it. 

Ml.'. "Wegexast: It depends on what the compensation is. If it is higher 

The Commissioner : If you make your compensation higher because he contributes 
probably it may be so. 

Mr. Wegenast: And there will be other influences which will tend to increase 
the cost, apart from the scale of compensation. 

The Co:\imtssioner: But you see it is only the odd man who is injured who 
would get the benefit of the increased compensation. The people who 
would contribute would be largely people who never had claims upon the 

Mr, Wegexast: That, of course, is the insurance idea. I quite appreciate that, 
but my general proposition is that it is quite possible that it may cost the 
employers more. I say it is probable it will cost the employers more if the 
workmen contribute than it would if they do not contribute, but notwith- 
standing that we would rather have a system under which the workmen 
would contribute. 


• 1 

The Commissioner: Why? 

Mr. Wegexast : For the very, I was going to say numerous, reasons I have given 

Mr. Bancroft: To save all these schemes that are in existence now in Ontario. 

Me. Wegenast: In the first place we consider no system can be as effective as it 
is possible to be without invoking the pecuniary interest of the employees. 
That is one reason. 

The Commissioner : The great weight of opinion as far as I h^ve been able to 
observe is against that; that factor does not count. 

]MiR. Wegenast : I would like to submit then that whatever text-book writers may 
say, and I submit they support my contention, the great preponderating 
opinion in this Province is on the other side. 

The Commissioner : I think common sense would teach anyway that' the workman 
never considers when he is working whether he has got to pay for an 
accident if it happens. Take the cases you have mentioned where a man 
goes to work and puts on a belt while the machine is moving, or when he 
interferes with a machine that does not belong to him, or puts his hand out 
when he is talking to somebody; does he ever think on those occasions 
whether he is going to be paid or not if he gets hurt? 

Mr. Wegenast: I quite admit all that, but apart from the logic the prevailing 
opinion is to this effect, that if the workman contributes he will be more 
careful. You will find that opinion expressed over and over again. 

The Commissioner : I have no doubt that is the view of the manufacturers. 

Mr. Wegenast : The manufacturers and employers generally. 

The Commissioner: The only way it seems to me his contribution would assist 
at all is that you will have an incentive for him to prevent improper claims 
upon the fund, malingering and all that sort of thing; that is the only 
argument I have heard of yet that has at all appealed to me. 

Mr. Wegenast: I wanted to mention at the outset what I have found to be the 
prevailing opinion, but beyond that there is this, that whether individual 
care would be assured or not by contribution, it cannot be doubted that 
collective interest in the prevention of accidents would be invoked. There 
can be no doubt the workmen collectively in their organizations would take 
a greater interest in the prevention of accidents if they were pecuniarily 
responsible to some degree. 

The Commissioner : A workman knows, if he knows the law, that if he is himself 
negligent he cannot recover; does that prevent accidents? 

Mr. Wegenast : I am speaking of the workmen collectively. 

The Commissioner: I am talking about them collectively. Does that prevent 
accidents ; is it a factor that counts at all ? 


AIr. Wegeijast : No, not that perhaps. It does to some slight degree but the factor 
I am considering is this : We want as manufacturers to have the co-operation 
not only of individual workmen but of the organizations. 

The Commissioner: Do you not think that what you would have instead of that 
would be an irritating sore? 

Mr. Wegenast: Well, we are quite willing to take our chance on that. 

The Commission ek: But is the public willing to take that chance? 

Mr. Wegenast: We are the most intimately concerned. 

The Commissioner: No, the groat mass of the public are over you all, and it is 
not in the interests of the public that there should be war between the 
employing and the employed classes. 

Mr. Wegenast: Of course I am assuming it would not mean war. 

The Commissioner: I do not mean war in that sense. 

Mr. Wegenast : It does not mean war in Germany. 

Mr. Bancroft: They do not contribute in Germany. 

The Commissioner: They only contribute with that waiting period of thirteen 
weeks, and when they do contribute they get the sick benefit for which 
there would be no excuse for taxing the employer. 

Mr. Bancroft: And it covers non-occupational accidents. 

Mr. Wegenast : That is precisely what I am submitting. 

Mr. Gibbons: That is Mr. Dawson's statement, that if this waiting period covered 
non-occupational accidents and diseases the workmen should contribute, 
but not otherwise. 

Mr. Wegenast : That is a matter to be worked out, a matter of proportions. 

Mr. Gibbons : We contend that this sick fund covers non-occupational diseases and 
the manufacturers contribute to that. 

Mr. Bancroft: Will the manufacturers of Ontario say they will 'include non- 
occupational diseases and non-occupational accidents? 

Mr. Wegenast: If the workmen pay for it. With regard to non-occupational 
accidents I concede this, that some provision will in the future have to 
be made, when experience has accumulated to such a degree that it can be 
properly dealt with, and really occupational diseases will have to be classed 
with accidents. 

The Commissioner: Do you not think that the German system is a guard to 

some extent against malingering? 
Mr. Wegenast : I think so. 

The Commissioner: You have a fund there to which the workmen contribute, 
and it covers a great number of small accidents where there would be a 
chance of malingering. 

Mr. Wegenast: That is what I am getting at. While the individual employei' 
may not be prevented from malingering or practising frauds, the workmen 


■ 1 

collectively would discourage that sort of thing, and without going into the 
minutife of the way in which it would work out, I think it must be clear 
that the co-operation of the workmen's organizations would be invoked to 
prevent malingering and fraud and impositions on the fund. 

Mr. Gibboxs: Our experience, Mr. Wegenast, is the other way, and I think the 
Street Eailway will bear me out. When a man is injured the greatest 
trouble we have is to keep him from going to work too soon and probably 
bring on a recurrence of the trouble or a relapse. We have had cases where 
we have had to send the man out to keep him from going to work, because 
the doctor said there would be danger of a collapse, where the injuries were 
internal, or something of that kind. That has been our experience. Every 
organization has its sick benefit or accident fund and they pay in cases 
of accidents; does that tend to prevent accidents? The accidents will 
occur anyway. The organizations are at the present time interested in 
having no accidents because we pay for them out of our funds, but it does 
not tend to prevent accidents, accidents still occur. 

Mr. Wegenast : I say it should tend to prevent accidents. 

Mr. Gibbons: A man does not get injured intentionally. 

Mr. Wegenast: But your society makes regulations which tend to make it diffi- 
cult for a man to succeed in a fraudulent claim ? Have you not regulations 
which are intended to stop a man from practising fraud upon the fund? 

Mr. Gibbons : Xo, I don't think so. We have never had a case of fraud to deal 
with; if we had a case of that kind we would probably deal with it. 

Mr. Bancroft: In Germany, if you notice, in the accident compensation fund the 
employers are the sole administrators, which is evidence that the workmen 
do not contribute. In all the other funds, mind you, the workmen have 
representatives of the board and take part in the administration. That is 
what stops malingering; it is the representation on the administration 
board that stops malingering, as far as Germany is concerned. 

The Commissioner: They say it has not stopped it. 

Mr. Bancroft: It does to some extent. On the administration board for accident 
compensation in Germany the employers have sole control; the workmen 
have no seat on that board, which shows they do not contribute. 

The Commissioner: Nobody disputes that where they come upon the compensa- 
tion fund in Germany the employer pays it. It is only the thirteen weeks 
period to which that the workmen contribute; everybody concedes that. 

Mr. Bancroft : We have tried to explain that, and Mr. AVegenast will bear us out, 
that the reason for that was this, that the social legislation in Germany 
commenced earlier than in any other country in Europe. The first legis- 
lation was sickness and death, the second invalidity and old age, and the 
third accident compensation. The social legislation had all been arranged 
and it was found that the thirteen weeks did not cover accidents which were 
so serious as to take a longer time, so they took in accident compensation, 
and it was adopted as a principle that the employer should bear the burden 
of an accident in his industry. Had it been that the accident compensation 


i ■ 1 

had come first in Germany you would have found that the workmen would 
never have consented to any other principle than that the employer should 
bear the burden from the first day. In the case of the week's waiting 
period if it lasts longer it reverts back and he is paid from the first day of 
his injury. 
Mr. Doggett : I pointed out not many months ago that the building trades in this 
province made a strong agitation, and a deputation waited on the pro- 
vincial legislature in order to have a seafl^old requirement so that scaffolds 
would be put up. A gentleman representing one of the largest industries 
in this city opposed it. It shows that these people have not always been 
with us in trying to prevent accidents. Before the committee was 
appointed by the House one gentleman representing one of the largest 
concerns in this city came and opposed the floors of a building being 
covered with planking; he wanted the building to be run up six storeys 
before they laid planking to save people from falling. Why did they not 
support us in that? 

Mr. Wegenast: The only conclusion to come to from the remarks of Mr. Doggett, 
which I am surprised to hear coming from him as he has always appeared 
fair, is that we are insincere in our advocacy of accident prevention. It 
does look, altliough I do not believe it, that our friends across the table are 
bound to pick a quarrel with something. 

Mr. Bancroft: We are trying our best to agree with you. 

Mr. Wegenast: I have an extract from the Washington report which I would 
like to read ; it appears in my brief. " The burning issu3 of the industrial 
situation to-day is the need of a first-aid fund. When the act was discussed 
in the legislature it already bore a provision for first-aid, which was 
stricken out at the urgent request of the manufacturers, who declared that 
they desired to establish their own first-aid funds; it was also felt that the 
law, revolutionary as it was in a great many respects, would prove to be a 
sufficient burden without the addition of a first-aid provision. The whole 
matter was therefore stricken out and the schedules designed to accompany 
that provision were allowed to remain as they are. It will be seen that the 
law provides simply for the bare necessities of life during disability or after 
the death of a workman, and the expense of doctor's bills, hospital dues, etc., 
is absolutely unprovided for. It is clearly up to the employers and 
employees of the state to give this question of first-aid careful and serious 
consideration inasmuch as it constitutes in the opinion of the Commission, 
the most imminent problem in connection with the administration of 
industrial insurance in this state to-day." As I say it is in anticipation 
of that gap we propose the first-aid fund. 

Let me say, too, the provision incorporated in some of the acts, whereby 
medical expenses and surgical expenses up to a certain stated limit is pro- 
vided for, is not in my opinion satisfactory. I know of a number of cases 
where hospital expenses have extended over months and years. I know of 
one case in Hamilton where the inan has been in the hospital for, I think, 
nearly two years in the effort to have a broken leg mended and internal 
injuries cured; the expense in that case must run up into hundreds or 
perhaps into thousands of dollars. In a case of that kind the provision 
would be inadequate. In other cases it is altogether likely that the pro- 


vision would be abused, by reason of the doctor taxing as nearly up to the 
limit as he possibly could. A pro\Tision, for instance, like that in the State 
of Ohio for a limit of $150 would be entirely absurd, because it is too high 
in ninety-nine cases out of one hundred. 

The Commissioner : The United States act has a provision too, has it not ? 

Mr. Wegenast : Yes. I do not just remember what it is. 

The Commissioner: Are you gentlemen who speak for the labour organizations 
favourable to or against an adaptation of the German system of thirteen 
weeks, or some other period, covering all kinds of accidents and sickness, the 
employees as well as the employer contributing to that fund? 

Mr. Bancroft: We have not really ever considered it from that standpoint. 

The Commissioner : You might consider it from now until the Commission meets 
again, and let me know what your views are. 

Mr. Gibbons: It would cover sickness and non-occupational accidents? 

The Commissioner: All kinds of accidents. 

Mr. Gibbons: That is the point I have been taking all the time, that there is one 
non-occupational accident to ten of sickness, and what the employee pays 
out for that one case of accident he receives more back from the employer 
in the ten cases of sickness. That is our contention, and if that is not 
established the employees should not contribute anything to the accident. 
In Germany the employer actually pays into ten cases where tlie employee 
pays into one. It is safe to assume that there are ten cases of sickness to 
one non-occupational accident. 

The Commissioner : The German system only requires the employees to con- 
tribute to that thirteen weeks. 

Mr. Gibbons : That covers all diseases. 

The Commissioner: Yes. 

Mr. Bancroft: The social legislation of Germany has worked out — it is not aj 
permanent system or anything, but it covers all the unfortunate accidents 
and illnesses that occur to the working class. Supposing sickness was only 
thirteen weeks and then only a compensation covering accidents after that 
thirteen weeks, if a man happened to have consumption that went on for a 
period of years he would be practically out of court altogether. But the 
social legislation of the State we labour men in this Province say, and 
labour men in Great Britain and in every other country that has dealt 
directly with compensation say, should be entirely separate from the field 
covering accidents arising out of and in the course of employment. If 
social legislation is necessary covering sickness then that should be a 
separate piece of legislation entirely. We fear that the sickness compen- 
sation argument is only for the purpose of getting the workmen to con- 
tribute to accident compensation. We are convinced of the proposition 
because it has been no secret on the part of the manufacturers. It has 
been known for a long time that whenever workmen's compensation was 
brought up in this Province th^at the maimfactnrers would commence and 

120 iriXUTES OF K\II)K.\( H: 

liglit on it. Mr. Wegenast brings you the evidence here this morning of 
the by-law of all these schemes in existence, but the Britisli Act is a clear 
case of workmen's compensation, and you see how it has worked there. We 
agree that individual liability is not a good thing at the present time, and 
the workmen of England agree it is not a good thing, and they are asking 
for a State Insurance Department in Great Britain, which I hope ]\Ir. 
Comniissiuner, you will find out about by seeing some of the men; they are 
very good fellows I assure you, and they are working for State insurance 
in connection with the act. That act starts out with straight compensation, 
and now the social legislation of England is following upon this act. I 
say tbe best thing, and I think the workers of this Province AA-^ill say that 
the best thing to be done is to have a straight workmen's compensation 
act wdth all those frills set aside and if the employers are so concerned 
about the sickness of the workmen, let them contribute to a fund to look 
after the sick as well as the unemployed. If the employers are honest in 
this they will then recommend a piece of social legislation to which the 
workmen will be asked to contribute. I do not think it is fair to work in 
tbe sickness compensation; this is a plain thing, that accidents arising out 
of and in the course of the employment should be compensated and that 
the burden should fall upon the employer. After that if the employers 
want to bring in social legislation I think the workers will consider it 
favourably. Germany is not an analogy ; Germany started with social legis- 
lation and brought in accident compensation afterwards; in this Province 
we are doing it the other way around. When the Commission resumes, 
after j\fr. Wegenast has completed his argument, we hope for an opportunity 
of supplementing what we have already said. We have a great deal to say 
on this matter now that Mr. Wegenast has brought all these matters up. 
We have a great deal of confidence, however, in your judgment, Mr. Com- 
missioner, and we will be glad to put you, while on your trip to England 
and in Germany, in touch with men who have made it a lifelong study: 
We want this to be made an absolutely straigbt case of workmen\-* compen- 
sation. The Government, when they appointed this Commission, appointed 
it at the request of the labour interests ; we made the request to Sir James 
for a Committee, and he appointed the Commission. It was understood from 
the first that it was a plain case of workmen's compensation and not deal- 
ing with sick insurance; that is a separate thing altogether. The waiting 
period for which the manufacturers are now arguing through Mr. 
Wegenast is an attempt to defeat the plain issue of workmen's compensa- 
tion, for which they have absolutely no case, according to the evidence of 
the experts brought here. This waiting period is just a means of getting 
a contribution from the workmen afterwards. 

Afit. Wegenast: I am sorry to stop ]\rr. Bancroft's flow of eloquence, but I really 
do not see what the point of it all is. 

The Commissiokeu: I would like to know when a man ceases to be a worker? 
I tliougbt a newspaper reporter did nothing and that he was no longer a 

]\li;. Baxcroft: There is no doubt about it that the reporter* are the hardest 
worked of all. The proposition is that there is a wage-earning class, and 
a class wliicb owns and controls industry. We have good relations with the 


employers in many cases, but we say all those people who are earning wages 
are in a different position entirely from those people who are earning 
salaries. A man who earns a salary and has two weeks' holidays with his 
pay going on, and who does not punch a clock in the morning, we do not call 
a workman. A workman puts in a time-sheet, and the time-sheet goes into 
the office and from that time-sheet he is paid, and if he is not making a 
profit for the employer he is fired. That is the reason of the strenuous 
labour and the systems which have been developed here and in the United 
States. There I understand the fact is that in Taylor's "' Efficiency 
System" a man stands with a stop watch to see if a man is using a machine 
to its utmost capacity, or if he is running a lathe as fast a- ii can be run. 
Men who are earning wages are looked upon as human maihines and are 
subject to mathematical calculations to see if they get through the work in 
a given time. Their conditions are entirely different from those who have 
been fortunate enough to have their wages called salaries. That is why 
we speak of a worker as a wage-earner. A foreman is a wage-earner. I 
would not like to call you a wage-earner, Mr. Commissioner, because i 
would not like to think that you were subject to the regulations in your 
business that we are. For instance, I find Mr. "Wegenast can be here any 
moment he likes, and he can go all over the States to investigate workmen's 
compensation ; we cannot do that. 

The Commissioner: He is putting in his day's work. 

Mr. Wegexast: And the night as well. 

Mr. Bancroft : When we speak of workers we do not mean any disrespect to 
other people. A worker under the present system lives in environments 
into which he is thrown, and those who are unfortunate enough to be in 
that class are making a fight for better conditions. 

The CoMMissroxEK : Fortunate en(mgh, you moan. 

Mr. Wegenast: 1 just want to mention once more, what I despair of getting 
into Mr. Bancroft's head that the proposition of sickness insurance, or 
social insurance as he terms it, is not our ]iroposition; it was not suggested 
by us either to-day or at any other time. 

Mr. Bancroft : We did not bring it up, that is certain. 

The Commissioner : The proposition Mr. Wegenast has given is a much narrower 
proposition. His proposition is for the short period accidents arising out 
of the employment that this fund sliould be created, 

Mr. Wegenast: Yes, and what I said in response to Mr. Gibbons" suggesttion 
that it should include non-occupational diseases and sickness and so on, was 
that we had no objection to tbat. It is possible, but wo bavo no eonoorn 
with it. 

Mr. Gibbons: Mr. Wegenast is assuming that a waiting period is necessary; we 
do not assume that a waiting period is nooossary. It is (uily in Germany 
where the waiting period is, and there the employer contributes to the 
sick benefit. 

The CoM:\rissTONEi! : In most countries there is a waiting periorl. \\\ England 
there is. 


I — , __ — — » 

Mr. Wegenast: The original foineptioii of the British Act was that there should 
be a waiting period of three weeks, which the workmen were supposed to 
cover out of their own resources. 

Xow, I would like to refer to the method of collecting the fund. I 
submit that this could be done through the agency of the banks so that an 
employer could pay in his insurance premium. 

The Commissioner : That is all a matter to be dealt with by the Commission, I 
should think, except so far as it may be thought desirable to use the muni- 
cipal machinery. 

Mr. Wegexast : I was just making that the foundation for the suggestion that 
possibly an effort might be made to induce the Dominion Government to 
allow the system to utilise the Post Office Savings Bank. I appreciate the 
difficulty in the way of such a plan, but I think that even under our 
federal system it might be pracHcable. I do not see that there could be any 
complaint from the other Provinces on the ground of discrimination; it 
would be open to the other Provinces to adopt the same system. 

The Commissioner: I see no difficulty about that. Arrangements could be made 
for payments to be made to Hhe banks, or wherever the Commission thought 
right at a certain time, and if payments were not made at that time then 
they could be collected through the ordinary tax collector. 

Mr. Wegenast : I mentioned the Post Office because I felt that if the suggestion 
had not occurred to you it might be possible to ascertain, unofficially 
perhaps, whether the method would be considered. 

I only desire to refer to what, I submit notwithstanding the doubts of 
the labour people as to our motives, is after all the main consideration in 
this class of legislation. I refer to our own attitude and our own inten- 
tions in the matter of accident prevention. 

The Commissioner: You told us all about that yesterday, didn't you? 

Mr. Wegenast: I may have casually mentioned the plan. The idea is to form 
mutual associations corresponding with the classes into whicli the industries 
would be divided for insurance purposes, and to have these organizations 
conduct whatever activities may be found advisable in the direction of 
accident prevention. To that end we would like to have facilities afforded 
by the act for the recognition of these associations, and for the payment, 
probably out of the insurance fund of the class, of inspectors or such other 
officials as might be necessary. The whole scheme can be worked out along 
the lines of least resistance; nothing is compulsory about it or would be 
compulsory about it. We should like to have facilities open for that. 

I have nothing further to say, Mr. Commissioner, except that we 
appreciate your courtesy and long suffering from the length of the dis- 
cussions. I cannot really take any blame for it; I blame the subject for it. 
There would be no profit in ignoring any of the important phases, even 'in 
the interests of brevity. I should like to suggest that if you visit Germany 
I might submit a list of officials whom you might see, and particularly I 
would suggest the name of Dr. Zacher, who is at present in Africa, but who 
will be back in Germany by the end of this month. He is the head of the 
insurance department in the Imperial Office. He is the head of the whole 


* -» 

German insurance system, accident and sickness, unemplopnent, and all 
the rest, and he is the foremost authority upon the subject in the world 
to-day. Dr. Zacher speaks English quite well. 

The Commissioner: What is his calling? 

Mr. Wegenast : Mr. Keys says he is a statistician. 

The Commissioner : You might give me a list, if you will. 

Mr. Wegenast : I presume at a later stage we will have an opportunity of dis- 
cussing something concrete. 

The Commissioner: Have you not got to anything concrete yet? 

Mr. Wegenast : Our arguments are directed to the framing of some measure, but 
I should like to have something in cold print perhaps to discuss further. 

The Commissioner : What do you mean by that ? 

Mr. Wegenast: I presume you will in due time draft a bill, and we should like 
to have an opportunity of discussing its provisions. 

The Commissioner : Oh, yes, an opportunity will be given. 

Mr. Bancroft: We will send you a few names later on. We think on your trip 
you will get corroboration of some of the arguments we have made, and 
when you get the information first hand we can better make our arguments 
and complete our case. We have not a great deal of doubt of the ultimate 
outcome, because the evidence all over the world is in favour of the things 
we are asking for. We would like at some session after you return to be 
allowed iti the labour interests, to go on with the case as Mr. Wegenast has 
been going on. We understand the forms were built and the concrete was 
being poured in, and the bill was taking some sort of shape. I would be 
sorry to go back to the mixing again. I think by now your views 
must be getting pretty well defined, and we feel confident and certainly 
hope that the next session of the legislature the bill will be framed and ready 
for discussion by the people of Ontario. I think that in the last analysis 
your recommendations will go to the legislature, and the legislature will 
be the body to say what the act shall be, and the people of Ontario in the 
last, analysis will pass judgment upon the wisdom or otherwise of the 

The Commissioner : You will have an opportunity. I have a commission to draft 
a bill, and that bill will be properly the subject of discussion here. That is 
only reaspnable because it will be a difficult thing to draft, and I want all 
the assistance possible. 

Mr. Wegenast : I would like to add another suggestion, that you visit the State 
of Washington. 

The Commissioner : No, I think I should keep away from there. We had 
Washington here. 

Mr. Wegenast: No, that was Ohio. I had in mind bringing Mr. Preston here, 
but I should think it would be desirable for you just to go over 
the ground and see how it actually works out in practice. I am very much 


, 4 

interested myself in finding out liow it does work, and 1 propose to go out 
in a few weeks, but I think it would I»l' of eonsideral»le vaiuo to the pro- 
vince if you also would go. 

'J'iiE Commissioner : I think it a good idea for you to prepare a list of the indus- 
tries which you suggest should be classified and let Mr. Bancroft or Mr. 
Gibbons have a copy of it so that they can consider it before we meet again. 

Mr. Wegexast: I have just glanced over the headlines of the memorial of the 
C. P. E., and it looks to me as if we and the labour people had a task before 
us to answer the arguments of the railway that are directly contrary to our 
mutual presentations. I notice they do not confine themselves to their 
particular branch, but go into the discussion of the general principles. 

The Commissioner": You have said all you are going to say on the general 
principles, I presume. Of course it is agreed that the classes must not be 
too small, otherwise it may result that the burden upon a class Avill be such 
that it cannot bear. 

Mr. Wegexast : I propose after covering certain lines of industry more or less 
thoroughly to go over the whole ground with some consulting actuary. 

The Commissioner: What would we have to do with classification; should it 
not rather be somebody who has been accustomed to accident insurance? 

Mr. Wegenast: Yes, an actuary of accident insurance companies: that is what 
I meant. 

The Commissioner : You want to classify them according to the risk. 

Mr.' Wegenast: Ye<. I do not see that thei\> should be a great dt*,il of room for 
any difference of opinion in classifying. 

The Commissioxkh : Anything that is done by the legislature will iiave to be 
very elastic, allowing the Commission to re-classify and to determine to 
what class a particular industry, or a part of it belongs, so that they would 
have it within their control, and the power to determine all; for instance, 
there might be a question as to whether ^Ir. A's establishment belonged to 
Class 1 or to Class 10, or to both. One of the most difficult branches of 
the question will be how far this should extend, whether it should include 
all classes of employees and employers, or whether it should be limited to 
what may be called the industrial occui)ations, and whether the clerical 
classes should be included. 

Mr. Wegexast: And the clerical department of the shop, and the managers, and 
if the manager goes out into the works and receives an injury whether ho 
would receive compensation. 

The Commissioner: Then as to the scale of compensation: 1 would like to have 
the views of both sides as to what that should be. 

Mr. Wegenast: Ours is contingent upon the question of contribution. 

The Commissioner: You can put it in that form, briefly. Then there is the 
question as to whether the agricultural industries should be brought in. 

Mr. Wegexast: T think our submission is clearly laid before you on that question. 
We consider that all industries should go in and will go in ultimately. 


,__ « 

The Commissioner: What do you meau by all industries? 

Mr. Wegenast: The agricultural industry for instance. 

The Commissioner : Do you include all the employees in such a place as Eaton's, 
all the employees in the retail departments ? 

Mr. Wegexast : Yes, decidedly, without exception. Wc recognize, however, that ':i 
order to get it properly started some industries might well be omitted. 

The Commissioner: As far as the agricultural industry is concerned, I do not 
think it makes much difference what the Commission may report. 

Mr. Wegenast: Except that you should consider the form of the system in view 
of the uniform tendency. 

The Commissioner: I think it could be drawn in such shape that it would be 
easy for the House to make an exception of any class it might choose. 

Mr. Wegenast: That is one of the many things I left unsaid. It might be well 
to enumerate the industries in the act, nltliough tliat method lias sonic 
objectionable features. 

The Commissioner : It has a good many. 

Mr. Wegenast: On the whole I believe it would work out best in the end. If 
they were included there would be no doubt whether a certain industry was 
insured or not. 

The Commissioner: Thait might be so, but there ought to be general terms to 
cover all other classes that are intended to l)e brought within the scope of 
the act, leaving the Commission to detei'inine whether they come within 
those provisions. 

Then another thing I would like to have. One of two courses would be 
open: either to bring into force so much of the act as would appoint the 
Commission and enable it to frame a scale for the first contribution, and the 
rest of the act to go into force at a later date, or to embody the first con- 
tribution in the act. If the latter course were adopted then it would be 
necessary to have some skilled person or persons to prepare that. 

M'R. W^egenast: What was in my mind was this, that the act should give the 
Lieutenant-Grovernor power to appoint a Commission with power to make 
a preliminary assessment, and that the compensation should begin to accrue 
on a date to be fixed. 

The Commissioner : If that plan were adopted it would bring into force so much 
of the act as created the Commission and its accessories, and power to 
frame its tariff. Then the rest of the act would come into force on a later 
date to be fixed, giving time for the preparation and settlement of this scale. 

Mr. Wegenast: Leaving the time elastic. 

The Commissioner: You could make it elastic, and let the rest of the act come 
into force, or proclaim a late enough date to enable this to be done. 

Mr. Wegenast: What I thought might be done is to say that on or before a fixed 
date the Commission shall make tlieir ju-eliminary assessments, and so on. 
10 L. 


. . ( 

The Commissioner: They have got to do more than that; they have to settle the 

Mr. Wegenast: Well, that would be the scale. 

The Commissioxep : Then as soon as the rest of the act came into force they 
should at once take steps to collect that. 

]\Ir. Wegenast: I think I would collect it before the date at which the act weat 
into force, the insurance premium is paid before the insifrance goes 
into effect. I do not see any difficulty in working out that plan. 

The Commissioner : You mean the provisions for collecting it should come into 
force before the rest of the act? 

Mr. Bancroft; "When you asked Mr. Boyd as to how long it would take an 
accident actuary to figure out a scale of assessment in a city like Toronto 
he said sixty days. 

The Commissioner: That must be taken with a good deal of reserve. First of 
all there would be a good deal of difficulty in selecting the man to do it. 

Mr. Bancroft : If the industries to be covered by the act were not specified would 
the Commission have power to determine who came under the legislation? 

The Commissioner: Xo. Unless it is general and covers every employee I think 
Mr. Wegenast's suggestion might be right, to enumerate the industries 
included, and then by some general words, some general expression, to 
include all other industries of a particular class, leaving the Commission 
to determine what industries fell within that class. Supposing it said 
" manufacturing industries," then leave it for the Commission to determine 
what is a manufacturing industry. 

Then I would like to have your views when we meet again whether 
from the date that the bill receives the assent of the Governor until it 
becomes o])erative there ought not to be a provision to cover accidents 
happening in the intermediate time, and whether these three defences in 
case any accident happened between the date of the passing of the act and 
its coming into operation, should be done away with so as to entitle the 
injured person to the benefit of it — that is the three defences of common 
employment, assumption of risk, and contributory negligence. In some 
of the laws of the United States they abolish them. 

Mr. "Wegenast: Xot for the preliminary period. 

The Commissioner : I see no reason why that should not at once become law until 
the new provisions take effect. I think everybody concedes that at any rate 
the defences of common employment and of assumption of risk should go 
by the board. 

Mr. Wegenast : We have no assumption of risk practically in this Province. 

The Commissioner: Oh yes, we have, except so far as it is limited and controlled 

by the Compensation Act. I would abolish it as a defence at common law. 

Then I do not know how they have it defined, but this doctrine of 

contributorv negligence as it stands now, is, I think, highly objectionable. 

While I would not at present favour doing away entirely with that as ai 


defence in this preliminary period, it ought to be cut down; what should be 
done after the compensation provisions come into force, I say nothing. 
Whether the doctrine of comparative negligence should be adopted or not is 
a question. I have not yet seen that defined, but what ought to be done, I 
think, is where the accident has been caused in part by the negligence of 
both parties the tribunal in assessing damages should have regard to the 
extent to which each has contributed, and limit the damages or compensa- 
tion accordingly. 

Mr. Bancroft : That would be in the interim period. 

Thk Co]\[Mrs.sroNER : Ye«, that is what has been passing through my mind. I 
would like to have your views. When the act conies to be framed that will 
have to be considered. 

]\Ir. Bancroft: To anticipate, does that mean there may be a considerable period? 

The Commissioner: Well, there must necessarily be some months or perhaps a 
year before the act will become operative ; it would not be reasonable to 
leave what is admittedly a defective condition of the law to govern the rights 
of people who are injured in the meantime. 

Mr. Wegenast: We do not, of course, admit that it is a defective condition. 

The Commissioner : I will decide that against you offhand. 

Mr. Wegenast: We quite admit that conditionally. There is this further 
question, whether that would include all employments and agricultural 

The Commissioner: My present impression is to alter the common law and make 
it general. 

Mr. Wegenast : I am not prepared to answer these things offhand. 

The Commissioner : I am not asking you to do that. The one thing I am clear 
on is that the present law is defective ; I have already delivered myself upon 
that. Everybody admits that, or I think they do. 

Mr. Wegenast : We admit that with certain qualifications, but 

The Commissioner : You should not have so many " buts." 



The Building, Toronto. 

Salurdaij, 1th December, 1912, 2.30 p.m. 

Present: Sir William R. Meredith, Commissioner. 
Mr. F. N. Kennin, Secretary. 
^[r. W. B. Wilkinson, Law Clerl-. 

The Commissioner: This meeting has been called on short Kotice, because I 
nnderstand Mr. Wolfe is here from New York, and cannot stay over. J 
think all the parties are represented. I understand Mr. MacMurchy wishes 
to examine Mr. Wolfe. It has not been the custom to take the evidence 
under oath so far, so we will take Mr. Wolfe's evidence on his honour. 

Mi{. Axcis MacMurchy, K.C. : You might state to the Commissioner your 
connection with accident insurance, and other forms of insurance, and 
your knowledge and experience, Mr. Wolfe. 

Ml!. S. II. Wolfe: I am a consulting actuary, and have been connected with various 
insurance departments and insurance companies for about eighteen years. 
I have been actuary for or have made examinations for a great many insur- 
ance departments of the ditferent states, such as Maine, Vermont, Massa- 
chusetts, Connecticut, New York, California, Taxas, Tennessee, Ohio and 
a number of others. I have been consulting actuary for life insurance 
com})anies, accident insurance companies, liability insurance companies, 
and Iiave represented the Plnglish shareholders of the Ocean Accident 
and Guarantee Corporation for a number of years, and as such 
representative have scrutinized the various acts of the Ignited States. T 
1 hi Ilk I have answered that pretty fully. 

Mr. MacMukciiv : And have you had occasion to investigate in any way the 
working out of woi-kiiieirs compensation in Europe as well as in the United 

Mi;. Woi.fh: 1 have. 1 have been consulting actuary of the Massachusetts Em- 
ployees Insurance Association, a corporation which I will describe more 
fully later, and also consulting actuary of the Iowa State. 

Ml!. MacMl1!ciiy: Then dealing with Europe, have you made any personal investi- 
gations into the Avorking of these laAvs? 

Mr. Wolfe: I went abroad last year for the purpose of considering the operations 
of workmen's compensation in the ditTerent countries there, and while I 
would hesitate to say I made a thorough investigation of European method^ 
1 think I ()l>taiiu'(l a thorough kno\\l('(lgc of the workmen's (Compensation 

Mr. MacMurchv: In what countries? 

Mr. Wolfe: Germany, France, England, Belgium, Austria. 

The Commissioner: Norway? 



Mr. Wolfe: I did not go to Norway, no. 

Mk. MacMurchy : Switzerland ? 

Mr. Wolfe: Yes, I was in Switzerland. 

Mr. MacMuechy: These are the principal countries? 

Mr. Wolfe: Yes. 

Mr. MacMurchy: You mentioned England? 

Mr. Wolfe: Yes. 

Mr. MacMurchy: How long were you abroad? 

Mr. Wolfe: I was abroad for a little over three months. 

Mr. MacMurchy': And did you obtain access to the usual means, or any unusual 
means of information in these countries? 

Mr. Wolfe: Well, I approached the subject in a diflferent way from the one that 
is usually followed. I entered by the basement instead of going in by the 
front door. For instance, in Germany I watched the operation from the 
standpoint of the Police Department. I was registered as a volunteer 
worker and had my cards issued and stamps affixed, and just saw how the 
thing was operated from the standpoint of the worker, not relying entirely 
upon the published statements of the way in v/hieh the machinery of the 
departments themselves were conducted. I didn^t feel it necessary to go 
into that. 

The Commissioner: What do you mean by the worker? 
Mr. Wolfe: The individual employee. 
Mr. MacMurchy: The workman, I suppose you mean? 
Mr. Wolfe : Yes. 

]\[r. MacMurchy : Then you can tell us, I suppose, from a comp,arative standpoint 
the differences in principle and working out between the systems in force 
in these countries? 

Mr. Wolfe: Yes. In a general way. 

Mr. MacMurchy: And in the United States? 

Mr. Wolfe : In a general way. 

MfR. MacMurchy : Such of the States as have adopted the compensation laws. 

Now, can you specify shortly the different systems in vogue? 

Mr. Wolfe: Yes, I can. 

Mr. MacMurchy: You have a memorandum there, I see? 

Mr. Wolfe : Yes. Sir William, on account of your sacrificing your own con- 
venience and your own time and meeting mine and holding this meeting 
this afternoon, I have prepared a memorandum in order to save time, and 


. ( 

with your consent I will read from it and you can follow it, and as 1 go 
along if you wish to interrupt me, do not hesitate to do so. 

The Commissioner: Any gentlemen here who are interested had better follow 
it, make a note of any questions they wish to ask, and ask them later on. 

Mr. Wolfe : "The advisability of enacting some form of workmen's compensation 
to take the place of the common law liability of employers, is conceded 
by all ; the question of the form which such an enactment should take, 
however, is a matter open to discussion. An examination of the different 
plans indicates that the following are the methods in use in some of the 
various countries or states which have attempted to handle this proposition. 

1. The legislature may limit its activities to the enactment of a 
statute specifying the compensation which shall be paid to an injured 
employee, irrespective of the question of negligence. This method does not 
attempt to provide for any form of guarantee to the injured workman as 
to the ultimate receipt by him in all cases of the benefits due, and leaves 
the employer to carry his own insurance, or to protect himself by a policy 
in a mutual association or a stock company. 

2. The legislature may provide for a scale of benefits to injured work- 
men and may require the employer to furnish some evidence of the probable 
continuance of his financial solvency either by furnishing a bond or becom- 
ing a policyholder in an authorized insurance corporation. 

3. The state after fixing a schedule of benefits may insist upon the 
formation of mutual associations composed of employers engaged in the 
same form of industry and prohibit any other form of protection. 

4. The state itself may become the vehicle of distribution by assessing 
upon the employers (in any way which may seem reasonable to it) the 
cost of the benefits which are provided by the statute. 

Let us consider the advantages and disadvantages of each of the plans 
in the order stated : — 

1. The first plan is the one now in use in England and in some of the 
states of the United States. It would seem to be the method alfording the 
maximum amount of personal freedom with the minimum amount of state 
interference. The principal question arises as to the method of administra- 
tion. Is the plan productive of an undue amount of litigation? Are the 
employers inclined to avail themselves of the privilege of requiring their 
injured employees to seek the aid of the courts in enforcing their proper 
claims? It has been stated that in Great Britain in 1000 only 2i/^ per 
cent, of the new claims for compensation were taken to court and that only 
one-half of these were tried, settlements evidently having been made out 
of court in the case of the other half. It would appear, therefore, that 
the element of litigation is not a serious or vital factor. But the objection 
has been made that (a) if so disposed an employer can force the injured 
workman to litigate his claim, and, (h) that the person entitled to the 
benefit payments has no guarantee that the employer will be solvent at 
the time that the first payment is due or that he will continue in a solvent 
condition until the last installment is paid. 

To overcome these objections some of the States have modified this plan. 


The second method is the one which has been adopted by the Common- 
wealth of Massachusetts and has been suggested in a modified form for 
the State of Iowa by the Employers' Liability Commission of that State. 

In Massachusetts an employer in order to bring himself within the 
act must give his employees the statutory notice and must become either 
a policyholder in a stock company or a mutual association authorized to 
transact liability insurance in the Commonwealth or must become a sub- 
scriber to the Massachusetts Employees Insurance Association. 

Mr. MacMurchy: That is on account of the Constitution? 

Mr. Wolfe: Of course the supreme courts in the various states differ in that 
respect. In New York they decided that a compulsory act was uncon- 
stitutional, and in Washington it has been held that it is not. 

In Iowa it is proposed that every employer shall come within the 
act unless he gives statutory notice of his intention to remain without, 
and those electing to come within the act are required to become policy- 
holders in the Employers Indemnity Association, any other protection in 
a stock or mutual company not being recognized. The bill in Iowa will 
be considered at the next session of the legislature and at that time it 
will be determined whether the people are in favour of the creation of a 
monopoly of this kind or whether they prefer to have the benefit of com- 

In Massachusetts, the Massachusetts Employees Insurance Association 
is required to divide its subscribers (the employers) into groups according 
to the nature and hazard of their industries, to charge premiums in advance, 
and after setting aside the necessary reserve for the ultimate payment of 
losses that have occurred in any year, is authorized to apportion the un- 
expended balances among its subscribers in an equitable and proper .manner. 

The legislature of the Commonwealth of Massachusetts, therefore, has 
definitely prescribed for the charging of premiums and the accumulation 
of reserves on the capitalized value plan, which is described more fully 
in the following pages. 

The Commissioner : Has that the effect of keeping the employers out of this Asso- 
ciation or is their joining compulsory in Massachusetts ? 

Mr. Wolfe: They are not compelled to join. If they come within the act they 
may either join the association or take out a policy of insurance in any 
liability company authorized to transact business in the State. 

Mr. MacMurchy: Or may they insure themselves? 

Mr. Wolfe: No. 

The Commissioner: What is the result of that? Have many gone into this 
association ? 

Mr. Wolfe: The Massachusetts Employees Insurance Association was authorized 
to issue policies on July 1st of this year. The law provided that it should 
not issue contracts until it had one hundred subscribers covering 10,000 
employees. The Association in five months of its existence has over 500 
subscribers and about 80,000 employees. 

132 MIMTlvS OF i:\" I DKXCK : 

The Commissioned: What proportion of the Avholc would that represent? 

Mr. It is impossible to say. 

The CoMMissioxKi; : It would be a small percentage? 

Mr. Wolfe: No, it would be a comparatively large percentage. It unquestionably 
is sharing the business with the stock companies and other mutual com- 
panies. While it is impossible to give any authorative figures at this time, 
prior to the filing of the sworn statements with the Insurance Department 
of ^Mas^achusetts^ I am of the opinion that the Association will l>e found to 
have covered about 30 per cent, of the business in the Commonwealth. Of 
course that is purely an estimate. 

The CoMiMIssioxer: What security docs it afford? What is its financial basis? 

Mr. Wolfe: It has fixed rates which have been approved by the Insur- 
ance Commission of Massachusetts as adequate. It is permitted by the 
statute which brought it into effect to fix a contingenf liability for it* 
subscribers. The Association by its by-laws has fixed that contingent lia- 
bility at 100 per cent, of the cash premium which any subscriber pays. In 
other words in case of a catastrophe or a very heavy loss a subscriber may be 
called upon to pay an additional premium not in excess of 100 per cent, of 
his casli premium which he has ])aid. 

TriE CoMMTSsioKE]! : Does tliis Association come under the insurance laws of the 

Mr. Wolfe: It does. 

The Commissioner: Subject to all tiie laws affecting a mutual company? 

Mr. Wolfe: Yes, a mutual company, and in addition to that there is a further 
safeguard thrown around it in the sense that all its operations have to be 
approved by the insurance commissioner, in not only the fixing of rates 
but also the grouping of the subscribers for the purpose of charging pre- 
miums, and the dividends which they will return, and all other matters 
pertaining to its operation. 

The Commissioner: It is not purely mutual because there is a premium? It 
is not an assessment? 

Mr. Wolfe: it ])ays the premium in advance, and the statute })rescril)es that 
at the end of the year the amount unnecessary for the payment of the 
losses that have occurred in that year shall be returned to the subscribers, 
so it is purely mutual in its pure sense. 

The Commissioner: Is that not a round-about method? Would it not be much 
more simple at the end of the year to assess the loss as you do in mutual 

insurance companies, liaviiig your first ]>rcmium, tlie initial ])reiiiiutn, pro- 

Mr. Wolfe: The effect is the same. 

The Commissioner: Only it is a round-about way of getting at the same result. 

Mr. Wolfe: I wish to call your attention. Sir William, to the fact that there is 
an added security to the subscribers in this sense, that one of the by-laws 


prescribes at the eud of the year there shall be apportioned this returji 
preiuiuni. The Aissoeiatioii need not immediately return that in cash to 
tlie subscriber, but may retain that for not more than one year, if it see fit. 
and pay interest at the current rate. 

The Commissioner: Well, what provision have you if the opposite results, if 

you have nothing to pay the losses? 
Mr. Wolfe: Then the subscribers are liable to an assessment of not more than 
100 per cent, of the premium. 

The Commissioner : And if that falls short of meeting claims? 

Mr. Wolfe: The association would be in exactly the same situation as a stock 
company, the liabilities of which were more than its capital stock and 
surplus. It is a very unusual situation. 

The Commissioner : What was the reason of limiting that amount ? Why would 
not each group be liable to meet all the claims made upon it? What 
suggested that? 

Mr. Wolfe: I am giving now entirely my personal opinion, but in my opinion 
it was a very wise limitation, because otherwise no man would know what 
his liability assessment was. 

The CoiiMissiONER : It made this Association a competitor with the line com- 
panies ? 

Mr. Wolfe: Yes. 

The Commissioner: But if they had the field all to themselves there would not 
be that competition. 

Mr. Wolfe: No. I think the same objection would still stand, because if there 
were the right to an unlimited assessment no employer would know how 
his future resources were mortgaged. 

The Commissioner: Well, it would be an incentive not to have any accidents 
in his establishment. 

Mr. Wolfe: There are other incentives offered under this plan. I think it 
very important, Sir William, that no manufacturer should have hanging 
over him the sword of Damocles in the shape of an unlimited liability. 

The Commissioner: He has that in the English system and he cannot get out 
of it. 

Mr. Wolfe: He can get out of it by insuring, can he not? 
The Commissioner: Yes, he puts it on somebody else. 

Mr. Wolfe: And therefore that is exactly the position of the Massachuseti-^ 

The Commissioner: If a man did not want that risk would there not spring up 
insurance companies that would insure him under the assessment against 
liability, under a purely mutual plan insure him against his liability over a 
certain amount? Lloyd's will take a fly at a thing of that kind. 

Mr. Wolfe: Lloyd's will take a fly at anything, but whether it would be possible 


to obtain a policy guaranteeing you against the possibility of future assess- 
ments is a thing which I am not competent to answer, I do not know 
in the iirst place whether it would be a legal form of insurance or not. 

Mr. Gibboxs: Would not the company who took those risks be up against the 
same proposition as the company you are speaking of? 

Mr. Wolfe: They would, certainly. There would always be that question. In 
times when no demands would be made upon that company its financial 
condition would be magnificent, but at the very time a catastrophe occurred 
there would be great demands made upon it and its assets would fade 
away and you would very likely have an insolvent insurance company on 
your hands instead of an insolvent employer. 

The Commissioxer : Has there been a case in which an association in Germany 
has failed to meet its obligations? 

Mr. Wolfe: I know of none, but I will point out the reason for that later on. 
I think you will find I touch upon that very point. 

3. The third method has been carried to its highest point of develop- 
ment lin Germany, and for that reason is generally referred to as the Ger- 
man type. 

A proper consideration of this type compels us to refer briefly to the 
political and social conditions affecting its formation. When the German 
Empire was founded a workman injured in the course of his employment 
was comi>elled to establish the negligence of the employer in order to 
secure any relief under the provisions of the common law. As aptly 
expressed in the 24th Annual Report of the United States Commissioner 
of Labour (p. 983) : 

"It is the general testimony of German writers of the time that under 
the system of compensation provided by the common law an injured work- 
man or his surviving depdndants could but seldom secure adequate com- 
pensation for his losses and then only through a time-consuming lawsuit. 
In the majority of cases, even if the suit was won, the injured workman 
was no better off, because the fellow workmen or establishment official 
against whom judgment was usually obtained had no property with which 
to pay the damages. As a result, the injured workmen and their dependants 
were frequently forced to accept the degrading relief of public charity." 

The Commissioner : What became of the employer, because you speak only of 
the fellow-workman or establishment official? Why wasn't the employer 
liable at common law? 

Mr. Wolfe: Well, I think that the establishment official refers in that relation 
probably not only to the superintendent but to the one who owns the 
establishment. That is a quotation from an official report. 

This then was the situation which confronted those at the head of 
the newly established Empire and in 1871 an attempt was made to solve 
the problem by amending the liability law in such a way as to place more 
responsibility upon the employer. After several years of experience with 
that law, however, it was generally admitted that the experiment was not 
a success, and after an abortive attempt in 1881, two bills were introduced 
in 1883 to provide for accident and sickness insurance. The sickness 


insurance plan was passed in that year, but the provisions relating to a 
compulsory accident insurance law were not passed until 1884. Subsequent 
amendments have extended the application of the benefits, have laid down 
new rules for the guidance of the employer and the employee and have 
served to inject elements which have presented a due appreciation of the 
demerits of the system, as will be pointed out later. 

It should be borne in mind that this new form of protection was 
rather a growth than a creation. In the words of the report just referred 

"The system of workmen's insurance introduced on a national scale 
in the early eighties had many antecedents which had provided sufficient 
experience to enable the new system of insurance to be considered as a 
development rather than an entirely new department." (p. 980). 

In connection with this it should be noted that the laws passed in 
1845, 1849 and 1854 had encouraged the formation of organizations 
among employees for the purpose of paying disability benefits which were 
the result of either sickness or accident. 

It will be seen, therefore, that the political and social ground in 
Germany was in a most receptive condition for the planting of the seed of 
accident insurance by means of mutual associations under the guidance 
and strict supervision of the state. To have attempted to introduce this 
system without the preliminary education, without the years of prepara- 
tion which had gradually accustomed the employees to a form of pater- 
nalistic interference, would, in my opinion, have been an almost impossible 

The Commissioxer : I did not learn until I went to Germany that under the 
system there they compelled the employers to form these associations, so 
that very many of them would be new, not ones which were existing when 
this law was brought into operation. 

Mr. Wolfe: That again is a point I think I develop later. 

Thirty years ago Charles Francis Adams, Chairman of the Railroad 
Commission of Massachusetts, pointed out why it was not safe to assume 
that Government ownership of railways in France and Germany could !)e 
successfully followed in England or in America. His views are so perti- 
nent and applicable to workmen's compensation that I desire to bring 
them to your attention : 

"In applying results drawn from the experience of one country to 
problems which present themselves in another," said Mr. Adams, "the 
difference of social and political habit and education should ever be borne 
in miiKji. Because in the countries of Continental Europe the state can 
and does hold close relations, amounting even to ownership, with the rail- 
roads, it does not follow that the same course could be successfully pursued 
in England or in America. The former nations are • by political habit 
administrative, the latter are parliamentary. In other words, France and 
Germany are essentially executive in their governmental systems, while 
England and America are legislative. Kow, the executive may design, 
construct, or operate a railroad ; the legislative never can. A country, 
therefore, with a weak and unstable executive, or a crude and imperfect 
civil service, should accept with caution results achieved under a govern- 
ment of bureaus." (Atlantic Monthly. Vol. 110, Xo. 6, p. 748). 


A discussion of the various features of the German compensation 
system, their merits and demerits, may be seen by particular reference to 
them as follows : 


The benefits prescribed in the German type are intended to meet 
the individual needs of each injured workman. This is an important fact 
which should be borne in mind, and which sometimes has been lost sight 
of. For instance, so well informed a student of the subject as Mr. James 
Harrington Boyd in the synopsis of liis brief on p. 470 of the •'Interim 
Report on Laws Relating to the Liability of Employers by the Hon. Sir 
William Ralph Meredith, C.J., C.P., Commissioner," states in support of 
the Ohio Workmen's Compensation Act: 

"The law should require the employee to accept in lieu of his former 
precarious right to adequate damages, a stipulated sum computed not 
independently as to each party injured on the basis of loss peculiar to 
his own personal injury, but relatively as to all in accordance with their 
respective earning capacities. Its sole justification is public welfare, and 
whatever its form, it must be in effect an arbitrary levying and administra- 
tion of a tax fund." 

Mr. Boyd, who was prominent in framing the Workmen's Compensa- 
tion Act in Ohio, states that it is an adaptation of the German Industrial 
Insurance Law, but it would seem to vary in this very important particulai- 
from the German law — a difference which is so vital as to go to the very 
basis of the plans. The report of the Commissioner of Labour previously 
referred to, states: 

"As compensation is granted for 'disability,' the definition of thai 
term is of importance. Total disability has been defined as beinfj not 
templorary inability to earn an income, but in view of the actual condition 
existing, the impossibility of the injured person's securing a regular income 
in an occupation suitable to his physical and mental power and his previous 
training. In deciding this point it is of no consequence that the injured 
person has been unable to secure any employment whatever. The only 
facts tfo be kept in mind are, first, whether, abstractly considered, the 
injured man is able to earn a living, and, second, what is the amount that 
he is able to earn. Thus the loss of one arm or one leg is not usually 
rated as total disability, but the loss of both arms or both legs is always 
so rated. The previous station in life of the injured person is also not 
without influence in estimating the loss of earning power caused by an 
accident. Ordinary day labourers who incur slight injuries which do noi 
prevent them from performing the same kind of labour as that to which 
they have been accustomed receive no compensation.'' (Workmen's Insur- 
ance and Compensation Systems in Europe, 24^h Annual Report of the 
United Slates Commissioner of Labour, 1909, Vol. J, p. 1002). 

In support of his interpretation the Commissioner gives the following 
table from "Einrichtung und Wirkung der Deutschen Arbciterversicherung. 
p. 175:"' 



Occupation of injured person. 

Sawyer f-ioss of right hand 

Farm labourer i-^oss of 2 phalanges of right index! 


Washerwoman JRight hand crushed 

Butcher 'stiffness of right index finger fol-; 

I lowing cut 

Cabinetmaker i^oss of 1 phalanx of right index | 

and ring fingers \ 

General labourer 

OSS of 2 phalanges of the third, 
and fourth fingers of left handj 

Loss of left thumb 

Loss of left little finger 

Loss of right arm 

Weakness in right arm, stiffness of 
elbow, acompanied by weakness 

of old age 

Loss of left forearm 

Blindness in both eyes 

Loss of one eye 

Loss of sight of one eye 

Weakness caused by loss of flesh 

from left leg 

Mason i Injury to left leg 

Farm foreman ' Loss of left leg 

Glass grinder | Injury resulting in clubfoot 

General labourer iLoss of 3 outer toes of left foot. . . 

Cabinetmaker Loss of foot following caries 

Worker in hat factory 

Worker in machine factory .... 


Ship carpenter (67 years of age) 

Second-class steersman on vessel. 

Factory hand 

Ship carpenter and calker 

Mason's helper 

Farm labourer (62 years of age). 

Amount of pen- 
sion in per cent, 
of "Full pension.' 








Carpenter (51 years of age) 


Mason's helper 


Injury to right knee joint 


Aggravation of a " right hernia, 

development of a. left hernia . . 









Mr. Wolfe : This taltle is important inasmuch as it develops the fact that the 
same injury to dilferent employees is compensated for differently. For in- 
stance, a ship carpenter and calker who loses one eye receives fifty per cent. 
0^ tihe full pension, while a mason's helper who loses one eye receives only 
twenty-five per cent., exactly one half, due to the fact that the mason's 
helper's disability owing to the loss of one eye is only one half as great as 
the ship's carpenter. 

The Commissioner : But these do not form part of the law. These are the results 
of the administration. 

Mr. Wolfe: Yes, these are the results of the administration which are intended 
to supplement the statement of the Commissioner of La'bour, and show the 
correctness of his conclusions. 

The Commissioner : When you speak of a man not employed, do you mean not 
employed after the injury? You make use of that expression. 

Mr. Wolfe : In deciding this point it is of no consequence that the injured person 
has been unable to secure any emplojTnent whatever. 

The Commissioner : While he may only get twenty per cent, he may be entirely 
deprived from doing anything by reason of the injur}''? 


Mb. Wolfe: Yes. In connection with that, Sir William, I do not know whether 
you came across any of the conventions which were held last year in Ger- 
many attended by the physicians who were employed by these associations, 
and who carried the separation and differentiates of these different disa- 
bilities to a wonderfully scientific conclusion. They are able to tell Just 
how much disability results from the loss of one-tenth of an inch of the 
little finger, or some similar loss under some other occupation. 

The Commissioner: Under the British system the county court judge has to do 
the same thing. He may not do it as scientifically, perhaps. 

Mr. Wolfe: It does not carry it to the same scientific refinement as the German. 

It should be borne in mind that the percentages shown above are not 
based on the wages of the injured employee, but are percentages of the 
"full compensation,'" which is 66 2/3 per cent, of the average wage. It 
will be seen that the amounts received by the injured workmen are not 
stipulated benefits, but are computed independently on the basis of the loss 
peculiar to the injury sustained, together with the effect of such injury upon 
the future earning power of the employee. 

So much for the disability payments to the injured workman himself. 
The consideration of the payments made to total dependants in case of 
death shows a marked departure from the method employed in compen- 
sation acts in the United States, where in the event of death a definite per- 
centage of the average wages is paid to the widow and children, irrespective 
of the number of such. dependants (as in the Massachusetts type) or of the 
deceased's earnings (as in the Washington type). In the Commonwealth 
of Massachusetts, for instance, there is paid to the widov/ of a workman, 
fatally injured, 50 per cent, of his average weekly earnings (limited, how- 
ever to 300 weeks from the dat-e of the injury and subject to maximum 
and minimum limitations) without considering whether she is childless, 
has a large family, or re-marries within a short time; in the State of Wash- 
ington, on the other hand, a payment of $20 per month is made to the 
widow without regard to the earnings of the deceased, and further allow- 
ance of $5 per month for each minor child until he reaches the age of 16 
years, a maximum limit of $35 being established. In marked contrast to 
these methods is the one used in the German type, where the widow's 
benefit consists off 20 per cent, of the earnings of the deceased husband, and 
an extra 20 per cent, is allowed for each child until he reaches the age of 
16, but more than 60 per cent, of the deceased's wages is never to be paid, 
and if there are more than two children, the portion of the widow and that 
of each child must be reducted in an equal amount in order to keep the 
total of the pension within the maximum limit of 60 per cent. 

I have referred at great length to this provision for it indicates a funda- 
mental difference between the points of view of the German employee and 
his brother workman in this country. From statements which have been 
made to me, it is quite apparent that 20 per cent, is considered an inade- 
quate allowance for a widow, and there is much to be said in support of 
that contention. As I am dealing only with the actuarial aspects of this 
question, however, I refer to this merely as bearing directly upon the ques- 
tion of cost to the employer, which is discussed later. The supervision 
and paternalistic watchfulness which the German Government, actdng 
through the mutual associations, exercises over the injured workmen, would 


i — _^ — — ■ — —r 

be repugnant to our workmen, and would not be tolerated. Suoli, for in- 
stiinco is tlie ]n-o\ision that if the mutual association provides proper em- 
ployment for a disabled workman and he refuses to accept it, his pension 
stops at once. (Brief, pp. 7-8.) 

The CoMMissioxER : You have something like that in the Washington, the Federal, 

Mk. Wolfe : That is not passed, but they had a similar provision of that kind. 

The Commissioner: What is unreasonable in it? If a man can get employment 
that is offered to him and will not take it, why should he be a pensioner? 

Mr. Woi.fe : Well, in Germany that places upon the mutual association of em- 
ployers the decision, Avhich, while it is true mayvbe subject to further re- 
view by the authorities, nevertheless induces litigation there, and I am in- 
clined to think that it would perhaps be found to work more desirably if 
some limit Avere placed upon the length of time for which disability pay- 
ments are made. 

The Commissioner: Of course there is this casual observation to make. A man 
under the British, or any of these systems, may be paid a pension long 
after w^hen if he had never been injured he would not be able to earn a 
dollar. Then it would never do when the man becomes least able to sup- 
port himself to throw him on the charity of the community. 

Mr. Wolfe : But that is what is done if he becomes disabled from any other cause, 
from rheumatism, for instance. 

The Commissioner : But the thing is to get rid of that. 

Mr. Wolfe: That is a very desirable condition of affairs which I hope some time 
to see, or have my diildren see, instituted in this country and in every other 

The Commissioner : It would occur to me as an ideal system when_a man reaches 
the stage of employment where in the ordinary course of things he would 
not have any earning power that the State itself, or the community, should 
bear the burden. 

Mr. Wolfe : Yes, I agree with you fully. 

The Commissioner : But we are not yet far enough advanced for that. 

Mr. Wolfe: No. The point I wish to develop about this transaction is this: I 
can best illustrate it by stating what occurred at the National State Federa- 
tion last, week, when we were considering the form which a liability asso- 
ciation act for New York State would take. A representative from the In- 
dustrial Accident Board of Massachusetts, the body which is entrusted with 
the supervision of the Workmen's Compensation Act in the sense that no 
settlement of any injured workman is final until it has been approved by 
this Industrial x\ccident Board, was telling how well the Massachusetts 
system worked. He said that within two days of the time tliat the act 
became operative a man was killed in one of the establishments there, and 
within forty-eight hours ihe Insurance Company which was protecting his 
employer sought the widow, and found from the company that his average 

140 .MIMTKS OF K\il)K.\('H 

wage earnings liad been $14.66 per week, and immediately started to pay 
her a pension of $7.33, which she would eontiniie to receive for three hun- 
dred weeks. In the su'bsequent discussion a representative of organized 
labour referred to it very sneeringly and asked whether anybody there 
tliought a payment of $7.33 per week for three hundred weeks was a proper 
payment to a widow. I mention that as pointing out the difference in the 
viewpoint. In Germany this widow would have received twenty per cent, 
of the average wages for life, and in this case the Massachusetts act gives 
the payment at $7.33, or 50 per cent., for six years, at the very time when 
she needs it the most. 

The Commissioxeh : Is there any provision that wJien remarriage takes place the 
pension stops? 

Mh. Wolfe: Xot in Massachusetts. 1 took that up at the time the act was under 
consideration, and they told me there were so many spinsters in Massa- 
chusetts they had to discourage remarriage. 

The Commissioner: How is it in Germany? 

Mr. Wolfe: It is three years. 

The Commtsstoner : Even if they are married in the first year. 

Mr. Wolfe: They get three years, and I think the same thing happens in Wash- 

The Commissioner: Now, what would happen under the system here, the ques- 
tion is what is the pecuniary loss the widow sustains by the loss of her 
husband, and that is given in a lump sum. That is taking into considera- 
tion all these things, the probability of death, the probability of her re- 
marriage, and so on, but under either of the systems it is an arbitrary 
method of dealing with it. 

Mr. Wolfe : Entirely so. There are some cases where I know the loss of a hus- 
band would render the widow's condition better, and she therefore Avould 
owe the employer something. 

Mr. MacMurchy : I remember a case where the widow sued for damages and pend- 
ing the trial she married again, and I was very pleased to see that she 
was not entirely deprived of her compensation. The Chief Justice presid- 
ing said the Jury might take it into consideration, but probably it was not 
a complete consolation for the loss sustained. She married within six months 
of the accident. 

Mr. Wolfe: Costs (Brief, ]). 8.) 

The relative cost to the employers of any country which attempted to 
install the German type at the present time is a matter about which nothing 
is known. In the words of the United States Commissioner of Lalbour in 
the 24th Annual Report (p. 1103): 

" It is practically impossible to present a definite statement of what 
th'.> insurance for industrial accidents under the German system costs the 

There are many reasons for this. In the first place, the administration 
of the accident insurance department is so closely interwoven and inter- 


mingled with the adniiiiistration of tlie sickness funds, that it is practically 
an impossibility to separate the two in such a way as to determine or ascer- 
tain the proper amount which should be allotted to each one. A further 
difficulty arises from the fact that for many reasons into which it is not 
necessary at this time to go, the Grerman mutual accident associations have 
jiot charged eacli year a sufficient amount to pay the benefits occurring in 
that year. In other words, it has not capitalized the future payments for 
accidents ^^1llicll occur in any year, but has collected only enough for the 
actual disbursements of the year, plus a small contribution for the estab- 
lisiiment of a reserve fund; this reserve fund is to take care of possible in- 
solvencies in the future, together with a decrease in receipts due to business 
depressions, and any excess will serve to reduce the ultimate collectionis. 
It is not quite correct, however, to state that the entire German system is 
based on this current cost idea, for we find that in the case of accident in- 
surance for persons engaged in the building trades, the German Govern- 
ment has abandoned the "current cost" idea, and has adopted tilie "full 
capitalization" method of levying its assessments. The statement of the 
United States Commissioner of Labour (p. 1061) in reference to this method 
is as follows : 

"The cost of the insurance in the building trades cannot' very well be 
assessed on employers on the basis of the cost of the insurance in each year, 
as is done in the case of the industrial accident insurance. The fact that 
the amount of work done each year and that the persons engaged in the 
building industries change so frequently made it necessary to adopt a finan- 
cial system based on premiums sufficient to cover the entire cost of all acci- 
dents arising each year. . . . The basis for the calculation of the pre- 
miums is the capitalized value of the payments which the insurance insti- 
tute will probably have to make for accidents on building operations lasting 
more than six days.'' 

The CoM^NtissioxER : Now, is there not a difference? The hull ding trades are 
divided into two classes in England. Does this speak of both classes, the 
inside and the outside? 

Me. Wolfe : This speaks of both classes. 

Me. MacMukchy: There is a reference on page 1072, which seems to cover it. 

Mr. Wolfe : We are enabled, therefore, to compare the tariff of premium rates ' 
charged in the building trade industries with similar charges made by stock 
or mutual corporations in tihe United States, but in doing so we must bear 
in mind the following points of difference : 

First : In Germany 84 per cent, of the accidents incapacitate the in- 
jured workman for less than 14 weeks. 

Second: All disability payments during the first 13 weeks are taken 
from the sickness insurance fund, and therefore do not form any part of 
the cost which the mutual accident associations collect from the employers. 

Third: The expenditures for administration do not include the cost of 
the imperial insurance offices, the cost of the State insurance offices, the 
cost of the services of the Post-Office Department (which is used for paying 
claims) or the cost of the services of Government officials who supervise the 
working of the system, assist in detennining compensation, etc. (24th 
Annual Eeport of the U.S. Commissioner of Labour, 1909, p. 1100.) 

11 L; . 



Fourth : The beiiefitis differ in the two countries, hut it is fair to assume 
that the benefits (both monetary and those given in the shape of medical 
benelits) payable under the Massachusetts act, for instance, covering as 
they do from the first day of the disablement, are much greater than the 
payments which would be made after the thirteenth week in Germany. 

Let us compare tiie premiums payable by employers in Massachusetts 
and those payable by employers in the building trades in Germany. For 
this purpose we will take the Massachusetts rates from the manual which 
has been approved by the Insurance Commissioner of that Commonwealth, 
and the German rates from the "Amtliche Nadhrichten des Eeichs-Versiche- 
rungsamts, 1908," for the Kingdom of Hanover: 


Architects . . . 


Decorators . . . 

Papermakers . . 
Coppersmiths . 

Painters . . . . 



Window-cleaners and house-cleaners 

Building watchmen 



Shipbuilding — wood 

Shipbuilding — iron 


Building blacksmiths 


Woodworking with the use of circular saws, band 
saws, planing machines, and grooving machinery 
( using power ) 

Demolition of buildings 

Massachusetts rates, 

$3 75 

10 00 
6 25 











German rates. 

$1 50 



2 80 

3 30 
3 30 

3 00 
10 00 























The Commissioner: Now, do these Massachusetts rates cover the association, the 
stock and the mutual companies, or only the association? 

Mi{. Woi-FE: These are the rates of the stock companies. Later on. if you are in- 
terested, I will point out the reason for the difference bet^veen the Em- 
ployers' Association rates, and the stock rates. I prepared the rates for the 

The Commissioxer: Do you think you are sufficiently informed to glA'e all the 
reasons of the insurance companies for regulating their rates? 

Mr. WoLVi:: These rates are regidated by the Commissioner. 

The CoMMioSioxEP : Of the stock companies? 

Mr. : Of the slock companies. 1 prepared the rates for the association. In 
^[as.sachusetts no .-^tock company or mutual company may is^sue any rate 
which has not received the approval of the Insurance Commissioner. 


Mk. Gibbons: la Geriiianv. how do they pay? Tlie empk)yers 50 per cent, and the 
employees 50 per cent.r 

^1k. Wolfe: The employers have been eotitributing one third and rhe oniployees 
two thirds, but they intended to make a change, perhaps they have already 
made the change, whereby the contributions arc (iivided equally between 
the employer and rhe employee. 

The C'om:missioxi:k : The purpose of that was to give a Uirger control to the em- 

Mk. Gibbons: Xow, this covers non-occupational accidents and diseases as well as 
lueupational accidents ? 

Mk. Woli-k : Yes. 

Mh. (iiBBONs: \\ ould it not be a c-onservative estimate to say that there were five 
L-ases of non-occupational accidents and diseases to one of occupational 

Mr. I am not pre])ared to make an estimate of that kind. 

Mr. Gibbons: I tliink it would be a very conservative estimate to make, and there- 
fore the employees would be paying a greater amount at the present time, 
or contributing to non-occupational accidents and diseases, than if they paid 
ali the compensation for occupational accidents. 

The C'o.viMissroNER : I should doubt that very much. 

Mii. Gibbons: It covers diseases as well. 

The Commissioner: Oh. yes, it covers diseases. 

^Ii!. Woi.FE : Xow, I won't take time to read all the rest. For instance, architects 
in ^fassachusetts are charged .$3.75 for outside work. If they are confined 
to office work they are charged 15 cents. The German rates for architects 
are $1.50; decorators $3.50 outside and $1.75 inside, and $2 in Germany. 

The Commissioner: They average it up in Germany? 

Mr. Wolfe: Appareiitly they do. 

The CoMMissio^rEE : Is the German way not a little better. A painter here is one 
day inside and two days outside. Is it not better to lump them ? 

Mr. Wolfe : There are a great number of painters who do nothing bur inside work, 
and a great many who do nothing but outside work. 

The Commissioner: In bridge building there is a big difference. How do you 
account for that? 

Mr. Wolfe: I can't account for it. 

The Co:m:missioner : Ts it that the structures here are larger? 

Mr, Wolfe : I am unable to give you any definite information about that except 
• I know $3,30 is not a proper charge for a bridge builder. You see tJiat is 
only twice as much as for a cabinetmaker, and we all know the relative hazard 
is much greater. 


1 just call your attention to the woodworking in Massachusetts, which 
is $3 against $12.50 in Ciermany, and the demolition of buildings is $10 
against $20 in Germany. 

In the above it will be noticed that the description of some of the Ger- 
man occupations is more or less imperfect. For instance, carpenters who 
in Class E pay $3.o0, are charged $6.10 in Class L. It has been assumed 
therefore, that the latter must refer to carpenters engaged in scaffold work. 
In the same way tlie German list charges $11.50 for "supervision and con- 
trolling of building work'^ and $4.60 for "supervision of building work." 
The exact difference is not apparent to me. 

It will be seen from the above that in nearly every case when two 
systems are placed on all fours (as regards the capitalization of future loss 
payments) the relative cost to tlie manufacturer is greater under the German 
plan than under the plan in use in PJngland and in most of the United 
States, if we make due allowance for the benefits of the first thirteen weeks. 
It should be borne in mind that while it is impossible to give definite figures, 
it is an admitted fact that a large part of the cost of accident insurance in 
Germany is borne by the sickness insurance funds, to which the employer 
is likewise compelled to contribute. The extent of this additional contribu- 
tion can be observed by reference to Professor Taussig's contribution to the 
November, 1909, issue of the Quarterly Journal of Economics, wiherein it 
is shewn thait the Bergische Stahl-Industri, a large steel manufacturing cor- 
poration of Eeimscheid, Germany, made compulsory contributions per work- 
man during 1908, as follows: 

Sickness fund $3' OS 

Accident fund 6 89 

Old age and invalidity fund 2 15 

and in addition contributed, voluntarily, large sums:. It will be seen that 
tliis firm contributed almost half as much to the sickness fund as it did to 
the accident fund. An item of peculiar interest in connection' with this 
particular firm is that its initial payment in 1886 to the accident fund 
was $1.11 per workman and that this amount increased year by year until 
in 1908 its compulsory contribution to the accident fund was, as shown above, 
$6.89, a pertinent fact which should be borne in mind when considering 
the ultimate cost to the employers. But it must not be assumed tJiat this 
increase in the cost of accident insurance is peculiar to the firm just referred 
to; it is the general experience. The cost has steadily mounted upward and 
has not yet reached its maximum point. In the Diplomatic and Consular 
Eeports (No. 4773, annual series) for 1910, and the first four months of 
1911, the British Consul -General (at Berlin I believe) says on page 16: 

" An inquiry sent to various leading industrial concerns in Germany 
elicited the information that since 1888-89 the actual social burden in cash 
per head of the employed had risen by 100 per cent., that is, the amount ha.< 
doubled in twenty years. In one concern (a blast furnace works) the 
answer s/howed an increase of even 200 per cent. The burden has increased 
not only because the wages have increased ; if to-day it amounts on the 
average to 3.78 per cent, of the wages, it amounted to only 2.52 per cent, of 
wages ten years ago, and to only 1.89 per cent, of wages twenty years ago. 
These data were supplied by three lea'ding machine factories in Cologne. 


In the foregoing calculation of the social burden no account is taken of the 
amount spent m the various establishments upon voluntary welfare schemes, 
in which many of the leading works take a pride. In some of these estab- 
lislmieutc? the voluntary burden amounts to as much as the legal burden, in 
others to considerably more. The new insurance scheme, which will materi- 
ally increase this social charge, comes into operation on January 1, 1912." 
I am of opinion that this increased cost is due to two factors : 

(a) T^he increase and extension of benefits in order to meet a demand 
upon the part of the workman, and 

(b) The natural increase due to the method of charging each year only 
the current cost instead of adopting the logical and safe method of capital- 
izing each year the losses which have occurred during that period and levy- 
ing among the manufacturers the necessary assessment to meet the losses 
(both immediate and ultimate) which have occurred in their plants during 
the year. 

It seems hard to believe that any group of manufacturers would be 
willing to adopt a system so filled with inequalities as to work grave in- 
justice; in fact, it is safe to assume that the adoption of such a plan could 
be carried through only by a Government so strong and so paternalistic 
as is the German Government. The inequalities and unfairness of the 
s}-stem can be seen by reference to a specific case. An employer who starts 
a plant to-day is compelled to join the mutual accident association formed 
of employers engaged in a similar occupation; his assessment for the first 
year of his business history is calculated on the same basis as for those 
who have been in the business for a great number of years and wliose ;em- 
ployees have been exposed for some time to the hazards of the industry. 

The Commissioner: Wliat does that mean? 

Mr. Wolfe : That means if a cabinetmaker were to start business and come under 
the assessment the $100 pay-roll would be exactly the same as the cabinet- 
maker who had been in business twentj^ years. 

The Commissioxer : ^^^ly should it not? 

Mr. Wolfe : I think it should not be because he is being charged for accidents 
which have occurred for the last twent}' years. 

The Commissioner : "Wlien he goes out he will throw it upon the man who comes 
after him ? 

Mr. Wolfe : Provided the accidents come m in the same way, but by means of 
safeguarding devices we are reducing the accidents as we are led to believe 
we ought to. Then the man who comes in to-day and pays for the accidents 
that occurred under the bad system is being unduly penalized. 

The Commissioxer : You cannot have a perfect system. Would it not be pretty 
tough for the man who starts to-day and has to pay the capitalized value 
of all the claims that have occurred during the year, and perhaps next year 
he goes out? 

Mb. Wolfe: Xo. sir, that would be perfectly equitable, because if he is in business 
for only one year he ought to pay for the losses which have occurred in Tiis 
establishment -for the year. 


1 . — J 

The Commissioner : But he is paying for all the losses in the group, not only his 
own. He may have had none? 

Mr. Wolfe: Exactly. 

The Commissioxer: Supposing it had been a pretty bad year and there had been 
a number of fatal accidents, and a very large capitalization, and so on, 
would it not be much harder upon that man to have to pay that when he is 
going out of business ? 

Mr, Wolfe : I do not think so. I think it would be proper for him. For instance, 
here is Employer ''A" who starts business this year, a year which is un- 
fortunate in having a number of accidents. He goes out of business. Next 
year Employer "B'' starts and it is a good year. Should Employer ""B 
pay for the bad year when he was not in business and when Employer "A 
had been in business? 

The Commissioner : He is not paying the capitalized value. He is only paying 
the assessment for that year to meet the year's payment. 

Mh. Wolfe: Yes, but, Sir W^illiam, please bear this in mind: the current cost 
system reaches at one time or other such a point where every man pays an 
assessment one hundred per cent, of tlie necessary premiums for his capital- 
ized value I think I develop that graphically by means of tables within one 
or two pages. The Commissioner of Labour expresses this most aptly when 
he says: 

" Any newly founded establishment which engages in a business sub- 
ject to the compulsory insurance, or establishment whicn increases in size 
so that it becomes subject to the law, must join the accident association 
and pay the same charges for assessments as firms which have been in ex- 
istence since the inauguration of the insurance system. In other words, in 
any industry there is at the present time a known expense for the cost of 
accidents which occurred in tlie past, and any firm which enters that in- 
dustry must include this expense in its calculations just as it does the taxes 
on land, taxes for business licenses, etc. To exempt the new firms from the 
burden of the accidents of the past would, of course, discriminate against 
the older firms." (24th Ann. Kept., 1909, Vol. I., p. 1012.) 

But we might be "willing to gloss over this apparent inequality if the 
current cost system eventually produced satisfactory results. Such, how- 
ever, is not the case. The solvent, persistent employer is discriminated 
against. Even after the yearly assessment has reached the point where it 
is equal to the annual assessment on a capitalized basis, there is still a huge 
accrued liability in the shape of unpaid pensions. This point may well be 
illustrated by the following table, which assumes that the act becomes 
operative in 1912, that four per cent, of the ultimate cost of compensation 
insurance is disbursed during the first year for medical service, temporary 
disabilities, slight injuries, etc., and that 10 per cent, is divsbursed in each 
of the following six years, so that at the end of seven years from to-day, for 
instance, 'he entire liability for the accidents occurring in the present year, 
has disappeared. The merits of this comparison would not be affected if any 
other assumption? were made, i.e., if 30 per cent, were assumed instead 
of 40 per cent, as represcntinsj the current cost, or if the payments were 
extended over twenty years instead of six years : the sfhorter period, how- 



ever, -has been assumed in order that the table may not be too cumbersome 
and as six years is the approximate period which is used in a number of 
the United States as marking the time during which death and disability 
pensions are payable. 

Accidents Occueking in 





















per cent. 

per cent. 

per cent. 

per cent. 

per cent. 

per cent. 

per cent. 

per cent. 

per cent. 

per cent. 

40 A 

40 B 

40 C 

40 D 

40 E 

40 F 

40 G 

40 H 

40 I 

40 J 

10 A 
10 A 

10 A 

10 B 


10 D 

10 E 

10 F 

10 G 

10 H 

10 1 

10 A ' 

10 A 

10 B 


10 D 
10 A 

10 E 

10 F 
10 E 
10 D 

10 G 
10 F 
10 E 
10 D 

10 H 
10 G 
10 E 


10 A 
10 A 
10 A 

10 B 

10 A 
10 A 
10 A 
10 A 

10 B 

10 A 

10 A 

10 D 
10 B 

10 A 

10 A 
10 A 
10 A 


10 A 

10 A 
10 A 

10 B 

10 A 

10 A 
10 B 

10 A 



10 D 

10 B 




10 B 

10 B 

10 B 




10 D 


10 F 


10 B 

10 B 

10 B . 



10 D 




10 B 



10 D 

10 D 



10 G 

10 B 




10 D 

10 D 

10 E 

10 F 

10 G 

10 B 




10 D 

10 D 

10 E 

10 F 

10 G 




10 D 


10 F 

10 G 

10 H 



10 D 

10 D 


10 F 

10 G 

10 H 



10 D 

10 D 

10 E 


10 G 

10 H 


10 D 

10 D 

10 E 


10 F 

10 G 

10 H 


10 D 

10 D 

19 E 

10 F 

10 G 

10 H 


10 D 

10 D 

10 E 


10 G 

10 H 

10 1 

10 D 

10 E 


10 F 

10 G 

10 H 

10 1 

10 D 

10 E 

10 E 

10 F 

10 G 

10 H 

10 1 

10 D 

10 E 

10 F 

10 F 

10 G 

10 H 


10 E 

10 F 

10 G 

10 H 

10 1 

10 J 

10 E 

10 F 

10 G 

10 H 

10 1 

10 J 

10 E 

10 F 

10 G 

10 H 

10 1 

10 J 

10 F 

10 G 

10 H 


10 J 

10 F 

10 G 
10 G 

10 H 
10 H 


10 J 
10 J 

Now, this table, Sir William, I will try to explain without referring 
to the text, which explains it. You see the first column is 1918; that is 
"A." The manufacturers that year have to pay 40 per cent, of the 
losses which occur in the year 1912, and therefore there is left below the 
line 60 per cent., making up the 100 per cent, for the accidents 
which occur in 1913. That 60 per cent, would be paid during the follow- 
ing six years. Now, the next year comes along, 1913. The employers that 
year have to pay 40 per cent, of the losses which occur in " B," and 10 
per cent: which occur in "^A," and there is left unpaid the five instalments 
of the pensions for the losses which occurred in 1918 and the six instal- 
ments of the pensions which occur in 1913. Is that clear? 

The Commissioner: Yes. 

Mr. Wolfe : In " C " he pays 40 per cent, of the losses which occur in " C." 
I am presuming this act came into force in 1918. 

The Co:MirissioNER : You are going on the assumption that you have to provide 
for the current cost? 


Me. Wolf^ : I am only providing for payments which must be made in each year, 
as the table on page "18" shows. 

Me. Wegenast: I would like to ask where Mr. Wolfe gets his percentages, or on, 
what bases the percentages are estimated? Why is it 40 per cent, of the 
first year's premium goes for the claims of that year? 

Me. Wolfe : Because that is exactly the situation we expect to find. 
Me. Wegexast: Why do you expect to find it? 

Me. Wolfe: Because that is what happens. Most of the payments occur in the 
first year. 

Me. Wegenast: You are basing it on the experience of the liability companies? 

Mr. Wolfe: On the experience of the Workmen's Compensation Act in Massa- 
chusetts that we have had so far, in the last five months. 

Me. Wegenast : Wliy do you assume you will require that percentage ? 
Me. Wolfe : I am willing to assume any percentage you wish. 

The Commissiois^ee: It would make it worse if it was a smaller percentage. It 
would carry on the payments so much longer. 

Me. Wegenast : I am interested in knowing on what basis it is worked out, because 
it would appear to me, as you suggest, much worse. 

Mr. Wolfe: I have explained that this is an arbitrary assumption on my part, 
and whether you took the 40 per cent, now and 60 per cent, afterwards or 
20 per cent, now and 80 per cent, afterwards it does not matter at all. 

The Commissioner : This is based upon a stationary body, but these manufacturers 
are not supplemented by others. 

Me. Wolfe: I will refer to that in the very next paragraph. 

In the above table, the percentages above the line, which becomes hori- 
zontal after 1917, are the "current costs," i.e., the amounts which will have 
to be disbursed in cash; those below the line represent the accrued and un- 
paid installments which will have to be met in the future. The letters 
have been attached in order to show the year in which the accident occurred. 
For example, in 1915 there will have to be paid in cash 40 per cent, of 
the 1915 losses, 10 per cent, of the 1914 losses, 10 per cent, of the 1913 
losses, and 10 per cent, of the 1912 losses; at that time there would remain 
unpaid 60 per cent, of the 1915 losses, 50 per cent, of the 1914, 40 per 
cent, of the 1913, and 30 per cent, of the 1912. The important point in- 
dicated by this table is that in every year after 1917 every employer 
would be paying a premium which would be sufficient to pay all of the 
losses occurring in the current year, but as he paid too little in the past 
some of the current premiums must be used for paying losses of previous 
years and the unpaid liabilities of the current year are left to be met from 
future contributions. Who profit by this arrangement? Only those who 
were insured prior to 1918. Who suffer from this plan? All employers 
who are insured after 1917. 


> • 

The practical significance of the table shown above is that although 
for every yeai* beginning with 1918 the members of the association are 
paying one hundred per cent, of the premiums necessary lo provide for the 
present and future payments of all of the accidents which occurred during 
that particular year, there is left the huge liability shown below the line. 
This liability will never be removed unless the payments above the line 
are increased in order to take care of tlie payments due for losses of 
previous years. This increase would result in causing the premium for the 
current year to be in excess of 100 per cent, of the adequate 
premium. In the foregoing illustration I have assumed that a theoretical 
condition would exist, vis., that the same number of accidents would occur 
each year and that the disbursements each year would proceed along in a 
uniform manner. This of course is a condition which will not be found in 
actual experience, but whatever variation there will be will not affect the 
correctness of this exhibit. 

In the foregoing illustration I have provided for the accumulation of 
no reserve fund, for the reason that if a reserve fund be accumulated, it 
will simply add each year a small amount in order that the larger deficiency 
need not be collected in one sum at the end. It must be apparent, however, 
that this is merely a variation for it matters not whether we collect the 
deficiency in one sum or extend it over a number of years. We are con- 
fronted with this particular problem — a certain amount of money must be 
collected to meet certain losses. We may fool ourselves into the belief that 
by collecting a smaller amount the first year and gradually increasing the 
assessments of subsequent years, we will not be feeling the increase, but 
this reasoning is fallacious. If we collect too little in the beginning we 
must at some time collect more than one hundred per cent, of the losses of 
a particular year in order to make good the deficiency. 

If, however, the productiveness of an industry remained absolutely 
stationary so that each j'ear the same amount of work was performed and 
if there were never any withdrawals from the ranks of those who first 
entered the industry (either from insolvency, death or any other cause) 
there might be some justification for assuming that the current cost method 
would work no injustice ; the chief criticism which could be aimed against 
it would be that it distributed the costs of accidents unevenly. In practical 
biasiness, however, we find that this assumption is not justified by the facts. 
Firms come and go, changes naturally take place among employers, large 
establishments become unwieldy, pass out of the hands of their original 
promotors, become inefficient and are eventually succeeded by smaller units. 
Does it seem equitable or just to burden the new establishment with the 
accrued liabilities of organizations in which it has no interest and between 
which there exists no common bond save that of being engaged in the same 
line of work? 

The Commissionek : You and I are living under this injustice. Millions are 
spent to-day and posterity bears the burden. Xow, if that is universal for 
all the people why is it unfair to apply it to this particular class with regard 
to the accidents happening this year? 

Mr. Wolfe : Wliile we may be spending millions to-day that posterity will pay, we 
are getting the benefit. I take it you refer to such a thing as the acquiring 
of a large tract of land. 


I 1 

The Commissioner: Some of the benefits we do not get. For instance all the 
money we give to Mr. MacMurohy's railway. 

Mb. Gibbons : And for the navy. 

Me. Wolfe: The opponents of the current cost system have attempted to draw 
an analogy between that plan and the assessment life insurance plan, the 
fallacy of which is now generally admitted. The advocates of the current 
cost plan retort that the comparison is not a fair one, for the assessment 
theory in life insurance would be equitable if the insurance were com- 
pulsory, i.e., if every man were required to insure his life and pay the 
current cost of each year. In attempting to distinguish between the 
current cost plan in accident insurance and the assessment plan in life 
insurance, the advocates of the former lose sight of one very important 
point. The current cost plan is compulsory at the outset, but there is no 
known force which can compel an employer to continue after the cost of 
production reaches tlie point where he feels that his continuance is no longer 
worth while. Assessment life insurance would be Just as impracticable as it 
is to-day if we should compel the insured to pay the premiums for the first 
year only; if they had the right to discontinue at any time we should be 
confronted with the same unworkable problems as exist in that form of 
insurance at present. 

There is another point of similarity between the early history of 
assessment life insurance and the German type of accident insurance, viz: 
the effect of the influx of " new blood." This has served to prevent the 
fiill measure of the fallacy of the German system becoming apparent before 
this. A moment's thought will convince one that if we are able to obtain 
a great number of new contributors each year, who would help to pay the 
accumulated liabilities of years gone by, we would have a large number of 
units paying more than their current cost and tJiereby reducing the cost to 
old contributors; that is exactly the situation which we find among the 
industrial accident associations in Germany. The number of manu- 
facturing establishments contributing during the various years, is shown by 
the following table, taken from " Amtliche N"achricht.en des Eeichs- 
Versicheningsamts, 1887 to 1910:" 

1886 269,174 1898 456.366 

1887 319,453 1899 465,551 

1888 350,697 1900 478,752 

1889 372,236 1901 483,578 

1890 390,622 1902 578,834 

1891 405,241 1903 608,955 

1892 415.335 1904 619.449 

1893 420,874 1905 637,611 

1894 426,335 1906 659.935 

1895 435,137 1907 673,118 

1896 442,772 1908 696,824 

1897 455,417 

The year 1885 has been omitted as it covered the last three months 
only. Notwithstanding this great influx of new blood, the much vaunted 
accident prevention systems and the accumulation of a reserve fund, 
which is still woefully small when compared with the accrued liabil- 
ities, the cost each year for the various industries has been steadily mounV 
ing, the expenditures for insurance by the various associations per $1,000 



of wages of persons insureii, are obtainable from the same source as the 
previous table — '• Amtliehe Xachrichten des Eeichs-Versicherungsanits," 
aud while it would encumber unduly the pages of this memorandum if 

I were to give the increase year by year, the general effect can be observed 

by comparing the expenditures for 1886 with those of 1908, as follows: 

Cost per $1,000 Cost per $1,000 
Association. of wages, 1886. of wages, 1908. Increase. 

Mining (Association 1) $8 91 $26 06 292% 

Quarrying (Association 2) 8 82 28 65 324% 

Fine mechanical products (Association No. 3) 3 15 7 03 223% 

Iron and steel (Associaion. Nos. 4 to 11) 3 61 17 65 488% 

Metal working (Associations Nos. 12 and 13) 1 60 8 93 558% 

Musical instruments (Association No. 14) 1 61 ' 8 35 518% 

Glass (Association 15) 2 02 8 93 442% 

Pottery (Association 16 ) 97 7 13 ' 735% 

Brick and tile making. (Association 17) 2 85 17 27 606% 

Chemical (Association 18) 6 18 17 99 291% 

Gas and water works (Association No. 19) 4 06 13 10 322% 

Linen (Association 20) 2 53 10 00 395% 

Textiles (Associations Nos. 21 to 26) 2 16 8 02 371% 

Silk (Association 27) 114 2 98 261% 

Paper-making (Association No. 28) 5 37 23 26 433% 

Paper products (Association 29) 161 6 26 388% 

Leather (Association 30) 2 19 13 44 613% 

Woodworking (Association Nos. 31 to 34) 6 16 20 33 330% 

Flour milling (Association No. 35) 4 75 42 14 887% 

Food products (Association No. 36) 3 81 8 28 217% 

Sugar (Association No. 37) 5 83 29 19 500% 

Dairying, distilling and starch industries (Association 

No. 38) 5 28 18 28 346% 

Breweries (Association 39) 19 14 30 98 161% 

Tobacco (Association 40) 59 179 303% 

Clothing (Association 41) 103 3 72 361^0 

Chimney sweeping (Association No. 42) 11 61 16 93 145% 

Building trades (Association Nos. 43 to 54) 5 41 21 92 405% 

Printing and publishing (Association No. 55) 1 59 4 81 302% 

Private railways (Association No. 56) 4 05 16 14 398% 

Street and small railways (Association No. 57) 2 52 11 38 451% 

Express and storage (Association No. 58) 3 15 15 45 490% 

Drayage, cartage, etc, (Association No. 59) 3 28 42 28 1.289% 

Inland Navigation (Association Nos. 60 to 62) 5 38 32 81 609% 

Marine Navigation (Association No. 63) 4 42a 29 42 665% 

Engineering, excavating, etc. (Association 64) 5 36a 18 07 337% 

Meat products (Association No. 65) 7 66b 14 17 185% 

Blacksmithing, etc. (Association No. 66) 3 21c 9 65 300% 

a For the year 1888, not 1886. 

bFor the year 1897, not 1886. 

cFor the year 1902, not 1886. 

The Commissioxek : You have already pointed out that the burdens on the fund 
have largely increased owing to the increased benefits to the workmen. 
Would that not account for a very large proportion ? 

Mr. Wolfe : I think not for a very large proportion of it. because the increased 
benefits to the workmen have not had sufficient time to make this increase. 

The Com:missioner : Do you suggest that that is no more in the case of the 
current cost system? 

Mr. Wolfe: I suggest that that is no more in the case of the current cost system. 

The Commissioner: But surely there must be some factory that would explain 


that increase? I thought you said earlier that the cost to the manufacturer 
had been larorelv increased bv the increased benefits given to the work- 


Me. Wolfe : I said there were two causes which led to it, and you will find them on 
page 16. 

The Commissioxer : Do you not eliminate one of those causes when you come to 
make that table ? 

Mr. Wolfe: I do not eliminate it. I give the table for what it is worth. 

The Commissioner: But it ought to have a note to it, or perhaps that ought to 
be in one's memory when it is only a few pages back? 

Mr. Wolfe : It is on page 16. 

The Commissioner: You make that one of the causes of the increased cost? 

Mr. Wolfe : Yes. I do not consider that it is responsible for a very large pro- 
portion of this increase. That increase in the case of the mining assoc- 
iation is 292 per cent., the case of the quarry association 324 per cent., and 
the iron and steel 488 per cent. 

The Commissioner: One goes up to 1,289 per cent? 

Mr. Wolfe: Yes, that is drayage and cartage. I tliink I can offer a partial 
explanation of that, although it Just occurs to me at this time. No, I can't 
explain it. 

The Commissioner : Does the Imperial Office make any attempt to explain these 
increases ? 

Mr. Wolfe: I have seen no explanation. It may have done so. 

Mr. MacMurchy: These are the official figures? 

Mr. Wolfe: Yes. 

The Commissioner: I suppose it must be taken that these are the sums paid in 
these respective years, but what the reasons were for the large increase we 
may want a little more infonnation on. Some of it, no doubt, is due to 
causes which you specify, but there may be others contributing causes. 

Mr. Wolfe : There may be but I think they all pale into insignificance when 
compared with the current cost factor. 

The Commissioner : That means, of course, when they have had the insurance 
too cheap at the beginning. 

Mr. Wolfe: Exactly. It means, Sir William, that no group of manufacturers 
can arrogate to themselves the functions of a mint. They cannot coin 

It would be strange indeed if the employers, in Germany did not object 
strenuously to a plan, the defects in which were beginning to become so 
apparent. For obvious reasons it is difficult and even impossible to obtain 
from the authorities in Germany any tangible expressions of this dis- 
content, but fortunately we have access to the testimony of a disinterested 
witness in the person of the British ConstU-General above referred to, who 


♦■ • 

in his report on the trade industries of Germany (published in September^ 
1911) in dealing with the labour troubles says: 

"' A further element of uneasiness was introduced into the industrial 
life of Germany by the proposed revision of the German insurance schemes. 
The burden on German industry under the existing scheme already amounts 
to approximately 800,000,000 marks per annum. Under the new scheme 
the classes included in the various schemes have been further extended and 
the additional cost is calculated at 135,000,000 marks, so that the daily 
burden will in future amount to 3,000,000 marks per working day. A 
number of Chambers of Commerce (Plauen, Chemnitz, Essen, etc.) in their 
annual reports complain that the social schemes which have been extended 
without any reference to employers are approaching the limit of a bearable 
burden, that the expenditure which they entail is becoming so serious a 
matter in the cost of manufacture that it must tell against Germany in 
foreign markets." 

The Commissioner: Whb is this man? 

Mk. Wolfe : He is from the State Department. 

The Commissioner: What is his opinion worth? I would like to know what 
means he has of judging of these things? 

Mr. Wolfe : Well, from my own experience I think the British Government has 
been very careful in the selection of its Consul-Generals. I think I ought 
to be able to recall the name of this man in a moment, sir. 

The Commissioner: Because he is a Consul-General I would not accept his state- 

Mr. Wolfe : His name is Sir Francis Oppenheim or Oppenheimer. 

The Commissioner : I would like to see the reports to see what they say. 

Mr. Wolfe: Any consideration of the Germaq^ type would be defective if it did 
not emphasize two very important points : 

First : The manner in which the state is regarded by the citizens of 
Germany and their willingness to- recognize its paternalistic rights to an 
extent which would not be tolerated in this country. 

Second: The gross inequalities which would result in any country 
which adopted the German type without having a sufficient number of 
establishments to permit of a successful operation of the law of average. 

To attempt to analyze the willingness of the German people to accept 
the paternal administration of the Government, would take us far afield and 
would require us perhaps to dip into the developments of history together 
with the psychological and political differences of the various elements 
entering into that great nation. I doubt, however, whether any country in 
the western hemisphere is prepared so completely to turn over to the 
Government the supervision of the transactions of every day life as are the 
Germans. The police system performs important work in the adminis- 
tration of accident insurance; the post office lends its aid in an effective 
way; every branch of the huge political structure contributes in some way 
to the administration of this form of indemnity.. 


The CoMjIISSioner : What objection could a man find to the municipal machinery 
for the purpose of administering this law? How would that interfere with 
his democratic ideas? 

Mr. Wolfe : Well, a very homely illustration occurs to me. Standing on the steps 
of an hotel in Munich I watched a small boy playing with a ball. The ball 
rolled on tlie grass plot in front of the hotel, and he stood and looked at it. 
I was anxious to see what he would do. He disappeared in a few minutes, 
then returned from the hotel with a rake, reached over and pulled the ball 
out. I don't know what the Canadian boy would have done, but I know the 
average American boy would have simply jumped over and got the ball out, 
and then if anybody came after him he would have done as a distinguished 
counsel of New York city said: "he would waggle the fingers of contempt 
from the nose of derision." 

The Commissioner : What objection is there ? Why should not the Post Office lend 
its aid? 

Mr. Wolfe : I do not object to it. 

The Commissioner: That is not bureaucratic? 

Mr. Wolfe : The way in which the Police Department is administered in Germany 
I think is bureaucratic. 

The Commissioner : They just investigate the accidents, I think ? 

Mr. Wolfe : They do more than that. Every worker has to receive a card from 
the Police Department. I had a card but I did not bring it with me. 
This card is ruled into fifty-two spaces, one space for each week, and a 
stamp has to be affixed each week in one of those spaces, and if a man be 
out of work that space is open. The police inspect these cards and they are 
able in that way to keep tab on the unemployed. They watch in every way 
the registration of the imprudents. As you doubtless know every one 
of them has to be registered in the Police Department. It is not necessary 
for me to go into the various details, but it seems to me we are not prepared 
for quite as bureaucratic form of government as we find in Germany. 

The Commissioner: How does that differ in principle from the registration of 
births, deaths and marriages? 

Mr. Wolfe : I think I answer that question within the next two pages. Answer- 
ing your question I would say the births and marriages probably do not 
occur as frequently. 

In the United States and Canada no such similar inter-dependency 
exists, and the extent to which the people of Germany are willing (or are 
compelled) to entrust not only items of administration, but also "of 
judgment to the Governor is best illustrated by the descriptions of the 
workings of " The Insurance Institute of the Navigation Accident Associa- 
tion " as outlined in the 24th Annual Report of the United States Com- 
missioner of Labour (p. 1081), in which it is pointed out that the accounts 
of the Navigation Accident Association and its subsidiary body the Insti- 
tute, are not only kept separate, but the method of raising the funds is 
entirely different. While tjie former must defray the administration 
expenses of the Institute, the funds necessary for the payment of benefits 


by the) tsmallw est-iiblislmients, which the Institute must provide, are 
collected by a system of advance premiums paid by tiie communes or feder- 
ations of communes located on the coast, in accordance with the rules issued 
by the state government. That seems to me the exercise of unusual power, 
that some employers may be assessed and some may not be. That, I think, 
is repugnant to our ideas. 

The Commissioxkk : We exempt all incomes to a stated amount here. 
;Mk. Wolfe: Is not every man who has an income of that size exempt? 
The Commissioner : Yes, every num. 
Mr. Wolfe : This does not say that. 
The Commissioxer: It is the small one. 

Mr. Wolfe : I think it is just as they please. They may or may not assess one 
hundred large ones and ten small ones if they want to. 

The communes themselves must bear half of the premium payments and 
are permitted to assess the other half upon the employers engaged in the 
industries insured. There is no obligation upon the communes to apportion 
half of the premiums among the employers in proportion to the benefits, 
but they "may assess the other half in such manner as they deem proper; 
they may, for instance, tax only employers with the larger establishments 
and exempt the smaller ones." The reason for assessing half of the 
premiums on the communes is that " the profits of the business are so small 
that assessing the premiums on the employers would create a serious situa- 
tion, due to the fact that the risk rate of the industry is very high." Are 
we prepared in our political structure for the exercise of discretionary 
power of this kind? 

This difference in the political make-up of the two peoples is well ex- 
pressed by the English railway economist, W. A. x\cworth, who, speaking of 
the management of railroads by the Government says : 

" Prussia is Prussia, with a government in effect autocratic, with a 
civil service with a strong esprit de corps, and permeated with old tra- 
ditions, leading them to regard themselves as servants of the king, rather 
than as candidates for popular favour. I am inclined to think that the 
effect of the evidence is that the further a government departs from auto- 
cracy and develops in the direction of democracy the less successful it is 
likely to be in the direct management of railroads." — (Atlantic Monthly. 
Vol. 110, Xo. 6, p. 748.) 

Xow as to the question of having a sufficient number in the various 
employments to permit of the formation of the accident associations among 
the different industries as now found in Germany. It has been pointed out 
in one of the foregoing pages that in 190S there were 596.821 establish- 
ments employing nearly 9,000,000 employees. The number of persons 
injured in the various associations at that time Avas as follow> : 

Mining ( Association No. 1) 79S.37S 

Quarrying (Association No. 2) 439.719 

Fine mechanical products (Association No. 3) 224.477 

Iron and steel (Associations Nos. 4 to 11) 1.210.1S3 

Metal working (Associations Nos. 12 and 13) 203.039 

Musical instruments (Association No. 14) 50,333 


Glass (Association No. 15) 84,798 

Pottery (Association No. 16) 89,005 

Brick and tile making (Association No. 17) 277,955 

Chemicals (Association No. 18) 216,751 

Gas and water works (Association No. 19) 70,079 

Linen (Association No. 20) 59,412 

Textiles (Association Nos. 21 to 26) 761,866 

Silk (Association No. 27) 69,235 

Paper-making (Association No. 28) 86,856 

Paper products (Association No. 29) 131,248 

Leather (Association No. 30) 76,788 

Woodworking (Associations Nos. 31 to 34) 428,743 

Flour milling (Association No. 35) 63,729 

Food products (Association No. 36) 154,697 

Sugar (Association No. 37) 93,791 

Dairying, distilling and starch industries (Association No. 38) 50,020 

Breweries (Association No. 39) 106,035 

Tobacco (Association No. 40) 175,894 

Clothing (Association No. 41) 278,866 

Chimney sweeping (Association No. 42) 5,662 

Building trades (Associations Nos. 43 to 54) 1,260,270 

Printing and publishing (Association No. 55) 174,653 

Private railways (Association No. 56) 28,714 

Street and small railways ( Association No. 57 ) 69,129 

Express and storage (Association No. 58) 368,241 

Drayage, cartage, etc. (Association No. 59) 104,153 

Inland Navigation (Association Nos. 60 to 62) 5'9,242 

Marine Navigation (Association No. 63) 77,345 

Engineering, excavating, etc. (Association 64 ) 306,276 

Meat products (Association No. 65) 110,251 

Blacksmithing, etc. (Association No. 66) 151,919 


A study of the above table show.s the large and extended exposure 
enjoyed by these associations, the effect of which is to cause the '*' catas- 
trophe hazard " to disappear entirely. 

The Commissioner: That is a merit in the German system. 

Mr. Wolfe: Yes, and one which could not be applied in a place where there was 
a smaller exposure. 

It requires no argument to show how serious a matter to a small com- 
munity, an unusual fluctuation in the loss ratio can be. 

I have devoted considerable time to an analysis of the German type, 
for there is a tendency among those who advocate the adoption of some 
form of Workman's Compensation Act in new communities, to place great 
stress upon the advantages of that system without explaining the defects 
and the possible entanglements which may result from its adoption in com- 
munities not prepared to meet the problems. 


The State itself has become the vehicle of distribution in two of 
the United States — Washington and Ohio. Both of them, however, differ 
in radical respects. In Washington, for instance, the employers engaged in 
so-called " liazardous occupations " are divided into classes by the act itself, 
and the contributions per $100 of pay-roll are fixed in the same way. 
This act became operative in the latter part of 1911; the published reports 
showing its operations do not permit of an accurate determination of the 
true condition of the fund. Whether enough has been collected from the 


fuud to euable losses which have occurred during the year to be met in full, 
or whether the funds on hand will be insufficient for that purpose, are 
matters which cannot be determined from the published reports. 

In connection with that I may state that I think there was an appro- 
priation of $150,000 made the first year for the expenditures of this Wash- 
ington Compensation Commission, and this year they have asked that this 
sum be increased to $250,000. 

It is interesting, however, to compare the number of establishments and 
the number of employees covered in the various classes for the purpose of 
comparing them with similar factors in the German scheme for the purpose 
of determining the question of exposure to which I referred at some 
length. It would appear that the powder industry furnishes a definite 
illustration of the danger of limited exjxtsures, for apparently only two or 
three powder manufacturers are included in this group, and a catastrophe 
which happened during the early months of the history of the Act has not 
only exhausted all of the funds belonging to that class, but has created a 
deficiency. The report shows that only 5,750 firms are listed, and only 
130,000 employees covered. In Washington, as in Germany, the operation 
of the act is compulsory and it must be assumed, therefore, that the number 
of establishments in Washington represented the maximum exposure obtain- 

In Ohio, on ^hc other hand, we find no compulsory act, but an optional 
one. If the employer elect to come within it, he contributes 90 per cent, 
of a semi-annual premium fixed by the State Liability Board of Awards 
and is authorized to deduct the remaining 10 per cent, from the wages of 
his employees. The act has been operative since "March, 1912, and there 
has been no publication of the results of the first six months which enable 
a proper analysis to be made. Strenuous eiforts are being made by the 
Board to induce the employers of Ohio to deposit their premiums with the 
State Treasurer, but to what extent it has been successful it is impossible to 
state. In the same way no data are available for determining "\\hether the 
State Liability Board of Awards intends to capitalize the losses or to use 
the current cost system of the German type. At the end of the first six 
months period the Board announced slashing reductions in the premiums 
to be charged the employers ranging from 15 per cent, to 65 per cent. If 
the premiums charged originally were calculated on a proper actuarial basis, 
it is difficult to understand this sudden reduction for it must be apparent 
to everyone that the experience of six months (especially of the first six 
months) is not a proper basis upon which to estimate the eventual costs. 

The Commissioner: Xow, is not all that explainable — these manufacturers in 
Ohio would not come under the act because the common law liability is 
retained ? 

Mr. Wolfe : The common law liability is retained. 

The Commissioner: That was the trouble as I understand it. Were these cut 
rates not to meet the competition of the insurance companies? 

Mr. Wolfe: I imagine they were. I perhaps hesitate to ascribe such a sordid 
reason to a State Government, but it might have been that very thing. I 
see the State Liability Board in its official announcement states that the 
12 L. 


employers generally have recognized the importance and justice of this 
rule, and the State Liability Board of Awards maintains "when the history 
of compensation insurance is written the application of the new rule will, 
create a red letter day." 

The Commissioner : I think there is a provision there for capitalization. 

Me. Wolfe: I think not, not in Ohio. 

Mr. MaoMuechy: Was that on the assessment plan? 

Mr, Wolfe : I don't know. I cannot tell. 

Me. Weqenast: They are all worked out on the capitalized plan. 

Mr. Wolfe : They were originally, but when they reduce a thing 65 per cent, either 
they must have made a grievous blunder in their first calculation or else they 
have abandoned it. 

Mr. Wegenast: The liability rates are a good deal lower now than the state rates 
in Iowa. The companies are charging lower rates. 

Mr. Wolfe: No, I thing not. If they were the State Liability Board of Awards 
would not get any policy holders. 

^[r. MacMurchy : I see in the interim report there is a synopsis of the law of 

Ohio given. (Reads.) 

It may be objections are being made to the constitutionality of the 

The Commissioner : No, the Ohio act has been upheld. 

Mr. Wolfe : In the absence of specific information, however, it is idle to speculate 
on the lessons tought by the Ohio attempt. It may not be amiss to point 
out an error which appears in the synopsis of Mr. J. H. Boyd's brief in the 
interim report at page 474: 

In the years 1906, 1907, and 1908 ten employers' liability insurance com- 
panies doing business in the State of New York received in premiums 
from employers $23,524,000 00 

Paid to injured employees 8,560,000 00 

■Waste $14,964,000 00 

To call the difference between the premiums paid and the losses paid 
"waste" without taking into account the reserves required for the payment 
of future losses, is an amazing proposition and bears on its face its own re- 

The Commissioner: Future lo-jses? I would understand it is not fair not to 
include claims which have not been either adjusted or paid. But each 
year washes itself. What future losses can there be? How long is the 
premium for? 

Mr. Wolfe: For one year, but sometimes the losses are unsettled for ten years. 
The Commissioner: How could that be? 


Mr. Wolfe: Why, under these liabilitiy policies a large percentage of the claims 
are dependent upon court decisions, and no payments can be made until 
they are decided. 

The Commissioner: That would be where accidents have happened and the 
claims have not been adjusted or paid? 

Mr. Wolfe: Yes. 

The Commissioner: Those could be accurately obtained? 

Mr. Wolfe : Yes, but they have not been. 

The Commissioner: What I was quarrelling with was future losses. 

Mr. Wolfe : The future losses which have accrued on those premiums. 

The Commissioner: They are losses which have occurred but have not been paid. 

Mr. Wolfe: That is what I mean. 

In thus briefly outlining the principal systems, I have not attempted 
to touch upon all the various forms to be found in the different countries, 
but I have attempted to confine my discussion to those plans which seem 
most likely of adoption. 

To summarize — I am of the opinion that the methods now being 
followed in Germany, Ohio and Washington are ill adapted to the needs of 
Canada, or to any of the United States. I am of the opinion that the 
maximum benefit can be derived from the adoption of a type similar to 
that in use in the Commonwealth of Massachusetts, with such modifications 
as will make it applicable to the particular community which it is intended 
to benefit. 

The Commissioner: I would have thought that all your objections except in so 
far as they may rest upon the state creating a monopoly, would be removed 
if instead of current cost the whole burden were borne in the way that has^ 
been suggested, caplitalize the payments. 

Mr. Wolfe : That is only one of the serious actuarial objections. 

The Commissioner : What is the other ? 

Mr. Wolfe: To my mind the greatest one is the question of exposure. For 
instance, while I am entirely unfamiliar with the statistics of Canada, I 
think this law is only to apply to this province? 

The Commissioner: To Ontario? 

Mr. Wolfe; Yes. I seriously question whether you could have an exposure .in 
any particular industry which would enable you to obtain a satisfactory 
action of the law of averages. For instance, in the pottery association 
where they have 89,000 employees exposed to risk. I don't know how many 
you have in Ontario. Perhaps you know, sir? 

The Commissioner : No, but I should think very few. 

Mr. Wolfe : Possibly some of the gentlemen here could tell me ? 

The Commissioner: Mr. Wegenast would perhaps know as to the potteries? 


t — ■ — i 

Mr. Wegenast : Xo. The total number of wage-earners I have estimated atJ 
about 400,000, 1 think half a million would be the largest number. 

The Commissioner: What does that cover? 

Mr. "Wegenast: All workmen except farmhands and domestic servants. 

The Commissioner : Places like Eaton's ? 

Mr. Wegenast: Yes, all sorts. Without domestics and farm labourers 1 think 
our estimate was -450,000. It is a little over the industrial population of 

The Commissioner: Explain your proposition about this exposure, please. 

Mr. Wolfe: I think the Province of Ontario would not have a sufficient number 
of employees in the various occupations to permit of a proper exposure. 

The Commissioner: Ex5)lain what that means. 

Mr. Wolfe: I mean by that if we atte}upted to separate the employees, or if we 
attempted to separate the employers in Ontario into associations such ag 
we have in Germany that we would have a small number in certain occupa- 
tions. For instance, the one I have just referred to, the pottery, we might 
have 1,000 or 1,500 employees, and those figures are too small to permit 
of a satisfactory law of averages. 

The Commissioner : What does that mean ? 

Mr. Wolfe : That means when you have too small a number to present a surface 
for the usual occurrence of accidents that you become liable to unduly 
large payments due to catastrophes. For instance, if there should be a 
boiler extension in some plant which belonged to an association in which 
there were only 1,000 employees, the loss from that boiler explosion would 
require so large a payment that the premiums distributed amongst the em- 
ployees of that association would be unduly large, and it would practically 
result in a system of self insurance. 

The Commissioner: Well, under the system of individual liability it would b^ 
the same thing, only it would not spread over the group. 

Mr. Wolfe: Exactly. 

The Commissioner : Then you would answer me, "But he can insure against that."' 
Why cannot he, as I suggested earlier, if you have an assessment upon the 
whole group — why would not some of these insurance companies if they 
are driven out of that business which they are now doing insure the men 
of that group against the losses, and so get rid of the difficulty you are 
suggesting ? 

Mr. Wolfe: Because the very key-stone of the arch of insurance companies is the 
one which you would remove. 

The Commissioner: What? 

Mr. Wolfe: Namely, the proper distribution of risks. 


The Com;missionek : WoU, they know there is a elass composed of fifty people 
aud they ean t-stimate, just a> they can esliiuaif the chanees of their taking 
a risk upon one, they ran estimate the risk on lifty. 

^li^ Wolfe: Not in liability insurance. 

The Commission ek : Why not? 

Mr. Wolfe: For this reason, that \vhen you insure fifty i>eople you emerge from 
the realm of insurance and enter one of ,u"anibling. 

The Com:missioxei! : Well, they are in that business now. 

Mr. Wolfe: They are not in the business of ganiblino;; they ure in the business 
of insurance, and they are enabled to be in that business because they are 
covering not fifty employees in this class but they are covering two hundred 
thousand employees of all classes. I think T might perhaps make that point 
clear if I refer to the manner in wliich T prpirel the rate- and classifi- 
cation for the ^rassachuselts Eni])loyees Insurance Association. 

The Commissioner: I do not see how that works out. Leave out the workmen's 
compensation altogether. They insure you and they insure me; why will 
they not insure fifty together? 

ilR. Wolfe: The only reason they would insure you and insure me is because they 
are also carrying insurance on 100,000 other people, and the number of 
accidents that occur in any year in a group as large as 100,000 people is 
well known. If you went to an insurance company that did a fire insurance 
business and said for the usual premium of $'25 please issue to me a $5,000 
accident policy that company would be extremely foolish to do it, because it 
would not be insurance, it would be gambling. The company would be 
gambling against $25 a possibility of you being the one who was injured. 

The Commissioner: Is it not all gambling? 

Mr. Wolfe: No, I think not. 

The Commissioner : There is a very eminent man who says that every man who 
insures his life is betting, gambling? 

Mr. Wolfe: Well, I take it the English authority Dr. Thorne said, while there 
was nothing so uncertain as the individual life there was nothing so 
absolutely certain as life in the aggregate, which is absolutely true, and that 
is the one thing that distinguLshes insurance from gambling that they are 
establishing a sufficient exposure to justify the proper application of the law 
of averages. While we can say with certainty that among 100,Q00 em- 
ployees there will be 500 injured in the course of a year, if we only took^ 
1.000 employees we could not apply the same percentage with certaintv' or 
with correctness. 

The Commissioner: Now, take an insurance company that lias been confined to 
this Province, whose operations were limited to this Province, woiild it not 
be in exactly the same position as the case I put that the State would be in? 

Mr. Wolfe: If an insurance company were confined to this Province? 

The Commissioner: Confined to accident insurance within the limits of this 


Mr. Wolfe : It would be exactly the same position as state insurance in this Pro- 

The Commissioner: Are there not many of those companies in existence and 
making money? 

Mr. Wolfe: I know of no company that is confined to the Province of Ontario 
that issues liability insurance or workmen's compensation. That may 
arise from my ignorance of the subject. I don't know if there are any. 

The Commissioner: I would not suggest that. 

Mr. Woodland: That is correct; there are none. 

Mr. Meredith: Is it not the fact on the line you have been arguing that you 
really don't want a Workmen's Compensation Act? 

Mr. Wolfe : Just the reverse, sir. I am a believer in workmen's compensation. I 
think it is a crime that up to the present time we have allowed these acci- 
dents to go. I am one of tlie warmest advocates in the states of that, and 
would do everything possible. 

The Commissioner: Would you like the Government, the state, to assume the 
responsibility of the compensiation ? That is what we want to get at. We 
know there are companies that will insure us any time. What we want now 
is a practical insurance guaranteed by the Government, so that if a man 
gets injured when he dies there will be an absolute surety that that man's 
family will get compensated, that those who are left will get something 
when he is dead. 

Mr. Wolfe: That is exactly the thing that I want, and that is the reason why I 
do not approve of the British system, because under the British system a 
workman may be injured and if his employer becomes insolvent and has no 
insurance there is no way in which the payment can be guaranteed, and- 
the worlonan may be left without receiving anything, or may be left after 
having received his compensation for one year and unable to get the balance 
of it. 

Mr. H. T. Meredith : And you would like by your argument to prove that the 
Government can do something of this kind, by these acts, as you say, in 
Massachusetts and the State of Washington, and in Germany. 

Mr. Wolfe: What I would like and w'hat I believe in is this: I believe that the 
legislature should provide for a scale of benefits for injured workmen, and 
should require the employer to furnish some evidence of the probable continu- 
ance of his financial solvency, either by furnishing a bond, or by becoming a 
policy-holder in an authorized insurance corporation. That is what I believe 
in. I believe first of all you should pay compensation benefits to an injured 
workman with some guarantee that he is going to get the money. 

The Commissioner: Let me ask you this: how does your Massachusetts Associa- 
tion differ from the weak thing you have been telling us about? 

Mr. Wolfe : The weak thing ? 

The Commissioner: Yes, the thing that is too small an exposure. 



Mr. AYolfe : It does it in this way : I have combined the 'best elements of the Aus- 
trian system with the German system, and have carried it out in the follow- 
ing fashion. Where the German system hias fifty-six associations I have 
only eighteen. The Massachusetts statute provides that this association, with 
the approval of the Insurance Commissioner, shall divide the employers into 
groups, according to the nature of their business, and the degree of the risk 
of injury. Now, I have done this: I have assigned to each employer in 
Massachusetts an index number. For instance, under index No. 2 you will 
find a great number of different indusftries all belonging to the same group. 

The CoMiiissioxEK : You make larger bodies in your groups. 

Me. Wolfe : Not only larger bodies, but those of diversified industries, so that we 
have a better exposure. 

The Commissioxer : Well, why could not that principle be adopted under such a 
scheme as suggested here? 

Mr. Gibbons : That is what I say. 

The Commissioner: But you are still determinedly hostile to the idea of current 

Mr. Wolfe : Hostile, I think, is not the proper term. I would be opposed ibecause 
I feel it is unsafe from an actuarial standpoint. 

The Commissioner : If riiere were the proper capitalization and large groups, such 
as you have in Massachusetts, is there any objection to the assessment system 
managed by an honest board ? 

Mr. Wolfe: Yes, there is still a much greater objection, and one which I have 
expressed frequently, and that is this : I do not consider that we are at the 
present time equipped to have the Government undertake this work. 

The Commissioner : Well, you are permeated with the idea that the Government 
can do nothing except manage Government affairs, are you not? 

Mr. Wolfe : No, I think not. I have been charged by some of my friends in the 
states with going to the other extreme, so I am between cross-fires here. 

The Commissioner : Well, supposing a province was unwise enough to come to the 
conclusion that it could do its business as well as any stock company, or 
any body of gentlemen, is there any objection to a scheme of grouping, 
sucli as you have in the Massachusetts scheme, compulsory insurance, and 
abandoning the idea of current cost? 

Me. Wolfe: If we could have a scheme similar to the Massachusetts, and when I 
say similar to the Massachusetts you will recall that I pointed out that the 
law specifically provides that the capitalized reserve value system should be 
employed. To repeat, if we could have the Massachusetts system with a 
sufficient exposure and with the assurance that we would get as effective 
service as we would if we permitted free and active competition, there is no 
reason why we shouldn't. 

The Commissioner: I do not see how the competition would help it any more 
than to keep down the rates? 

Me. Wolfe : That is exactly the point. 


The Commissioned: How is it possible for any company that lias to divide profits 
amongst shareholders to carry on its business in competition with a state 
body that has no expenditures, the state bearing all the expenses of the ad- 
ministration? How is it possible for them to compete? 

^li;. Wolfe: II the state bore all the expense it is absolutely impossible for it to 
compete, but that resolves itself into the proposition that the tax payers 
of the community generally shall pay for a specific servioe. 

The Commissioner: ISTow, is there not a good deal of reason in that proposition 
from a manufacturer's standpoint? It is pretty hard to make him bear the 
burden of the accidents when he is in no sense in fault, that are incidental 
to the industry. Why should not the whole community pay that? 

Mk. ^^'oLFE: That goes to a question of political economy which I tell you frankly 
I am not competent to discuss at this time. 

The Commissioner: You are estimating yourself too low? 

^Ik. Wolfe: If it be an admitted fact that the general community shoidd bear 
the expenses of the administration for such a plan, I see no reason why 
you should not extend the idea further, why the general community should 
not pay the expenses of administration for other classes. 

The Commissioner: A little at a time. 

Mr. Wolfe : Whv eventually the state should pay for this and the manufacturer 
should not. We may come to that. 

The Co;mmissioner: Xo, Ijecause the consumer pays what the manufacturer has 
to pay. The consumer pays and we are not all consumers. Make everybody 
pay the other. The only people who say that is not so are the silver mining 
people. They say they cannot put it on the commodity, , the world's market 
fixes it? 

Mr. Wolfe : Well, it seems to me, Sir William, there is a great deal of talk a;bout 
this element being put upon the manufacturer and he being thereby dis- 
qualified from competing with his competitors who have not a similar 
burden. It seems to me every manufacturer uses a margin of safety, a 
factor which is added to his cost of production to cover unusual and un- 
foreseen expenditures, and I think that is done in this case. 

The Commissioner: But if he has to meet competitors who have not any such 
burden surely he is handicapped to that extent? 

Mr. Wolfe: The handicap, apparently, is not a very well recognized one for this 
reason: We have now in six or eight of the states workmen's , compensation 
acts, and I have not heard that the manufacturers or the employers in 
those six or eight States have suffered in competition with the manufac- 
turers of those states which have not the acts. 

The Commissioner: These laws are pretty new. 

Mr. Gibbons: Would it not work out the same as the tariff does; that in the 
province where they have to pay compensation they would have a certain 
profit and the others would raise the amount and have just that much more? 



The Co.M.M]^slo^'EK : That wouki be i>reity hard on the poor cons^unier. 

i[R. Gibbon?;: WqW, that is the wa}- it usually works out. Mr. Wolfe was saying 
that the manufacturer or employer should furnish some guarantee that the 
money would be paid. Now, in this scheme we were speaking about, the 
State insurance, we would compel the employer to jiay a certain sum into 
the commission, or the commission that handled it. You said, Mr. Wolfe, 
that he should furnish a bond l)y a guarantee comjiany. 

Mr. Wolfe: 1 didn't say a guarantei> company. 

Mr. Gibbons: Well, supposing it was in the hands of guarantee companies, and 
that the employer didn't pay his contributions or his insurance into that 
company, they wouldn't be liable for that amount. 

Mr. Wolfe: They would be furnishing the kind of guarantee that 1 would want. 

Mr. Gibbon: The employee would be no better off? 

Mr. Wolfe: Oh, that is not a factor at all. T only know of one place in the whole 
world, ^Ir. Gibbons, where the state is guaranteeing the payment to the 
injuTed workman. 

Mr, Gibbons: The employer will pav his premium into the State, and the State 
will then be liable and the employee will be sure of his compensation. 

Mr. Wolfe: P'xcuse me. which plan do you mean? 

Mr. Gibbons : State insurance. 

Mr. Wolfe: As transacted in what country? 

Mr. Gibbons: In Germany. 

Mr. Wolfe: In Germany there is no state insurance, and the State does not guaran- 
tee the payment to the injured workman. 

Mr. Gibbons: Well, does not the employer there pay into the State a certain amount 
on his pay-roll? 

The CoMiiissiONER : The state administers the fund there. 

Mr. Wolfe : The State administers the fund and levies the assessments. While 
of course it is an almost impossible situation, if we can conceive of the 
point where chimney-sweeps, for instance, would be unable to meet their 
assessments levied by the State, the injured chimney-sweep would not receive 
his compensation. 

Mr. Gibbons: Would not the same thing be so if they were insured in liability 
companies, if they did not pay their premiums the liability company would 
not pay them ? 

Mr. Wolfe: Yes, it would exactly. 

The Commissioner: What are the penalties in "Massachusetts, or the mean? of en- 
forcing that provision that a man must be insured, that he must be either 
in the Association or insured in some company? Supposing he is not? 

Mr. Wolfe : 'J'hen he does not come under the act. 


_ — . , _^ 

The Commissioner: The workman is left to his common law liability? He might 
be in the hole then. 

Mii. Wolfe: No, the three important defences are removed. 

The Commissioner : Still, he has to go to law. 

Mr. Wolfe: Yes That is the great defect in the Massachuseitts system, there is 
no way of compelling every employer of labour to protect his workmen. 

The Commissioner: Are you speaking now of constitutional difficulties? 

^Ir. Wolfe: Apparent constitutional difficulties. In New York at the present time 
we are considering an amendment to our State Constitution which will 
permit us to make this workmen's compensation compulsory. 

The Co:mmissioner : As I understand it, under your Massachusetts law there is 
some branch of the court— is it the Common Pleas? — that settles all dis- 

Mr. Wolfe: No, sir; there is an Industrial Board consisting of five members. 

The Commissioner : From that Board is there any appeal to anybody ? 

Mr. Wolfe : There is an appeal on questions of law but not on questions of fact. 

The Commissioner: To what? 

Mr. Wolfe: To one of the lower courts. 

The Commissioner: There is one State, and I thought it was Massachusetts, but 
evidently it is not from what you say, where all these disputes were deter- 
mined by one of the courts? 

Mr. Wolfe: Yes, there are in a number of States; in New Jersey and in Illinois. 

The Commissioner: What questions of law, under a properly draAvn act, with a 
system of compensation for all injuries, would be likely to arise? 

Mr. Wolfe: Well, Sir William, you are getting me beyond my depth. 

The Commissioner: You are neither a political economist nor a lawyer? 

Mr. Wolfe . Exactly. You have not touched all my limitations. 

The Commissioner : You are discussing the bureaucratic system, which you say 
could not very well be incorporated into this country. I would like to see 
this Industrial Board a pretty bureaucratic concern with power to determine 
all questions. 

Mr. W^olfe: Both of law and of fact? 

The Commissioner: Yes. There are many questions, but nowadays they arise 
mainlv from this: "Arising out of and in the course of employment," 
which Is a ver\' inaccurate expression. 

^1r. Wolfe : And then there are further considerations. For instance, "the serious 
and wilful misconduct," which I think very provocative of litigation. 

The Commissioner: Their disoherlionce of a rule. 


Mk. ^IacMikchy: Probably you are thinkino- of the law of Ohio. I see there is 
an appeal to the Common Pleas court of the county. "The Board shall have 
full power and authority to hear and determine, and its decision shall be 
final." but on certain points there is an appeal to the Common Pleas Court 
of the county, and to a jury if demanded. It is section 36 of the Ohio 

Mr. Wolfe: Then section 18 of the Xew Jersey Act, the one I referred to, is as 
follows : " In case of a dispute over, or failure to agree upon a claim for 
compensation between employer and employee, or the dependants of the 
employee, either party may submit the claim, both as to the question of fact, 
the nature and effect of the injuries, and the amount of compensation there- 
for according to the schedule herein provided, to the judge of the couTt of 
common pleas of such county as would have jurisdiction in a civil case, or 
where there is more than one judge of said court, then to either or any of 
said judges of such court, whidh judge is hereby authorised to hear and 
determine such disputes in a summary manner, and his decisions as to all 
questions of fact shall be conclusive and binding." 

The Commissioner : Yes, that is the one I was referring to. Now, in the Massa- 
chusetts act. which you are partly responsible for, I judge, it is optional 
whether a man becomes a member of this association. How about the 
wor'kman; has he any option? 

Mr. Wolfe : Yes, after an employer of labour has elected to come within the act 
by giving the statutory notice to the employees and becoming a policy holder 
in either the association or a liability company authorized to transact busi- 
ness in the Commonwealth, his employees then have the right of election. 
They may serve notice on him that they do not care to come under the act, 
and in the event of an injury to them in that case the employer may use 
those three important defences. 

The Commissioner : Is there no provision as to the proportion of the workmen 
to determine it, so that a man could not have one workman in and one 
workman out? 

Mr. Wolfe : Xo. It is an individual notice given by the workman. I may say, 
however, that it is a more or less academic question because among all the 
employees covered by the association not one of them has given notice, that 
is, that he desires to retain his common law right-s. I understand that one 
of the lawyers in Massachusetts — we have a term there and I don't know 
whether it is used in this Province or not, but we call them shyster lawyers — 

The Commissioner: No; we have not got them. 

Mr. Wolfe : ^\'ell, one of those lawyers ha;s been going around and inducing the 
employees ot one or two of the large manufacturing plants to serve notice 
upon the Industrial Accident Board and upon their employers that they do 
not care to come under this act. I think that as soon as the advantages of 
the Workmen's Compensation Act becomes known and recognized no em- 
ploj^ee will do that. 

The Commissioner: What good does this association do? What was the object 
of creating it ? Why not have left it to the manufacturers to form a volun- 
tary association of that sort? 


Me. Wolff : To enable the manufacturers to obtain compensation insurance at 

The Commissioner : They could do that by forming a mutual insurance company. 

Me. Wolfe: They could by forming a mutual insurance company, yes, but there 
would be no state regulations of an association to see that it would be oper- 
ated upon proper lines. There are mutual organizations in Massachusetts 
at the present time whicli issue liability insurance policies. 

The Commissioner: Well, what is the objection to that? 

Me. Wolfe : There is no objection to that that I can see. 

The Commissioner: It seems to me a useless piece of machinery has been created. 
You do not make it compulsory to form the association as the Germans do. 
It is vohmtary. Unless that association has some privileges over other 
associations formed voluntarily, I do not see what was the object of creating 

Me. Wolfe : It has privileges, as I think I can point out. In the first place, an 
employer coming into it knows that his rates, the method of administration, 
his dividends, and all matters pertaining to the machinery, are supervised 
and regulated by the state. 

The Commissioner: Would that not be so if it were an incorporated association? 

Mr. Wolfe: 'No, it would not. 

The Commissionee : Xow, here in this country the manufiacturers, if tliey chose, 
could form a mutual insurance company. 

Me. Wolfe: And as long as that mutual insurance company was operated in 
accordance with the laws of this pro\ance there could be nothing done by 
any subscriber or polic3'-holder to insure his getting just exactly the amount 
he was entitled to. For instance, the Board of Directors of such an organ- 
ization as you have referred to might decided to pay all the losses out of 
the receipts, and simply distribute the same amount. 

The Commissionee : Xot if you had a good insurance law and a good inspector. 

Me. Wolfe : Yes, but there is no insurance law on any of the statute books of 
any of the States or Provinces or countries that I know of at present which 
prescril)es that the dividends, the returned premiums of liability insurance 
must be distributed in a particular way. 

The Commissionee: Xo, I do not think that there is. 

Mb. MacMuechy: Did the state not contribute something towards that association 
to form it? 

Me. Wolfe: Yes, the State appropriated $10,000 for the preliminary expenses 
before it was authorized to do business. 

The Commissionee : Which is the State that requires 

AFe. Wolfe: The Liability Commission of the State of Iowa has brought in a 
bill which will be presented at the next session of the Legislature. They 
have attempted to make use of some of the pro\'isions of the Massachusetts 


act, bin have applied tlieiii iii a very peculiar and unusual way. For in- 
stance, in the Massachusetts act, upon my advice, the directors of the 
Massachusetts Employees Insurance Association created a reserve fund to 
take care of this catastroplie hazard by setting aside ten per cent, of each 
premium received. The Iowa commission tried to vary that, attempted 
an improvement on it, in this way. The Iowa bill, section 50, provides 
tliat when the membership represents 15,000 employees there shall be 
$30,000 re-insured, and when the membership represents 25,000 employees 
$50,000 shall be re-insured, and when the membership represents 50,000 
employees $75,000 shall be re-insured. In other words, the greater the num- 
ber of employees and the greater the exposure the more insurance shall be 

The Com:missionee : They are looking at the amount of risk? 

Me. "Wolfe: Exactly. 

Mr. Wegexast : Mr. Wolfe, was it not tlie original intention of the Massachusetts 
system to displace the liability companies by having all the employers who 
join the association, or who come under the act, come under this State 
system ? 

Mr. "Wolfe : There has been a change there, and I do not remember which came 
■first. I do not remember whetlier the first act provided that the liability 
companies should he excluded or whether the first act did not provide for 
it and the second act injected it. I know there have been two or three or 
four changes in the Massachusetts act. 

Mr. Wegexast : You did not have anything to do with tlie agitation ? 

]Mr. "Wolfe : I had nothing to do with the act until it was created. 

The Commissioxer : They are on the ground yet, the liability companies ? 

Mr. "Wolfe : Yes, under regulation. In connection with that statement I want 
to point out this, that there is necessity for the provision requiring their 
rates to be approved by the Insurance Commissioner, because if it were 
otherwise the rates issued by the liability companies would be much lower 
than the ones prepared by the association. 

The Co:\r]\iTssioJ^ER : A\liy are they not uniform ? 

Mr. Wolfe : I promised to explain that, Mr. Commissioner, and I will touch 
upon it briefly. I have held this, that the entire method of calculating 
premiums by liability companies is incorrect, for tliis reason : that while 
in the case of liability insurance there is a perfectly sane and actuarial 
reason for expressing the premium in a percentage on the pay-roll, that 
reasoning does not hold good when he comes to workmen's compensation. 

The CoiiMissioNER : You explained that in what you said as to Iowa. You gave 
as an illustration a man having a thousand on his pay-roll. 

Mr. Wolfe : Yes. The reason for that can be illustrated in this war. One of 
the principal benefits under the Workmen's Compensation Act, and some 
people maintain that it will be the principal one, is the granting of medical 
service. It must be admitted that medical service is a function of the 
number of employees and not of the pay-roll. In other words, that it will 


— ^ — 1 

cost ju.-t as much to give medical attendance or beneifits to a clerk getting 
$5 a week as it will to a man getting $20 a week, so that we ought to charge 
for medical service on the basis of the number of employees exposed and 
not on the amount of money they are receiving. VThen we come to the 
compensation payments, we find that in Massachusetts no payment may be 
less than $4, or more than $10 a week, irrespective of the amount of wages 
which the injured workman had been receiving. Therefore it is incorrect 
to charge a premium based solely on the imy-roll without taking into 
account the maximum limits. Take for instance two mamifacturing 
establishments side by side, having identically the same risk, having identic- 
ally the same accident prevention methods, being engaged^m identically 
the same industry and having the same number of employees. To make it 
clearer, I will say that each had one thousand employees. Factory "A" has 
a pay-roll of $8,000. That is, each employee receives $8 a week. Factory 
"B" has a pay-roll of $7,000. That is, each employee receives $7 a week. 
In case of an accident to the employees of both plants the same payment 
would be made exactly, namely $4 a week. Xow, why s.hould factory "A" be 
compelled to pay a larger premium than factory "B"' when he has exactly 
the same amount of risk? 

The Commissioxer : Have you any labour organizations in your country? 

Mr. Wolfe : Yes. 

The Commissioner: How is it possible for that state of things to exist. 

Mr. Wolfe : It is not only possible, but it is the actual fact. For instance, in the 
case of this association there were four boot and shoe factories. The boot 
and shoe industry is a very active one in the Commonwealth of Massa- 
chusetts. The figures are as follows: the premium calculated on my basis 
for plant "A" amounted to 92 cents per $100 of pay-roll: plant "B" $1.02; 
plant "C" $1.05; plant "D" $1.24, due to the fact that plant "A" has a 
great number of highly paid employees, men receiving more than $20 a 
week, and the man who receives more than $20 a week in case of accident 
receives only the same benfit as the one who is getting only $20. 

The Commissioner: Well, if you have no limitation I suppose it all comes out of 
the consumer? ^ 

Mr. Wolfe : Yes, except so far as the medical service is concerned. 

The Commissioner: I was told of a case which happened, I believe, in one of 
your St-ates, where the foreman was directing the operations in a shop, and 
in doing it he gave offence to a man who was working inider him, and the 
man picked up something and hit the foreman over the head and killed 
him. Of course the decision went against him; but it was thought to be an 
outrage, and that the man wa-s more entitled to compen.sation than if it had 
been an accident. He got no compensation. I like the German definition 
of it a little better than the English, which gives rise to a great deal of 
trouble. You say you are not a lawyer, but do you see any reason why, 
if you use the English term •'arising out of and in the course of the em- 
ployment" to make both oases prima facie in favour of the workman; if 
it happens during his employment the onus is upon the employer to show 
that it did not arise in the course of his emplo^nnent. and if it arises out 


of the employment to have a similar presumption that it arose during the 
course of employment? There are so many cases, especially among sailors, 
where it is impossible to show how the thing happened, such as a case where 
a man is found drowned. He may have gone to the edge of tihe ship to 
relieve himself, and fallen overboard, and therefore it would not be under 
the law. More probably the thing referred to happened while he was doing 
his duty on the boat; but they held it was conjecture, and they could not 
recover. Now, if there were such a presumption as I suggest then the 
burden of proof would be shifted, and the employer would have to show 
that it did not arise out of the course of his employment? 

Me. Wolfe : Expressing merely a layman's opinion, I believe we should do every- 
thing possible to make sure of the payment of compensation in all cases to 
the injured workman. I think there is a necessity for a better definition 
of what constitutes an accident. 

The Commissioner: You see in this ease I gave as an illustration it was not an 
accident at all. It was a designed thing. I believe they did not put it 
on that ground, but that it did not arise out of his employment. 

Mr. Wolfe : If I remember correctly in the language of the Massachusetts act it is 
a ''personal injury sustained by an employee in the course of his employment," 
and that is very indefinite. A man's feelings might be hurt, and while I 
take it that the Industrial Court would not award him any compensation 
for that, I think the term "accident" certainly should be used. 

Mr, MacMurchy : Do you remember a case in November, 1910, where there was a 

The Commissioner: I did not see it; reported. 

Mr. MAcMuRCHy: Do you remember hearing of the case in 1910, where a man was 
taking money to pay tlie employees of a mine and was murdered? 

The Commissioner: Yes, they recovered there. 

Me. MacMurchy: And quite rightly. I do not think that was reversed. 

The Commissioner : I will tell you something that may jar a little on your views^ 
I don't know. The Mining Federation is a mutual association of the miners, 
in England, and they found that the risks were very much greater in some 
mines than in others, so that in regard to that class each employer bears in 
the association the burden of the accident, but with regard to fatal accidents: 
they found there was uniformity and there they made an assessment on the 
whole group. According to the tables in one year there were some very bad 
accidents. That seems to work out all right there, and that is not a very 
large exposure. 

Mr. MacMurchy: Is there not some provision in the case of a catastrophe? 

The Commissioner: No. 

Mr. MacMurchy : I have seen a statement to that effect. 

The Commissioner : Then there is the shipping federation. That is based on the 
tonnage, not on the pay-roll. Then the building tracfes have an 
association, and the boot and shoe trades have an association. Mr. 


xVrmstroug of the Ocean Accident, used an argument regarding the 
question of cheapness. He said of course we can afford to do it a great 
deal cheaper than the state lor that is only one branch of our business and 
you will have to charge the whole cost of your staff to that department. 
He said : "Our head department practically costs nothing — perhaps I am 
putting it too strongly — to the accident branch, and therefore we can do 
our business cheaper.^' 

Me. Wolfe : The Commercial Union has bought all the capital stock of the Ocean. 

The Commissionek : Well, something ought to be done, I think, as a result of 
your statement, Mr. Wolfe, to prevent these accidents taking so much toll 
out of the people. 

Me. Wolfe : Well, I would be very glad if I could feel that any of my efforts had 
helped to a satisfactory solution of this workmen's compensation in your 

The Commissioxer : I think if you had been there when they were framing that 
act you would have said: "Instead of making this a voluntary association, 
make all that are under the act come in and give the association a mono- 
poly of the business." 

Mk. Wolfe: No, I wouldn't have done that; I will explain why. In Iowa that 
is exactly what they have done. They have provided that every employer 
of labour having more than five employees shall on a certain date be pre- 
sumed to come under this act unless he gives notice to the contrary and 
both he and his employees must renew that notice each year within thirty 
days of its expiration. Furthermore that all employers who have not given 
this notice thereby become members of the Employers" Indemnity Associa- 
tion and, if I may take a few minutes of your time, I would like to just 
read to you section -iS and tell you what is going to happen if this bill 
becomes law, "Any emplo^'er coming under the terms of this act for the 
payment of compensation for injuries sustained by any of their employees 
coming under this act shall be conclusively presumed to have elected to 
secure the payment thereof as by the terms, conditions and provisions of the 
act, and any employer coming under this act employing five or more em- 
ployees coming under this act, thereby elects to and becomes a member 
of the Employers' Indemnity Association, except the State, county, and 
municipal corporations and school districts, including cities under special 
charter and under commission form of government. The Board of 
Directors appointed by the Governor shall within ninety days after this part 
of the act takes effect, call the first meeting of the members of the asso- 
ciation by a notice in writing mailed to each member at his place of business 
not less than ten days before the date fixed for the meeting." A subsequent 
section provides that at this meeting the employers shall be divided into 
groups and assessments levied in accordance with the nature of the business 
and the risk of injury, and the premium sihall be collected. I want io 
direct yjour attention to the practical impossibility of that bill. In the first 
place how can any Board of Directors know who are the members to whom 
this notice shall be sent? There is no method of registration in the State 
of Iowa at the present time, although every employer of more than five 
workmen is compelled to register, but assuming that in some occult way this 


Board of Directors kuows the names and addresses of all the employers in 
Iowa who come iiiuler this act and notice is sent to them, I estimate con- 
servatively there would be lo,OOU coming under the statute. Where will 
15,000 employers meet for the purpose of transacting this very important 
and technical business r Assume, however, that they have met. Where is 
this Employers' Indemnity Association going to obtain the necessary 
actuarial underwriting and clerical assistance to inspect at once and take 
care of 15,0U0 risks. That is something that has to be done at once; then 
collect those premiums, and inspect the plants for the purpose of properly 
differentiating for paying the losses. It is a practical impossibility. 

The CoMMissioxEii : Well, under your system, supposing you got all ihe manu- 
facturers in Massachusetts, and they gave that notice, that would be the 
same thing? 

Mr. Wolfe : There is a provision in the by-laws to which I would like to call 
attention : '" Xo policy shall be issued by this Association to any member 
until his plant, workroom, or shop, shall have been inspected by a duly 
authorized representative of the Association, but the Association may issue 
a binding receipt upon the payment of a year's premium at a tentative 
rate agreed upon which will protect the applicant until the inspection has 
been completed." 

The Commissioner : Well, these are all matters of detail ? 

Mr. Wolfe: This provision would have been impractical if 15,000 or 30,000 em- 
ployers were suddenly thrust into an organization. A thing of this kind is 
only possible where you have the employers coming in gradually. 

The Commissioner: That would all be met by providing that it should not be 
compulsory but all should be in for a stated time, say three or four years. 
. That would meet that difficulty. 

Mr. Wolfe : That it should not be compulsory ? 

The Commissioner: That they could all be bound to bs in this for a stated 
period ? 

Mr. Wolfe: Well, what would you do in case of accidental injury during that 
period ? 

The Commissioner: Supposing they did not argee upon a premium in your case 
what would happen? It would be under the common law liability? 

Mr. Wolfe: But, the premiums have already been prepared and the classification 

The Commissioner : How could they do that until they know who were to be the 
members ? 

Mi;. Wolfe: Well, I have prepared rates for every possible" form of employment? 

The Commissioner : Do your rates not differentiate according to the plant anri 
the way it is managed and the way it is conducted, or do you put them all 
on a flat rate ? 
13 L. 


Mr. Wolfe : No, sir. In answer to that I would like to read from the report which 
I made to the Directors of the Massachusetts Employees Association when I 
submitted my rates : " The sum of these three results — that is the three 
factors in the premium — will give the annual premium which it is nec- 
essary to charge to a first class risk in any of the specified occupations. If, 
however, it should be found upon inspection that the amount of the risk 
is increased, not owing to occupational causes, but due to defective installa- 
tion, the absence of recognized safety devices, or any other defect which may 
be removed, the imposition of a differential should be insisted upon." In 
other words the inspector goes around and he finds the gears unprotected, 
he finds places v/here there is an exposed electric switch, and so on, he 
reports to the Association, and this employer is notified that there is a 
differential of 20 per cent, placed upon him until he complies with all 
the requirements of the inspection. 

The Commissioner: Then he comes in at the normal rate? 

Mr. Wolfe : Yes : His inspection takes place within twenty days of his coming in. 

The Commissioner: Why could that not all have been done under the Iowa law? 
Why couldn't you make your groups under the Iowa system? 

Mr. Wolfe: It could be done theoretically, but practically it could not be done 
when you are dealing with a huge mass which in one day is forced into 
the membership. 

The Commissioner: I do not know that it is necessary to bring them all in 
together. Why could you not have your State Board regulate it? 

Mr. Wolfe: You would still be exposed to the same difficulty by having a great 
number of risks. 

The Commissioner: You would have the rate and you would know what they 
were to pay? 

Mr. Wolfe: Even so the task of taking care of a great number of risks on one 
day is an impractical difficulty. 

The Commissioner: Well, there ought to be some method of getting around that. 
According to that you have to begin small and grow. 

Mr. Wolfe: According to my idea what you have got to do is to evolve some 
method which would not immediately throw an impossible burden upon any 
corporation that you create. 

The Commissioner: What would you think of a scheme by which side by side 
workmen's compensation, clalwratcrl with a provision that you should start 
with certain groups of industry, whether collective or on the capitalized 
plan, and add to those groups from time to time as experience suggested 
or was convenient, nnrl then when the men came under the board and that 
part of the act he would cease to be under the individual liability? 

Mr. Wolfe: Let me see if T understand your question correctly. You mean, for 
instance, if the Province of Ontario should decide that the mining and the 
steel industries should have compulsory workmen's compensation laws. 


The Commissioner: A eompulsoiy insurance managed by the state. 

Mk. Wolfe : And that such insurance should be on the capitalized reserve value 

The Commissioner : Assume that to be the proper basis. 

Mb. Wolfe: Would I still find any objection? 

The Commissioner: Yes. 

Mr. Wolfe : I would still urge my objection that in my opinion the State is not 
equipped at the present time. 

The Commissioner : I understand that. Assume that the State is competent. You 
see we have a very good State here. 

Mr. Wolfe : I realize that. No statement that I have made I trust will be taken 
as a reflection upon it. 

The Commissioner: But leaving that out of the question, and assuming it is 
advisable that a board appointed by the state should act as a Board of 
Directors, if you chose to call it that, do you see any objection to first putting 
the obligation of the employer and the right of the employee upon a sound 
basis ? 

Mr. Wolfe : No sir, I do not. 

The Commissioner : Leaving them to their ordinary remedies for recovery of 
whatever their claim is, and then from time to time as expediency or con- 
venience suggested bring in different groups and let them put their mutual 
assessment plan on the capitalized value, if you like on that principle. Do 
you see any objection to such a system as that? 

Mr. Wolfe : There would be two objections ; first, that there would not be sufE- 
cient exposures in the province in any particular industry to form assoc- 
iations the same as in Germany. 

The Commissioner: You are destroying your own proposition. You made the 
groups big enough. 

Mr. Wolfe: Yes. 

The Commissioner: Let the State Board make the groups big enough to give a 
proper exposure. 

Mr. Wolfe : Then there would be no objection except the question of administra- 
tion expenses. 

The Commissioner: What does that mean? We have not touched that. 

Me. Wolfe : That means the cost of administering the expenses of this associa- 
tion would be unduly large if you only had one association, one group. 

The Commissioner: If you had only one group, but I do not say one group. 
Perhaps there would be several groups. But had you not the same diffi- 
culty in Massachusetts? 

Mr. Wolfe: No, there, if you recollect, I stated that this Association could not 


become operative until it had one hundred subscribers with ten thousand 
employees. That was the minimum. 

The Commissioner: Well, supposing they were put in under the various depart- 
ment groups that represented that number, there could be no objection? 

Mr. "Wolfe: Absolutely none. 

The Commissioner: Then I suppose there could be added to the general law a 
provision requiring a man if he was not in this Association to insure to the 
satisfaction of the Board ? 

Mr. Wolfe : Yes, which is similar to the provision in Massachusetts at the present 

The Commissioxer : Have you told me yet whether in Massachusetts they could 
make use of the common law right? 

Mr. Wolfe: An employer coming under this act gives a statutoiy notice to his 
employee, and unless the employee gives notice of his desire to reject that 
act he waives his common law rights. 

The Commissioxer: Well, in this province. I fancy, it would not obtain to the 
same extent, because there are recoveries on your side where there are not 
here. The number of recoveries at common law are practically a negligible 
quantity. I do not suppose there is one in a thousand in Ontario. I can 
count on the fingers of my hands the cases in which the common law 
liability has been maintainefl. Then the difficult}' is that as long as that 
common law liability exists it encourages litigation, and it increases the 
cost of insurance. 

Mr. MacMurchy: Yes, I have offered double the amount under the Workmen's 
Act to get rid of the common law, and after that the action lias been dis- 
missed with costs in several cases. 

The Commissioner: Y"ou framed the groups of Massachusetts. I suppose our 
conditions are not very different. I suppose we could iise your figures. 

Mr. Wolfe : I should be pleased to have you use them because that would be proof 
positive that they existed, but the conditions are different and my framing 
would not be applicable. It is worked out with the limits of $J minimum 
and $10 maximum. 

Mr. MacMurchy: What is the number of employees covered in Massaehusett-^ ? 

Mi;. Wolfe: Approximately 80,000 in the Association. 

Mr. MacMurchy : What is the population of Massachusetts ? 

Mr. Wolfe: I think it is between three and five millions. 

Mr. MacMurchy: And the workers? 

Mr. Wolfe: I don't know that. 

Mr. MacMurchy: So it is less than twice that of Ontario. 

The Commissioner: How would you propose to divide the cost of handling Ihe 
fund ? 


Mk. Wolfe: i made my premiums consist of three factors, the cost of the weekly 
disability; second, the cost of death and of dismemberment; and third, the 
cost of medical service. 

The Commissioxer : What do you mean by dismemberment? 

Mr. A^'olfe : If a man's arm is cut off he gets under the Massachusetts act one 
hundred weeks or fifty weeks. 

The CoiniissioxER : Assuming that is left out. In the British act it is based on 
the extent' of the injury. 

Mr. Wolfe : Well, it would be simply the two factors. 

The Commissioner: How do you biin^' iu that medical part? \Miat is your 
basis ? 

• ilu. Wolfe : 1 have prepared a table for the Association which shows that for index 
No. 1 there should be charged $1.85 per annum for each employee. 

The Commissioner: Per annum? 

Mi;. Wolfe : Yes. Index No. 2, there should be charged $2.32 per annum for 
each employee. Now, all they have to do after finding out in which group 
an employer is, to obtain the medical factor simply multiply the number of 
employees by the cost opposite his index. 

The Commissioner: What is your medical allowance? 

Mr. Wolfe: In Massachusetts the medical allowance is the cost of medical and 
hospital service and supplies for the first two weeks, not to exceed, I am not 
sure whether it is $100 or $200. It does not matter much about the use of 
the words " not to exceed," because the doctors of Massachusetts manage to 
consider that every case is worth the maximum fixed by law. We also have 
a provision there that the funeral benefits shall be paid in case the injured 
workman is killed and leaves no dependants. The funeral benefit is limited 
to $200. The other day they called my attention to a case where a workman 
in an automobile factory was run over by an automobile and. killed. He 
left no dependants. What the undertaker did for that poor Italian I don't 
know, but he must have had a magnificent funeral. He had charged for 
slippers and candles and all that sort of thing. 

The Commissioner : Let me ask you one question more. What objection is there 
instead of your method of collecting the premium, if you find you have 
taken too much and paying it back, of substituting for that commencing 
with an initial premium based on a rate, and then at the end of the first 
year to make an assessment for the loss, the actual loss, without anything 
to be repaid, except possibly in respect to the first premium ? 

Mr. Wolfe: There would be no objection because that is exactly what the Massa- 
chusetts act does. 

The Commissioner : It does in effect but in a roundabout way. 

Mr. Wolfe: No, I do not think so. 

The Commissioxer: You collect it and pay it back? 


Mr. Wolfe: Yes. What happens is this: the employer in Massachusetts makes 
his initial deposit for the year, and instead of at the end of the year they 
east up his account and find what amount should be returned to that group, 
and they return it, and he makes another deposit for the coming year. 

The Commissioner : I do not see why he should continue to do that. He makes 
an initial deposit, and at the end of the fiirst year the loss amounted to so 
much. You assess then according to the proper proportion that he should 
bear. If his initial pa3'ment is not enough he has got to add to it and if it 
is too much he hasn't to add. Then he pays exactly what he ought, and 
there is nothing repaid. 

Mb. Wolfe: Well, the reason is that the method used by the Massachusetts Assoc- 
iation is a safer form and furnishes better protection to the injured work- 
man in this way, that if there is any overpayment it is kept for one year, 
which in case of a catastrophe would be paid for the losses. 

The Commissioner: You have your surcharge, as the Germans call it, for that 
purpose ? 

Mr. Wolfe: Yes, but that surcharge as in Germany does not deal with that. 

The Commissioner : Then you do not provide in a case of the premium being too 

Mr. Wolfe : I thought I had explained to you that we provide for the payment 
being too little in this way, that every employer can be assessed one hundred 
■per cent, of his cash premium in case it should be necessary. 

The Commissioner : I understand that, but the way it occurred to me would be 
the better way to do and all that would be avoided. The man pays down 
his initial payment, and at the end of the year there is an adjustment, and 
then the next year he pays, 

Mr. Wolfe: I see no objection to that. It is practically what is being done in 
Massachusetts. It is not a vital element. 

The Commissioner: Have you discussed with Mr. Wegenast this question bf 
current cost? 

Mr. Wolfe : I have not had the pleasure of any talk with Mr. Wegenast. 

The Commissioner: Mr. Wegenast is very much wedded to the current cost plan. 
Have you seen anything, Mr. Wegenast, to shake your faith in that? 

Mr. Wegenast: Certainly not. 

The Commissioner : Your faith must be able to remove mountains. 

Me. Wegenast: Of course some of the statements that Mr. Wolfe has made with 
regard to the German system would lead one to believe that there were 
inherent objections to it, and that they were being realized in Germany, but 
as a matter of fact, it is pointed out by Dr. Zacher that the German system 
is gradually being placed in the position of a capitalized plan. The whole- 
trouble with Mr. Wolfe's figures there is that he does not allow for any 
percentage being added to it. The minute you begin to add even a small 
percentage, even one per cent., you at once start it on your capitalized basis, 


because there will arise a time when that percentage will have rolled up a 
fund so large that it will reach the capitalized basis and in Germany that 
is in fact what is being done, and Dr. Zacher says that is the intention. 

The Commissioner : The date has been put forward a bit to what was originally 

Mr. Wegenast: Yes, but there comes the factor of higher degree of industrial- 

The Commissioner: T am not sure whether it was he or somebody else who said 
in twenty years. 

Mr. Wegenast: Well, Mr. Dawson pointed out that in most of the industries in 
fact it has been reached long since. 

Mr. Wolfe : What industries ? 

Mr. Wegenast- Well, take the second one given here, the beer-bottling industry. 
In 1892 the rate was higher than it was in 1898. (Interim Report^ 
p. 112.) 

Me. Wolfe : My tabulation of the industries the first time will be found on page 23. 

Mr. Wegenast : It was very clearly pointed out by Mr. Dawson that the maximum 
had been reached in one case as early as twelve years, and fifteen years and 
twenty-five years, and it has been running along on the level ever since, the 
reason being, of course, that that percentage added was between nine and 
ten per cent. Take general co-ntract carpentering because there are two 
divisions. In 1893 the rate was $2.46. That is nearly twenty years ago. 

The Commissjoxer : Take wood-working, as that is in Mr. Wolfe's. 

Mr. Wegenast: Furniture factories, wood-working, that was $1.99 in IS'U. In 
1908 it was only $1.93. It has not risen since 1891. 

Mr. Wolfe: I have the record each year for the number of persons insured, the 
total amount of wages, and the total expenditures for insurance, with the 
average expenditure per person and per thousand dollars of wages of persons 
between 1885 and 1908, by the industries in Germany and then follows the 
sixty-six associations. 

The Commissioner : If you notice, Mr. Wolfe, under some heads there are two or 
three different ones grouped. Perhaps they may be reduced while on the 
whole it may not. 

Mr. Wolfe : Perhaps so. 

The Commissioner: There are included in the table numbers 4;^ to 54. If 
carpentering were in that and your figures are accurate it would indicate 
that while there has been a decrease in that particular branch upon the whole 
of the building trades it has increased. 

Mr. Wegenast : Well, it is quite certain that there are some industries in which 
there has been an increase. I do not know that I am competent to speak 
on the average over the whole system, or even in groups. But I simply 
point out it is quite well understood in some industries there are some groups 


which have not risen for very many years. They base it on a percentage 
basis, and this is taken from the twenty-fonrth annual report. I have not 
taken the trouble to verify the figures by referring to the German report; I 
am assuming that they are coriect. These figures are taken from the same 
,-chedule as was presented to the Federal Commission at ^^'ashington. 

The Commissionek : Would it be possible for Mr. Wolfe tu allow Mr. Wegenast 
to go over the statement and send him his views, and then Mr. Wolfe send 
in his reply? 

Mi;. Wolfe: I will be very glad to do that. 

Mr. Wegenast: 1 would also ask .Mr. Wolfe to answer that portion of my brief 
dealing with liability insurance. 

^Ir. Wolfe: If you ask me the questions I can perhaps answer them. 

Mr. Wegenast : I am afraid it would take too long. It is dealing also with the 
current cost plan, pages 101 to 111. 

Mr. Wolfe: If there is anything I can answer I will be glad to do so. I am not 
competent to go into the law of the subject, but there is one thing I would 
like to say to Mr. Wegenast, and that is this, if they include in the assess- 
ment a percentage for a reserve fund in each year the cost must at some 
time go beyond 100 per cent., because you cannot lift yourself up by your 
boot straps. If you have to provide for a back liability you have to contribute 
money at some time to pay for that. 

Mr. Wegenast: If you add to the regular yearly cost say 10 p:^r cent, there will 
come a time when you have to drop that 10 per cent. 

Mr. Wolfe : Yes. but do you not see that at some time you have to pay 110 per 

Me. Wegenast : Precisely. 

Mr. Wolfe: I tell you frankly you can get rid of those back liabilities whenever 
you are wnlling to pay more than 100 per cent, to do it, but until that time 
you cannot. 

The Commissioner: In the last two lines of page 103 there seems to be a clerical 

Mr. \\' Yes, it .should be ''more careful." I do not want to spoil Mr. 
Wolfe's case, or appear to spoil it. I realize that he represents interes'ts 
adverse to our proposition. 

Mr. MacMurciiy: As far as I am concerned Mr. Wolfe has been brought here as 
an independent actuary. FTe does not represent anybody, as far as T am 

Mr. Wolfe: I do not look upon the subject of workmen's compensation as touch- 
ing, except in the most remote degree, the question of liability insurance. 

^^R. Wegenast: If you impose the liability on the individual employer he has to 
find protection somewhere. 


Mr. Wolfe: Yes, bul liability insurance is simply holding the policy holder free 
irom any recoveries in actions at law arising from accidents in which he has 
been negligent. 

Mk. WEGEXA.ST: Xot necessarily. It is a question of what you include in your 
terms. By liability insurance 1 mean the insurance of the liability of the 
employer, whatever that liability may be, and if you throw it on the employer 
he must look for protection somewhere. 

Me. Wolfe : But that would apply to fire i]isurance, and personal accident insur- 
ance also. 

The Commissioner : Under the British act a man insures for whatever he is liable 
under that act or at common law. 

Mr. Wolfe : That is not liability insurance. 

Mr. Gibboxs: Would that state of affairs allow some to take out a policy in one 
company and some in other insurance companies? Would that not create a 
state of affairs that would make what you regarded as too small a group ? 

Mr. Wegexast: You have twenty-five or fifty companies doing business and divide 
the insurance in each occupation amongst those companies, or a number of 
.them, and the splitting of the exposure is just as great or greater. 

Mr. Wolfe: I beg leave to differ with you. In the first place liability accident 
insurance companies in the past have not divided their risks in the indus- 
tries. They have put them all in one bisf policy and paid out the benefits. 

Mr. Wegexast: How do they strike the proper rates: 

Mr. Wolfe: By the statistics of all the companies. 

Mr. Wegexast : Which, it is recognized, are entirely inadequate. 

Mr. Wolfe : The premiums are inadequate, but the >tatistic? are not. 

Mr. Wegexast: Mr. Wolfe has assumed, of course, the system to be a lump sum 
system, or one like the Massachusetts system where it is ended at a certain 
time. But where the payments may be extended over a generation, and 
where the factor of the probability of a man being married, the probability 
of the number of children, and all these factors, how can you possibly deter- 
mine the premium? 

Mr. Wolfe: Where do you get any authority for saying that I have based my 
ideas upon the lump sum? My calculations are not based on that at all. 

Mr. Wegexast: What rules are there for capitalizing the probable amount for 
which the company would be liable extending over a generation unideT 
periodical payments? 

Mr. Wolfe: Very easily. It is not a question of theory, it is a question of what 
is actually done. You will see if you refer to my statement. Those things 
balance themselves very easily. 

Mr. Wegexast: There is no way for th'> insurance company to determine what the 
extent of its liabilitv will be finally. 


Mr. Wolfe : Oh, yes. There have been laws passed or projected that will take care 
of that. For instance they are discussing now just what safe estimation 
shall be made, whether they shall assume that 60 per cent, of tlie premium 
charged shall be used, and that the capitallized value therefore shall be the 
difference between 60 per cent, and what has been paid out as losses. 

Mr. Wegenast: But with all the inspection and the examination by yourself and 
other expert actuaries you say : " An examination of the rules laid down by 
the statutes of the various states for determining the value of the unpaid 
claims of liability companies shows that companies which have not been 
in business for a certain number of years have required to set aside for tlie 
first year fifty per cent, of the earned premiums, less loss payments and 
modified by the suit experience, as the value of the unsettled claims. If we 
were to follow this rule for workmen's compensation we should in all prob- 
ability have to face the same deplorable conditions which we now find 
among the liability companies, for I seriously question whether 51 per cent, 
or 55 per cent, or 60 per cent, of the earn<ed premiums, as now charged, will 
be sufficient to meet the claims in the future." You admit frankly that 
there is no certainty. 

Mr. Wolfe : Then I go on to show what is the proper way to do it. You ought to 
r(ead that too. 

The Commissioxer : Take a thousand men who have been partially incapacitated, 
some more and some less, how is it possible to get per thousand at the 
probable duration of the payment? The amount that will have to be paid 
will depend upon the duration of the disability. 

Mr. Wolfe: Yes. 

The Commissioner: How is it possible to ascertain that; or is it almost a pure 

Mr. Wolfe: The same way in which the personal accident companies, and the life 
insurance companies to-day do that for tlie purpose of their annual state- 
ment, for instance. 

The Commissioner: Do not they too only guess at it? 

Mr. Wegenast : That liability is a liability once and for all at the time of the 

Mr. Wolfe : Xo, we pay $25 a week for a certain number of weeks. 

Mr. Wegenast: You do rot extend it over six or eight years? 

The Commissioner: I am afraid I am very much prejudiced against these 
accident companies, pure accident. They put insurance on you and charge 
you a premium of so much a thousand for a number of years, and when 
you happen to reach a particular age not only does your premium go but 
the whole of your insurance goes, and they won't carry you at all. 

'Sin. Wooni.AND: That does not apply to our company. T will t<ike you at your 
present age. 

Mr. Wegenast: My point was that there was always a limit of from four to six 



years, and as soon as a period of that length has elapsed the experience over 
that period will govern the rates. 

The Commissioner: It is within a circumscribed space. 

Mr. Wolfe:- If you have to pay an annuity of $5 a week during the life time of a 
person it is very easy to determine what is the present value. 

The Commissioner : Suppose you have to pay me $5 a week so long as I am under 
a disability that I am suffering from now. 

Mr. Wolfe: Yes, unquestionably the Department of Insurance will bring with it 
tables which will enable us to calculate that with the same degree of math- 
ematical accuracy, as we have at present with cases involving death. 

The Commissioner : You do not believe in malingering at all ? 

Mr. Wolfe: That is a great problem. 

The Commissioner: Do you know Mr. Biggar? He represents some of the 
shipping people in Glasgow. He points out as a result of the British acl 
that it may pay a man to be off work, because he gets so much from his 
insurance and so much from friendly societies. He gave me a case where 
a man was actually better off when he was out of work than when he was 
working. I do not suppose that there are many but there are some such 

Mr. Wolfe: Then as you doubtless know in Germany a great number of peculiar 
diseases have arisen owing to the workmen's compensation act. For 
instance there is one called " pension hysteria," and a man is perfectly 
honest about it too. 

The Commissioner : That occurs to-day ; it is one of the things that juries are 
told about. When the litigation is over and the man gets his money 
his hysterical condition disappears. That is not incident to workmen's 
compensation alone. 

Mr. Wolfe: He is perfectly honest about it. The idea of the pension constantly 
appearing before his eyes has a peculiar effect iipon his nervous system. 

The Commissioner : That is all caused by the original wrong that was done him. 
If he had not been injured he would not have got the hysteria. 

Mr. Wolfe: And if he had not been employed he would not have got injured. 

Mr. Wegenast: You do not believe in a pension or periodical payment system; 
you would rather settle it in lump sum? 

Mr. Wolfe: Xo, I would not. I believe firmly in a pension system. 

Mr. Wegenast: Do the liability companies at the present time believe in admin- 
istering a pension system? 

Mr. Wolfe : If you care to read this pamphlet which you have in hand you will 
find that I maintain it as my opinion that this workmen's compensation is 
more akin to personal accident than to liability. For a great many years 
personal accident companies have paid claims of $35 per week to injured 


The CoMiviissiONER : But there is a time within which that ceases. Mr. 
Wegenast's point may be emphasized by this, that the contract is between 
the employer and the insurance company. What power has the insurance 
company to compel the workman to submit to a periodical examination? 

Mr. Wolfe : In the case of Massachusetts the statute insists upon the workman 
being paid by the association and not by the employer. I think this is a 
very desirable thing. 

The Com-Missionee : But supposing the association is willing to pay and the 
insurance company says, "No; this man is not injured." What means 
would they have of compelling the man to submit to examination? 

Mr. Wolfe : The statute provides that every claimant must at reasonable times, 
upon demand, submit himself to proper medical examination. 

The Commissioner: That only applies when the employer is insured in the 

Mr. Wolfe: No, that applies generally, and payment ceases during his refusal. 

Mr. Wegenast: Then what if the liability company goes under, as you indicate 
in your pamphlet there is some danger of its doing, after the man has been 
injured and the employer has paid his premium? Does the man have re- 
course against his employer again? 

Mr. Wolfe: No, he does not. The workman does not get his money; exactly 
what would happen under the Grerman system if for any reason the Assoc- 
iation were unable to pay him. 

Mr. Wegenast : You have omitted to state there, Mr. Wolfe, that the Government 
has power if the Association goes under to levy on the members of the Asso- 
ciation whatever is necessary to make up the premium, and to that extent 
it is a state system. 

Mr. Wolfe : Yes, but if they cannot collect the premium. 

Mr. Wegenast: Of course you cannot get blood from a stone, but the group is 
liable, and the stale has the means of enforcing payment. 

The Commissioner: It is a complex subject. 

Mr. Gibbons: The whole group will have to fail, while in the other case the 
liability company only would have to fail to take the compensation away 
from the workman. 

Mr. Wegenast: In connection witli the danger of small groups, have you seen the 
statement of the Washington system for the first year? They state, and I 
think there is no question about their figures, that if that large powder 
company had paid its premium notwithstanding that catastrophe which 
killed eight girls and injured two more, the rate would have been only five 
per cent, on that very small group, and it leads to the inevitable conclusion 
that the danger of having too small a group is a very slight one. Of course 
the smaller they are the greater the fluctuation in the rate, but the averages 
would still work out over a period of years. 

Mr. Wolfe: I do not subscribe to that at all, that with a small group the danger of 


t — ^ — — ■ 

a catastrophe hazard as a disturbing factor is not very vitah 1 disagree 
with that. Look on the top of this page and read what, it says about the 
number of employees. 

Mr, Wegenast: The number of lirms listed and assessed 5,750; employees listed 
and protected 130,000. 

AIk. Wolfe: That shows the exposure you have in the wdiole State of Washington. 
You have there about forty odd groups and you have only 130,000 in all 
the groups. 

Mr, Wegexast: 1 do not know that that makes any difference. It could be done 
by making them inter-dependent, which would be quite possible by setting 
up a reserve fund as in Germany, and allowing the unfortunate group to 
have recourse to the reserve fund. 

Mr. Wolfe : That means the unf oxttinate group using the reserve of the more 
fortunate group. 

Mr. Wegexast : Temporarily. The group would restore the portion of the money 
it has borrowed. I am quite willing to take tip .Mr. Wolfe's brie^ in the way 
you have suggested. 

The Commissioner: What do you say to tliat, Mr. Wolfe? 

]\Ir. Wolfe : I will be very grateful for an opportunity to do it. 

Mr. MacMurchy: Mr. Wolfe is not here to withliold any information, hut to give 
it in any way that will be of assistance to the commission. 

Mr. Wegexast: You will iind the portion at pages 101 to 111 of the interim re- 
port. 1 have stated for instance that it is a recognized fact that em- 
ployers' liability companies have been operating in the United States and in 
England at a loss, and notwithstanding that tliey have not paid to the work- 
men more than 50 per cent, of the money that has been paid into them. 
I am putting it at the most conservative estimate. Some say as high as 
To and 80 per cent, has been wasted. 

Mr. Wolfe : If these statistics show that not one cent was ever paid to the injured 
workmen I do not understand tliat that would have any bearing on the 
subject at all and for this reason: the liability policies issued by the com- 
panies protect employers against their common law liabilities for accidents. 
We can readily assume a situation Avhere an employers* liability company 
was successful in every litigated case, and therefore not one cent would bo 
paid in the shape of a judgment to an injured workman, but every cent 
would be paiil for attorney's fees and court costs. Therefore, the mere 
statement that only 50 per cent, or 80 per cent, of the premiums received 
l)y h'al)ility companies went to the injured workman to my mind does not 
mean anything at all. . 

The Commissioxek : Tt means this, that if the group is mutually insured and can 
save that it is so much gained. 

Mr. Wolfe: Yes, but I wisli to call your attention to the fact that no group is 
proposing to do liability insurance. The group is proposing to do work- 
men's compensation, wliich is an (uitirely different proposition. 


If Mr. Wegenast's brief is merely citing these things to show the 
advisability of workmen's compensation instead of employers" liability, why, 
we agree. 

Mr. Wegexast: There is really a workmen's compensation act in Great Britain, 
and the same conditions apply there. 

Mr. Woi.fe : You also have a liability act concurrent with it. 

The Commissioner : Very little comes under that. 

Mr. Wegenast : How can you eliminate that waste so long as you have the cir- 
cuitous form of liability? You have two chances of litigation and two 
chances of loss. Why not have it direct? 

!Mr. Wolfe : You do not find that situation in Massachusetts. 

Mr. Wegenast : You impose the liability on the employer in the first instance and 
he turns round and insures. 

Mr. Wolfe: No, in Massachusetts there is an act which provides that there shall 
be a Massachusetts employees' insurance association formed. 

Mr. Wegenast: You are not here to boost that part of it. 

Mr. MacMurchy: I object to that. 

Mr. Wolfe : I am not boosting anything. 

Mk. Wegenast : It is the last thing in my mind to be offensive. My point is that 
you want to preserve the liability companies in business 

Mr. Wolfe: No, I do not want to preserve them because they are liability com- 
panies, but I M'^ant to prevent the State from doing something which, in my 
opinion, it is not equipped at the present time to do. I say I am in favour 
of doing it to the extent that it is being done in Massachusetts, but not ex- 
clusively. I do not think the State is equipped at the present time to do it. 
If you will be good enough to refer to my address before the liability con- 
vention in October, 1911, you will fmd that I pointed out very specially in 
that address, which is entitled, " Is the State to compensate the Workmen." 
the fact that the State is not in a position at the present time to flo that, 
but that it might in the future become so. This is merely an attempt on 
my part to prevent nhe State rushing into -something wliioh. in my opinion, 
it is not equipped to handle properly. 

Mr. Wegenast: Then you agree with another statement I make in that portion 
of my brief, that no system of individual liability can be permanent, or is 
likely to be permanent from present indications; that it must be a case of 
the State institutions driving the others out of business; and that no form 
of act should be passed which imposes liability on the employer and leaves 
him to shift it on to somebody else. 

Ml!. Wolfe: I think that is fundamentally wrong and should not be allowed to 
exist at all. 

The Commissioner: How is the State equipped to manage old age and invalidity? 
That is a bigger proposition. 


Mk. Wolfe : I do not think it is equipped. 

Mb. Wegexast : 1 would like to point out tliis : 1 have here a letter written to a 
friend of mine by the Casualty Company of Canada, and it quotes certain 
Government figures. It was written for the purpose of inducing this friend 
to subscribe for shares in this company which it is proposed to organize to do 
liability business in Canada. I asked Mr. Wolfe whether he agreed with 
me that the companies in the United States were running at a loss in order 
to refer to this. (Reads letter.) ''In the year 1910 these companies paid 
dividends ranging from ten per cent, to sixty-two and a half per cent." 
Now, I wanted to ask Mr. W^olfe if the companies, and all these companies 
are American in their origin, or possibly some English companies — I do 
not think there is a purely Canadian company doing liability business ex- 
clusively — if these companies are making these profits on their Canadian 
business they must have been making them at the expense of the Canadians. 

The Commissioner: But Mr. W^olfe admits that if the State could properly 
manage the thing it would be a benefit. He has no faith in state manage- 

Mr. Wegenast : It is with a view to pointing out that there is an inequality which 
is practically inseparable with companies covering various Jurisdictions. 
They discriminate between the employers in one jurisdiction and those in 

Mr. a. W. Ballantyne: I am informed that that prospectus was written by a 
man who failed in business. 

Mb. Wegenast : I don't know. 

Mr. Gibbons: Mr. W^olfe, is it not the experience that municipal machinery can 
be used for the collection of assessments without any special cost? They 
levy taxes for different purposes, and they could levy a tax for the work- 
men's compensation. 

Mr. Wolfe : Well, I do not know anything about the operation of these bodies in^ 
Ontario. I do know in other localities great injustiae is done to some, 
people by means of imperfect taxing machinery. J 

Mr. Wegenast: Would it be essentially more difficult than to run a Government 
railway, or run Government enterprises of other descriptions? 

Mr. Wolfe : I think it would be for this reason, that the operation of a company 
transacting workmen's compensation business constantly presents new 
problems which require treatment by a skilled underwriter. For instance 
in passing upon claims, whether it is a proper claim or not, and in passing 
upon questions of malingering, and a great number of problems. 

The Commissioner : We are ''ery much obliged to you, Mr. Wolfe, for the infor- 
mation you have given us. 

Mr. Ballanttne : Some of the insurance companies, Mr. Commissioner, would 
like to present a statement, and they propose also to call witnesses. We 
would like to get an appointment for some time ahead so as to make our 
arrangements. We propose having Mr. Sherman of New York. 

The Commissioner : I will be glad to arrange that. 



The Legislative Building, Toronto. 

Friday, 27th December, 1913, 11 a.m. 

Present: Sir William E. Meredith, Commissioner. 
Mr. F. N. Kennin, Secretary. 
Me. AV. B. Wilkinson, Laiv Clerk. 

Mr. Hellmuth, K.C. : Will you please tell the Commissioner your qualiiications, 
]\Ir. Sherman? 

Mr. p. Tecumseh Sherman : I have studied the subject of compensation in 
Europe for several summers, 1901, 1902, and 1908. I was Com- 
missioner of Labour for the State of New York for about three 
years, from 1905 to 1907, and studied the subject of compensa- 
tion intensively from the standpoint of accident prevention. Since 
I resigned that position I have been Counsel for the National Civic Feder- 
ation of New York City, which is a national organization of employers 
and workmen, and I have been in charge of their investigations of this 
particular topic. I have been consulted by quite a number of the American 
State Commissions and by the Congressional Commission. T have been 
retained by the Connecticut Commission, and during the last six months 
I have been retained by -a number of Casualty insurance companies. All 
the time I have been in constant correspondence with foreign authorities 
and getting foreign literature on this subject. I think that covers my 

The Co^i:\rissiONER : You have omitted one qualifl'cation — alderman of New York 

"Mr. Helt.:muttt: You have, I believe, prepared a memorandum on this subject? 

Mr. Sherman' : Yes, I have prepared a memorandum which I would like to 

The Commissioner: Certainly. Just read it. 

Mr. Sherman : "I was formerly Commissioner of Labour and ex-officio Chief 
Factory Inspector of the State of New York; and approach this subject 
from the standpoint of the factory inspector and with particular emphasis 
upon accident prevention and better industrial relations as well as from 
the standpoint of a lawyer and economist. 

The existing law of negligence (technically called the law of tort) 
is as between employers and their employees generally unsatisfactory. It 
engenders class feelings of mutual hostility. It is slow, uncertain and 
wastefully expensive in operation. It is unjust: (1) because its rule of 
assumption of risks is wrong. To the extent that the unavoidable risks 
of the employment are the cause of injuries, the business of the employer 
and not ihe injured workman should bear the loss therefrom. (2) because 


the tort law does not cany out its theories into practice. Wrongful claims 
as often as not prevail: and rightful claims as often as not are defeated. 
In fact the very idea that the responsibility for the causation of each of 
the mass of work acoidents occurring can be correctly ascertained is absurd ; 
and the further idea that responsibility can be ascertained and abstract 
justice done in each case by the slow and lumbering wheels of judicial 
machinery is doubly absurd. 

Therefore to do anything like justice in practice it is necessary to 
resort to some simple rule of average justice, and to substitute it for the 
law of tort as between employers and their workmen. Such a rule is the 
compensation law, which holds employers responsible for half of the acci- 
dental worlc injuries in the mass, or for half the wage loss from each 
injury in the particular, and accordingly makes each employer liable for 
h&lf the damages in the way of wage loss from every ordinary work accident 
to his workmen. That rule, with various modifications, has been adopted 
pretty generally throughout the civilized world (America, however, is as 
yet only in a stage of transition to it) ; and it has been found .in actual 
practice to be more just both to employers and to workmen than the older 
law which it has replaced. 

But there is another reason besides justice for the change. It is the 
prevailing opinion of European industrial experts that to relegate liability 
for injuries caused by employers' real torts to the penal law, and so to frame 
the civd law as to hold each employer and workman jointly and equally 
responsible for all ordinary work-accidents in the mass. To make the 
employer, pay half the wage loss from every ordinary work-accident, cer- 
tainly and without chance of escape by the gamble of a law suit, is the best 
known way to reduce accidents in organized employments. 

To be most effective for accident prevention the scale of compensation 
should follow the theory just stated, and be approximately 50 per cent, 
of the wage loss, and this should be proportionately increased where work- 
men contribute to the insurance or where limitations on the pension pay- 
ments are short or low. .Some of the European laws give low flat rates 
of compensation without relation to wages; hut they are more properlv 
to be regarded as measures for poor relief: they have no relation to 
justice and no effect in the way of accident prevention. Others of those 
laws combine the two purposes. 

The compensation law, therefore, is both a measure of average pri^•ate 
justice (modified from abstract and exact justice so as to be prompt, 
certain and economic in application), and a public regulation for accident 
prevention.- Such compensation laws as do not fulfil both of these pur- 
poses (e.g., the laws of Norway, Washington and Oliio) are defective and 
in some respects very harmful. 

Now, as to insurance. Insurance is no more an essential feature of 
the compensation law than it is of the tort law. Where insurance is 
required in a compensation law, that requirement is simply an ancillary- 
method of effecting the purpose of the liability thereby imposed upon the 

But there is a specific danger under the compensation law that insur- 
ance may thwart the purpose of that law as a regulation for accident 
prevention. If tlie employer with a high risk is enabled to insure hi^ 
14 L. 



liability at the same rate as a competitor with a distinctly lower risk; or 
if an employer with a low risk is compelled to pay for his insurance the 
same rate as a competitor with a distinctly higher risk, the effect of the 
compensation liability, as an incentive to the employer to study out methods 
and to incur expense to decrease his risks in order to cut down his rate 
for insurance, will be defeated. The cost of his insurance is the civil 
penalty each employer pays for maintaining the hazards of his business; 
and to be effective it must be closely proportionate to those hazards. 
Insurance rates therefore must be differentiated fairly according to com- 
parative risks, as determined (1) by experience, and (8) by physical and 
moral conditions, which can be ascertained only by expert inspection. Such 
inspection is a requisite to proper rate making, and in turn the pro^dsion 
of such inspection service is a most beneficial attribute of proper insurance. 
Insurance schemes, like those of Norway and of Ohio, which eliminate 
inspection are, therefore, seriously defective. 

Finally, insurance must be sound. Employers should not pay for 
insurance and then have it happen either that they are subjected to further 
and unexpected charges, or that their injured workmen do not receive their 
compensation from the insurance. 

We have, therefore, two problems which are logically absolutely dis- 
tinct. The first problem is to frame a just and beneficial compensation 
law. The second problem is to determine how far and in what way 
insurance should be required in order to effect the purposes of the com- 
pensation law. Great care must be exercised not to confuse these two 
problems; otherwise you are apt to sacrifice much of the good to be derived 
from a proper compensation law by muddling it in a harmful experiment 
in social insurance. 

Whether insurance should be compulsory or optional under the com- 
pensation law is, in my opinion, a question to be determined by experience. 
It should be made compulsory only if and where reasonably necessary in 
order to assure to injured workmen the payment of their compensation. In 
no event should those concerns that are amply able to carry their own 
insurance be required to buy insurance or to contribute to a State scheme — 
that would be pure economic waste. 

In my opinion the best system of insurance must develop through 
competition and experience. 

Wliere subjected to the test of competition (in The Netherlands, Itah', 
Sweden, France and New Zealand) state managed insurance has demon- 
strated its inferiority to stock company and voluntary mutual insurance. 
It may have a use; but certainly it is not a factor in accident prevention 
and is not economic. 

Monopolistic state insurance eliminates the expenses of competition and 
effects a small further saving through the free use in administration of 
established governmental machinery. This is the sole merit of the Nor- 
wegian law. Against that form of insurance law are the following objections : 

(1) Although the conditions in Norway are most favourable, State 
insurance there has not actually resulted in particularly cheap insurance. 
The Norwegian State office started off with rates unduly low; a deficiency 
was soon incurred and a row resulted. Since then the rates have been 
steadily jacked up, until now they are comparatively as high on the average 



_ I 

as the English rates wliich cover all the cost of administration. The 
Norwegian rates do not cover the expenses of administration which are 
paid out of general taxation, and for the better classes of risks the Norwegian 
rates are much higher than the English. 

(2) The Norwegian system has resulted in complete official indifference 
to a proper discrimination in rates according to hazards. Experts agree 
that the effect of such a practice on the accident rate is bad and in an 
industrial countr}' would be serious. The Norwegian officials refuse to 
discriminate in rates between different establishments on the ground that 
if they did so they would be subject to accusations of and appeals for 
favouritism. They could not discriminate properly without such an addi- 
tion to their force as would make the expense of their scheme unbearable. 

(3) The Norwegian system places employers at the mercy of political 
oflScials in the matter of assignment to trade classes, and consequently as to 
the rate at which they shall be taxed. Since the variations in rates between 
different trade classes are most material, this is a power which if abused 
would be seriously harmful and oppressive. 

(4) The allowance of claims and the adjustment of awards is absolutely 
in the discretion of political officers. Employers have nothing to say about 
the management of the fund or the allowance of claims against it. They 
merely foot the bills. European experience indicates that this practice 
results in extreme laxity in precautions against fraud and exaggerations, 
and in a tendency on the part of officials to misuse their powers to distribute 
political favours or charitable relief at employers' expense. 

Without going further into details, this method of insurance may be 
fairly described as a crude scheme to avoid the difficulties of adjusting 
and securing private rights and liabilities between employers and employees 
by turning the whole matter of compensation over to a political bureau 
with power to tax employers and to distribute the proceeds among em- 
ployees about as it pleases. If this be good practice in regard to com- 
pensation, why should it not be good practice in regard to life and fire 
insurance, and in regard to all other private rights and liabilities? 

The Washington law is somewhat like the Norwegian law, except that 
the state does not itself guarantee the payment of the compensation, but 
workmen must look to the funds. All employers must insure with the 
State Board. Employers are divided into trade classes, and those in each 
class are taxed for a special fund out of which compensation is to be paid 
to all workmen injured in that trade. If a class fund is exhausted the 
employers in that trade class are subject to assessment to make good the 
deficiency. The rates for each class are fixed by statute, but the officials 
are empowered to increase the rate for unusually dangerous conditions 
but not to reduce rates for unusually good conditions, or for improvements, 
and no provision is made for inspections. This law is grossly unjust to em- 
ployers, and particularly to the better classes of employers, and for this 

The compensation law in its simple form as in Great Britain and in 
the majority of foreign countries, makes the employer an insurer of his 
workmen in limited amounts. That liability subjects the average employer 
to a serious peril of a ruinous loss without fault, unless at a reasonable 
rate he can re-insure and distribute his risk. The Washington law makes 



each employer jiot only an insurer of his own workmen Init also an insurer 
of all ihe workmen of all his competitors in the same trade; it multiplies 
his risk, and theii taxes him a heavy premium as if for insurance; but it does 
not insure him; does not indemnify him; does not distribute his risk. Take 
the case of the Dupont Powder Company which is in the same (,'lass with 
two other and smaller concerns. In the first year of the Washington law it 
was taxed ten per cent, on its j)ay-roll, or $11,-1:00, as against some $2,000 
from its two competitors together. One of those other concerns blew up and 
killed eight persons. The amount of the liability to their dependants, so far 
as I can find out, is not yet settled; it might have been $;32,00O. And 
whatever the excess of tl.iat liability over the sum of the original ten 
per cent, assessments — bo it $1."),200 or less — 85 per cent, of it is to be 
assessed back upon the Dupont Company. The Dupont Company then 
for its $14,400 assessment did not procure indemnity, but remained liable 
for 85 per cent, of any deficiency in compensation that might become due 
by the fund to all workmen in powder mills in the state of Washington. 
To procure indemnity such as the English employer gets when he buys 
insurance the Dupont Company must still go into the open market and 
buy real insurance, under the same conditions — -but for a much larger 
risk, and therefore at a higher cost — as before the adoption of this fanciful 
scheme. Whatever may be said in criticism of the State insurance schemes 
of Europe, none of them are as bad as this. 

The Ohio law is very similar to the Washington law. The State guaran- 
tees nothing, hut there is only one fund for all injuries. 

Both the Washington and the Ohio laws have been made attractive to 
employers by their exceptionally low rates; and yet the?e, through lack 
of discrimination, are grossly excessive in some cases. Those rates are 
merely initial, experimental for the first year, and cannot be maintained. 
Xeither the Ohio Board nor the Washington Board has published a report, 
in form and in detail required of private insurance companies, nor in 
sufficient detail to lead to any deduction other than the deduction that 
such public reports and statements as are issued are indicative of mis- 
management. Tender neither law has there been sufficient experience to 
justify any conclusions as to the sufficiency of rates or of the cost of the 
scheme. Unduly low rates at first resulting in deficiencies and in unduly 
high rates later have been the common experience with foreign state 
insurance offices; and the Washington and Ohio Boards are simply following 
in the path of those unsuccessful foreign essays in the way of cheap rates. 
Insurance cannot be sold below cost without laying up trouble and loss for 
the future. 

In Germany, Austria, Hungary and Luxemburg the state does not 
manage the in.surance, hut absolutely prescribes its form, by requiring em- 
ployers to join certain mutual insurance associations. In (Jermany the 
industrial associations are formefl on tradr lines; in Austria they are 
organized territorially. Of tlu-^c two form< the German is undoubtedly 
far preferable. 

The British comi)ensation law makes the employer directly liable for 
com]x.Misation to bis injured workmen, and permits him to insure it or 
not as he chooses, and how he (•hoo.«'es. The laws of Kussia. Spain and 
Denmark are similar. Another common type of comijeusation law goes. 



one step further than the British law, and requires the employer to insure 
the payment of compensation in some one of several .specified ways, in 
stock companies, mutual associations, joint benefit funds or in state insurance 
offices. The distinctive feature, of these laws is that there is no monoply 
of insurance: each employer is free to choose insurance as he may deem 
best, and is not by law placed at the mercy of a political board or of a 
badly run mutual association. He may bargain for rates among competing 
insurers; may change his insurance where it is unsatisfactory; can secure 
a reduced rate in return for improvements; may join a mutual association 
if conditions suit him; by agreement with his workmen, may e^ftablish 
a mutual benefit scheme of insurance; or, where his risks are sufficiently 
distributed or where he furnishes security, may carry his own insurance. 
Under this system, in Great Britain for example, where there are no 
political abuses and malingering, the bane of State insurance, is kept in 
check, there has developed a system of rate differentiation based upon 
expert inspections that has been a powerful factor in reducing the hazards 
of industry; and insurance rates are relatively as low as anywhere else, 
in spite of the fact that in Germany and in the State insurance countries 
the State pays a large share of the expenses of administering the insurance. 

Wlien it comes to adapt a compensation law to conditions in this 
country, the choice of a model lies in my opinion, between some" one of 
these last prescribed types of law and the German law. Studying that 
choice in detail, my opinion is overwhelming and eniphatic in favour of 
the British type. I will now explain more in detail these two systems 
and give reasons for my preference. Before doing so I premise that the 
sentiment of some emp^loyers in this country in favour of the German law 
is based not on any of its merits, but on its principal demerit, namely, 
the practice of conducting insurance on the deferred assessment plan. 
To follow German precedent in that would be, I think, a great mistake. 
No other country where insurance is required permits that method. It was 
allowed in Germany only as a political concession to the employers of the 
last generation and as a means by which they were permitted to shift a 
large part of the cost of compensating their workmen upon a later genera- 
tion. It has involved German industries in a dangerous economic experi- 
ment that has not yet passed its crucial test. For us to think of following 
the German law in that detail would be foolhardy. 

The British law is comparatively simple and its operations are readily 
comprehended. The German law, on the contrary, is extremely complex : 
it is difficult to acquire a correct understanding of its essential details. 
In explaining the two laws, it will be necessary to dwell at greater length 
upon the German law, the better to elucidate its weaknesses and dangers 
and the difficulties in the way of adapting any part of it to American 
conditions. We can then compare the respective merits and demerits oi 
the two systems. 

The British Workmen's Compensation Act, 1906, applies to wage 
earners in practically all employments. It replaces the act of 1897, which 
applied to certain enumerated industries, and the act of 1900, which 
applied to agricultural employments. This act imposes upon the employer 
a direct liability to compensate his employees for accidental injuries arising 
out of and in the course of their employment. Some enumerated occupa- 




tional diseases are treated as injuries and must l^e compensated for as^ 
such. The scale of compensation is approximately 50 per cent, of the 
estimated wage loss from injury, beginning at the end of the first week, 
and under conditions reverting to the date of injury. 

The statute does not relieve the employer from liability for full damages 
at common Jaw, nor from liabilit}' for limited damages under an earlier 
statute; but those liabilities are incurred only where the employer, or a vice- 
principal, has been guilty of serious and certain fault, and are practically 

The employer may insure or not at his option. If he does insure, the 
insurance does not relieve him from his individual liability. 

Disputes may be settled by arbitration — either by a standing board 
voluntarily organized i)y an employer and his employees or othennse — or 
by a judge of the proper county court, sitting as arbitrator and under 
summary procedure. 

An employer and his workmen may by agreement substitute a scheme of 
mutual benefit insurance in place of the law, pro^'ided that the benefits to 
tlie workmen thereunder are equivalent to their benefits under the law. 
plus their contributions, if any. 

The German AVorkmen's Insurance lyaw (codified in 1911), is di\ided 
into three branches: 

The Sickness Insurance Law. 
The Accident Insurance Law.* 
The Invalidity Insurance Law. 

This system of social insurance legislation was in large part a develop- 
ment of old established usages and institutions. Workmen's sickness in- 
surance associations were quite general throughout large parts of Germany, 
and the Sickness Insurance Law simply made such insurance universal and 
compulsory, and required employers" contributions. The requirement of 
employers' contributions is based upon a pre-existing legal liahility of em- 
ployers in many occupations to care for their sick employees, a liability 
similar to that in our maritime law. The Accident Insurance Law is, to a 
degree, a development and amendment of the pre-existing Employers' Lia- 
bility Law. 

The sickness insurance is the basis of the entire system. Although it 
provides for the care of the sick for twenty-six weeks only, it yet disburses 
annually more than double the sum expended by the accident insurance. 
In 1909, the sickness insurance fund disbursed 333,000,000 marks as 
against 161,000,000 marks disbursed by the accident associations. It takes 
care of injured workmen for the first thirteen weeks after accidents without 
expense to tlie 'accident insurance; and, under certain conditions, for further 
periods at the expense of the accident insurance. It thus reflieves the 
accident insurance of nearly all care and expense relative to injuries lasting 
less than thirteen weeks. 

These three branches of the "Workmen's Insurance I>aw are so intim- 
ately correlated and interdependent that we cannot e\i:ract the Accident 
Insurance Law by itself and then expect it to work satisfactorily. Both in 
theory and in practice it is an organic part of a system and not an indepen- 
dent unit. 

This code of laws is elaborately formulated (in over 1,800 sections), 
is carefully framed and fitted to suit the peculiar usages and conditions in 



Germany; is founded upon a system, of close control by Grovernment over 
the conduct of individuals; and has been usually well administered. In 
many resoects it has been highly successful, and as a whole deserves ad- 
miration and respectful consideration. There are, however, increasing 
doubts as to its permanent success, land very serious difficulties and objections 
to applying it, or any integral part of it, to the radically different con- 
ditions existing in our coimtry. 

The accident insurance branch of the Workmen's Insurance Law as 
originally proposed by Bismarck was to have been a bureaucratic State in- 
surance law, to be maintained by the taxation of employers and workmen. 
Under tJie criticism of Jurists and industrial experts, however, it became 
before its enactment in 1884 a collective employers' liability law, secured 
by insurance in highly autonomous employers' trade mutual insurance asso- 
ciations subject to state regulation. Workmen's contributions were omitted 
except as received indirectly through the sickness insurance; and the Ger- 
man Accident Insurance Law now rests and always has rested upon a 
judicial principle of employers' liability for compensation as a substitute 
for employers' liability for damages in tort. That liability is the basis of 
the law; the insurance is merely an ancillary method of effecting the pur- 
pose of the liability. 

The Accident Insurance Law is sub-divided into three branches: 
The Industrial Accident Insurance Law. 
The Agricultural Accident Insurance Law. 
The Xavigation Accident Insurance Law. 

These three laws do not cover wage-earners in all emplojTnents. 

The Navigation Accident Law it is unnecessary to discuss. As to the 
Agricultural Accident Law, it is sufficient to note that German experience 
shows that insurance of agricultural labour presents a problem radically 
different from the insurance of industrial laJbour; and the German law de- 
votes to the former a distmct code of about 130 sections. The disposition 
of American admirers of the German law seems to be to follow exclusively 
the Industrial Accident Law and to apply it generally to all employments. 
It is, therefore, appropriate to elucidate particularly that branch of the 
accident law that we may understand the machinery and conditions re- 
quisite to its successful operation, and that we may judge of its applica- 
■bility to non-industrial employments. 

With special provisions covering public employments, the Industrial 
Accident Insurance Law places the liability for compensation upon em- 
ployers' trade mutual insurance associations, there being generally a separate 
association of all employers in each trade or group of allied trades throughout 
the empire or in each of some large territorial divisions, ilembership in 
the proper association is compulsory. These associations are highly 
autonomous. Some of them are divided into almost equally autonomous 
"sections," the sections being substantially voluntary dinsions of the asso- 
ciations. There are 66 associations, comprising 593 sections. 

Some have "branrh institutes." These organizations are established 
in some trades to take care of the small irresponsible employers, who are 
likely to run up lia'bilities against the associations without adequate return. 
^Members of the branch institutes are charged premiums high enough to 
maintain "capitalized value reserves," and have little or no voice in the 
management of the associations. 



JSubject to goveniineiital control and reo-ulatiou, the associations or 
sections: (a) have framed their own constitutions and make their own by- 
laws; (6) fix the insurance rates charged to their members; (c) make and 
enforce safety regulations. Workmen have some representation in the con- 
ferences for the adoption of safety regulations. 

Except in the "Engineering and Excavating Association," and in the 
"Branch Institutes," the funds to pay the liabilities of the associations are 
raised upon the deferred assessment basis, without reserves to cover out- 
standing liabilities, but with provisions for small reserves to provide for 
emergencies and periods of depression. 

Payments are made through the Post Office. 

Benefits hegin at the end of the thirteenth week after injury, and con- 
sist of periodical payments amounting to 66 2-3 per cent, of the wage loss 
upon wages up to $428 and upon one-third of any excess. There are also 
some complex provisions for medical care, to be explained later. 

The procedure after an accident is about as follows : In the first place 
the police investigate all injuries. The injured workmen are cared for 
during the first thirteen weeks by their sickness insurance associations, and 
thereafter, if still disabled, receive pensions and necessary medical care 
from their employer's accident insurance association. That association 
makes an ex parte investigation (to which witnesses may be subpoenaed, 
etc.). decides what it deems to be due the injured workman, and makes an 
offer of award. If that offer is unsatisfactory to tlie workman, he may 
appeal to the local insurance office (formerly to a Board of Arbitration), 
and from the decision of such office a second appeal lies to the highest in- 
surance office of the empire or of the State. Under certain conditions, the 
accident association may revise its award, and from that re^^sed award a 
new series of appeals lies. 

Some objections to and difficulties with the German Industrial Accident 
Insurance Law are : 

(1) The correct mai^halling of all employers and their organization 
into trade associations is a difficult task, and entails not only much initial 
trouble and expense, but also continuing disputes and litigation. Classifica- 
tions by trades are necessarily arbitrary, and it is frequently doubtful in 
which of several associations a particular establishment rightly belongs, and 
between such associations thei'e are often very serious differences of rates. 
The matter of assignment to an association and of transfer from one asso- 
ciation to another rests m the discretion of the Insurance Office. This gives 
rise to many disputes, and the officials are subject to political influence in 
regard tliereto. Transfers entail serious difficulties and comsiderable in- 
justice in the adjustment of outstanding liabilities as between the associa- 

(2) The practice of the majority of the assocdations of omitting to 
maintain reserves to cover outstanding liabilities — the reserves maintained 
being sufficient merely for emergencies and periods of depression — and of 
levying assassments sufficient merely to meet payments falling due during 
the curroit year, incurs such serious economic danger and lias so many in- 
herent disadvantages that Germany alone has ventured to permit it. Its 
disadvantages and the objections to it are as follows: 

(a) While it starts off with pleasingly low rates, it must eventually 
result in unduly high rates. The universal satisfaction at first felt with the 



German law was consequently ephemeral. That condition is passing away. 
There are now some loud complaints from employers; and their dissatis- 
faction will increase as rates continue to rise, as they must for many years 
to come. The rates m Germany to-day average about treble what they 
were in the beginning. It is calculated that they will not reach their 
stable maximum for some twenty years or more. How much higher they 
will tlien be no one knows, but the majority guess is that they will double. 

(b) This practice conceals the cost of insurance. N"o one in Germany 
to-day knows what is the true cost as distinguished from the current prices 
charged for insuring compensation in any given trade. 

(c) This practice once embarked upon, the law cannot be changed 
without serious embairrassments, for there will be heavy liabilities to be 
liquidated. The figures for the industrial associations alone are not avail- 
able; but the outstanding capitalized liabilities of all the German accident 
associations in 1910 were estimated at $271,900,000, their reserves at 
$75,930,000, and their deficiencies at $195,970,000. Our hazards and rates 
of wages being approximately double tliose of Germany, we can estimate 
the probable deficiencies under an application of this practice in America 
at about four times those of Germany, relatively to the number of workmen 
affected. Under the British law, on the other hand, there are no deficiencies 
to be liquidated, and that law could be radically changed to-morrow, if 
deemed desirable, without disturbing existing insurance liabilities. 

{d) This practice handicaps new establishments by compelling them 
to as.sume the liabilitv^ for and to pay a material proportion of the losses 
of their pre-established competitors. And it imposes upon successful estab- 
lishments the burden of liability for pensions for injuries incurred in estab- 
lishments of defuiict and insolvent competitors. It is obvious that if a 
large proportion of the establishments in any trade should shut down, the 
financial liability thereby shifted upon the survivors would be ruinous. In 
this respect the dangers' and defects of the German industrial accident in- 
surance are analogous to those of voluntary mutual life insurance. 

(e) Finally, this practice is subject to the danger that the accumulated 
liabilities of the-asisociations, which are in effect mortgages on the various 
branches of industry, may become so burdensome in a period of general 
and prolonged depression and contraction, as to crush the industries of 
the country or State affected in competition with the industries of other 
countries not similarly burdened. To meet the increasing cost of overhead 
charges for past indebtedness in a period of continued prosperity, rising 
prices and expanding industry is comparatively easy; to liquidate a heavy 
indebtedness carried over from the past under opposite conditions, is an 
entirely different matter. 

(3) This law compels insurance where insurance is unnece.ssary, and 
thus imposes a useless expense merely to round out a paper scheme. 
roads and large companies with many separate establishments, having their 
assets and ris:ks well .distributed may properly meet their compensation 
liabilities as current expense, and have no need of insurance. To force them 
into a mutual scheme is an imposition upon them. 

(4) The arbitration provisions of this law result in far more litigation 
than tbe judicial procedure provided for in the British law: and the 
process of adjustment with the insurance associations is more irritating to 
workmen than the direct negotiations with the employers or their insurers, 
which are the primarv^ mode of settlement in England. 

.1//?. SHEEMAX 


i_ . 

Litigation under the German and British sytstems compared: In Ger- 
many, in 1909, there were 422,076 cases wherein compensation was awarded 
by the associations, of which 76,352 (18.9 per cent.) were appealed, and 
of tliese appealed cases 22,794 (5.4 per cent.) were again appealed to the 
highest insurance offices. In Great Britain, in 1909, there were 335,953 
new compensation cases. In all, 8,254 cases (2i/2 per cent.)_ went to Court 
under the compensation law (besides 298 cases under the tort law). Of the 
compensation case*, the majority were settled by simple orders, etc., and 
only 4,105 {ly^ per cent.) were tried. Of these latter cases, only 135 
were appealed to the Court of Appeals (the majority upon the construction 
of the clause "arising out of and in the course of" 'the employment) ; 25 
of wliich, however, were withdrawn. Two cases only went to the House 
of Lords. 

Both the German and British experience under their compensation 
laws compare favourably with their previous experience under the tort 
law — in spite of the fact that by the change from the law of tort to the 
law of compensation the total number of cases in which injured workmen are 
entitled to relief, and about which conseguently litigation may legitimately 
arise, has been multiplied — in England at least— about nine or ten times. 

The foregoing figures show how ridiculous are the frequent accusa- 
tions of tile critics of the British Compensation Law that it ''has resulted 
in enormous litigation" and "fills the law reports with cases of statutory 
construction." They also show how unjustifiable is the belief, entertained 
by many of the advocates of compensation laws, that the suhstitution of 
official boards of arbitration or of administrative officers in the place of 
courts of justice would reduce litigation. Issues of law and fact would 
still arise and would have to be tried very much in the old way, or injustice, 
abuse, and general harm would result. To abandon the existing judicial 
machinery for a novel substitute, with its procedure, practice, precedents, 
etc., yet to be worked out, would be a perfectly useless change from one 
kind of courts to another kind of courts, and would result simply in a 
duplication of expense. It should be borne in mind that the method of 
arbitration proposed is compulsory, by standing boards of political ap- 
pointees, and would give none of the satisfaction of voluntary arbitration. 

(5) The adjustment and final determination of awards by adminis- 
trative officers has led in Germany to many abuses complained of, with 
some exaggeration perhaps, by Herr Friedensburg,* and later by Dr. Bern- 
hard.' All the facts available indicate that the administration of the in- 
surance law has been powerfully influenced by a desire to exercise liberality 
towards the unfortunate and has been governed by the spirit of benevolence 
rather tlian of law. Experience everywhere demonstrates that such a policy 
produces demoralizing effects and carries with it grave dangers of fraud 
and of abuse. Witli us, such questions as are involved in tlie making and 
review of awards always have been determined judicially, tJiat is by courts 
of justice. And every lesson of experience is against depriving the parties 
affected of their rifjhfs to judicial determination of such questions, if desired, 
for administrative boards do not furnish adequate guaranty of impartiality 

' " The Practical Results of Working Men's Insurance in Germany," Ferdinand 
Friedensburg. Tran.slation, The Workmen's Compensation Service and Information 
Bureau, N.Y., 1911. 

I " The Future of Social Policy in Germany," Ludwig Bernhard, Prof, of Pol. 
Science, University of Berlin. " Stahl and Eisen," April IS, 1912. 



or ot' strict adherence to law.' The contentdon in mitigation, that the per- 
version of a law of private rights to purposes of public charity reduces the 
volume of necessary poor relief, is not supported hy figures. 

In Germany this tendency to administer public charity out of private 
funds is TO some extent checked by the powers of the employers' associa- 
tions. The prevailing idea of American imitators of the German law is 
to raise the insurance funds by taxation. Such funds would Be puljilic funds. 
It is further their idea that the original awards against the funds should 
be made liy political officers. Under such conditions the rights of the em- 
ployers' associations in and to the funds or otherwise would be far different 
and far less effectually safeguarded than in Germany. 

(6) There are serious political dangers incident to the control of the 
associations, of their funds and of the rate-making. In the first place, the 
public functionaries having the regulation of the insurance, have the in- 
dividual employers at their mercy; they may mould the constitutions and 
by-laws of the associations so as to favour their friends and ruin their 
enemies; in assignments to associations they can dispense favours; by their 
control over rate-making they can likewise dispense favours and mar the 
whole scheme for accident prevention. In the second place, assuming that 
the public officials exercise their powers of control properly, there still re- 
mains the certainty of bitter political struggles between the private classes 
affected for the control of the associations — ^such control carrying with it 
the control of the common funds and of the 'rate-making. This is best 
illustrated in Germany by the use that the Socialists have made of their 
control of the sickness insurance associations as means for the propaganda 
of socialism, and the consequent struggle on the part of employers (aided 
by a minority of the workmen) to secure equal representation in the man- 
agement of those associations, even at the expense of higher contributions. 
Even among the employers all is not harmonious, the different classes are 
constantly wire-pulling for control. The German policy has been to form 
the associations of as harmonious elements as possible; and as between the 
smaller and greater employers so to frame their constitutions as to give 
control to the latter. Will American politics permit the adoption of that 
policy? If not, the smaller ^nll outvote the greater employers and imjustly 
impose the bulk of the cost upon them. Whichever born of the dilemma 
we might elect, an industrial civil war would almost inevitahly result. 

In addition to the foregoing objections inherent in the German law 
is tlie further objection that it does not fit our local conditions : 

(1) It is suited to a people who are accustomed to paternalistic gov- 
ernment control of all their actions. It is impossible to explain or for the 
average American mind to comprehend the multitude and minuteness of the 
practices of this kind incident to the administration of the German law. 
The following examples will serve to illustrate : Injured workmen are obliged 
to submit themselves to hospital or surgical treatment about as their em- 
ployers' associations may prescribe subject to some check from governmental 
regulation. Employers are obliged to submit their private books and papers 
to the inquisitorial inspection of their competitors — if officials of their asso- 
ciations — and of public officials almost without check. 

(2) It depends for its success upon an elaborate system of police regis- 
tration and surveillance, for which there is no substitute here. What the 

'Henry W. Farnam and Ernst Freund, in "Survey." N.Y.. May 4. 1912. pp. 243. 



police do ill Gerniany in the way of ijivestigating accidents aiid injuries, 
identifying parties, checking frauds, exaggerations, etc., etc., would have 
to be done here by some equal force of equal efficiency, or the German 
scheme would miscarry. 

(3) Its low cost of administration is due in part to the free use of 
the Post Office in making payments. In our State we would have to organize 
a large, separate force for that purpose. 

(4) It has succeeded only through almost perfect administration of 
the governmental functions, and an unvarying imperial policy; whereas our 
administration is looser, and is apt to change its policy Avith changing party 

(5) 'It is suitable only for a stable and homogeneous industrial popu- 
lation and stable industrial conditions; our industrial population is fluid 
and made extraordinarily complex by immigration. Our small employers 
are constantly changing their industrial status, changing from the condition 
of employees to that of employers and vice versa, and changing their busi- 

(6) Germany is large enough, probably, to furnish au adequate dis- 
tribution of risks in each trade association, without which distribution in- 
surance as to employers is a mockery and a misnomer, and worse than no 
insurance at all. Probably no state in the United States is large enough 
to do that in all trades, and consequently, if the German scheme were fol- 
lowed, there would be many trade associations in wliich there would be too 
few establishments with too small aggregate assets to provide a.n}i;hing like 
adequate risk distribution. Truly unfortunate would be the plight of a re- 
sponsible employer with a good business who should be forced into a blind 
pool with a few comparatively irresponsible competitors and saddled with a 
joint liability for the risks of all. A good illustration of this has already 
occurred under the Washington law, resulting from what i? known as the 
Chehalis disaster.* 

(7) The German scheme is suited to a state where employments 
generally are carried on continuously A\dthin the jurisdiction. In each of 
our states and in the Canadian Provinces there are many employers whose 
employees work irregularly part of the time within and part of the time 
without the State; their premium rates consequently would have to be ad- 
justed so as to apply to each pay-roll only for the part of the time employed 
within the State. It would be a very difficult task to apportion the pay- 
rolls accordingly; there would be many disputes, and many conflicts between 
the courts of dilTerent jurisdictions in applying tJieir different laws to 
transient and interstate employments. 

There remain to be considered a few difficulties and pit-falls in the 
way of an adaptation of the German Industrial Accident Insurance Law : 

(1) As stated above, that law is intimately correlated with the Sick- 
ness Insurance Law, which disposes of all injuries lasting less than fourteen 
weeks, without trouble or expense to the accident insurance associations. 
Without the sickness insurance, we would have to extend the- accident 
insurance so as to compensate for injuries lasting over, say, two weeks. 
Such insurance would be concerned with a very much larger proportion of 
injuries than the German law — about 50 per cent, instead of 22 per cent. — 

* Cf . " .\ Novelty in Legislation," bv Will. G. Graves, of the Washington Bar, 
Spokane, 1911. 



and would cover the class of short time injuries in regard to which imposi- 
tions are greatest and the ratio of expanse of administration is highest. 
That difference would make all the experience of the German insurance as 
to cost, practice, etc., etc., inapplicable, so that in effect we would have 
to proceed without experience to guide us. It is vain to consider devising 
offhand a system of sickness insurance to serve as a basis for a system of 
accident insurance. With our unstable and immigrant working population, 
sickness insurance is a problem infinitely more complex than work-accident 
compensation, and a problem such as no foreign country has ever solved. 

(2) The Industrial Accident Insurance Law is designed and fitted to 
apply only to industrial employments (manufacture, transportation and 
construction). The entire Accident Insurance Law does not cover all em- 
ployments or even wage-earners in all employments and it is not appropriate 
therefor. If, then, we are seriously to imitate the German example, we 
must pre^Dlare distinct and appropriate codes for industries, for agriculture, 
for maritime employmentiS, for commercial employments, etc., respectively, 
and must accurately and in detail define the scope of these different codes 
as conditions actually require. Nothing could be more contrary to the 
spirit of their asserted model than the crude schemes that have been pro- 
posed in America as adaptations of this German law, and applied sweepingly 
to all employments. 

(3) The formation and organization of the compulsory trade mutual 
insurance associations is a problem that cannot 'be solved satisfactorily 
simply by prescribing what trades shall form separate associations, and 
then compelling employers to associate accordingly and to work out their 
salvation as best they can under the dictatorial supervision of state officials. 
Germany did not leap in the dark like that. Before the German law was 

enacted the administrative regulations were fairly outlined and agreed to, 
and the trade associations and their constitutions were tentatively formed 
or projected. Care was exercised to form the associations as far as possible 
of harmonious elements. The great Krupp works were made practically 
a distinct association. The policy adopted tended to give control of the 
associations to the captains of industry. The small employers, so far from 
being given equal voting power with their larger associates, in some associa- 
tions have been relegated to "branch institutes," in the management of 
which they have practically no voice at all. In fact, there are about a 
thousand details relating to the administration and regulation of the 
association which in some way must be determined and settled in advance 
before this complex scheme can be put into operation. There is no indica- 
tion that the American advocates of the German model have given these 
things the slightest consideration. 

(4) In order correctly to follow the precedent of the Industrial Acci- 
dent Insurance Law, it is necessary to distinguish carefully between com- 
pulsory mutual insurance and state insurance, and to avoid taxation and 
bureaucratic management as distinguished from bureaucratic regulation 
and governmental assistance. The German industrial employer is liable 
to his association for assessments to pay a quasi-contractual liability, he 
is not taxed. The mutual associations' funds are private not public funds; 
are managed by the association and not by public officials, although subject 
to public regulation. The funds are disbursed by the associations, and 



— — ■ ■ 5 

not by public officials — ^although the Post Office assists. These distinctions 
are vital. Yet many in America think that they are imitating the German 
Industrial Accident Law when they propose to resort to the exercise of the 
power of taxation to raise the insurance funds, and when they confide to 
public officials the management and disbursement of the funds. They are 
in fact varying from essential features of their model, and are imitating in 
part either the Agricultural Accident Insurance Law of Germany, or the 
Norwegian law. It is not within the province of -this article to present 
the objections to the Agricultural Accident Insurance Law. It is sufficient 
to say that the merits of the Industrial Accident Law of Germany cannot 
truthfully be claimed for it. 

(5) In this connection it should not be ignored that mutual insurance 
if self-managed has peculiar dangers of its own, which are familiar to us 
in this country from our experiences with mutual life and fire insurance. 
"While many of the German mutual associations have been successful, some 
have been unsuccessful, and have involved in their losses many employers 
who liave had no part in the mistakes or mismanagement which have brought 
about the bad results. It must also be understood that the German system 
of self-managed mutual insurance entails on members a large amount of 
unremunerative service which takes them away from their regular occupa- 
tions and engages them in a new and technical business. Such service is 
and must be compulsory. 

Now, to turn to the alternative — the British precedent. 

The British Workmen's Compensation Law applied to industrial em- 
ployments would be the simplest and least experimental first step in the 
direction of wider social insurance. It would entail no departure from 
our political principles, and only a slight change in our judicial principles — 
a change which many of us believe to be not fundamental. 

It would remedy the one industrial evil which particularly calls for 
immediate relief — the injustice of our liability laws. 

It would not interfere with the accustomed usages and liberties of our 

It would adhere to our time honoured practice of judicial determina- 
tion of issues affecting private rights and liabilities. ^ 

It would avoid absolutely all the dangers and abuses of bureaucracy 
inherent in systems like the German. 

It would avoid the piolitical struggles over the control of trade associa- 
tions and the management and disposition of mutual funds, inherent in 
the German system. 

It is consistent with voluntary mutual insurance, where desired, and 
permits of a comparative test of all sound proper methods of insurance. 

It would be a prudent experiment, adapted to further development or 
amendment; whereas the German system, once embarked upon, can never 
be departed from without the embarrassments of liquidating a heavy out- 
standing indebtedness. 

Against the British law certain objections are currently insisted upon 
by some well-known piublicists who give the German law unlimited endorse- 
ment. These objections will be discussed seriatim. 

First: As to cost. The critics referred to measure the cost of com- 
pensation by the rates of insurance. That leads into grievous error. 



The English insurance rates cover the total cost. The German rates 
do not cover the cost of insurance — much of it is deferred. The published 
German rates do not cover the expenses of management; these are extra, 
and are assessed separately. 

In addition to the cost to employers in Germany, there is a heavy 
cost to the public — and the cost to the public of an adaptation of the German 
law would be higher in America. That cost would consist of: (1) The cost 
of a field and office force to supervise and regulate the associations, their 
rate-making, and the collection, investment and disbursement of their 
funds. (2) The cost of a great system of official boards of arbitration, 
with offices, clerks, etc. (3) The cost of a force to disburse payments and 
to exercise surveillance over claimants and pensioners. The total cost of 
these three forces, if adequate for their duties, would be an amount which 
the public would not tolerate; and if adequate forces are not provided the 
whole scheme would miscarry. 

The argument is frequently advanced that because the German rates of 
insurance are lower than the rates charged for insurance of compensation 
under the recent law of New Jersey; and because the cost of management 
of insurance in private companies under our tort laws amounts sometimes 
to 65 per cent, of premiums, while the accredited cost of management in 
the German associations is only about 15 per cent., therefore insurance 
under the German method would ])e cheaper than insurance in stock com- 
panies of the direct liability for compensation. 

These arguments are quibbles. Taking them up in order : 

The German rates are no indication of what our rates would be under 
the German method, because : ( 1 ) Our hazard is at least twice as great 
as the German hazard. (2) Our insurance would cover all injuries lasting 
over two weeks instead of those only which last over thirteen weeks ; i.e., 
about 50 per cent, instead of 22 per cent, of injuries. (3) Our expenses 
of management would be about three times greater than the German. The 
comparison consequently between the German and the New Jersey rates 
furnishes no indication of the relative cost of insurance under a scheme 
like the German and under a direct liability like the British. The best 
indicator of the relative cost of the two systems of insurance is a com- 
parison of the German with the English rates. Such a comparison shows 
that the English rates average a little lower than the German rates, 
although the latter have not yet reached the stage zvhere thei/ cover the cost. 
Looking further into the German rates, it is to be noted that the rates in 
Germany for some comparatively non-hazardous trades are inordinately 
high; for example, the rate for tanneries, is in England 0.75, in Germany 
8.23. Such startling rates in Germany indicate that there exist serious 
dangers in the method of insurance. 

As to the cost of management of insurance under the various systems: 
Cost under our tort liability is no indication of what the cost would be 
under a direct liability for compensation ; consequently it is wholly deceptive 
to compare that cost with the cost under the German system. The cost of 
management under a settled direct liability compensation law in England 
is about 36 per cent.; in Germany, it is claimed, it is about 15 per cent., 
ignoring the cost of the free assistance from governmental agencies, etc. 
Neverthelesis insurance in England is to be had as cheaply as in Germany. 



The cost uf administering insurance iu America under an adaptation of 
the German law would be about three times as great as the cost in Germany, 
because here the scheme would lack the free assistance of the Post Office 
and of an all-pervading police force, and because it would have to deal 
with the short-time injuries, with which the German accident insurance is 
little concerned, and in regard to which the expenses of management are 
relativel}' highest. 

Consequently it is difficult to form any estimate of the cost of com- 
pensation insurance in America, particularly under an adaptation of the 
German system. Foreign experience gives us every reason to believe that 
the cost in America of a system of insurance in imitation of the German 
would be infinitely greater than the cost in Germany, and mucii greater in 
the long run than under an adaptation of the British law. 

Second: It is objected to the British law that it does not tend to 
reduce accidents, and that the German law does. It is almost certain, 
although not demonstrable, that both laws do tend generally to reduce 
accidents. Why then this invidious distinction? Because in England the 
volume and ratio of accidents have increased, while in Germany it is the 
opinion of experts that the law reduces accidents. But the volume and ratio 
of accidents have correspondingly increased in Germany : and it is the 
opinion of experts that the British law likewise reduces accidents. Apply 
the same test to both laws and they measure up about the same. 

A report, in 1904, of a Parliamentary Committee appointed to investi- 
gate the workings of the Compensation Act of 1897, in which it was 
stated that the Committee oould not see that that law had any effect in 
accident reduction, is often cited against the British law. But expert 
industrial opinion is the other way, and the doubtful finding by that Com- 
mittee is explained by the dictum of German experts that the effect of their 
law in the line of accident prevention could not be seen in statistics until 
it liad been in opleration fifteen years. A later British Departmental 
Committee on Accidents has reported as follows {to quote the suunnary in 
the Annual Eeport of the Chief InsjDector of Factories for 1910) : "They 
find that while the accident risk probably remained almost constant in the 
decade 1897-1907, any increase due to extended use of machinery and 
greater pressure being counteracted by improved inspection and by the 
greater care resulting from the Workmen's Compensation Act, it has de- 
creased since 1907, owing to the causes above named and to the experience 
of employers in the efficient guarding of machinery. They regard tlie 
increase of reported acidents up to 1907 as due almost entirely to improve- 
ment in reporting, which since that date has been less marked, so that the 
effect of lessened risk has shown itself in the statistics." 

Strong testimony in favour of the efficiency of the direct liability law 
of Great Britain in the way of accident prevention may be found in the 
brief of Mr. John Calder, a leading industrial expert, filed with the Con- 
gressional Employers' Liability Commission', and in the testimony of Mr 
Gill, M.P., and of Mr. Clynes, M.P., before the New York Employers' 
Tiiability Commission'. 

Third: It is objected to the British form of compensation law fluit 
• it provides no security to injured workmen for the payment of their com- 

'Report of Hearings. Pt. 2, p. 768. 

" Minutes of Evidence, 1910, pp. 83. 89. 



pensation. It is to be noted that this criticism is not included in the sweep- 
ing arraignment of the British law by Mr. Miles M. Dawson, in his brief 
filed with the Congessional Commission on Employers Liabiliiy (1911). 
The significance of this omission is that in actual experience in England, 
there has been almost no loss from the omission of any requirement of 
security'. Looking at the subject practically, it is obviously far more need- 
ful to require of employers security for their contingent liabilities for 
damages under our existing American negligence laws, than it is to require 
security for the contingent liabilities for compensation under the British 
law — and yet we have never thought it necessary to do that. Why then 
merely because one liability is substituted for another should the addition 
of a requirement for security be deemed essential? It is true that accrued 
liabilities for long continuing pension payments under the compensation 
law subject the beneficiaries to the risk of their respective employers con- 
tinuing solvent during such periods; but it is easy to require security for 
accrued liabilities without requiring general insurance in advance. It is 
also possible that dummy corporations may be resorted to to defeat the 
liabilit}' (a practice more probable in America than in England) ; but in 
that event a particular remedy can be adopted to meet that particular evil. 
It is also probable that in America compulsory security may prove to be 
advisable in some industries. It would be absurd, however, to subject all 
industries to unnecessary bureaucratic domination or to launch the state 
into an uncertain and expensive actuarial experiment merely to forestall 
the possibility of an abuse that has not arisen in actual pa:"actice. 

Fourth: It is objected to the British form of compenstion law that it 
starts with a maximum strain upon industries. The meaning of this is 
that, upon the adoption of such a law employers, if they insure, must start 
in abruptly to pay premiums sufficiently high to establish reserves to cover 
the capitalized values of liabilities accruing during the period paid for. 
These premiums will undoubtedly be so much higher than the premiums 
for insuring the liability for negligence as to cause some embarrassment at 
first ; whereas under the German system only payments due during the first 
year need be provided for by the first yeai*'s assessment-premiums, and the 
future payments upon accrued pension liabilities may ])e left to be pro- 
vided for by future assessments, and the increase in premiums is thereby 
made gradual. But there are serious objections, liereinljefore explained, to 
the German method. It is too much like issuing bonds to pay for current 
expenses. It is to be noted that British industries have passed through 
the period of initial strain without material embarrassment, and now have 
the advantage of solvent insurance. It is also to be noted that all other 
countries, Germany excepted, have elected to meet the initial strain of the 
increased liability at once, without attempting to defer it. 

Fifth: It is objected to the British law that it causes discrimination 
against the employment of the aged and defective. This is an evil of dis- 
puted proportions. That it exists at all is more generally denied*. It is 
more reasonable, however, to suppose that employers do so discriminate 
considerably not only because the aged are more liable to injury, as appears 
from German statistics, but also and more particularly because accidents to 

' See testimony of Mr. GiU, M.P., before N. Y. Employers' Liability Commission, 
Minutes of Evidence. 1910. p. 81. 

* See testimony of Mi-. Gill. M.P., before N. Y. Employers' Liability Commission. 
Minnti^s of ICvidenre, 1910, p. 76. 
15 L. 



elderly persons often lead to permanent disabilities caused not so much by 
the injuries as by old age, and obligate the employers to pay what are 
in effect old age pensions in addition to compensation for injuries. It is 
difficult to fonn an estimate of the extent of this discrimination, because 
there is, independently of this cause, a universal preference for younger 
men in taking on new Avorkmen, particularly in the more hazardous indus- 
tries. If the objection is to be deemed material it may readily be avoided 
by minor amendment to permit old men, etc., to contract for a sliding 
scale of compensation, dependent upon age or certified infirmity, as is 
now being advocated in England. It cannot be avoided by adopting the 
German Industrial Accident Insurance Law, because that law by itself 
would cause about as much discrimination as does the direct Ifability in 
England. It is the Disability Insurance Law and not the Accident Insur- 
ance Law that in Germany stills complaint of this discrimination. 

Sixth : It is objected to the British law that it is not conducive to 
workmen's efficiency. It is commonly believed that during the past half 
century the average physique of the English working classes has degenerated, 
whereas tlie physical well-being and efficiency of the German working classes 
have increased. Some of the panegyrists of the German law attribute this 
improvement in Germany to the Workmen's Insurance Law, and this real 
or supposed degeneration in England to its compensation law. There is 
only a modicum of truth in the former conclusion ; in the latter, none. 

While the German Workmen's Insurance Law has undoubtedly exerted 
a material influence in improving the contentment and well-being of the 
working classes and thereby in promoting workmen's efficiency, it does not 
follow that this result is due to the distinctive features of the Industrial 
Accident Insurance Law, so that the effect of the German system as a whole 
would have been any less beneficial had the direct liability for accidents been 
adopted instead of compulsory muhial insurance. It is a tremendous ex- 
aggeration to attribute the growth in German efficiency so exclusively to the 
Workmen's Insurance Law, since widespread vocational training, com- 
pulsory military service, an iron discipline and early and wise child labour 
regulations are considered by many to have been the principal factors in 
bringing about that result. Moreover it is a vital mistake to attribute 
German industrial efficieney too much to the workmen. German man- 
agerial and technical efficiency were famous before the workmen's insurance 
laws, and are undoubtedly the ultimate cause of Germany's general efficiency 
and prosperity. The more one studies the subject the less becomes one's 
admiration for the German Workmen's Insurance Law in comparison with 
admiration for the administrative efficiency that has made those cumbrous 
statutes operate successfully. 

Seventli : It is objected to the British law that it docs not provide for 
the medical care of the injured. A comparison of the different policies of 
the German, French and British laws, will aid to an understanding of this 

Under the German law, the employers' associations are obliged to 
provide medical care, etc., for injured workmen ; but the control of the 
whole matter — including control of the patients — is given almost absolutely 
to the employers, subject to moderate State regulation. The employers' 
associations seem to have exercised thoir powers diplomatically, and the 



practice, except for some incidental abuses, has worked well, and has pro- 
duced good results in the way of cures. 

In France, the employer is liable for the cost of medical care, but the 
injured employee has the choice of a physician. This gives rise to many 
abuses, is uselessly expensive, and produces the worst results in the way of 
cures, etc. 

The British law places uo obligation upon the employer to furnish, 
medical care, trusting that his self-interest to effect cures as soon as possible 
will induce him, or his insurer, to furnish proper medical care wherever 
necessary. The consenus of opinion seems to be that generally it has 
resulted as expected; but it does not cause due medical care to be given as 
universally as does the German law ; and it has been construed to permit the 
expense of hospital care to be deducted from compensation benefits, which, 
generally, is wrong. 

The choice lies between the British and the German practices. It 
seems safer to follow at first the British practice, with some modifications. 

Eighth: It is objected to the British law that it has caused general 
dissatisfaction, whereas the German law, it is contended, is generally satis- 
factory. In discussing this proposition, it should be borne in mind that 
the comparison lies between the British "Workmen's Compensation Act and 
the German Accident Insurance Law, and not between the British Old Age 
Pension, Sickness Insurance and "Workmen's Compensation Laws on the one 
hand, and the entire German "Workmen's Insurance Law on the other hand. 
While as a whole and in many of its details the German system is the more 
perfect and the more generally satisfactory, yet the degree of satisfaction 
given by the accident laws of the two countries respectively is about equal. 

The German Industrial Accident Insurance Law was at first extremely 
satisfactory to employers, on account of its low rates ; but that cause of 
satisfaction has ceased, and as rates continue to rise dissatisfaetioii 
among employers is increasing. On the other hand, the sudden and 
heavy increase in insurance rates caused by the adoption of the Com- 
pensation Act of 1897 in Great Britain at first made that law abnoxious 
t-o employers; but they have gradually got used to it, and now satisfaction 
with it is general, at least among industrial employers. Xo British em- 
ployer with a well-equipped and well-conducted establishment would prefer 
the German law. 

The attitude of labour towards these laws is complicated by socialism. 
In Germany non-socialist labour has generally been fairly satisfied, and the 
accident law has produced better relations between them and their em- 
ployers. The socialists, on the other hand, were at first bitterly hostile to 
the insurance legislation, but have since become fairly satisfied with the 
sickness insurance. "W'ith the accident insurance, however, they remain 
dissatisfied, and demand a part in the management of the associations and 
benefits equivalent to 100 per cent, compensation regardless of fault. In 
England, labour generally has been satisfied with the compensation law. 
Recent declarations of British Labour Congresses against that law have been 
coincident with socialist control of those bodies. It is to be noted that the 
English socialists have not declared for the German law, but for a state- 
insurance law, awards to be made by political officers, and compensation to 
be on the 100 per cent, basis, with additional provisions for medical 
care, etc. 



* — ■ — - — — 

The impressions created upon American observers by the two laws 
respectively are not conclusive. All have been impressed by the complete- 
ness of the German system, and by tlie general excellence of its administra- 
tion. When it comes to the Accident Insurance Law and particularly to 
the question of its applicability to our conditions, opinion is divided. The 
preponderance of expert opinion is undoubtedly in favour- of caution and 
of a trial of the British system. 

We should not be over impressed by the encomiums on their law from 
German officials. Naturally they are prejudiced in its favour; and they 
are the last persons who should be expected to cry aloud its weaknesses. 
Tlie criticisms of such men as Priedensburg and Bernhard are sufficient to 
show that all is not satisfaction and perfection in Germany. That there is 
no like official chorus of praise for the British law is due solely to the fact 
that in great Britain there is no established biireaucracy connected with 
the administration of its law. 

From the foregoing the conclusion is obvious. For us to adopt sub- 
stantially any integral part of the German Workmen's Insurance Law 
would be a leap in the dark; it would be making the «^elfare of our people 
the playfield of impulsive experiment, and would entail a radical change in 
our political principles and in our social and industrial habits and customs. 
Both the Britisli and the German laws, although in different ways and to 
different degrees, are products of gradual development. Even if our ideal 
be a system of broader and more perfect insurance than that provided by 
the British law, yet prudence dictates a course of gradual approach. The 
safest and most surely beneficial first step on that course would be the 
adoption of an adnptation of the eaivlier fonm of the British law. 

The reserves under the German law are often spoken of as if they were 
for the purpose of liquidation, and I think some of the German officials 
have it in the back of their minds that the reserve may serve for the purpose 
' of liquidation, but if you study the reserves you will find they are really 

very small. They are designed simply to pay the compensation in periods 
of depression or war when German industries are shut down, and there is 
no provision, no adequate provision, under the German law for ever paying 
off or ever liquidating the indebtedness of the associations. 

The Commissioner: At page 26 of your brief what year do you quote from, 
because we had a quotation from Mr. Wolfe? The operations of what year 
do you mean when you speak of the present? 

Mtt. Shermax: 1909 is my last information. 

The Commissioner: Have there not been very large reductions since 1909? 

Mr. Sherman : I would like to have a chance to look that up, but tlie last figures 
officially published are 1909, the last check up. 

Mr. Ballantyne: Mr. Wolfe gave up to 1908. 

Mr. Sherman: T take 1909. There may be something later, but T have not had 
time to go over all the figures. I think Dr. Zaoher calculates that the 
German rates will reach their maximum in ten or twelve years, but Dr. 
Manes who is the head of one of the insurance investigating bureaus, or 
something like that, gives twenty years, and it is pretty doubtful when the 



whole thing will work out to a stable basis. Schwedtman and Emery are 
very favourable to the German law so I think it is fair to take their calcu- 

With reference to my statement on page 35 of my brief (3) I may say 
this objection does not apply generally to the German law for this reason, 
that the railroads are largely owned by the Government and are formed 
into separate sections so that each railroad really carries its own insurance 
and manages its own insurance, and the same with the big Krupp works. 
It was formed into a separate association and carries its own insurance, so 
that really they have not forced the big establishment into the common 
scheme as much as the letter of the law on its face seems to indicate. The 
same thing is true in Norway where they have State insurance. They 
exempt the railroads. The railroads are the only large employers in 
Norway, practically. Even in Austria quite a number of large establish- 
ments and some railroads are exempted from the general obligation to 

-I think if you will give the figures consideration you will see that both 
the German and the English experience under the compensation law com- 
pares favourably in the amount of litigation with their previous experience 
, under the tort law, in spite of the fact that under the compensation law 
the number of cases in which they are entitled to relief, and consequently 
about which litigation may ultimately arise, has been multiplied in England 
at least eight or nine times. 

I think, however, that the working people have very good reason to ask 
for the establishment of a Board which shall pass on all settlements so that 
the employer and workman must submit all settlements of claims to a Board, 
and such settlement shall not be binding upon the workman unless approved 
by the Board. * 

The Commissioner: Eef erring to your brief at the top of page 40, have you 
investigated that, because there must be some reason for that wide differ- 

Mr. Sherman : I have corresponded a great deal over there, but I have never been 
able to get the exact accounting explanation of that except this, that in the 
tanneries the trade has decreased, that branch of the leather trade has 
declined, so that you have a smaller number of plants carrying the differ- 
entials, but I have not been able to verify that. 

The Commissioner: What is grouped under that heading in the two countries 
must be different. My attention was called to that with regard to the 
building trades. A very mistaken idea was given by Mr. Wolfe by the 
nomenclature. It did not mean the same at all when used in Germany as 
it did somewhere else. 

Mr. Sherman : The point I mean to make is simply this, that in many trades in 
Germany they have run up pretty high rates, and there is no doubt about 
it I think that this is an excessive rate. I do not attribute any cause to it, 
because I cannot tell you as a matter of knowledge. When I first drafted 
this I attributed it to the cause of declining tannery business, but I haven't 
got sufficient authority to make that proposition. 

Every body agrees that the workman must get his compensation, and 


the experience iu England has been, I think, that the workman does get his 
compensation. I have never been able myself to find any case where the 
workman was defeated. If sentiment here is different from that, I think it 
is easy enough to require the employer to insure unless, in the judgment of 
a proper board, lie is capable of carrying his own insurance. 

The Commissioner : Would that not only shift it from the weak employer to the 
weak insurance company? 

Mr. Sherman : The employer can insure. 

The Commissioner : What protection is there in one of these accident insurance 
companies ? 

Me. Sherman: The fact is you get much more protection than you do in any* 
State fund unless the State itself guarantees the fund. If you have insur- 
ance regulated by law, insurance companies, mutual associations, and all 
forms of insurance, required to carry reserves to cover all their outstanding 
liabilities, required to a surplus capital, and are liable to be wound 
up the very minute they fall below those levels prescribed, I think you have 
a security that will be greater for the workmen than by any other way. 

The Commissioner: What use is that for him? He has no right to it under the 
British law except in the single case of the bankruptcy of his employer where 
he may prove for the accrued payments. He has no right to be subrogated 
to the rights of his employer against the insurance company. 

Mr. Sherman : I think he has under the last act. 

The Commissioner : No^the only provision there is that if the employer becomes 
bankrupt the workman is entitled to prove for the arrears and rank against 
the estate. 

^Ir. Sherman: I see what you mean. We have covered that in quite a number of 
bills that are pending in America. I think the Connecticut Commission 
that I advised covered that by the provision that all insurance shall run 
directly to the benefit of the workman and that it shall cover the entire 
liability of the employer. 

The Commissioner: How would you work that? They insure with a blanket 
policy fixing the maximum in any single case. How would it be possible 
to do that under the British system ? 

Mr. Sherman : It isn't possible to do that under the British system, but I am not 
advocating the British system with all its faults or flaws. 

The Com^^iissioner : I thought it was perfect half an hour ago ? 

Mr. Sherman: I think not; if I have given you that impression I have gone a 
little too far. 

The Commissioner: I did notice that you said it was a good step; as if it ought 
to go further some time. 

Mr. Sherman: I think the British law could be very much improved on in a great 
many details. I also hope that I have not misled you into believing that I 


am a very bitter opponent of the Grerman law, because the German law in 
my opinion is one of the good laws. 

The Commissignek : You spoil it by saying it is not adaptable to the conditions 
in this country. 

Mr. Sheeman: I respectfully insist upon that very firmly, and I do not think 
] there is now any doubt about that in many minds in this country. 

♦ ■ I think the law of the State of Michigan is a very good law. The 

employer may apply to that board for permission to carry his own insur- 
ance or he may insure in the State office. 

The Commissioner: What about the political favouritism that you were talking 
about a while ago ? 

Mr. . Sherman : There is some possibility of political favouritism there, but not 
very jnuch because the line is pretty well drawn there, I think. The 
Department will not exempt any concern unless its risks are really well 
distributed. The board is not going to get itself criticized by allowing a 
concern to do that where it is possible for it to be wiped out with a disaster. 

The Commissioner : "Where would the workman be in a case where they dispensed 
with insurance and the employer failed ? 

Mr. Sherman : The workman would not get anything in case the employer's assets 
all went up in an explosion. That is the only case where the workman 
would not get his compensation. 

The Commissioner: Supposing the concern goes out of business altogether, breaks 
down? You must look out for that. 

Mr. Sherman : The supposition is that a board of that kind will use its discretion 
pretty cautiously. The Michigan board refused to exempt the Cadillac 
Motor Car Company which covers three blocks in Detroit, and if any one 
wants any better security than the paper of the Cadillac Company I do not 
know what it is. 

The Commissioner : You are between the devil and the deep sea. If they compel 
them to insure you have told us it is economic waste because it is not nec- 
essary, and if they do not compel them to insure and the man happens ti0 
leave the workman without any security at all for future payments he is out 
of it. 

Mr. Sherman: The workman is insured by the employers' liability. This pro- 
position came up before the United States Congressional Commission and 
there was not much argument on that particular phase of it, because the 
workmen did not care a rap about security, because there were the railroads 
of the United States which were perfectly solvent and the security about 
as perfect as it can be. 

The Commissioner : How many have gone into bankruptcy in the last fifty years ? 

Mr. Sherman : But they have a preferred claim. 

The Commissioner: How many to-day are in the hands of receivers? 

Mr. Sherman : I do not know. Two or three. 


The Commissioner: Are these claims made a preferred claim? 

Mb. Sheemax: Oh. yes; on the property. 

The Commissioner: That was the proposition of the United States law. 

Mr. Sherman : That is what Michigan does. Generally in the United States laws 
these claims are preferred. I know more about the bills now pending than 
I do about the laws. In almost all they are preferred, and I think in some 
cases they give the workman the right to attach also the moment his claim 
accrues. I really think that you are looking on this from the abstract a 
a little too much instead of from the concrete. The workman according to 
the British experience does not lose his compensation. 

The Commissioner : But the British law has only been in force for a few years. 
Under the Employers' Liability where it was a lump payment the difficulty 
did not arise, but here you have payments spreading* over perhaps twenty or 
thirty years. 

Mr. Sherman: It has been in force since 1897. I do not think you can find 
practically any loss at all. 

The Commissioner : Conditions are not nearly as stable in this country as in 
Great Britain. 

Mr. Sherman : There is something in that, but I think if you cover that point by 
requiring security where security is necessary, and having your Board err 
on the side of requiring security, you certainly avoid all danger of turning 
the workman out into the cold. I do not see that the workman stands any 
chance at all of losing, compared with all the other risks of life that every- 
body else has to bear. 

The Commissioner: Would you be in favour as part of your scheme if a loss 
happens — not a fatal accident, because that is compensated for at once — that 
the insurance company should be bound to put up the capital sum that 
would represent the future payments? 

Mr. Sher]\[AN : They should be obliged to carry it, yes. 

The Commissioner : To deposit it somewhere so that it would be there to answer 
the claim. What injustice would there be in that? 

Mr. Sherjian: I do not see any objection to doing it in case the injury was 
definite and certain and fixed. What I mean by that is a long time injury. 
Of course you know the majority of the injuries are sliort time injuries, and 
you would not want to be paying in a deposit and going through all sorts 
of rigmarole with them. The employer can take care of those right wit!) 
his workmen. I think that is the British experience. 

The Commissioner: I have understood that Professor Friedensburg's criticism 
was not directed against the principle of the act, but against its maladmin- 
istration. You seem to have a different opinion. 

Mr. Sher^^ian : It is pretty hard to tell. He windvS up with a sentence that seems 
to indicate a preference for ])ure State insurance, but his criticism T think is 
against the administration of the awards by the German officials. If von 


will study those officials, however, yoii will find they are about the highest 
type of official you can get anywhere. I do not know of any better type of 
men than they are. Speaking of the United States I do not think we quite 
rank up to them. 

The Commissioner: In this country we are away ahead of them. Of course we 
are always changing and making experiments. 

Me. Sherman : It may be a very expensive experiment if you are not careful. 

The Commissioner: Do you think it is better to commence with the tail and cut 
it off inch by inch, with reference to the insurance companies? We have an 
idea suggested of cutting off the head right at once. Your idea would be 
a gradual wiping out. 

Mr. Sherman: Yes, only I do not know exactly where we are working up to. I 
do not see that the problem has been thoroughly and satisfactorily solved in 
any place, but I do think you would have to adopt a law capable of being 
developed in various directions. I do not believe, for instance, that the 
first law should be applied very broadly. I mean by that it would be better 
to adopt a law simply for the industries instead of for everything, and then 
fill it out, and the same way as to insurance. I think the best way for 
insurance will be found by experimenting and by competition. Trade 
mutual insurance is good, probably one of the best forms, but I know that 
it is verj^ unsatisfactory and unpopular v/here it is compulsory, and I feel, 
without having been able as yet to verify it completely, that many of those 
associations do go wrong and do run up high rates in many of the sections. 

The Commissioner: Why do you distinguish between industrial accidents and 
agricultural accidents? Do you not call those industrial accidents? 

Mr. Sherman: No. 

The Commissioner: Why not? 

Me. Sherman : I do not want to take up too much of your time, but I think that 
is rather interesting. It does not have any .particular bearing on my argu- 
ment, but I think the experience in Bavaria was somewhat like this : — They 
had the farm owner injure his workmen, his employees, in his territorial 
association. That association had to pay for every accident to the farmer's 
family, because his wife and his daughter and his sons, and everj'body else 
around, were employees; and secondly there was no distinction between 
work accidents and play accidents. Every accident was a work accident; if 
the farmer's small boy fell out of a tree and broke his arm that was a work 
accident. So it was unpopular among the members, and to defeat those 
claims they simply raised the rates and turned it into a complete accident 
insurance. It developed about that far in Bavaria when along came the 
farmer himself. " Look here," says he, " everyljody else here is insured, 
my wife and family, and everybody else on my place, but I am not insured ;" 
so they have got the provision there that he can insure himself also, and 
that insurance is practically developed now in Bavaria to cover pretty much 
all accidents. 

The Commissioner: I do 'not understand how 5'ou maintain that farming is not 
an industry. It is not a manufacturing industry 


<r- ■ -■ — -^ 

Me. Sherman: What is an industry is a question of definition. They do not call 
it an industry. I think if you go into insurance in any form you ought 
to distinguish agriculture because of the German difficulty. 

The Commissioner : Was that distinction not only because of what you have just 
mentioned, that the farmer was permitted to insure himself by adding his 
wage to the pay-roll? 

Mr. Sherman: You cannot base it on the pay-roll. They have abandoned all 
attempts to base agricultural insurance on the pay-roll. They have got to 
either levy the premiums like taxes on the land, or a sort of assessment on 
the probabilities of employment, and the work, and everything. I think it 
is growing more and more to be like land taxes in America; the assessor 
goes around and assesses your farm so much for accident insurance. I think 
that grew up because they were unable to draw the line, and it works very 
satisfactorily in Bavaria, I understand. It is a very good social institution. 

The Commissioner: Well, what about the clerical classes? I do not mean the 
clergymen, but the clerks in shops, and all that class? 

Mr. Sherman: They are just being taken into the German law now, but they have 
never before been able to apply the law to the clerks. They are just work- 
ing up to that. 

The Commissioner: Why should not a clerk who is injured in the course of his 
employment, and arising out of it, be compensated just as much as the man 
who is busy planing? 

Mr. Sherman: This compensation law arose from what is known as the doctrine 
of trade risk or risque professionnel which is supposed to be very high in 
some kinds of industries, and it is very low generally in mercantile employ- 
ments. The clerks really have very little professional risk, and so they 
have been left out to date for that reason. 

The Commissioner: As I understand from what you tell me, Mr. Sherman, you 
do not believe any good can come out of a state board for any purpose ? 

Mr. Sherman : A State Board to manage it ? 

The Commissioner: To manage any business. 

Mr. Sherman: Oh, yes; but not to manage insurance. 

The Commissioner : If it is proper for a railway, why not for insurance ? 

Mr. Sherman: Do you mean because it is proper for a State to run a railway it 
can run other things? 

The Commissioner: Yes, I understand the basis of your objection is that it is a 
political machine. Is that the only objection you have to it? 

Mr. Sherman : That may have something to do with it. My objection is that 
foreign experience shows that State insurance fails. 

The Commissioner: That may be a defect in the system, not in the kind of man- 


Mr. Sherman : Well, tlie trouble is you see other kinds of insurance succeeding 
and that kind failing and calling on the public for taxes, and running up 

The Commissioner: We cannot shut our eyes to the hundred and one insurance 
companies that fail. 

Mr, Sherman: Foreign experience is that insurance companies may lose money, 
but they do not fail. 

The Commissioner: Our experience is not always that. Perhaps the failures are 
exceptional, but they fail. 

Mr. Sherman : I believe they have failed quite considerably in various lines in 
America in the past, but I do not believe if they are properly regulated they 
fail. ^ ' ' H 

The Commissioner: If we had a board uninfluenced by politics altogether why 
should it not manage well an insurance scheme? 

Mr. Sherman : The regulation of this business is entirely a different thing from 
the management of it where you have political officers having power to de- 
prive one man of all the profits of his business and give the profits of the 
business to another. 

The Commissioner: That is assuming he is dishonest. 

Mr. Sherman: No, not dishonest. In Norway it is their indifference in different- 
iating their rates. If I go ahead and go to a heavy expense and cut down 
my accident cost and my plant is all right, I have still got to pay my share 
of other people's losses. That has been the universal practice under all 
the state insurance systems. 

The Commissioner : That is non-interference. That is not political interference. 

Mr. Sherman : That is non-interference in the exercise of a very necessary func- 
tion, but it is interference with a man attending to his own insurance for 
himself an d_ running his own business for himself. 

The Commissioner: Then I gather that you are, perhaps, not as unalterably as 
some, but opposed to any kind of mutual insurance. 

Mr. Sherman : Oh, no. 

The Commissioner: Some of your observations would lead to that. Perhaps I 
did not follow you. 

Mr. Sherman : I believe in mutual insurance. There are difficulties, but I have 
advised the formation of mutual insurance companies. 

The Commissioner: We have mutual insurance companies, some of the best in 
the country. 

Mr. Sherman : I mean mutual associations. 

The Commissioner: I am talking about mutual insurance companies, not mutual 
associations. Your observations rather led me to think you were against the 
soundness of mutual insurance. I want to know if that is so, if you care 
to tell me. 


Mr. Sherman : I do not understand the «xact question. 

The Commissioner : Do you think mutual insurance against accident, against fire, 
against death, is a desirable form of insurance? 

Mr. Sherman: Well, the mutual insurance may be in a good many different forms. 
The mutual insurance I have in mind is mutual insurance in associations 
of employers self-managed. 

The Commissioner: Take an ordinary mutual insurance company, a company 
which has directors, no stockliplders, but carries on life insurance on a 
mutual plan. 

Mr, Sheriman : I do not know very much how those vary from the stock companies. 
Some of them vary very little from th« stock companies and others vary very 
little from the self-managed mutual associations. I believe in them as 
near as possible on the lines of self-managing trade associations. AVhen it 
comes to a complicated mutual company I have never been able to under- 
stand exactly how it works out. I would like to have the employer either 
practically carry his own insurance in combination with his associates in 
some trade, or else I would like to have him pay a certain amount by 
which he secures full indemity, and put that down as a charge to the 
business for the year. 

The Commissioner: Supposing you got voluntarily all the employers of labour 
in Ontario to form an insurance company to insure against industrial 
accidents, would you think that desirable? That is every employer of labour 
in the country voluntarily joining and voluntarily becoming a member of 
an insurance association. 

Mr. Sherman: I rather think I would. 

The Commissioner: Yon would not object to that? 

Mr. Sherman : No, sir. 

The Commissioner : You would approve ? 

Mr. Sherman : Yes. 

The Commissioner: Well, what difference is there if he is made to come in? Wliat 
is the vice of making him come in? 

Mr. Sherman: In one case yon are making a man .do something that he is not 
able and ready to do, and lias not studied out. 

The Commissioner: That only hurts his feelings. 

Mr. Sherman: Oh, no, it doesn't. I will put it this way. I will go into partner- 
ship with a man whom I like and approve of and trust, but when you come 
and say I must be the partner of some man, and must share his liabilities 
and be responsible for his losses, it is an entirely different proposition. 

The CoMjnssiONER: Part of your paper, I thought, did not quite agree with the 
other part of it; perhaps there is an explanation for it. You expressed your 
dissatisfaction, which you said was general, with the existing laws providing 
for workmen in case of industrial accidents, and you spoke of the loss or 
waste of litigation. 


Mr. Sherman : Yes. 

The Commissioner: Then afterwards you defended having the claims under a 
compensation law go through the ordinary courts of law. Now, those are, 
perhaps, reconcilable, but I would like to know just how you intended to 
put il. 

Mr. Sherman: My proposition is this: Under a system like the British there is 
much less litigation through the courts of law than there is through the 
paternal boards of arbitration in Germany. 

The Commissioner : Have you allowed anything for the difference in the disposi- 
tions of the people? The Grerman, as I understand it, likes u little law. He 
is perhaps like my countryman, the Irishman. 

Mr. Sherman : No, I do not make any such allowance. 

The Commissioner: Has that not to be considered? The kind of appeals are 
very different from the kind of appeals that you are comparing it with in 

Mr. Sherman : Of course when I talk about retaining the courts of justice and 
their jurisdictions I do not mean to say, as I explained before, that I would 
like to make the plaintiff, the claimant, hire an attorney and come into court 
and file a complaint, putting his case on the calendar, leaving that as a 
method of settling any disputes that the employer and the workman do not 
settle directly. I think there should be some administrative court official 
to whom the workman could go directly without going to any attorney, or 
any calendar practice, and state his case, and practically have the em- 
ployer summoned and let him state his case, and see if they cannot fix it all up 
without any law. In jMassachusetts they have a practice^ something like thai 
you know. I like that practice. The only thing, it seems to me, that is 
wi'ong in that is the final determination, if there really has to be litigation. 
If there is a Board of three arbitrators that Board has to sit in places around 
Massachusetts, and I think it would be much better to let the District Judge 
or the County Judge, as in England, pass right on that. 

The Commissioner: I suppose you are familiar with our system. A board, if there 
is one constituted as proposed, would be appointed by the Government of 
the province. The judges are appointed by the Government of Canada. 
Do you think any superiority attaches to men when they are appointed in 
that way and because you call them judges than if you call them 
members of a board; is there anything in the difference of designation; is 
there any virtue in the difference? What difference does it make if you 
call me a judge or a member of a Board. 

Mr. Sherman : I think it makes considerable difference, because in one case you 
are part of the administration and you are simply dispensing the political 
functions of Government. I think the judiciary is a little different. 

The Commissioner : But this board would be performing judicial functions in 
passing upon a claim. 

Mr. Sherman : That may be, but I think it would be better if I explained why T 
like the British svstem. 


The Commissioner: You are unalterably opposed to any Board of management or 
any management by a State Board; is that not really the bottom of your 
objection ? , 

Me. Sherman: I object to having the State Board the final judicial arbitrator of 
all questions relating to that law instead of the courts having the usual 

The Commissioner: You grant, as everybody mus't grant, that the number of 
cases in which questions of law will arise are very few. You pointed out 
the few that have gone to the House of Lords. 

Mr. Sherman: Yes. 

The Commissioner: Which is the only place where questions of law ultimately 
do go. 

Mr. Sherman: Yes. '^ 

The Commissioner: Which is better, a business Board dealing with questions of 
fact and questions of how the accident happened, and the extent of the 
injury, or a judge and jury? 

Mr. Sherman : I do not want the jury at all if I can help it. 

The Commissioner: What about the judge; you are going from bad to worse; 

Mr. Sherman : What I want there is a doctor. I do not want the administrative 
Board when it comes to determining the degree of incapacity; that is the 
' ■■ great fault. 

The Commissioner: Why should the Board not determine that? 

Mr. Sherman : Because the Board does not know anything about it. 

The Commissioner: But advised by a doctor? 

Mr. Sherman: All right. I do not see the necessity of the Board. 

The Commissioner: Would you have a doctor decide finally? 

Mr. Sherman : Report to a judge and let the judge decide. 

The Commissioner: Why do you want to go to a judge; that is going to court 
and that means a lawyer. 

Mr. Sherman : I do not want to have a lawyer. I think you are magnifying my 
objections. I am simply saying that I do not see any particular use in 
creating additional machinery when you have got the machinery of the 
courts in most of our American states right there and perfectly well organ- 
ized and competent to act under the British law. 

The Commissioner: But under your system you cannot deny a man a trial_by 

Mr. Sherman : No, we could not deny him that. 

The Commissioner: I do not understand if you had a good Board composed of 
men who would not be influenced by political considerations — a good board 
— why you could not as safely trust them as you could twenty judges. 


Mr. Shfkman : Well, 1 do not see that it makes any difference if you say the Board 
shall be practically the same as judges and exercise the same functions as 
judges, and do everything a judge would. 

The Commissioner: This Board to determine whether there is a claim, and the 
extent of it You see it would he only another case of a guess; they are all 
• guesses or opinions; to a large extent they are guesses. 

Mr. Sherman : I agree with you that you want to get closer to the workmen, instead 
of having the body that determines sit back behind a bench and having the 
claimant come with a lawyer, and a petition and everything like that. We 
want some administrative tribunal, and I think it ought to proceed as a 

The Commissioner: Supposing the Province were foolish enough, in your view, 
to be wedded to the idea of establishing a mutual insurance plan, whether 
on the current cost or the other plan, would it be preferable to bring such 
a law into operation at once applicable to all employments, or would it be 
preferable to bring in certain of the industries at first and bring in the 
others as experience showed it was desirable to do so? 

Mr. Sherman : I think it would be better to proceed gradually by experiment on 
a small scale, simply to see how it worked out. In the United States we 
would have some constitutional questions, but here you have none. 

The Commissioner: Well, apart from the view that it would be better to make 
haste slowly, would there be any other advantages by leaving them out and 
bringing them in by degrees? 

Mr. Sherman : Yes, there would be some advantage in picking out your most 
appropriate trades and organizing the trade associations only in those 
trades where you found the employers pretty universally willing and recep- 
tive to your scheme, because I think it insures the defeat of mutual insur- 
ance to have an unwilling or dissatisfied element in your association. 

The Commissioner: Would it remove or mitigate any of the evils that you have 
pointed out if there were power where a man had not a proper system for 
prevention of accidents to be able to charge him or penalize him for that, 
making him pay a larger proportion into the common fund? 

Mr. Sherman : Yes, you want to make him pay a larger proportion, but you also 
want to be very careful at the same time to make the employer who has 
better conditions feel that he is getting a lower rate. 

The Commissioner: Would that not be the effect of putting a man on a higher 
rate where accidents happen — would the effect not be to relieve the others ? 

Mr. Sherman: It might be if you collected your penalty, but you want to hold 
OTit an inducement to improve. That is a much more important thing 
than the penalty; rather than falling behind the average you want the 
industry to get ahead of the average. It is something like fire insurance, 
where, for example if you instal a certain apparatus in your building you 
get a lower rate. So in the matter of safety, you want to have in each 
trade all the factors of safety pretty well understood, and every time an 
' ' employer makes an advance you want to make it worth his while in the rate. 


The Commissioner: Would that not be possible under such a system as has 
been suggested? 

Me. Shehmak: Such a system is in oi>eration in Great Britain and in Germany, 
and I think the insurance companies in the United States are preparing to 
develop tha.t system pretty thoroughly. Of course it exists already where- 
ever there is insurance in regard to elevators and boilers for instance, and 
everything like that. Your rate depends on the inspection and the con- 
dition existing and compliance with the highest requirements of safety. 

The Commissioner : Have you not in your paper left out of consideration alto- 
gether the existence of adequate factory acts, well administered? 

Mr. Sherman : The factory acts are a somewhat separate question, I touched 
on that when I said I thought the factory acts should be kept separate 
from the civil law, the civil liability, and tliat compliance with the factory 
act should be enforced by penal liability only. The general feeling amongst 
the factory inspectors has heen that when a question of compliance with 
the factory act comes up in private litigation between a workman and 
his employer that sympathy to a certain extent enters into the determina- 
tion of the compliance and into the construction of the act. It is better 
to have the factory laws solely in penal proceedings. 

The Commissioner: That is hardly the point. My point is that if you have a 
good factory act, a well administered one, that takes care that there are 
very few slovenly factories. 

Mr. Sherman : The general feeling is that the facory act must supplement the 
direct liability of the employer, either a di-rect liability or an obligation 
to pay properly differentiated rates, that to expect the factory acts to do 
it all would be imposing too heavy a burden on them. The English factory 
insj)ectors have proceeded pretty well and they have a very good reputation, 
but their reputation for efficiency is not quite equal to the reputation of 
the inspectors of the individual insurance companies or of the mutual 
associations, or of the German association inspectors. They have not 
quite as high a reputation, and their efficiency is not thought to be quite 
as high. 

The Commissioner: You would not want to fasten on us a similar body to the 
one which exists — I do not know whether it is a provision of the law — 
which is called an underwriters' association, which dictates to everybody? 
It appears to be a kind of law maker for the oountry. 

Mr. Sherman : That is practically what they have in fire insurance. 

The Commissioner: You would not suggest anything like that? 

Mr. Sherman: I am afraid I would. Sir William, I think I would; I think that 
is very effective. 

Thk Commissioner: For raising the rates. 

Mr. Sherman : Yes, and as an inducement to obliterate certain practices that 
are found by experience to be dangerous and hazardous in certain condition'^. 
I do not think you can by statutory law cover that subject as well as the 


underwriters, whether they are insurance companies or mutual associations, 
or whatever they may be. 

The Commissioner : I think you said you had some connection with some federa- 
tion; the National Federation, or what is the name of it? 

Mr, Sherman: The National Civic Federation. 

The Commissioner: You said that was composed of employers and workmen. 
Perhaps you will tell me what proportion of workmen to employers? 

Mr. Sherman : A very large proportion of the organized workmen has representa- 
tives in that association. It is not, of course, a body that can act and bind 
anybody. It is simply a sort of mutual, you might call it a debating or 
talking association in many respects. There are a very large number of 
the organized labour associations in America represented; the United Mine 
Workers have withdrawn recently, but almost all the others are represented. 

The Commissioner: It expresses opinions upon occasions and passes resolutions 
does it not? 

Mr. Sherman: Yes. 

The Commissioner: Can it be said that the resolutions or pronouncements of 
that body in any sense represent the views of the employed? 

Mr. Sherman : It cannot be said that the pronouncements of that body represent 
any definite number of employers or of workmen. The fact was something 
like this, that the general conclusions of that body have been generally 
followed by employers in New York. The National Manufacturers' Associa- 
tion another concern, composed exclusively of employers, has little different 
views or opinions. The labour bodies have split uip in various ways. The 
American Federation of Labour has generally endorsed the stand of the 
Civic Federation. The State Federation of Labour in New York State 
just now is very strongly inclined to state insurance, but the employers are 
all opposed, and the neutral members are all opposed, so that just at present 
we are in conference — that is, we have been holding conferences about 
twice a week for the last two or three weeks. I think we will get together 
on something like the Michigan law, that is the general feeling. 

The Commissioner: I do not know whether it is a fair question to ask you, and 
you need not answer it unless you wish, but am I to understand that the 
opinions you have expressed here are quasi-judicial, or are they to some 
extent fashioned from your association with the concerns that you are 
connected with; are they impartial, or are they to any extent, justly or 
unjustly, influenced by your immediate association? 

Mr. Sherman : Well, that is pretty hard to say. Those opinions I think are 
impartial. I formed them, after a good many years of study, about 
two or three years ago, and I have always stuck to them very consistently 
ever since. I have represented a good many different interests since then, 
and I have never represented until within the last few months the parties 
whom I have been mostly representing lately, that is the insurance com- 
panies. However, the insurance companies have had to come to my views 
on certain questions, not I to theirs, and I think my reputation for being 
rather an opinionated person is unfortunatelv rather good, 
16 L, 


The Commissioner : Are you familiar witti tlie associations of employers in 
England, such as the Shipping Federation, tlie Mine Owners' Association, 
and the Boot and Shoe Association, and the building trades? As I under- 
stand it in various forms these different industries have created associations, 
some of them nearly all in the trade being members of them. In one oi: 
them they have a committee that acts as a kind of insurance bod}', I think 
that is in the Shipping Federation. They conduct their business somewhat 
upon this mutual insurance plan. In the case of the mines, the secretary 
told me that they found only in case of fatal accidents could they make a 
flat rate; that their experience showed that in all the mines the fatal acci- 
dents were relatively the same, but that in the cases of accidents that were 
non-fatal there were sucli wide differences they had to make differential 
rates. Now, why do those people avoid the insurance company? 

Mr. Sherman : Some of them avoid insurance companies, and some of them do 
not. Some of the trades in Great Britain, quite a number, have built 
up very satisfactory mutual insurance systems; others have not done so. 

The Commissioner: If the State were to build it up for them would it not be 
doing a good service? 

Me. Sherman : No. If it were done for them they would be thoroughly, dissatis- 
fied. I do not think it can be done for them as well as they can do it for 

The Commissioner: I think the country where your views would prevail more 
would be France. They are all for the individualistic way of doing things. 
They do not want any of those associations. 

Mr. Sherman : Yes, France is very individualistic. 

Mb. Hellmuth : I was going to suggest, Mr. Commissioner, that perhaps as Mr. 
Sherman has gone over the brief filed with you by Mt. Wegenast that there 
are some points in it that he might discuss usefully. There are some 
matters he has very strong opinions on as to some statements of opinion 
and some statements of fact. I thought perhaps Mr. Wegenast might like 
to ask him in reference to them. 

The Commissioner: Does not Mr. Sherman's statements practically contain the 
answer ? 

Mr. Hellmuth : It does in a general way, but not specifically. 

The Commissioner: By all means supplement it by any questions. 

Mr. Hellmuth: Mr. Sherman, I -believe you have gone over Mr. Wegenast's 
brief ? 

Mr. Sherman: Yes, I have gone over it and I am rather surprised at Mr. 
Wegenast's statements in regard to opinions, the weight of opinion, as to 
the foreign laws on the subject of accident prevention. I have noted a 
good many points here which struck me as very clearly erroneous, and I 
think it might be well to put into the record just a short statement of my 
answers to them if it would not bore you unduly. The first error I find 
is on page 59, under the heading of "State Liability." Mr. Wegenast cites 


Washington law. In the Washington law there is no state liahility; there 
is no guarantee by the State. 

The Commissioner : I do not suppose he means that. 

Me. Sherman : Then he proceeds to say ''the method of individual liability has 
been pronounced with singular unanimity by those who have investigated 
the operations of the different systems as a failure."' 

The Commissioner: Does he cite his authorities for that statement? 

Mr. Sherman: Messrs. Frankel and Dawson, Schwedtman and Emery, and the 
report of the Federal Commission. Xo matter what the authority is I 
would like to say that that is not singularly unanimous; that opinion is 
rather the other way. Now, he cites here the report of the Federal Com- 
mission. The report of the Federal Commission is decidedly the other way. 
That report follows my argument before it, and at pages 56 to 58 of that 
•report it takes the contrary view that I have been submitting to you. 

The Commissioner: You are speaking now of the current cost system? 

Mr. MagMurchy: No, the individual liability. The current cost is only a 
method of carrying out compensation. 

The Commissioner: One is individual liability, entirely distinct from current 

Mr. MacMurchy : There is another, the capitalized basis. 

The Commissioner: That is another branch of it. 

Now, I find "the third reason for recommending this law is, in dealing 
with a number of small employers any one of them may be financially ruined 
by some severe or great calamity, and the wisdom of distributing the 
shock by means of insurance is apparent." Does that not rather support 
Mr. Wegenast's view? 

Mr. Sherman: I see that, but here is the fifth point which you will find there, 
where the direct liability is stated as the most conducive to accident pre- 

The Commissioner : Are they not separating the railways and dealing with them 
as you suggest they should be dealt with, on a different plan from that 
upon which they would deal with the small employer, and is that not what 
- , is there that you are relying upon applicable only to that? 

Mr. Sherman : It may be construed that way, but what they said in their report 
was that whatever might be better for smaller employers on account of 
security, what would be the most conducive to accident prevention was 
direct liability. I think you will find that is the majority expert opinion. 
Now, even Mr. Dawson, who is cited here, admits that the Norwegian 
law which results in flat rates is very harmful, or would be very harmful 
in an industrial state. 

The Commissioner: Perhaps you will explain, for the benefit of those who may 
read this, what you mean by a flat rate? 


Mr. Sherman: The flat rate is a rate which is the same for all employers iu 
the same trade or industry — approximately the same, or roughly the same. 

The Commissioner: Is that not what Mr. Wolfe recommended to the Massa- 
chusetts peopjle? 

Mr. Sherman : No, Mr. Wolfe proposed a system of careful inspection by which 
the employers are rated according to their actual risk, and not by trade 

The Commissioner : As I understand him, although I have not read the document 
he refers to, his objection to the scheme here was small groups, and 
apparently instead of making a large number of small groups he had 
grouped the industries not according to the nature of the industry, bat 
according to the hazard, and in that way the exposure was greater, 

Mr. Sherman : Yes, that is his idea. It all depends on his working that out ; 
if he works it out perfectly then he gets the equivalent of the direct lia- 
bility. It is the direct liability that is the normal proper way for accident 
prevention. If you get your insurance scheme you must work it out so 
exactly as to be the equivalent of direct liability. 

The Commissioner: There is one question I forgot to ask you, I want to appeal 
to you now as an economist. Under a system such as is proposed is not 
the manufacturer, and whoever is subject to the law, a mere collector of 
the tax, and is it not collected from the whole community in effect; does 
not the tax fall ultimately upon the general body of consumers? 

Mr. Sherman: I think not; no, sir. 

The Commissioner: Why not? 

Mr. Sherman: Not if you impose it upon the employer. 

The Commissioner: He will not pay it out of his own pocket if he can help It? 

Mr. Sherman : No, not if he can help it. 

The Commissioner : He will throw it onto somebody else. 

Mr. Sherman: If he can. 

The Commissioner: Why can he not? 

Mr. Sherman: Why can he? Supposing you go ahead and tax me, if I am a 
manufacturer in Ontario, a certain price every year in my factory, I can- 
not immediately tack it onto the price of my product because that is 
governed by other things. 

The Commissioner: I am told by those who assume to speak as economists, that 
the difference in the law in the different states is a negligible factor, that 
it does not count, that in the states where they have more onerous legisla- 
tion it does not make any difference in competition with the next state 
where the laws are less onerous. Do you differ from that view? 

Mr. Sherman: To this extent, I think eventually the employer who has the 
lowest accident cost within the tariff wall territory, where he has to compete 


will work that item of cost into his price, but I do not believe that the 
man with an excessive cost will be able to do it. We have in New York, 
for instance in the machine manufacturers, two establishments which are 
very similar, one of which has an accident rate of about three or four 
times as much as the other. I think eventually the one with the low 
accident rate might probably be able to work this cost into the price, bul 
I do not believe the other one can work the cost into the price, because I 
think the lower one will fix the price. 

The Commissioxer: Can he not remedy that by reducing or changing the con- 
ditions that make his price the greater? 

Me. Sherman : That is what I want him to do ; that is the very thing. I want 
to say to him, "you cannot put that on the consumer, you have got to 
cut it down yourself." 

The Commissioner: You have just given an answer to that — his competitors 
would compel him to do that. 

Mr. Sherman : If his competitor is doing better he has got to come down to the 
grade of his competitor. What I say is, leave those employers directly 
liable and that will be the result. If you tax them roughly about the 
same there will he no inducement on the one with the high accident rate 
to cut it down. That is the general theory; I do not think there is any- 
body disputes it very much. It is the direct liability theory, and if you 
do not have the direct liability you must work out a system of exact 
differential that will effect the same result, and that is very difficult to do. 
Then at the bottom of page 63 and at the top of page 63 of the interim 
report, Mr. Wegenast says : "While there appears to have been on the 
whole, since the introduction of the English Workmen's Compensation Act, 
some diminution in the number of industrial accidents, the writers and 
investigators concur in refusing to credit this to the system of compensa- 
tion established by the act." I think that is an error. The British 
Departmental Eeport for 1910 attributes tliat to the operation of the act. 

The Commissioner: In part to the operation of the act. 

Mr. Sherman : In large part. 

The Commissioner: You read it, did you? 

Me. Sherman : Yes, in large part. Of course all the successful laws depend 
in large part also on first class factory inspection in addition; that is 
understood. I think the weight of authorities is clearly against that asser- 
tion now. 

Then he says "The German system exhibits perhaps the most striking 
results." We will not dispute that ; but he says, "A corresponding measure 
of success has attended the operation of other collective systems." From 
my studies I would say no ; I don't think that is true. I think the German 
system is an exception in the collective systems. Then the next sentence 
says: "There is absolute unanimity amongst the writers and investigators 
in ascribing to the German system an immense superiority over the English 
system in reducing the industrial accident rate." T do not think there is 


absolute unanimity. I think he is going a little too far in some of his 

The next statement is a matter of opinion only; he has as much right 
to his opinion as I to mine. '"There is every reason to anticipate for the 
act of the State of Washington a similar measure of success in preventing 
the occurrence of accidents."' I think that most all the industrial people 
who have studied that act think not; that it will not have that effect, 
because it penalizes the better employer too severely in the assessment. I 
am pointing out just a few little points. 

The Commissioner: It is not to be taken that anything you do not mention is 
admitted ? 

Mb. Sherman : Here is a perfectly fair statement, and yet it leads, I think to a 
very unfair inference : — 

''The German collective system represents an efficiency of 87.2 per 
cent, only 12.08 per cent. 1>eing taken up in expenses of administration.''' 
I do not think that is untrue, but it is not the whole truth. They do not 
represent 87 per cent, of efficiency because only 12 per cent, of employers' 
premiums are taken up in expenses of administration. There are a lot 
more expenses of administration that do not come out of the employers' 
premiums, so that when you say 87 per cent, there that is exaggerating 
considerably. ^ 

The Commissioner: You dealt with that in your paper, I think, about the 1? 
per cent. 

Mr. Sherman: Then at the bottom of page 79 and at the top of page 80, Mr. 
Wegenast is speaking about the correlation of the system of inspection with 
a view to prevention of accidents with your insurance system, and he points 
out that a collective organization of employers will have \'«ry great facilities 
in having an efficient factory inspector. He says, "The individual lia- 
bility systems provide no corresponding incentive or facilities," and "The 
insurance company has no direct facilities for standardizing machinery nor 
any means of enforcing regulations except by a threat to decline or cancel 
the policy, the coercive effect of which would be very slight." I think the 
English experience is that the insurance companies have very efficient means, 
very efficient facilities for standardizing and for inspection, and that the 
threat of refusing insurance, and on the other hand the inducement of 
lower rates of insurance, have the same effect as the corresponding practice 
in the collective. You cannot much distinguish them in that respect. Then 
on page 84, in the second paragraph, Mr. Wegenast says: "The individual 
liability system also on account of its wastefulness necessitates the pay- 
ment of insurance premiums approximately double those required to confer 
corresponding benefits under a collective system." T do not think there 
is any justification for that statement. When you get at the collective 
system on the deferred assessment basis you get very much lower rates at 
first and very much higher rates later. Probably the only difference theo- 
retically between the collective rate and the private insurance rate is the 
expense of agents' commissions in competition, and as I have contended, 
and I think it is pretty generally established, there i? not very much 


difference there; but whether there is or not it is not anything like double, 
the fact being that the English rates to-day are about the same as the 
Norwegian rates. 

The Commissioner: Everybody admits that the English rates have got to go 
up, and go up largely. 

Mr. Sherman : They have got to go up some, but you must remember that every- 
body admits that the Norwegian rates are going up, and that the German 
rates are going up. 

The Commissioner: The only exception I heard v^as from one insurance com- 
pany which said it was not so; but in all cases they have lost money and 
will have to increase the rates. 

Mr. Sherman: If you look at the figures you will find the English insurance 
companies have come very close to running it pretty nearly at a little 
profit. The French experience is much worse; all along the line, both for 
the sickness and the mutual and the private companies, they have all fallen 
behind, so that the general experience throughout Europe has been lost 
everywhere. The only people that have not made universal loss have been 
the English companies, and they arp on the average about one or two per 
cent, behind; but they are pretty close to being correct and right, and 
they have held their rates more steadily and uniformly, I think, than any 
other system. The experience in private insurance, and in all kinds of 
insurance in France, has been pretty pooir, but in England it has been 
pretty good. 

On page 86 in the second paragraph, Mr. Wegeuast says : "In Sweden, 
likewise, where there is a system of state insurance with the option of 
insuring in private companies, the State scheme has been gradually absorbing 
the business of its competitors owing to their inability to compete with it."' 
The fact is that the State Insurance Office has its explenses paid by the 
state, and the private insurance companies have to pay their own expenses; 
there are some local privileges also given to the State Insurance Offif^-^. 
Nevertheless the private insurance and the mutual insurance — the voluntary 
mutual insurance — has been pretty nearly holding its own even in spite of 
the handicap; it does not show the superiority of State insurance, it shows 
the superiority of the other. You will find that same experience in 
the Netherlands, and something like it in Italy. It is only in New Zealand 
that state insurance in competition is fair, that is it is not privileged and 
is not subsidised, and there it seems to cover about ten per cent, of the 
field. It seems to be useful and satisfactory judging from the reports 
that I get, and is neither growing nor decreasing very much. 

The Commissioner: You do not think it is satisfactory because it only gets a 
fraction of the insurance? 

Mr. Sherman: Well, it is satisfactory because it probably covers a field whicii 
is not satisfactorily covered by other forms of insurance. I do not feel 
as you seem to feel that there must be one kind to satisfy everybody. I 
believe that some people want one kind and some another kind: there is 
some advantage in variety. 


The Commissioner: But what variety is there iii an accident insurance company? 
They are all the same. 

Mr. Sherman: No, you have the state insurance, and you have the other. 

The Commissioner : I see what you mean ; it is all unanimity with accident com- 
panies, they agree. Unless an agent on the sly cuts the rate they have a 
uniform rate. 

Mr. Sherman: They have a tariff rate, hut as a matter of fact there is some 
degree of competition, and if there is a field by which any one can get 
an extra lot of territory, or an extra lot of customers, he is very likely to 
move into that tariff or no tariff. 

On page 88, in the first paragraph a little way down, Mr. Wegenast 
says: "The contract of insurance in such cases, however, assumes the form 
of an undertaking on the part of the insurance company to indemnify, not 
the workman against loss by injury, but the employer against loss through 
the enforcement of the workman's claim against him as employer." Gener- 
ally throughout Europe it is not so categorically done. The insurance is 
for the employer and the workman, and I think insurance should be 
required that way by law ; that is it should not insure the employer against 
the workman. I do not think it implies protective insurance against the 
workman so much as insurance for the workman. 

The Commissioner : Yes, but ife Mr. Wegenast not perfectly right ? The contract 
is with the employer and the contract is simply to indemnify him against 
any claim that under the law tlie workman may have against him. 

Mr. Sherman: That is the contract under the tort liability. 

The Commissioner: Under compensation too. 

Mr. Sherman: Not in the European countries. 

The Commissioner: I have not seen the form of the policy. 

Mr. Sherman : I think you will find that under the American law, or the United 
States law, they are pretty much all requiring that to run direct to the 
workman. It ought to, of course; we want to get rid of that old insuring 
against the workman. 

That about covers the "principal points. Some of these statements 
occur again and again, but you know the points I want to illustrate. I 
think the majority opinion is against Mr. W^egenast's expression in regard 
to that. 

The Commissioner: These observations you have made are supplemental to your 
written statement? 

Mr. Sherman : Yes. 

The -Commissioner: Because you attack liim in several places in the written 
statement, not directly but in your text? 

Mr. Sherman: Yes, 


Mr. C. H. Bitchie^ K.C. : There is one question I want to ask Mr. Sherman while 
he is here. Have you seen tlie report of the working of the Compensation Act 
in Washington State? 

Mk. Sherman : Yes, 1 have a copy here. 

The Commissioner: Is this the last report? 

Mr. Eitchie: It is the only report as 1 understand it. 

Mr. Sherman : This is the report that is published. 

Mr. Ritchie: How many reports have there been of the working of that? 

Mr. Sherman : As far as I know two, one for eight months and one for the 
year. This is for the year. 

Mr. Ritchie: Is that the one that appears in the Xovember issue of Industrial 
Canada ? 

Mr. Sherman : It seems to be the same. 

Mr. Ritchie : Then will you kindly tell me, Mr. Sherman, if you have any observa- 
tions to make about the circumstances under which the report was made, 
and as to its accuracy? 

Mr. Sherman : That report shows they are claiming a very low cost for the 
operation of this law. I think it is very misleading, because if you look 
here you will find they have set up reserves, that is covering outstanding 
liabilities, in only about half of the fatal accidents so far. 

The Commissioner: Do you mean half the claims allowed, or half of the claims 

Mr. Sherman: The claims made. 

The Commissioner: If it is the claims made they shouldn't do that because a 
large number would have been withdrawn and disallowed. 

Mr. SHERiiAN : Yes, but what they have done is set up their reserves solely for a 
proportion of the death claims and a proportion of the total permanently 
disabled, and they have in their balances a comparatively small proportion. 
You see their reserves would amount to about $20 per accident; they 
balance about $20 per accident. " Now, they have about fifty per cent, of 
their claims for death, and for permanent total diablement unliquidated. 
You have to have a reserve to cover that. 

The Commissioner: What do you mean by unliquidated? 

Mr. i^herman: That is the claim is simply presented and it is not adjusted, 
it is not allowed. The custom is in insurance, and particularly in the 
first year of the compensation laws, to calculate just as soon as you have 
notice of an accident the average amount which should be credited to the 
reserve against that, that is simply the more serious accidents. We find 
up here in this report that they had notice of a thousand or more accidents 
and there is no reserve for them at all, the law does not require any. 

The Commissioner: Until the claim is allowed? 


Mr. Sher3Ian : Whether the claim is allowed or not. 

The Commissioner: When is the reserve required to be put up? 

Mr. Sherman: For death and permanent disability. 

The Commissioner: When? 

Mr. Sherman : The law does not specify. 

The Commissioner: They apparently do not require it until the claim is allowed. 

Mr. Sherman: No, and they have not set them up; I am talking about the cost 
of it. When they have in their balances only the same amount about as 
they have in their reserves, and they set up reserves for only a very small 
proportion of the accidents, it is perfectly appiarent that their balances 
there are not suflBcient to cover the rest of their outstanding liabilities. 
I do not think any actuary would dispute that proposition. 

The Commissioner: But if they do not call upon the employer to put up the 
capitalized sum until the claim is allowed is your criticism not rather 

Mr. Sherman : It is perfectly fair. I am not questioning the fairness of it. 
I am questioning the fact that they are claiming that they can furnish 
this insurance at the present rates, and that I do not think that is right. 
The present board is all mixed up; two of them, I tliink, went dijecijly 
against one, or one against two, but they are involved in a good deal of 
trouble at present. They are not doing anything very morally wrong, I 
do not mean to say that; but I mean to say that the attractiveness of this 
scheme to the employer is made to appear very much better than it really 
is. Another thing I dislike about this is the statement of what is known 
as the Chehalis explosion. They stato what might have been, or as it 
would have been under certain other conditions, instead of reporting the 
fact very definitely. I have been writing to them as to that case, and 
the attorney for the Dupont Powder Company tells me an absolutely straight 
story which contradicts the story of the Washington board. I cannot take 
their statement. I do not know which is correct, but I would like to see 
that board report the facts about that accident as they have investigated 
it, and the calculations they have made. In other words they ought to 
report that frankly and candidly, and I do not think they have. I think 
that is a fault in that system of insurance. If you look at the report of 
the private companies as they are required in the United States you will 
find instead of a sheet like that there are about sixteen pages, very large 
pages, from which any one with any knowledge can calculate very exactly 
the operation of the law, and the cost, but this is simply a very partial 

The Commissioner: I should have thought those sixteen pages would so bury 
it up in words that nobody but an expert could find out what it meant. 

Mr. Sherman : Well, that is true, but no expert can find out what this means, 
and the unexpert thinks he knows, and that is the trouble. In the other 
case he knows he cannot know. 

Mn. Eitchie: In your opinion that report is misleading? 


Mr. Sherman : Yes, I think it is. 

Mr. Ritchie: Does it in your opinion furnish any fair basis of comparison with 
the cost under other insurance systems? 

Mr. 'Sherman: No, you cannot compare that with anything; there is not a 
basis of oomparison. 

Mk. Ritchie : Then one more question : I see stated in an article here by Mr. 
Wegenast, at page 743 of the December number of Industrial Canada, "It 
has been practically certain all along that some form of workmen's com- 
pensation act would be introduced in Ontario at the coming session. The 
only question was as to the form which the legislation should take. Should 
it be an act such as those in force in England and in some of the provinces 
of Canada, for instance, British Columbia, Quebec and Manitoba, where 
the liability is imposed directly upjon the individual employer, or should 
it be an act based upon the mutual insurance principle as in Germany and 
the State of Washington? Upon this question the manufacturers have 
given a decided answer. If there were no other ground of preference the 
fact that the plan favoured by the liability companies would cost employers 
two or three times as much for the same scale of benefits would surely be 

Now, does your experience as to the cost with liability companies com- 
pare with mutual companies or state insurance? 

Mr. Sherman: I do not think there could be anything like that possible. My 
own opinion is that the voluntary mutuals sometimes get rates down a 
little lower than private companies, and other times the private companies 
get the lowest rates in the long run. I do not think the collective system 
has ever succeeded in getting down the cost quite as low. 

Mr. Ritchie: How? 

Mr. Sherman : Not quite as low in the long run. 

SIr. Ritchie: You think the ordinary liability companies, all things being equal, 
would give insurance rates just as cheap ? 

Wr. Sherman: I think about as cheap, yes. 

Mr. Ritchie: I do not know whether you were asked the question, but what 
is the consensus of opinion, if there is any consensus, as to state insurance 
as opposed to ordinary insurance in mutual and liability companies? Is 
there any great preponderance of opinion? 

Mr. Sherman : There are so many different aspects of that. As I have said I 
think from the accident prevention standpoint the expert opinions are 
almost unanimous against state insurance. On the other side on the ques- 
tion of cost of administration opinion is divided, about evenly divided, I 
should say, according to the person's predilection and political ideas and 
things like that. 

The Commissioner: Mr. Ritchie has used a terra there that has many meanings 
as popularly used, "State insurance." What do you mean by State insur- 
ance? All kinds of things are denominated State insurance. 


Mr. Shermax: WTien I am speaking of it I mean wliere the State manages the 
fund, whether it guarantees the fund or not. 

The Commissioner : You call that State insurance ? 

Mr. Sherman : I do, yes. If you want to distinguish very closely, of course 1 
would distinguish. • 

The Commissioner: Because it is in no sense state insurance where the state 
simply manages the fund and is under no liability. 

Mr. Sherman: That is not strictly State insurance, Jio sir. 

The Commissioner: Have you any questions to ask, Mr. Wegenast? 

Mr. Wegenast : I have not anything to ask but there are number of observations 
that I might make. I perhaps ought to thank Mr. Sherman for affording 
me such a large field for observation, but I am afraid the time would be 
too short to enter into the subject. So far as Mr. Sherman expresses his 
opinions I would be disposed to give every consideration because of the fact 
that he is representing a cause which I cannot regard otherwise than as lost. 
So far as he has ventured on statements of fact the time will be too short 
for me to deal with it. I want to make this statemeiiit, however, as 
uncritically as I can, and with a view, and realizing it may appear dis- 
courteous to a stranger, that the misstatements of fact which Mr. Sherman 
has made are both many and serious, and if it is important that they 
should be contradicted or dealt with I desire to have an opportunity of 
doing so. I hope you will give me also an opportunity of dealing with 
the brief that was filed by Mr. Wolfe. 

The Commissioner: If you do not take too long to do it. 

Mr. Wegenast: There is the trouble. These gentlemen come here and make- 
statements, statement heaped upon statement, and unless one has a little 
time to analyze them it is impossible to meet them, and they may go 
uncontradicted, and the most absurd of them perliaps may do the mosi 
harm because uncontradicted; it is very difficult to select from amongst 
them. I hope to have an opportunity of doing what I can in that respect. 
The statements Mr. Sherman has made with regard to tlie Washington 
system are perhaps illustrative of what I am referring to, and I ought to 
thank my learned friend, Mr. Eitcliie, for giving me an op|)ortunity of 
making these observations. The observations which Mr. Sherman has 
made are characteristic of the observations which both Mr. Sherman and 
some other representatives of liability companies have been making in 
different parts of the United States Avith regard to the Washington system. 
It so happens I spent a week in the State of Washington only a month 
or six weeks ago, and I think the last two columns of that Washington 
report were put in at my suggestion. The report was ready at the time, 
and I said to the auditor "you would give us a very valuable basis of 
comparison between your rates and the rates of the liability companies 
if you won hi work out these rates on the pay-roll.'' They have not given 
tlie pay-rolls, but I should hardly venture to think that there could be 
any mistake in the figures. The first reflection of course is that they are 
perhaps only one third or one fourth, or jXM-haps as low as one fifth, of the 


average rates of the liability companies under systems giving very much 
smaller benefits; but passing that, I want to refer to what Mr. Sherman 
has said with regard to the reserves on death claims. The Commission 
has issued every month — not only at the end of six months or eight months, 
but every month — a statement showing the position of the fund, and in 
the other statement*; up to the eleven months' statement they have a column 
showing the number of deaths, and the number of deaths in which there 
were claims paid to dependants. I remember in the eleven months' state- 
ment (speaking subject to correction, but I think it was the eleventh 
month statement) the number of deaths in the lumbering industry, the 
largest industry, was 33; the number of deaths requiring no compensatiou 
to be paid to dependants was 29. The matter is absolutely clear to Mr. 
Sherman or to any other actuary why there are not larger reserves. The 
whole basis of the capitalization under the Washington system is a capital 
amount of $4,000 set aside in case of any death where there are dependants. 

The Commissioner: Why did that table not show the number of deaths in which 
there would be claims? 

Mr. Wegenast: They did in the former tables. 

The Commissioner: It ought to have been there. 

Mr. Wegenast : If Mr. Sherman had seen the eleventh months report, or even 
the six months report, he would not have made the observations he has 

The Commissioner: When do you understand they require the capitalized sum 
to be paid in? 

Mr. Wegenast: There is no capitalized sum paid in. It is calculated in the 
rate; it is all made up in the rate they assess in the first place. 

The Commissioner: In Ohio that is the capitalized sum? 

Mr. Wegenast: No, they have a capitalized sum of $i,000, but this is taken care 
of in the rate. They assess in the first place a three months' premium 
based on the schedule of rates. Wherever that fund was sufficient to carrv 
them through the whole year providing for capitalization and all, 4io further 
assessment was made. As soon as it was necessary in any group to make 
a further assessment a further assessment was made, but these assessments 
were sufficient to set aside the necessary reserve funds, based on a capitaliza- 
tion of $4,000 in case of death. I do not think Mr. Sherman would venture 
to say that the liability companies are in the habit of capitalizing a death 
claim at $4,000. The capitalization under this system is surely ample as 
compared with the liability system, and there is absolutely no foundatiou 
for the impression which Mr. Sherman seeks to make that this reserve is 
not sufficient. If it is insufficient, if $4,000 is not a sufficient reserve 
fund basis in the case of a death claim, then of course it is all the harder 
on the liability company. I hope to have an opportunity, Mr. Commissioner, 
within a week or ten days to say something further. 

The Commissioner: If Mr. Sherman cares to do so T think he should answer- 
that observation now. 


Mr. Sherman : I think Mt. Wegeuast shows they have sufficient reserves to cover 
the death claims allowed, but death claims are a very small proportion of 
the compensation outstanding. All their other balances do not duplicate 
the reserves for death claims. I do not believe that that shows for a minute 
that they have collected the total amount of their accrued and outstanding 
liabilities. In other words I am positive in my opinion that they are not 
paying their indebtedness, but that they have an uncovered outstanding 
indebtedness in addition to that balance, in addition to their reserves. 

Mr. Wegenast: That is getting away entirely from the point we are discussing. 
We have got away from the reserve fund as against the death claims. When 
you come to the other feature, the running claims, the claims for injuries 
which last three, four, or five months, then due allowance must of course 
'be made of those claims which will run into the new year, but at the 
same time you must off-set against that the overlapping claims under th ■ 
old system before the act came into force. You must make allowance for 
a fact which I ascertained there, that in a great many industries they did 
not find out that there was an employer until one of his employees wa> 
injured. Then the employer rushed in with his premium, and the em- 
ployee got his compensation, showing plainly that a great deal of insurance 
was not paid for. That condition of things will, of course, be remedied 
very shortly; it was incidental to the beginning of the system. Setting 
those factors off against the deferred claims, while we may not have a 
perfect balance we will at least have somewhere near an approximate 
balance. Then there is room for those rates to be doubled before they 
will approach the rates under the ordinary systems which represent a much 
more modest scale of benefits than that afforded by the Washington act. 
The Washington act gives the largest scale of benefits of any system in 
the world. 

The Commissioner : What do you mean by providing for claims for injuries 
before the act came into operation? 

^Ir. Wegenast : There will be a great many people who are not sufficiently in- 
formed as to the act. It takes a while for the act to come into operation 
and for people to know what their rights are under the act, and I have 
no doubt a great many claims during the first few months of the operation 
of the act would go unpaid. 

The Commissioner: I understand you to mean claims before the act came into 
operation at all. T didn't see how that could be. 

Mr. Wegenast: That condition of things is incidental to the beginning of the 
act, and I look for a slight increase next year unless it is counteracted by 
the very strong campaign which the Insurance Commission is conducting 
in favour of accident ])revention. T was going to say T hoped to have 
Mr. Hinsdale, the Chief Auditor of the system, before you, and I hope the 
representatives of the liability companies will do him the courtesy of 
attending and criticising what he says. 

^IR. Sherman : The only thing, it seems to me from what Mr. Wegenast says, 
they are carrying on the scheme on a deferred basis for all injuries excepting 
death injuries. I do not think that is understood, and I think if they are 


going on that basis they are going to find out not only next year tlie rates 
will go up very much higher, but the tliird, fourth, fifth, sixth, seventh and 
eighth year rates will all go higher on account of the accumulated pensions 
tliat will be rolling up. 

Mr. Wegexast: I must correct Mr. Sherman and say he is entirely in error 
when he assumes there is a reserve fund only in case of death claims. 
Where the injury is only temporary, such as the loss of a finger or a hand, 
the payment is in a lump sum. Where the injury is permanent and total 
there is a sum of $4,000 set aside. Where it is permanent but not total 
there is a less sum set aside, and it is all provided in the act. The idea under 
the Washington act is to capitalize fully; it is not on a deferred payment 
basis in any sense of the word. The only way in which any claims can 
be deferred is in the first year where the claims are not all brought in. 
I understand that during this year they have got the people of the state 
educated up to the ptoint where the claims come in very promptly, within 
a few days. It is very improbable that there are deferred claims amounting 
to any considerable sum. 

The Commissioner: Where are the figures with respect to these things? 

Mr. Wegexast : They are included. There is a reserve set up in the woodworking 
industry of $1,100.91. That plainly could not be a death claim or it would 
be $4,000. That must be a permanent partial injury claim. 

The Commissioner: I thought your idea was that these reserves only accounted 
for nineteen fatal cases? 

Mr. Wegenast: I am speaking only of the lumbering class, which had the largest 
number of deaths; I think about half the deaths occurred in the lumber 

The Commissioner: Are not the figures of the claims allowed something like 
6,595 ? 

Mr. Wegenast: Yes. Mr. Hinsdale, the auditor, wired me yesterday that he was 
equipped with full reports. This is only a sketch which was gotten out 
a few days after the close of the year, showing in the rough the results. 

The Commissioner : If there were seven thousand claims and you are right about 
the way they are providing a reserve out there, the reserve would be a 
good deal larger than that statement shows. 

Mr. Wegenast: The reserve is $243,000. 

Now, Mr. Wolfe stated, and I think in that res|)ect perhaps he was 
correct, that in approximately 84 per cent, of the accidents the 
injury does not last beyond the thirteenth week. That of course doe'* 
not represent the proportion of the cost at all. On that basis this state- 
ment looks very plausible. In regard to the deaths in the lumber camps 
that is capable of explanation. In the lumber camps a good many of the 
men are single men and have no dependants and float around the country 
and around the world with nobody particularly depending upon them, an-l 
it is quite possible that in the majority of cases there would be no claim; 
all they would need to do would be to bury the man. and there would be 


no necessity for setting up a reserve fund. That is only an example of 
scores of questions of fact into which I would like to enter if it were 
considered necessary. 

The Commissioner: I think it is quite likely we will have to wipe out all these 
experts on both sides and trust to common sense. 

Me. Wegenast: I have dealt with all these things in my brief, in anticipation of 
this belated appearance. As far as Mr. Sherman's observations on my brief 
are concerned, I would like to say that I am prepared to stand by every 
word of it. I was particularly careful not to include anything in my 
brief, either by way of statement of fact or of opinion that was not sub- 
stantiated by authority. 

The Commissioner: Mr. Eitchie, I think it would be just as well, if you can. 
if you would show us how these insurance companies provide reserves. 

Mr. Eitchie: That can be done. 

Mr. Wegenast: If you will permit me to go a little further, I want to venture 
the statement here, realizing its gravity, that I doubt whether there is a 
liability company in the Dominion of Canada to-day that can meet its 
obligations in respect of liability insurance that has not mortgaged the 
future to some extent. 

The Commissioner: What do you mean by liability companies? 

Mr. Wegenast : Liability insurance companies. I want to venture the statement, 
without professing any knowledge of the internal conditions of these com- 
panies but with the perfect willingness to establish it by the authority of 
actuaries, that there is not a liability company in business in the Dominion 
of Canada to-day that is prepared to meet its obligations. There are com- 
panies which have reserves derived from other lines of business who are 
able to meet their obligations, but I want to express in the plainest possible 
terms my belief that there is not a liability company that is prepared to-day 
to meet its obligations, and I would like to have tlieir ^^tatemcnt upon 
that point. 

Mr. Eitchie: Of course that assertion is denied. However, ^Ir. Commissioner, 
as you suggest I will have a statement prepared. 

The Commissioner: I would like to ask one question more, Mr. Sherman. If it 
is a fact that a large majority of manufacturers, perhaps the great bulk 
of the manufacturers, of this province desire the establishment of a law 
such as is discussed in that report, how do you account for it? 

Mr. Sherman: Well, you are assuming something. 

The Commissioner : I do not know whether the hypothesis is correct or not : 
assuming it to be so, how would you account for it? 

Mr. Sherman: I think thoy have been attracted by the idea that it is going to 
be very cheap and would defer the cost to future generations as in Germany. 
I think that would be so with a good many. As I do not myself find 
many manufacturers who have studied this subject desire anything of the 
kind, T am a little bit doubtful of the hypothesis. 


Mr. Wegexast : I understand Mr. Sherman advocates the Michigan act, and I 
would like to ask Mr. Sherman what observations he has to offer to this 
article from the Westei'n Underwriter, a paper I think of some standing in 
insurance circles. It is headed "Want law repealed": — 

"That an attempt will be made to repeal the Michigan Workman's 
Compensation Law, is the report that has gained considerable currency 
out in the State. The manufacturers are at the bottom of the move. Those 
in the smaller cities cannot reconcile themselves to the big hoist in rates 
which has prevailed since the law became effective. In Detroit, thus far, 
there has been no talk of repealing it. The manufacturers seem to have 
accepted it as one of the steps of modern progress and are adjusting their 
affairs to meet it. The manufacturers who are agitating for a repeal are 
charging that the casualty companies were the chief lobbyists in favour 
of the law when it was passed. The casualty companies deny this saying 
they did not favour it at the time, but have accepted it and are doing their 
best to live up to it." Then out in the State it is claimed that the com- 
pensation rates are being cut from 25 to 35 per cent. Then it goes 
on under' the headings "Crooked Attorneys Busy," "Kiddles State Plan." 
The liability companies are getting back at the commissioner who 
was appointed under the Michigan act and who is now advocating the 
establishment of a State system. The liability companies are getting back 
at him and riddling his plan. Then the next heading is, "Many Entangle- 
ments," showing the whole system in the State of Michigan after a year's 
operation is one of indescribable chaos. 

Mk. Ritchie : I was wondering who paid for that. 

Mr. Wegekast: Oh, this is an insurance journal published in the interests of 
insurance companies. 

I understand, Mr. Sherman, you recommend the Michigan system of 
workmen's compensation. Have you any observations or any explanations 
to offer upon the situation in the State of Michigan? 

Mr. Sherman: This newspaper report simply gives an account of a good many 
different feelings and troubles down in Michigan. The Michigan law 
has not been in operation very long and it is meeting some of the difficulties, 
but I do not see all that the German law has got up against, and all that 
the foreign laws are up against. I would never want to be understood 
as saying that the employees or workmen or anybody is satisfied with any 
law that I have ever seen in operation. They are all more or less dis- 
satisfied. I have been in different parts of Michigan, and the employers 
are forming some mutual associations. The general opinion I found there 
was that, the law from the employers' standpoint had increased their cost 
exceedingly; they had the same feeling about that increase that they had 
in England, as I mentioned, and that they have everywhere. In spite of 
some criticisms amongst the insurance people that the State insurance 
Commissioner, who is authorized to manage things in his State office, has 
been campaigning around the State for business, and has been conducting 
a regular campaign for business — that is competitive. I rather believe in 
it myself — ^but the insurance companies are calling names at him and he 
is calling names at them; that is very good for both sides and will have a 
chastening effect. I don't know of anvthing else that I can sav. 
17 L. " 


Mr. Wegenast: I would make this final observation. I do not suppose there is 
any use asking Mr. Sherman questions about it, but I want to make the 
statement that in comparison with them I found after promiscuous inquiry 
throughout the State of Washington that there Avas not a single employer, 
employee or member of the general community, who had any fault to find 
with the Washington system or the general principles under which it is 

Mr. MacMurchy: Are you referring to the Dupont case? 

Mr. Wegexast : I want to tell Mr. Sherman that the Dupont people had written 
out a cheque for the amount of their premium when the news came of 
the Chehalis disaster, and that they have been negotiating and dickering 
with the State Insurance Department since that time to try and get the 
Insurance Department to let them come in after the Chehalis disaster. 
There are further significant facts in connection with that. I mentioned 
one fact at the last sitting, that notwithstanding that tremendous catas- 
trophe if the Dupont people had paid their premium the rate would have 
been only about five per cent., showing that the catastrophe hazard is a 
bug-a-boo which the insurance people are trying to make a great deal of, 
but which in reality does not amount to a very great deal. I want to 
make this qualification. I said there was perfect satisfaction with the 
principles of the Washington act. I want to say this, that notwithstanding 
this act offers the largest scale of benefits of any system in the world the 
workmen were asking for more, and I think that is a condition that we 
can hardly expect to cope with. At the same time I want to make that 
qualification so as to keep myself absolutely correct. 

Mr. Hellmuth : May I ask if Mr. Wegenast will let us have copies of those reports 
before Mr. Hinsdale is called? 

Mr. Wegexast : He said he would bring the reports with him. There will not 
be any prints; I think the telegram said he had only proofs of them to 
bring. I would be very glad to facilitate my learned friend if I could 
do 60. 

Mr. Baxcroft: Mr. Commissioner, the elaborate statement that Mr. Sherman 
has given us appeals to us the same as it does to Mr. Wegenast; it needs 
a good deal of answering. There is a great deal in it with which we do 
not agree and which we believe is not correct. In the first place with 
regard to the National Civic Federation, of which Mr. Sherman speaks, 
Mr. Mitchell, who was a member of the National Civic Federation and 
who is organizing the United Mine Workers of the world consisting of a 
quarter of a million members, was more or less compelled to withdraw 
from that body.. I met Mr. Mitchell about two weeks ago in New York; 
he had been over in Washington in the summer and had been taking a. 
great deal of interest in the Washington act. He assured me that the 
Washington act was working splendidly and that it was a good act, and 
as far as he knew no complaints could be made against the administration. 
I also met men in New York who were part of the original conference, I 
believe they were on Mr. Sherman^s committee ; there was Mr. Gernon. 
I think he was Chairman of the original conference in New York on 


workmen's compensation, and they have met the Civic Federation at 
dinerent times. 

Mr. Sherman: They are members. 

Mr. Baxcroft : Their declaration is for state insurance. 

Mr. Shermax : They are out now for state insurance. 

Mr. Baxcroft: They have taken the same position as we have done here with 
regard to the state insurance plan. So you see Mr. Sherman's statement 
needs a great deal of answering, and some of the statements that Mr 
Sherman has made need qualification. We would like to iook over his 
brief for the purpose of answering it if they will furnish us with a copy. 

Mr. Hellmuth : We will certainly furnish you with a copy. 

Mr. Baxcroft: We rather feel, whether it is right to say it or not, that Mr 
Sherman's opinions largely reflect the opinions and maybe the desires of 
the great accident insurance companies of the United States; that is the 
impfression that I gained from my visit down south. We find there is a 
great deal of difference between Canada and the United States in this 
respect, that m Canada the Canadian Manufacturers Association is well 
organized, and the accident insurance companies, as far as I can find out 
are not organized. In the United States, particularlv in the State of 
Xew York, it is altogether different. The manufacturers are not very 
well organized and the accident insurance companies are well organized 
It IS these latter, the companies, who are putting up objections to state 
insurance; the fact is very plain to us, and I suppose to every one ejse. 
Like Mr. Wegenast, I am convinced from the information I have gained 
that the Dupont Powder Company explosion is merely being used bv the 
accident insurance companies as an argument against the AVashington act 
while those who are administering the Washington act hardly regard it 
a^ of any importance whatever. I have information similar to what Mr 
Wegenast has given us, that the Dupont Powder Company was on the eve 
of coming into the scheme. It would have cost them very little if they 
had got m beforehand, and they wish they had got in before the explosion 
Happened. I believe I have some knowledge of those matters, but as I eav 
you cannot just offhand reply to a brief or to a memorial such a^ Mr 
Sherman has presented. 

The Commissioxer: Are there any questions you would like to ask? 

Mr. B^^xcroft: Yes. Is it not a fact, Mr. Sherman, that the Xational Civic 

latioT^ ^'' ^'^'^'''^ ""^ ^ ^'^^ "^^'"^ ^^' ^^' '^ ^^j^^^ ^"'-^^^^^ ^^^'- 

Mr. Shermax : Xot that I know of. 

Mr. Bancroft: Have they not got an idea, and are they not trying to spread the 
theory that under workmen's compensation it will be far better to allow 
the accident insurance companies to do the insuring and the State o-uaran- 
tee the insurance company? * '^ 

Mr. Shermax: I have never heard of that specially. It is the British and Belgium 


way. I have never heard of that. What happened was along about 1911, 
or 191U, the Civic Federation drew up a bill, or a draft of a bill, for a 
compensation law which was circulated throughout the United States, 
advocating compensation laws. I do not believe anybody in the Civic 
Federation ever heard of any accident insurance companies at that time. 
That followed along the lines of the British law. The Federal Commission 
rather followed that; and Kansas and a few other States. Recently the 
Civic Federation has been trying to bring that draft down to date in view 
of the general experience, and circulate it simply as a basis for any form 
of laws adapted to the different states, without taking any particular 
attitude — a basic frame work. In New York State we have had conferences 
in which a great deal of difference of opinion has Been developed : I think 
we are now getting pretty close together. You know the American Federa- 
tion of Labour has been right back of the Civic Federation. 

Mb. Bancroft: Is it^ot a fact, as you have mentioned here where the National 
Civic Federation is not understood, that it is rather a debating society? 
That is nearer correct? 

Mr, Sheriian: That is substantially correct. They do not bind anybody. 

Mr. Bancroft : They do not represent anybody but themselves in the Federation ? 

Mr. Sherman: They are representing themselves. 

Mr. Bancroft: For instance, Mr. Gompers represented Mr. Mitchell, but not in 
the Federation? 

Mr. Sherman: No, there is no delegating at all. 

The Commissioner: Then it is understood that Mr. Bancroft and those associated 
with him may put in a written statement in answer to that. I understand 
he wishes to answer Mr. Wegenast as well? 

Mr. Bancroft: Yes, we are coming in a little later. 

The Commissioner : You must not leave it too late. 

Mr. Bancroft: If they keep on calling experts we will never get a chance. 

The Commissioner: I suppose the great body of the people want to get the 
best law, both employers and employees. No man of course, wants to be 
put out of business if he can help it. « 

I understand there is a gentleman from Berlin who wishes to speak. 

Mr. J. A. Scellen: Mr. Commissioner, a short time ago there was a cir- 
cular letter sent out by one of the large private liability insurance com- 
panies setting forth very skilfully the arguments in favour of private 
liability insurance in preference to a government administered system. 
The arguments advanced in that letter were such that no doubt many 
employers of labour were induced to give a favourable answer, because the 
form of the letter and the arguments used were, as . we think, somewhat 
unfair. The letter, after reciting the proposed legislation, amongst other 
arguments sets fortb : "State insurance is a movement towards paternalism 
of Government, more far reaching than any economic measure heretofore 
proposed. The adoption of such a plan commits you to a principle, which. 


if carried to its logical conclusion, means that any or all commercial indus- 
tries may properly- be conducted by the Government to the exclusion of 
private enterprises. It is for the Government to decide as to what form 
of legislation to place on the statute books in respect to compensation to 
injured workmen. That is one thing, but for the Government to arbitrarily 
fix the rates that the employer must pay for his protection is, I think you 
will agree with me, taking away your inalienable right to purchase your 
insurance, or protection, at the lowest possible cost." Then further it 
advances reasons, and winds up: "May I ask your replies to the following 
queries: Do you approve of that much of the proposal, viz., state insurance? 
Or are you in favour of continuing the present conditions whereby you 
may carry your own risk, or purchase insurance from companies properly 
qualified for that business?'' 

Now, many of the employers of Waterloo county, Berlin and Waterloo, 
from which I come, received that circular letter, and in order that there 
may be no mistaking the feeling among those employers and manufacturers 
I was sent down here to-day to say to you, Mr. Commissioner, that they 
are practically unanimous in opposing any privately conducted liability 
insurance, and that they are strongly in favour of a system administered 
by the Government. They have incorporated those views after a discussion 
of the principles, and have a petition signed, as I say, by practically every 
employer in Berlin and by many in the town of Waterloo. Not only have 
the manufacturers and employers expressed themselves to that end, but 
also the Trades and Labour Council of Berlin, which had this matter under 
discussion. The Trades and Labour Council represents all the trades and 
labour unions in that city, and have passed a resolution expressing in the 
same way their preference for a system of insurance administered by the 
Government. Those are the views, practically without dissent. There 
was a follow-up letter later on in which they referred to the former letter, 
stating "Will you be good enough to let me have your views on the subject, 
or if you have been unable to form an opinion, then a letter to that effect." 

The Commissioner: Did any of the gentlemen sign this petition? 

Mr. Scellen : No, but I understand there were two or three misled by the letter. 
They did not understand it and were led to answer favourably. 

The Commissioner: I have seen something of that kind emanating from an 
insurance company, with, I think, the initials "A. L." 

Me. EiTCHiE: Will you allow me to answer this, Mr. Commissioner? 

The Commissioner: Certainly. 

Mr. Eitchie : Some time ago representations were made to some of the casualty 
companies that this petition that was sent in by the Board of Trade did not 
represent the views of the manufacturers but rather elaborated the 
personal views of Mr. Wegenast who was retained by a committee that 
was appointed, and who was retained to collect evidence and make a report. 
It was also pointed out, or at least represented, that some of the members 
whose names appeared as members of that committee were not present 
at the discussion. Others subsequently said that while they did discuss 
the question of workmen's compensation, all agreed that the feature 


as to state insurance had not been brought forth prominently and 
had not been discussed, and that this petition really presented the 
views of Mr. Wegenast rather than the members of the committee. Having 
heard that, this particular circular to which Mr. Scellen refers was sent 
out ; I will not i-ake up your time in reading it because it is going to be put 
in. I submit there is no justification in the statement that anything 
appearing in that letter was of a misleading character, "May I ask your 
replies to the following queries : "Do you approve of that much of the 
proposal, viz., State insurance? Or are you in favour of continuing the 
present conditions whereby you may carry your own risk, or purchase insur- 
ance from companies properly qualified for that business? I shall be glad 
if you will let me hear from you at the earliest possible moment :" it seems 
to me it could not be put more clearly than that. 

The Commissioner: That is not what Mr. Scellen is complaining about. It is 
the statement of what the proposition involves. 

Mr. Ritchie: I submit there is nothing objectionable in that. 

The Commissioxer : It is wholly inaccurate ; that is all there is objectionable 
in it. 

Mr. Ritchie : Well, I have not read it recently, but if you will point out what 
is inaccurate? 

The Commissioner : Everything in that statement is inaccurate. 

Mr. Ritchie: "You are no doubt aware that a Royal Commission has been 
appointed by the Ontario Government." That of course is not. 

The Commissioner: No. 

Mr. Ritchie: "The Commissioner, Sir William Ralph Meredith, is now visiting 
England and the continental countries to investigate on the ground the 
systems in operation in these countries." That, of course, is not inaccurate. 
"A plan may be proposed by which all workmen sustaining ]Dersonal 
injuries by accident arising out of and in the course of their employment 
will receive compensation irrespective of who are to blame. A workmen's 
compenfiation act of such a nature would be only similar to those adopted 
in the other provinces of the Dominion as well as in England. There is 
a suggestion in the interim report of the Commissioner, that the manu- 
facturers of the Province of Ontario are favourable to a scheme of state 
insurance. The details, of course, are not disclosed, but the scheme would, 
I imagine, be operated on an assessment plan." I do not see, Mr. Com- 
missioner, that you can find any objection up to that point? 

The Commissioner: It is not State insurance at all; that is a misleading state- 

Mr Ritchie: It says "there is a suggestion in the interim report," I think 
that is the inference I would read. 

The Commissioner: State insurance is an entirely different thing. It is simply 
the management by the state of a fund provided by the employers to 
compensate the workmen for the injuries Avithin the scope of the act, 

WiMHvMKN'S r()Ml'i:.\SArH)\ rOM MISSION. 243 

wliK'U 1;; an eiuiroly diireivni ihiiig, and in no way optMi U) llu ultjt'ction:; 
thai sooni to undorlie thai statement. 

Mk. Kitchik: 1 daresay the dittienlty is, induing from the replies, that none of 
them seems to understand what Stale iiisuranic really means. 

•'State insurance is a movemeni towards paternalism of Government, 
more I'ar-reaehing than any eeonomie measure heretofore proi)Osed. The 
adoption of sueh a i>lan eommits you to a principle, which, if carried to 
its kigical conclusion, means that any or all commercial industries may 
proivrlv l>e conducted hy the (ioverninent to the exclusion of private 
enterprises. It is for the Ciovernment to decide as to what form of legis- 
lation to place on the statute books in respect to compensation to injured 
• workmen. That is one thing, hut for the Government to fix arbitrarily 
the rates that the employer must pay for his protection is, 1 think Vcm 
will agree with me, taking away your inalienahle rights to purrhase your 
insurance or protection at the lowest possible cost. Any legislation that 
will eliminate law costs and provide adequate compensation to the injured 
workmen will l)e gladly welcomed by the insurance companies. Let the 
Government ])ass smli an act. anil if neces>ary see that the liability 
companies are subject to the closest Government inspection so that 
no injustice may be done the em])l()yer in the fixing of rates, and 
I think it will be found that there will be a better feeling between 
the employer and the employee than if arbitrary rates are fixed by the 
Government under a syston of State insurance and injured emj>l(>vcc< are 
compelled to look directly to the Government for compensation." Then 
it goes on '"^May I ask for your replies?'"' 

That letter was sent out. ^'ery shortly after there was sent out. as 1 
have understood, by Mr. Wegenast a letter in which he said that a circular 
letter was being sent out by the Employers" Liability Company asking for 
answers to certain questions and stating that the circular was very mis- 
leading in its statements, and for them to ignore the circular letter, or 
at any rate to examine into the provisions of the proposed act before 
condemning it. I am instructed that there were probal)ly about fifteen 
hundred letters sent out, or in that neighborhood. Li answer to these, 
before apparently Mr. Wegenast's circular was received by them, eight 
hundred and ninety-two replies were received, and in these a number of 
employers, 70 or 80 per cent., favoured State insurance. The numlter of 
employers favourable to the present system of purchasing insurance from 
companies qualified for that purpose was 43 per cent. Then there were 
49 per cent, of the eight hundred and ninety-two v.dio saiil they had not 
given any consideration to the question and were not prepared to give 
any opinion. 

The Commissioxer : I suppose that was a polite way of saying -'Mind your own 

Mr. Eitciiie: "Well, you many construe it in that way: the fact is. as thev sav 
that they have not given it consideration. The names of these people are 
all given; the letters are all here; and my learned frier.d ^Ir. Wegenast 
may compare, if he de-sires to. the letters with the tabulation that we have 
made of them. At all events it shows in three hundred and eiirbtv-four 


cases these employers have written to say they are in favour of the present 
system of buying their own insurance. 

The Commissioner: I should have thought it was a very injudicious circular 
to send out. If they wanted an honest opinion as to this they would have 
said what was proposed; but to load it up with irrelevant and inaccurate 
statements as to what the scheme was, and what the consequence would 
be. It was, I think, very ill-advised, if I have a right to express any 
opinion upon it. 

Me. Eitchie: I have read the circular which was sent out in full. I did not 
scrutinize very carefully what was in the interim report, but it seemed 
to me having asked the question in that way, and the replies to these queries 
being as they are, that that was a matter that might very well be taken 
into consideration. At all events the gentleman who sent it out was led to 
believe tkat the Canadian Manufacturers were not by any means unanimous, 
and as I have said the committee were not -unanimous, and they thought 
they would get an expression of opinion. 

The Commissionbr : This has been going on for months, and Mr. Wegenast has 
been here expressing their views; if he were not expressing their views 
correctly, I should think that as business men they would soon be here 
to tell me so. 

Me. Eitchie: We had bo instructions in the matter until long after you had 
made your interim report, and these gentlemen thought it was a fair 
way of finding out whether this scheme was upheld by them. It is for 
you, Mr. Commissioner, to say, to express your view. 

Thb Commissioner: First my idea was. Can I propose a scheme that is economi- 
cally sound and workable? If I can, and that is acceptable to the body 
of the employers and to the body of the workmen, I think the employers' 
liability companies and insurance companies are a negligible quantity. 
What have they to say about it? 

Me. Eitchie: Quite so. I understand you will say they are self-interested; but 
any argument they can adduce for the purpose of showing that what is 
proposed is not economically sound, is not just, and would not be workable, 
that is perfectly fair ground. 

They agree, of course, with the view that there should be a workmen's 
compensation act ; and as to the details of it, that is for you, sir, to work out. 

The CoMMissiaNER : I would like it to go out from this commission that if there 
is any member of the executive committee of the Manufacturers Associa- 
tion, or any individual member of that Association, who repudiates or 
is dissatisfied with Mr. Wegenast's representation of what their attitude 
is, that they shall notify me in writing. That perhaps will test whether 
M^r. Wegenast does represent them. I would have thought when there has 
been no protest from anybody that was the best indication that he was 
representing those for whom he assumes to act, and representing their 
views. Whether they are right or not is another question. 

Mr. Bancroft: I do not know whether it is tlie fact, but I would like to ask 
Mr. Eitchie. I understand after consulting an actuary in Xew York in 


wliom I have some faith, that the reason that the insurance companies were 
in this position in Great Britain was that the stock-holders were not making 
any money and that the insurance companies were not a paying proposition; 
that the reason they always opposed state insurance was from this stand- 
point, that the managers, superintendents and the field force did not want 
to be put out of their positions, and so there was great opposition. 

The Commissioxer : They ought to form a union. 

Mr. Baxcroft : I submit that is the object of the opposition. 

The Commissioner: It is human nature. 

Mr. Ritchie: It is human natuje: I am not going to controvert that position 
at all. 

Mr. Bancroft: I submit if that is the reason for the opposition of the insurance 
companies they should say so, and not attempt to speak for the Manu- 
facturers Association, who have spoken for themselves. That information 
seems, I say, to be somewhat reliable. The accident insurance companies 
ought, I think, to show us how to 'draw up an act which is better than 
the one which has been proposed instead of trying to show in their own 
self-interests that their particular interests should be maintained in the 
community, and hinder the progress of a great interest at stake which is 
perhaps greater than the insurance companies. The workers are concerned 
much more than the accident insurance companies in this business ol 
getting compensation. 

"Mr. Ritchie: The insurance companies are quite willing to submit to any obliga- 
tions that are imposed upon them. You asked the question of Mr. Sherman, 
Mr. Commissioner, whether he did not think in case of deferred payments 
that the insurance companies ought to make some provision by setting 
apart a deposit. I understand the companies I represent are quite willing 
to submit to any such condition as that; if it is deferred payments and 
the liability is spread over a number of years, that that should be deposited 
to meet the payment when it matures from time to time. 

Mr. Harvey Hall : I just want to make one or two observations here, and one is in 
reference to a statement made by Mr. Sherman in which he suggested that 
the right of the employers and the employees to make agreements between 
themselves with reference to compensation — I may have misunderstood him 
but I understood it to be that he made the suggestion that that should be 
made a part of the provisions of the statute. I do not know whether it 
is or not, but I hope it is not. I hope that will never be allowed because 
possibility of influence being used upon a certain proportion of the em- 
ployees to bring about that condition which has in the past resulted in 
very serious concern on the part of the employees. You will no doubt 
recollect the old Grand Trunk compensation act which was worked under 
a statute got by the Grand Trunk, and through the agreements made under 
that statute those men were contracted out of liability. 

The Commissioxer: That is not what Mr. Sherman meant. I think Mr. Sher- 
man was explaining what the features of the British act were, and amongst 
them he mentioned a provision that the employers and the workmen in any 


particular establishment might agree upon a scheme provided the com- 
pensation is at least equal to that which the workmen would have under 
the act. That did not exist under the Grand Trunk act. 

Mb. Hall: I hope that will be prevented. 

The Commissioner: Then some Government official has to be satisfied with that 
before it becomes operative. 

Mr. Hall: From my experience it is an easy matter to bring tlie evidence to 
-make out that the employee is satisfied. 

The Commissoner: That is not it. The question is, is the benefit that he gets 
under this family scheme, if we may call it that, at least equal to what 
he gets under the act: if it is not then the scheme has no operation against 

Mr. Hall : Even then I think it ought to be under the supervision of the Govern- 
ment to see that those claims are carried out, because in my experience 
it is an iniquitous proposition. 

The Commissioxer : There is no doubt the Grand Trunk scheme gave the work- 
men a great deal less than they would get under such a law as is proposed. 

Mk. Gibbons: Did that not have the effect that the workman accepted a great 
deal less for fear he would lose his job? 

The Commissioner: Would he not run the same risk if he made a claim? 

Mr. Gibbons: The board would then adjust his claim. 

The Commissioner : I should hope under whatever scheme it is, whether the 
railways are within or without this complensation plan if that is adopted, 
that the Board will settle the claim? and they would have to pay them. 

Mr. MacMurcht: Certainly: that is the proposition. 

Mr. Hall : That is one question : the other is the matter of groups, putting the 
railways all in one group. That matter has been given some consideration 
by the conductors in this district, and with the knowledge that we have 
of the different railways of the country we think it would hardly be fair. 
You would have to make an equal assessment against each railway com- 
pany to assure this fund. Now, all railways are not equipped alike, some 
of them are very careless with regard to their equipment; T am afraid 
if you were to establish the group system that the careless fellow would 
say it doesn't make any difference for it is not costing me more than the 
other fellow who spends a great deal of money in improving his equipment. 

The Commissioner : You are following up ^Ir. Sherman on the whole scheme. 

Mr. Hall: There are things I disagree with, but there are some things he has 
pointed out, whether intentionally o|r not. that I do agree with, and that 
is one. Our railway companies are nearly all solvent propositions, but at 
the same time I feel that the employees of the railway companies should 
be brought under the protection of the act in some way, that there shotild 
be a reference board of some nature by whicli wlieii a company makes an 


offer of settlement that is refused iby tlu e.nployee that he should have a 
right of referring to this board to see whether it is right or not. 

Me. D. L. McCaethy, K.C. : There is no objection to that. 

Mr. Hall: Anything to keep him out of legal proceedings. I do not know 
whether the lawyers will agree with me, but a great deal of the insurance 
to-day, gentlemen, is eaten up in that way. 

The Commissioner: By whom? 

Mr. Hall: By such men as Mr. Eitchie here. (Laughter). I believe the inten- 
tion of this act is that we are trying to take something away from these 
gentlemen that they have enjoyed for many years. 

The Commissioner: I do not think this can be a blow at the lawyers or we 
would have the whole Law Society here, 

Mr. Hall: Well, they ajre well represented here to-day anyway. However, ^.o 
far as the railway companies are concerned the conductors of this district 
do agree to this principle, so far as the Canadian Pacific Railway is con- 
cerned, that the company pay the indemnity, but they should have the 
right of protection of a Board to which they could refer in case of dispute, 
so that they can avoid the law costs that they are up against at the present 

Mr. E. M. Trowern : As representing the Retail Merchants Association I was 
here some time ago. 

The Commissioner: You need not remind anybody who was present on that 
occasion that you were here. 

Mr. Trowern : I have been watching this matte>r very closely since, and I have 
also been discussing it with a number of merchants throughout the country. 
In listening to the discussion that has been going on to-day I find that 
there are no precedents anywhere by which the retail merchants come 
under this law. The time is getting very short between now and the 
opening of the session, and as this is a commission as I understand it 
for getting information so as to compile an act, it looks to me that Avhile 
there is a conflict between the Manufacturers Association, or members of 
it, or the manufactuxeirs rather, as has been shown here this afternoon, 
there is going to be a greater conflict when the facts are brought out. 
Would it not be a wise thing if we had something to go on in discussing 
this matter with the merchants ? The first thing they ask is, and naturally, 
"What 3,re the proposals; what does the Government propose?" I am at 
a loss, and I think every man in the room is at a loss to know exactly 
what the proposal is. I cannot see how in the world the retail merchants 
are going to come under it. The working class want it, I say give it to 
them; the manufacturers evidently want it, I say give it to them. Tlie 
retail merchants certainly do not want it : we do not want to be mixed 
into a thing that we do not know the first thing about and that is going 
to place a liability on every little storekeeper throughout the province 
for the benefit of some one he employs. He employs the man and gives him 
occupation and takes care of him, and then has to contribute, as I under- 


stand, to the Government a certain sum of money to keep liim when he is 
sick or meets with an accident, or something happens to him. We cannot 
change our minds — we have not been able to change our minds, we certainly 
would like, if there were a possibility, of having the thing thrown over. 
I am speaking now because I feel it is our duty as citizens, and my duty 
as secretary of the Retail Merchants Association, to give the Commissioner 
all the information that it is possible to give regarding the interests that 
I represent. I do not pretend to know anything about any other interests 
than the interests I am representing. Having been brought up in the 
retail trade and understanding the retail business, I feel that I am com- 
petent to speak for the retailers but for no other class. Our retail merchants 
throughout the country are watching very closely now and wanting to 
know what is the proposal. Lots of them, as you know, are Conservatives, 
as w^ell as Liberals, and the Conservatives feel that the Government is not 
going to bring in anything that is going to be an injury to them; but 
they have nothing to go on, they have absolutely nothing in front of them 
only just the information that comes out in the press and that, of course, 
is not sufficiently extensive, the papers could not hold all the information 
they desire. So, Mr. Commissioner, I am asking would it not be a wise move 
to have a bill prepared, and then give the merchants and manufacturers 
and others an opportunity of knowing the contents of it, because the bill 
will go in and we will not have time to do anything. An unfortunate 
thing we have in this particular Government is that we do not get time 
enough between the publication of an act and the time it comes before the 
committee; they no sooner print it, the print is hardly dry, before the bill 
is before the committee and then it passes through the House. 

The Commissioner: They are afraid of hearing you. 

Mr. Trowern : Well, if there is anything going to be presented that will be deri- 
mental to our interests I feel we ought to have time. The Government 
have always treated us fairly, but I certainly would like to have a little 
time between the drafting of the act and its presentation to the Govern- 

The Commissioner: I hope I did not misunderstand you. If I understood you 
aright the principle you laid down I should have thought would hardly 
be acceptable in this modern age, that the employer conferred a favour 
upon the workman by giving him employment and paying him wages. 
Might the workman not just as well say he conferred upon the employer a 
favour by giving him his services. Is that not a wrong way to approach 
the subject; is it not just a case that he gives his service and has to be 
paid for it? There is no compliment by anybody in the transaction; is 
that not so? 

Mr. Trowern : Yes, it is so. Your conditions are a little different as retailers 
than they are with the manufacturing industry. The retailers' profits 
to-day are very smald and Ave have a great many difficulties that it would 
be out of place to discuss here. The employment of a clerk is a different 
proposition from the employment of a skilled mechanic, an entirely dif- 
ferent proposition. To give you an illustration, I may tell you that the 
employees of the retail merchants travel from place to place more in Canada 


than they do in England or in Germany. Take as an illustration the 
waiters in restaurants; we all know that there are hosts of waiters who 
make it their business to travel around the world. They are here to-day and 
maybe work a week and are gone; they have seen enough of Toronto and 
they go on to another city. We want to know where we are with such 
help as that. Clerks are not engaged as long in their employments as a 
man who is a master mechanic, a man who is acquainted with the moulding 
trade, or the manufacture of any specific article; he does not travel around 
the same way as a clerk. People engaged in restaurants, and engaged in all 
sorts of business come in and go out; if they are all going to be included 
under this act we want to know it. 

The Commissioxee: For your information, Mr. Trowern, I will explain to you 
what the object of this Commission is, and what is its function. I am 
commissioned to enquire as to what, having regard to existing legislation 
in other countries and conditions here, would be the best law to put upon 
the statute book. I have to get what information I can, and if the 
retail merchants have any information that would enable a constructive 
policy to be adopted, or anything in the nature of objections to what is 
proposed or what has been suggested by those who have spoken, they should 
lay it before me if they choose to do so. Then I have to take the responsi- 
bility of coming to a conclusion upon what I think is a fair law, and report 
that to the Government. It will be for the Government to say whether 
they will introduce it at all; and if they are going to introduce it, when 
they will introduce it. If I do report a draft act, if there is any desire 
on the part of any employers or emploj'ees that that should not stand, the 
proper place to make representations is to the Government, and urge upon 
them to let it be placed before the public before it becomes a law. 

Mr. Calvix Laweexce: I have appeared twice before you, Mr. Commissioner, on 
this matter, and on one occasion I mentioned a law that at that time was in- 
troduced in the United States Senate. It passed through the Senate but Con- 
gress adjourned in 1912 before it was enacted. There are some good features 
in that law, and are some features that I would call bad, some provisions that 
I do not agree with. In the first place it says that every person 
engaged in interstate or foreign commerce, including commerce in the 
District of Columbia .... shall pay compensation in the amount herein- 
after specified to any employee who is hired or employed in such commerce 
by such employer who sustains personal injuries by an accident arising 
out of and in the course of his employment and resulting in his disability, 
or to the dependants hereinafter defined, etc. As I understand it that 
means that each railway company will pay their own compensation, com- 
pensation to their own employees, and not be grouped as was suggested 
in your interim report. I do not know that I led you to believe that we 
were in favour of the railway companies being grouped, that was not my 
intention. I think it would be to the detriment of the employees to group 
the railway companies. Any one familiar with the railway companies ot* 
Ontario and of the Dominion knows that some railway companies are 
more efficiently equipped than others. With some railroads there are more 
accidents than with others. We think as employees of our railway that if 
they were grouped and the efficient roads had to pay their share to the 


compensation for the employees on inefficient roads, that it would be a 
detriment to the employees on the inefficient roads. 

The Commissioner : Do you not think, in the language of the street, they would 
try and make the other railways sit up? 

Mr. Lawrexce: Can they do it? 

The Commissioner: They could put the law in force. 

Mr. Lawrence: The Eailway Board has passed orders for safety appliances on 
locomotives and cars. There are a number of railroads in Ontario that 
have greater efficiency in that line than the railway commissioners say 
thev shall liave, got by the employees. The employees' committee, if they 
see anything they think would be for their safety, will take it up with the 
officers of the road, and they get some tilings that the commission does 
not require them to have. If we go before the commission and ask for 
certain things, of course the railway companies naturally will oppose it 
for the simple reason, not because some of them do not want the equip- 
ment, but if it is made an order and a locomotive or car is sent out without 
being so equipped and an accident happens to an employee on that account, 
then they are liable for damages. I have had complaints from some roads 
about wooden bridges, and things like that, where employees claimed they 
were not properly watched and there was danger of accident in that regard. 
There is a law laid down with regard to that, and it is a hard matter. 
Of course all the railway companies have to watch their wooden bridges, 
or culverts, in case of fire. This law also says they may organize and 
constitute in such a manner as they may determine a committee or com- 
mittees for the purpose of settling disputes, and for awarding compensation 
according as it is prescribed in the act. That means, as I understand 
it, that the employees can have a committee, and the employers can have 
a committee, and in case of an accident the committees will get together, and 
if they can make a settlement well and good. I believe in a large majority 
of cases they could make a settlement. Then in case they cannot make a 
settlement they appoint an adjuster, and it is referred to him. The 
adjuster is paid as the district judges are paid in the United States, and 
that I think is tlie proper thing. This act also provides that an employee 
cannot contract, it does not make any difference what scheme he makes 
with the employer, it has no effect. Section 19 reads: "Xo contract, rule, 
regulation, or device, whatsoever, shall operate to relieve the employer in 
whole or in part of any liability created by this act." There are other 
features in this that I cannot agree with, but it is not necessary for me 
to mention them; that can be worked out later on as I understand when 
the bill is drafted. On behalf of the locomotive engineers I request 
particularly that the railway companies be not grouped, because it will 
not be to our benefit. I think it would be to our detriment if the railway 
companies were grouped as suggested by the other trades. I am not in 
a position to say anything about the other trades, whether they should 
be grouped or not, but I have been instructed that we take this up. We 
have legislative boards for each Province, as well as for the Dominion. 
Our legislative boards meet here in Toronto. We met last January and 
this thing was thoroughlv discussed, and thev were unanimous. Everv 



railway centre in Ontario was represented, and they were unanimous that 
it would be to the detriment of the employees to group the railways in 
this workmen's compensation act. As I understand it some of the rail- 
way companies at least are in favour of a proper workmen's compensation 
act, which we have not got at the present time, and therefore, Mr. Com- 
missioner, we would make the request that the railway companies be not 

Charles Clarke: I am a locomotive engineer, and I have been in the 
business for forty-five years. I am sent here by the men to tell you 
that they are certainly against grouping the railways; they want to be by 
.themselves. We have always got compensation so far, and I doubt if you 
make a bill now you will do as good as they have been doing. However, 
we think it would be a detriment to the road, or a very poor encouragement 
for them anyway, to look after its rolling stock, and keep up with all the 
modern appliances to date, if they had to pay part of the other roads' 
liabilities. Our men think, on the other hand, it would be wrong to take 
the money that our company pays out to pay into any other company' 
They have always been quite willing to meet us, and I can speak for quite 
a number. You will understand, sir, I have been thirty years employed 
with the Canadian Pacific, and during that time there is no doubt I have 
seen a good many injured, and I have seen a good many people pass into 
eternity ; in my own family it has been the same. I want to say I have yet 
to find a case where compensation has been asked that our cWpany has 
not liberally made it. In fact I know the engineers, and the trainmen 
too, every one that I have talked to are much opposed to doing anythimr 
like putting us into a pot, as it were, and everybody to take their share 
out. Xow, sir, we have nothing against compensation; whatever liabilities 
there are we would like to have our company pay them. I like the open 
statement that Colonel Gartshore made to you last winter. I was very 
sorry that I did not know of that meeting,^ for I certainly should have 
been there on behalf of the raihvaymen of London. He said he believed 
m compensation, and he believed it should start froin the moment that 
. the workman is injured, and he believed in paying for medical service*^ 
and medicine, and all such things. He also said he wouldn't like to 
say just how much, but he thought it should start off with fifty per cent., 
and when the workman was able to go to work it could then be settled 
by a committee of the Friendly Societies and the management If not 
settled then he said it might go to law, but he ventured the assertion that 
there would not be one case in ten. I can safely say, sir, that we would 
not have one m fifty. I believe in giving the best dav's work for the best 
day's pay. I do not believe there is a man in the Ontario Division who 
has been as much in touch with this as I have, and I must sav they have 
been very good in meeting everything; I have often gone to Montreal and 
I have yet to come home empty-handed. Xow, sir, if you can see your 
way clear m passing this act to keep us clear, do so: if not, I know the 
men will not be satisfied with it if the money our company pays goes +o 
pay for liabilities of another road. - ~ i j b ■ 

The Commissioner: I do not suppose it is possible now to fix the date of another 


meeting, but whenever the parties are ready another public meeting will 
be called. 

Mk. Hellmuth: Would you allow us at some meeting to summarize shortly? 

The Commissioner: I will hear all you have to say. 


The Legislative Building, Toronto. 

^YednesdayJ Sth January, 1913, 11 a.m. 

Present: Sir William E. Meredith, Commissioner. 

Mr. F. N. Kennin, Secretary. 

Mr. W. B. Wilkinson, Law Cleric. 

The Commissioner : I understand Mr. Hinsdale has been delayed and will not 
be here this morning. I received a communication from an officer of the 
Railway Trainmen from Ottawa the other day, saying they were appointing 
a representative to attend the meeting. Is there anybody here represent- 
ing that body? 

Mr. Gibbons: I have not seen any one representing that body here. There are 
different 0^de^s.^ 

The Commissioner: Mr. Wegenast wishes to answer the statements of Mr. 
Wolfe and of Mr. Sherman. I have just been discussing it with him, 
and it seems to me that what he has to say will have to be said in the 
way of argument, and it would not be advisable, I think, to interject an 
argument at this stage. He had better wait until the evidence is closed, 
because there may be something more to be said. I gathered from what 
Mr. Wegenast said that he had some statements to make from an actuarial 
point of view, and I have told him that I did not see how I could take 
that as evidence, as he is not an actuary, but that I would hear whatever 
he had to say and give such weight as ought to be attached to it in the 

I see Mr. Hellmuth and Mr. MacMurchy are here representing the 
railways, and Mr. Eitchie and Mr. Ballantyne representing the insurance 
companies. Do you thinki t would be of any advantage to enter upon 
anything in the nature of an argument until the evidence is completed? 

Mr. Hellmuth: I certainly, Mr. Commissioner, would not. I think one's argu- 
ment might be answered by evidence and perhaps be unnecessary. 

The Commissioner : Mr. Hinsdale, I suppose, is to answer from the practical 
working of the Wasliington act, and as an actuary, the evidence of Mr. 
Wolfe and of Mr. Sherman. 


Mr. Hellmuth : I would have liked to have heard what he had to say before 
entering upon any argument. 

The Commissioner: What do you say, Mr. Ritchie? 

Mr. Ritchie: I do not know that I -want to present any argument, Mr. Com- 
missioner. When the evidence is all in there may be something that should 
be pointed out. 

The Commissioner: I judge from what I see in one of the newspapers that 
there is a misapprehension as to the purpose for which this meeting was 

The statement as I recollect it was that this meeting was called in 
order to allow the labour representatives to present their case. That is 
not the fact. I am not going to call upon them to present their case 
until the case on the other side has been presented fully. This meeting 
was called in consequence of Mr. Wegenast informing me that Mr. Hinsdale 
was coming here, and that he desired to present an argument from the 
standpoint of the manufacturers whom he represents. 

Mr. Wegenast: I am quite willing to fall in with your suggestion and to leave 
the argument stand over until the evidence is all in. 

The Commissioner: It means we will have to have night sittings. I will not 
be able to give any day sittings next week. 

Mr. Wegenast: The material I have to present is something entirely apart from 
what Mr. Hinsdale will present. 

The Commissioner: You could not speak as an actuary. 

Me. Wegenast : I have left everything in that nature to him. 

The Commissioner: Is there any certainty that Mr. Hinsdale will be here 

Mr. Wegenast: I cannot say for sure. I understand he left Seattle on Saturday 
night, and in the ordinary course he should be here to-day. 

The Commissioner: We will adjourn till eleven o'clock to-morrow when this 
meeting is over. 

Mr. Hellmuth : It may not be necessary that we should be here, but I do not 
think Mr. MacMurchy and myself v^rill be able to be here. There is a 
meeting of the railways in Montreal. 

The Commissioner: The proceedings will all be in the notes. Mr. Hinsdale's 
evidence will not be directed particularly to the interests you represent. 
Perhaps you could arrange with Mr. Ritchie to be here and he could ask 
any questions which you might wish to put. 

Mr. Wegenast: Mr. Hinsdale has no instructions or communications whatever 
as to what he has to say. He does not knov^^ himself what he is appearing 
for. I know him personally and I know that he is informed fully as to 
the workings of the Washington system, and is for the purpose of giving 
information that I suggested that he should come. 
18 L. 


— — ^ — I 

The O0MMIS6IONER: Does your information, Mr. Wegenast, with regard to 
Washington agree with tliis, that the expenses of the commission for 
twelve months amounted to $107,868? 

Mr. Wegenast: I have not a copy of the Washington report in my hand. 
The Commissioner: Do you know if that is about the figure? 
Mr. Wegenast: I think it is. Sir William. 

The Commissioner: Now, what did you say was your idea of the number of 
firms that would come under the act if the scheme which you are advocat- 
ing is adopted? 

Mr. Wegenast : I could not speak off-hand. I would like to have my memor- 
andum before me. 

The Commissioner: They have apparently 130,000 employees. It would be 
four times that number here. 

Mr. Wegenast: I should think it would be two or three times — not four times. 

The Commissioner: Say four hundred thousand. If the expenses in Washington 
have been $107,000 it would probably be two or three times that here. 

Mr. Wegenast: Two and a half, perhaps. 

The Commissioner: That would mean over a quarter of a million and that 
would l)e increasing, I suppose — except the first year, where more work 
might have to be done. 

Mr. Wegenast : But it would not increase in proportion to the number of 
population or the number of industries. The same commission would 
answer, no matter how many there were. 

The Commissioner: Is this statement correct: The preliminary figi'res on one 
thousand cases indicate that less than three per cent, of all accidents 
reported under the Workmen's Compensation Act show a liability that 
would be good for a verdict under the old law? 

Mr. Wegenast: I think that is the statement made in this report. Of course 
in the nature of things it must be a pure estimate. 

The .Commissioner: But that is an enormous decrease. 

Mr. Wegenast: I think it is quite consonant with the evidence that has been 
given by Mr. Dawson and Mr. Boyd, that under a system of compensation 
for pure negligence or tort it will cover only a very small percentage of 
the actual accidents. 

The Commissioner: I do not speak with any certainty at all, but I think these 
figures vary very much from the English figures. 

Mr. Wegenast: What English figures, Mr. Commissioner? 

The Commissioner: Comparing the cases undei the present law with the cases 
before that law was passed. 


Mr. Wegexast : I am not competent to speak as to that. I am judging for 
myself largely from the reports of the various systems as to the causes of 

The Commissioner: These causes would not indicate that any such result would 
follow; how many accidents were due to the negligence of the employer; 
what percentage? 

Mr. Wegexast : I think the estimates given by Mr. Boyd and others vary from 
7 per cent, upwards. 

The Commissioner: It is a great deal more in the German one. Is it not some 
thirty per cent, odd due to the negligence of the employer? 

Mr. Wegexast : Here are some figures from Germany. They are taken from 
the analysis of Messrs. Schwedtman and Emery. Employers' fault 17 1-3 
per cent. ; workers" fault, 39 8-3 per cent. ; employers' and workers^ fault, 10 
per cent. ; hazard of industry, 43 per cent. Those, if I recollect rightly, are 
for the deaths in the different classes of fatal accidents. 

The Commissioner: ^Yhat is the non-fatal? 

Mr. Wegenast : I think I am wrong in that. They are not divided in this 

The Commissioner: What is that for? 

Mr. Wegexast: The responsibility for occupational accidents, including agri- 

The Commissioner: If that is so 17i/^ per cent, of these cases should have been 
compensated under the old law, not three per cent. 

Mr. Wegexast: Yes, that estimate, if it is an estimate, seems to me very low, 
but conditions are very much different in the Western States and the 
Middle States from what they are in Canada and the Eastern States. 
The proportion of cases in which the workmen recover, is, I think, much 
lower. I cannot give any definite authority for that statement, off-hand. 

The Commissioxer : I should have thought it would be the other way on, from 
my experience and reading about American cases. They recover more 
often, unless they have not as favourable laws. 

Mr. Wegexast: I think that is so in the East, but not in the Western States. 
I cannot, as I say, give any authority for that statement. On page 30 of 
my brief there is another set of figures from Mr. Boyd's analysis. These 
are for various years, of course. These figures are for the years 1887, 
1897, and 1907, from Mr. Boyd's brief, and I assume, they are taken from 
the official reports in Germany. In 1887 the proportion of accidents due 
to the fault of the employer was 30.47; in 1897 17.30 and in 1907, 16.81. 

The Commissioxer: So that apparently the more he has to pay the more careful 
he gets. 

Mr. Wegexast: I think the explanation given for that is that the German system 
has induced employers to be more careful. Then I have here the result 
of the investigation by Crystal Eastman. 


The Commissioner: Is that a lady? 

Mr. Bancroft: Yes. 

Mb. Wegenast: She gives the proportions as follows: Cases attributable solely 
to eniplo3'ers 29.97 per ce^t. This is what is called the Pittsburg Survey. 
I do not know whether it covers the whole state. 

The Commissioner: That may be limited to Pittsburg. 
Mr. Bancroft: I have here her whole Avork. 

The Commissioner : I think it would not be a bad idea to get this lady to come 
here. I know Mr. Hellmuth would like to talk to her. 

Me. Hellmuth: Thank you. 

Me. Wegenast: I have seen somewhere an estimate as low as seven per cent, 
but I cannot remember where. 

The Commissioner: That is from some manufaeturers association. 

Mr. Wegenast: Possibly. I should think it would be a good deal higher than 
given in this report of the Washington commission. However, there is 
considerable difference of opinion as to whose fault an accident really 
arises out of, and difference of opinion is quite accountable. 

The Commissioner: Mr. Wolfe's proposition, or Mr. Sherman's proposition, I 
have forgotten which, with regard to the farmers seemed reasonable, that 
it would never do to have them under such a system as is proposed, becau.-e 
it would mean that every member of the family would be a claimant upon 
the fund; that is, every member that is able to work. 

Me. Wegenast: I would like to make this broad suggestion, that all those ques- 
tions could very well be left to be determined by the constituency covered 
by the particular type of insurance. 

The Commissioner: What do you mean by that? 

Mr. Wegenast: If there are difficult questions incidental to the insurance of 
farmers that can very well be left for the farmers themselves. 

The Commissioner: I do not think that would do at all. There is no proper 
organization and no system under which that could be done. 

Mr. Wegenast : The organization would have to be worked out. 

The Commissioner: What seemed to me a good deal better would be to leave 
to this commission that is appointed the bringing under the act from 
time to time of such classes as it deems proper to bring under it. 

Mr. Wegenast: I entirely agree with that. That is what I assumed, but the 
commission would not apply it in the face of a majority of sentiment. 

The Commissioner: That would depend on who the men were. 

Mr. Gibbons: If every member of the family came under that act would they 
not pay a premium for every member of the family? 


The Commissioner: It is based on the wage-roll. 

Mr. Gibbons: Assuming they did not pay any premium they would not come 
under the act. 

The Commissioner: They would under this system; it says every employee. 

Mr. Wegenast: In Germany the pay-roll has been abandoned as the standard of 

The Commissioner: What is substituted for it? 

Mr. Wegenast : The number of persons, very largely. 

The Commissioner: It could not be that in itself. 

Mr. Wegenast: jSTo, not exclusively. Mr. Wolfe gave an idea which he has 
worked out himself, that even in the case of ordinary industries the pay- 
roll should not be the exclusive standard, and it is quite possible that 
some such idea could he worked out. 

The Commissioner: He thought scientifically that would not be right, but prac- 
tically it could not be helped. , 

Mr. Wegenast : His views are published in Insurance Journals, and there has 
been an active controversy between Mr. Wolfe and Mr. Cowles on the 
subject. Mr. Wolfe claims throughout the whole field of liability insur- 
ance the pay-roll shuld not be the exclusive factor on which the premium 
is based. Mr. Cowles disputes that. I think it is quite obvious that 
the pay-roll does make a rough and ready standard which is susceptible of 
refinement as time goes by. 

The Commissioner: Those who are interested in the coming act possibly had 
better be very careful that they do not load it down, or seek to load it 
down, by bringing in classes that the Legislature will not be willing to 
bring in. You may defeat the whole scheme. If the result of this enquiry 
was to present a bill in which the farmers were put exactly on the same 
footing as persons engaged in industrial occupations, my motion is that 
it would have no chance whatever of passing the Legislature. 

Mr. Wegenast: I think I have said that several times, as appears by the record, 
Sir William. So far as we are concerned we do not care whether the farmer 
is brought in now or not. We think, judging from the experience of 
every other jurisdiction, that the farmer will ultimately be brought in, 
and we have reason to think that it will not be long in this province 
before he will be brought in. All we say in regard to the farmer is that 
the System should be such a system as would be clearly adapted to extension 
to the farming community when the proper time arrives. 

The Commissioner : You see it would be very difficult following Mr. Gibbons' 
suggestion. A farmer has two or three sons able to assist him. He does 
not pay them any wages, but practically they are employees of his; they 
get their support, and yet their wage would not appear in the pay-roll 
at all. 

Mr. Gibbons : Could their compensation not be fixed by the amount of premium 


r— — — — ■ ' — ' — ■ 

The Commissioner: I do not know how that would do. 

Me, Bancroft: I think Mr. Hinsdale might be able to tell us. 

The Commissioner: The farmers are not in under their law. 

Mr. Bancroft : But those who do not appear on the wage-roll under the Wash- 
ington act are not entitled to compensation. 

Mr. Wegenast: Oh yes. 

The Commissioner: That might mean the employer might do the employee out 
of his compensation. 

Mr. Bancroft : The intention was to give the employer if on the wage-roll at a 
stated salary compensation as well. You remember Mr. Waldron brought 
up that point early in the commi'ssiou's investigations. 

The Commissioner: That applies in Germany in the case of a farmer. It might 
apply in the smaller industries where the man is practically a journeyman. 

Mr. Wegenast : I would think there would be no difficulty in any industry in 
having the employer insured provided he puts himself on the pay-roll. 
I think it might be left to the employer himself whether he would include 
himself on the pay-roll or not; and in the case of the larger corporations 
whether employees amongst the class commonly called clerical should come 
under the system. 

The Commissioner : Now from the standpoint of the manufacturers what would 
they think of a provision that where the accident was due to a disregard 
of the law as to safeguards for the prevention of accidents that he should 
personally pay the whole compensation? 

Mr. Wegenast: The general view that I have laid down in my brief is that any 
reasonable penalty on the employer for negligence or any other misconduct 
would not be objected to, but that the sum or penalty, or whatever it is, 
should not go direct to the employee but should go into the general fund. 

The Commissioner: Then, I suppose, under a proper system there should be 
power in the board, whatever board it may be, to re-adjust the rates in 
classes according to experience. 

Mr. Wegenast: Precisely. 

The Commissioner : If one employer showed he was conducting his business so a? 
to cause the least accident he should get the benefit of that. 

Mr. Wegenast: There is absolutely nothing in the contention which has been 
advanced over and over by the representatives of the insurance companies 
who have appeared here that the assessment system or any state system 
involves a blanket rate over all industries of a similar kind. There is 
absolutely no foundation for it. The statement was made that in the 
Norwegian system there was such a flat rate; that is absolutely contrary 
to the fact. The Norwegian system is. if anything, more refined than 
any other European system in its system of sub-classification. 

The Comjiissionkr : Of course a system of sub-classification is an awkward thing, 


and yet on the other hand to leave it to the judgment of the board would 
perhaps lead to anomalies and inconsistencies. 

Mr. Wegenast: What I have suggested, and I have not had a convenient 
opportunity to elaborate on this, is that these matters should be left 
largely to the initiative of associations, voluntary organizations, correspond- 
ing to the groups. 

The CoMMiKSioxEi; : I suppose any sensible Board, if there were an organization, 
would let it advise and inform them, but not in any way bind them to 
their conclusions. 

There seems to be a mistake in the first report; as I understand it 
tilie State guarantees nothing, it will merely disburse the fund. 

Mr. Wegenast: Yes, nominally, but really there is a state guarantee by virtue 
of the fact that the State has the facilities — 

The Commissioner : That is not what I am talking about. Supposing there were 
claims in a particular year amounting to half a million dollars, and there 
was not sufficient in the fund to pay them, the workman would lose. He 
would be scaled down so as to make the sum in hand cover his claim 
to date. 

Mr, Wegenast : No, I think not. 

The Commissioner: Yes, there is no obligation. The state's obligation is 
limited, as I understand it, to the amount from time to time that is paid 
into the fund. 

Mi?. Wegexast : But the board has the power to assess. 

The Commissioner: Yes, that is a different thing, but there is no such obligation. 

Mr. Wegenast: None whatever on the State itself. 

The Commissioner : This says the payments are guaranteed by tlie State ; that 
is misleading. 

Mr. Wegenast : It is in that one sense. I would like to read a sentence from 
a letter by Mr. Preston to me on that point : 

"In some of the earlier drafts of the bill I had it provided that if 
an injured workman found a deficit in the fund applicable to his case, 
the state shauld make it good out of its genera,! fund and then recoup 
itself later out of the industry involved. We have the constitutional pro- 
vision forbidding the state to loan its credit to any other than a public use.'* 
Then he says that we have no silch constitutional difficulties and there- 
fore are in a position to improve on their work in that respect. 

The Commissioner: I think any scheme that is adopted will have to fix .\ 
maximum sum that the State shall contribute, and if there is anything 
beyond that it must come back on those who contribute to the fund. 

Mr. Wegenast : I think the manufacturers throughout the province would be 
quite willing to accede to that. 

The Commissioner: I do not think there would be any chance of getting tlie 
province to assume an unlimited liabilitv. 


Mr. Wegenast: I think nobody would ask it. It is simply a matter of dis- 
tributing the money which the employer is perfectly willing to pay towards 
a reasonable measure of compensation. 

The Commissioner: We have not had anybody yet who has been able to give 
an expert opinion as to whether this is not really a tax in substance upon 
the community in its last analysis. 

Mr. Wegenast : I have given an opinion but it is not that of an expert. I 
entirely agree with that. What I do not agree with is a conclusion which 
you have drawn with that as one premise, and another premise which J. 
am not quite able to see. 

The Commissioner: What is the other? 

Me. Wegenast: I cannot quite see what the other premise is. 

The Commissioner: What is the conclusion? 

Mr. Wegenast: The conclusion is, apparently, that it is not unjust to have the 
employer pay the whole of whatever compensation the workman is entitled 

The Commissioner: Perhaps it happened when you hadn't a lucid interval. 

Mr. Wegenast: I want to qualify my statement with the observation that I do 
not agree with the conclusion which you attach to it. 

The Commissioner: Of course the railways can do anything they like, and the 
manufacturers, so long as they have a good wall up, but what about such 
people as the producers of wheat and the producers of silver; how can they 
throw the burden upon the community? 

Mr. Wegenast: They cannot do it. 

The Commissioner: I suplpose the answer is that they make so much that they 
can afford to pay it themselves. 

Me. Wegenast : Well, I am not prepared to speak on that feature. 

Mr. Hellmuth : Have you overlooked the fact that the Dominion Eailway Board 
can fix the rates of railways? 

The Commissioner: Yes, and I have in mind the fact that all the rates that are 
fixed are a great deal above what the railways are compelled by business 
conditions to exact. 

Mr. Hellmuth : Not always. 

The Commissioner: They were when I last looked at them, away above. 

Me. Hellmuth: It shows the railways have to reduce their rates. 

The Commissioner: They could not help it. They did not do it for love, they 
did it for business. 

Mr. Hellmuth: Quite so, but they cannot stick it on very well. 

The Commissioner: They will all take what the traffic can stand; that is their 
maximum is it not? 


Mr. Hellmuth: I think so. 

The Commissioner : I am not quarrelling with it. 

We have not had an expression of opinion yet, even from Mr. Trowern, 
I think, from that large class which might be called the clerical class. I 
would like somebody to give some information upon that, or the reasons 
why they should be either brought in or left out. 

Mr. Wegenast: Mr. Trowern contends very strongly that they should be left 
out of any schemes. 

Mr. Harvey Hall : There was an observation made here by Mr. Wegenast awhile 
ago. He said in case of accidents occurring through the negligence of an 
employer that any penalty over and above the workmen's compensation 
act should go to the general fund and not to the injured workman. Does 
that not more and more bring us to the conclusion that the railway com- 
panies are right in protecting themselves from the group principle? 

The Commissioner: I do not know. 

Mr. Hall: Is it not a certain amount of protection for this money to go to a 
general fund rather than to go to the injured person, to the negligent 

The Commissioner: No, it helps the body of those that are in the class. 

Mr. Hall: Will it not help the negligent party to the extent of that amount of 
money? That fund is enlarged or increased by this "money that should 
have gone to the injured person. 

The Commissioner: That would only be a small fraction. 

Mr. Hall: I would certainly object to that principle. 

Mr Wegenast : I would like to say with regard to that there is a distinct 
cleavage of opinion amongst not only experts but persons who have expressed 
opinions on the subject just on that point. The extreme view which Mr. 
Hall apparently favours is set out by a Mr. Calder. 

The Commissioner: He has not suggested any views. He has negatived your 

Mr. Wegenast: He suggests the view which Mr. Sherman also referred to that 
it is inadvisable to relieve the employer of his direct liability. 

The Commissioner : I do not understand that. 

Mr. Hall: No, that is not my idea. My idea is that what you are recommending 
is an Encouragement to the negligent employer because he is protected by 
the money that' other people put into a fund for him. 

The Commissioner: That feature could not have any such effect. 

Mr. Wegenast: Mr. Calder vv^ho represented some association of locomotive 
engineers advocated the prohibition of insurance. His idea was that each 
employer should be made individually liable and should remain individually 
liable and insurance should be prohibited. Now it is not necessary to say 
that that view has no general support. 


Mr. Hall: Who do you refer to? 

Mr. Wegenast : I think his name is Calder who spoke at the hearings before the 
Federal Commission. 1 think he is the only man who has publicly and 
permanently embraced that idea, and the Chairman of the Commission forced 
him to the logieai conclusion, which 1 submit, of course, is absurd. 

The Commissioxer : I do not follow your argument, Mr. Hall, at all. Suppos- 
ing the railways were grouped and an engineer is killed owing to some 
disregard on the part of the railway company of its duty, and the Board 
determines that that railway company should pay the whole cost. That 
relieves all others in that class to that extent, so that it would tend to gei 
rid, as it strikes me at the moment, of a difficulty that has been _ suggested 
of the careful man and the man who is not careful being on the same foot- 
ing and paying wdiat Mr. Wolfe called a flat rate. 

Mr. Hall: I quite agree with those ideas, but the principle involved may mean 
many things. If I have got to pay for the expense that is incurred by 
negligence on the part of another railway, who yourself or somebody ehe 
may represent, every dollar that I pay into that fund is easing you and 
possibly encouraging you in neglecting to furnish or equip your property 
as it should be. 

The Commissioner: Apparently the only people who are objecting are the rail- 
ways. All the manufacturers are quite willing to share that. 

Mr. Bancroft: And more than that a curious thing was, although we are not 
replying to Mr. Sherman now, that he took as his ideal model the Britisii 
act, which includes railways. 

^\r. Hkllmuth: Pardon me. The British act provides that any railway that 
has a benefit scheme approved of by its employees, which gives to the 
employee as large benefits as the state insurance, can contract out of the act. 

The Commissioner: That is only if it is approved by the Secretary. 

Mr. Hellmuth: Quite so. 

The Commissioner: At present I am against any such scheme as that. 

Mr. Hellmuth : That is in operation in England. 

The Commissioner: It would destroy the whole scheme if the manufacturers or 
the railways were able to form schemes of their own and keep out of the act. 
It would not do at all. The act would break down. 

Mr. Bancroft: The evidence that seems to have been brought out on the other 
side with regard to the railway situation there I find, that the only reason 
that the railways engaged in interstate commerce are excepted from the 
state legislation is because the state has no jurisdiction over interstate com- 
merce. 1'hey have included the railways as far as they could in the state 
legislation, and now the Federal Covernment is bringing in a Federal bill 
to include the railways engaged in interstate commerce throughout the 
whoe of the United States, so you see the intention is evidently to include 
the railwavs in the United States. 


The Commissioxer: It does not make auy difference to the manufacturers whether 
the railways are left out or not, except as a matter of sentiment. If they 
are left to bear individually their own burdens, making them whatever 
the Legislature thinks may be reasonable, nobody is hurt. 

Mr. Wegexast : I want Mr. Commissioner, to take explicit exception to the prin- 
ciple of exempting the railways. 

The CoM.AiissioxER : It is easy to take exception and it is easy to overrule an ex- 
ception too. As far as I am concerned I have come to no conclusion about 
that, but my personal impression would be that at the beginning at all 
events it would not be desirable to include the railv^ays in any group, but 
to leave them to be brought in if the board is of opinion, after some ex- 
perience of the working of the act, that they ought to be brought in. That 
is the way my mind is tending; I have come to no conclusion. 

Mr. Wegexast : On the ground of expediency I agree, but on the ground of 
principle, of course, I do not. 

The Commissioxer : Principle is nothing ; it is all expediency ; you cannot get a 
perfect thing. 

Mr. Wegexast: Xot all at once. 

The Commissioxer : It must be compromised. As a matter of natural justice, 
as Mr. Hall has pointed out, it is very unjust that manufacturers in Class 
A should pay a dollar for the losses incurred in the manufacturers Class B. 

Mr. Wegex'ast : That is what insurance means. 

Mr. Hall : This is one principle of it. 

The Commissiox'^er : I should not wonder if when these gentlemen come from 
Ottawa they will be combatting the views that Mr. Hellmuth and Mr. 
Hall and some other gentlemen are advocating. 

Mr. Hellmuth : I do not like to assume, but I understand that all the bodies 
of railwaymen that have met, and I think it goes without saying that the 
raihvaymen are not very amenable necessarily to the executive officers' de- 
sires, or the desires of the railways — they look after themselves — object 
to grouping. I may be quite wrong, but I understand wherever they have 
met they have taken that position. I am speaking of the grouping of 

The Commissioxer: I do not understand why they are taking such a warm 
interest in the interests of the employers. Xot in the slightest does it 
affect them. It is absurd to say that they are affected if the law is that 
all railways must pay their compensation: it is nonsense for them to talk 
about that. 

Mr. Hellmuth : May I put forw^ard what I understand is the view that perhaps 
the employees have, that if a good efficient road is simply grouped and has 
to pay with other roads to the general fund it will not individualize in 
regard to safety appliances, but if it knows it has to. pay its own losses- it 
will continue to take extra care with regard to the employees of that road: 
I think that is the idea; I mav be wrong. 


The Commissioner: That can be very easily corrected. If a railway disregards 
its duty it can be penalized and may be made to pay individually. 

Mr. Wegenast: And the other railways would very readily see if the C.P.R., 
for instance, had more accidents than the Grand Trunk, and the Grand 
Trunk would very soon make itself felt and would see that they were 
put on a lower rate than the C.P.R. My contention of course is that in 
the matter of accident prevention the tendency is the very opposite to 
what my learned friend suggests, 

Mr. Bancroft: I would like to ask what does Mr. Hellmuth mean when he 
says all the railway employees, as he understands? , 

Me. Hellmuth : I mean steam railways. I mean all the employees, so far as 
they have met in bodies, like the trainmen, the locomotive men, and 
others. I may be wrong; I only say I understand that. 

Mr. Bancroft: I have a letter from a point in Ontario telling me that the 
C.P.R. has circularized all their employees, and they have in their circular 
also pointed out the defects that they think are in the Commissioner's 
interim report, and asking the men to take the matter up. Is that true? 

Mr. Hellmuth: I believe there was a circular sent out. If you have the 
circular there I will tell you? 

Mb. Bancroft: No, I have not got it. 

Me. Hellmuth : The circular, as I understand it, asked the men to hold such 
meetings as they might see fit, but I understand there was nothing at 
all done in regard to placing any plan before them at all. 

Mb. Bancroft : This is a private letter that I will turn in, if the Commissioner 
desires it, in confidence, but I will read an extract from it to show what 
I mean. This is addressed to the Vice-President of the Trades and 
Labour Congress and was forwarded to me: "The workmen's compensation 
question is agitating the minds of the members of our lodge, and the 
fact that a bill will soon be introduced into the Ontario House 
has stirred the C.P.R. company up to issue a circular to its organized em- 
ployees, pointing out the various defects in the suggestions of the Honour- 
able Sir William Ralph Meredith in his interim report, a copy of which 
they enclosed with their circular." That is just an extract from the letter. 
A\Tien you speak of all the railways' employees I do not just understand 
what you mean. 

Mb. Hellmuth: I understand the Grand Trunk has done it, and I understand 
the locomotive engineers called their own meeting. 

Mr. Hall: I would like to say a word on this question. The railway employees 
as a rule are not fighting the employers. A circular was sent out by the 
C.P.R. company in which they promised to pay any sum that was author- 
ized, or any sum that was decided upon by the worlanen's compensation 
act, for injury or death, as the case may be, but in order to save themselves 
expense and to deal directly with their employees they ask to be relieved 
of the grouping principle, and they set forth certain reasons why they 
should be relieved from that principle. Now, the employees of the C.P.R. 


are agreeable that that should be done, but they want a reference board 
appointed in order to protect them against any disputes, and protect them 
from being hauled from one court to another in case of difference of 
opinion. We are all well aware that the higher officials of the railway 
companies are guided very materially by the lower officials, and they 
may have opinions as to why accidents happen, and very frequently up 
to a certain point these opinions are accepted by the superior officers. 

The Commissioner: I understood either Mr, MacMurchy or Mr. Hellmuth to 
say that they did not object, if the principle of the act is that the amount 
of the compensation sihall be determined by the Board, or the right to 
compensation, to the claims of the railway employees being so determined. 

Mr. Hellmuth : That is so, sir. 

Mr. Wegenast: May I ask Mr. Hall what is the opinion of the railway men 
as tc whether the company should be asked to pay in the full capitalized 
amount of the compensation at once, or should be allowed to pay the 
pensions as they come due from year to year? 

Mr. Hall: You are not mixing pensions with workmen's compensation? 

Mr. Wegexast : We certainly are. This gentleman seems to assume that the 
compensation will be paid in a lump sum. 

The Commissioner: The policy in all countries I think is against paying a 
lump sum. 

Me. Wegenast: Supposing a man is killed — 

Mr. Hall : If it is not paid in a lump sum I would disapprove of the act altogether. 

The Commissioner: There is no chance of my recommending the payment of 
a lump sum. 

Mr. Bancroft: Mr. Hall, are you representing the railway conductors? 

Me. Hall : Yes. 

Me. Bancroft: He says "all the railway employees of the C.P.E." I think he 
is representing the conductors, not all. 

Mr. Hall : Well, I will withdraw that statement as to all, but I want to say 
that I have not heard of an employee of the Canadian Pacific Railway 
yet who said to me personally or in a meeting that they were against the 
proposition recommended by the C.P.E. 

The Commissioner: I may say now definitely that I shall not recommend any 
scheme which involves the right to capitalize payments; I mean payments 
to workmen of the capitalized sum. There should be an opportunitv in 
cases where it is proper to be done for the board authorizing that, just 
as there is under the British act, but the very basis of this legislation 
is that it is social, there is no use disguising the fact. One of the main 
objects of it is to prevent injured employees and their dependants being 
made a burden upon the public. If you allow the compensation to be 
paid over in a lump sum it may be squandered, and the result brought 

^66 MIj^UTES of evidence 

about which you seek to avoid, and one of the primary objects of the 
legislation would be defeated. 

Me. Wegenast: May I follow up the suggestion of the gentleman here by asking 
the representatives of the C.P.E. whether they propose to pay into the 
insurance fund a capital amount, or whether they propose to run their 
suggestion on the current cost plan? 

Me. Hellmuth: 1 would answer that very simply. As I understood it we 
propose to carry out the law, whatever the 'bill drafted by the Commissioner 
and approved of by the House may be; that is to say if the law provides 
that you shall make periodical payments we will do so. 

Me. Wegenast: But you will not pay into the fund the capital amoimt; you 
do not want to pay it in? 

Me. Hellmuth: If it is provided that an employer should make a capital fund 
and pay into the capital fund— as the bill may be— then we certainly will. 

Me. Wegenast : You do not object to the application of the capitalized principle ? 

Me. Hellmuth : We do not mind what the principle is that is adopted ; we will 
do whatever the law may be in regard to that. What we are particularly 
anxious about is that we may be allowed to deal with our own employees 
and pav them such sums as the state may direct shall be paid to workmen 
so injured, and not have to be grouped v^ith other railways. 

Me. Gibbons: You do not want this Commission to determine what you should 
pay? You want to make that determination yourselves. 

Me. Hellmuth : Oh no, we want the Commission to determine. We do not ask to 
be put in any other position than anybody else. 

]\Ir. Bancroft: Supposing the bill was drawn up and in the grouping of the 
different industries it was pointed out that the C.P.E. was considered by 
themselves a group, and the G.T.E. hy themselves a group, and the 
Canadian Northern by themselves a group, and they were under the 
obligation of providing the compensation for the workmen as stated in 
the bill, and that they should pay into the commission fund just the same as 
anybody else to have it administered, and anything else they wanted to do 
they should do themselves, have you any objection? 

Me. Hellmuth: We think we could avoid the expense. There is only the question 
of expense of administration. 

The Commissionee: No, there is more than that in it. If any such scheme as 
Mr. Wegenast has advocated it would mean there must be paid into the 
fund a surcharge or something to form a reserve fund. Under a scheme 
such as you are suggesting there would be no provision for that at all in 
the case of the railways. 

M'E. Hellmuth: Would there not in this way: Supposing you assess on any 
particular pay-roll with enough additional, that a certain sum to be paid 
yearly, or whatever it may be, irrespective of the actual accidents, wouldn't 
that sum have to be put apart in some way satisfactory to the Board, if 


there is a board, or to the state, or whatever the state machinery may 
be, which the Grand Trunk or the C.P.E. would have to pay into a fund 
so that it would be earmarked? 

The Commissioner : That would mean then in addition to your being ordered 
to pay, or paying the claims as they arose, that you should hand to the 
board suliicient to represent a guarantee fund. 

Mr. Wegexast: That is what I understand Mr. Hellmuth is acceding to. 

Mr. Hellmuth: We are not suggesting that. 

The Commissioner : You would have to do that if you were left out. You could 
not \)e left out of the burden that there is upon other concerns. 

Mr. Hellmuth : We would have to assume the same burdens as others. There 
is, I understand, a distinction in regard to what is called the certainty 
of redress. That is a matter that you, Mr. Commissioner, laid some 
stress upon, that the workman should be absolutely certain of getting 
compensation. Now, in regard to the railways it could always be made 
a first charge upon the undertaking. 

Tpie Commissioner: There would be no power in the Provincial Legislature to do 
that in the case of a Dominion road. 

Mr. Hellmuth : Well, that might be obviated by a suggestion that Mr. Wegenast 
made, that the Dominion should adopt concurrent legislation as the Ontario 
act in Ontario, and possibly the Manitoba act, or perhaps we are opening a 
rather wide question there with regard to jurisdiction over the Dominion 

The Commissioner : What they might do, if the railways consented to it — -T sup- 
pose it could be done — to enable the hoard by the passing of a Dominion 
act or by the act itself to declare that any sums payable under such a law 
should be a first charge. 

Mr. Hellmuth : If that were done it would obviate the necessity of that. 

The Commissioner : It would look as if the railways were favoured more than 
other industries, and I do not like anything to have that appearance. 

Mr. Wegenast : What I suggested was that the Dominion Government might con- 
sent to waive the application of the clause in the Bailway Act which does 
impose a direct liability on tlie railways. There is a clause in the Railway 
Act under which the railways are liable for negligence, and that clause, I 
take it, the Ontario Legislature could not affect or remove. I should think 
it would be a reasonable thing to ask the Dominion Government to relieve 
them in that respect. 

The Commissioner : The Legislature would have to do that : that in any Province 
where there was a compensation law on these lines that that provision 
should not apply as to employees. 

Mr. Hellmuth: So far as hcing a favoured class is concerned, T would like to 
remove any such idea as that. The C. P. P. at all events does not want to 
he treated in auv wav differently from other people: they are prepared to 


bear tiie same burdens and liave the same privileges. But there are diffi- 
culties, Mr. Commissioner, in regard to that Dominion legislation. What 
is known as the statutory liability under the Dominion act we could not 
be relieved from. 

Mr. \\'egexast : You could by Dominion legislation. 

Me. Hellmuth : We could not be relieved from it by Ontario legislation. I 
suppose that could be sued for in the ordinary course here. 

The Commissioxee : ^Miat section of the Eailway Act creates any liability to an 
employee ? 

Me. Hellmuth: A great many. There is the section, for instance, in regard to 
the couplers, which Mr. Harvey Hall will be familiar with, having proper 
couplers; and the sections with regard to other appliances. There are a 
great many others that are directed to be put upon the railways. If these 
sections are not complied with then under the act besides the penalty any- 
body who is injured because of non-compliance, (and that covers employees), 
is entitled to recover as at common law for such damages sustained. That 
is not affected by the Ontario Workmen's Compensation Act, because fre- 
quently damages are given up to $4,000, $5,000, and $6,000 for loss of limb 
and life. There was a verdict the other day in Barrie, in a case I was in 
for $6,000, where a young man lost his arm by reason of not having proper 
appliances; I am saying that is the claim. 

The Commissioner : You do not expect that to stand ? 

Mr. Hellmuth : It has been upset at present, but it may be restored. I only mean 
that it is a question that will have to be considered, because while we dqi 
not want any favoured treatment it would be rather unfair that the railway 
should be obliged to pay the full amount under the proposed workmen's 
compensation act where there is no negligence at all, and then when there 
is negligence that it should be obliged to pay four or five times what a manu- 
facturer would be obliged to pay. 

The Commissioner : That will make you very careful not to be negligent. 

Mr, Hellmuth: That is one way of looking at it. However, I wanted to dis- 
abuse your mind of that idea. 

^Ir. Gibbons: Could it not be arranged that where you came under the liability 
of the Dominion act you would not be liable under the workmen's compen- 
sation act? 

Tin: Commissioner: A man could not get it twice over. 

Mr. Hellmuth: We do not want the larger amount where everybody else would 
have the smaller. 

Mr. Bancroft : Has it not worked out in England, .for instance, that wherever 
there has been a suit at common law on the employers' liability in preference 
to the workmen's compensation the judgments have largely been based upon 
the compensation that the man would have been entitled to under the exist- 
ing compensation law? 


The Commissioner: I do not know how that is. 

Mr. Bancroft : I think that is the evidence of everybody, that the judgments have 
largely been based upon that. 

Mk. Hellmuth : You mean the amount recovered ? 

Mk. Bancroft: Yes. 

The CoMiassiONEE : They are not fixed by a jury but the judge of the county 

Mr. Hellmuth : It is not so here with the juries. I have been in a number of 
cases in which the judge has said to the jury: "Now, assess the damages 
under the statute \" that is under what we call the workmen's compensation 
here, three years' wages or $1,500, which is the limit. I have seen cases 
where $1,500 has been assessed under one, and $5,0.00 or $6,000 under the 
other, so that the juries will very naturally give the larger amount wherever 
they can. 

Mr. Bancroft: It seems from your statement that the C. P. R. object to the 
grouping system whereby they will be paying an assessment for the negli- 
gence of a road that is not as efficient as itself. I understand that is your 
objection ? 

Mr. Hellmuth : AVe are not saying they will not, but we think they should not. 

Mr. Bancroft: That is the implication. Now, if the C. P. E. was made under 
the legislation a group in itself, like the Krupp works in Germany, where 
they have either a lower or higher assessment according to their efficiency 
and protective devices against accidents, I cannot see in my own mind where 
the argument is that you should be left out and allowed to manage your own 
insurance. I can easily see the danger of, for instance, the Timothy Eaton 
Company claiming the same thing, and the Grand Trunk Eailway, and that 
would reduce the whole social scheme. 

The Commissioner : I do not think that is what they are asking. They are quite 
content to pay the compensation and to pay any surcharge, or if the law is 
to be a capitalized fund, to pay it; they are prepared to leave to the Board 
just as if they were grouped under the act the determination of what claims 
should be paid. 

Mr. Bancroft : That is what we would like to get clearly from the C. P. R., as to 

whether they are willing to come under this act. 

The Commissioner: In everything, except they do not want to be grouped; they 
would not pay an assessment, they would pay as the losses occurred. 

Mr. Gibbons: There is one statement I do not understand. They say they want 
to deal with their own employees; that is something we would object to. 

Mr. Hellmuth : Only so far as paying the money over is concerned. 

Mr. Gibbons: What difference does it make if the Commission pays the money 


Mr. Hellmuth : We do not want to pay the costs of the Commission if we are 
paying our men. 
19 l. 


Mk. Gibjjoxs : 'Wie Commissiou makes the award. 

Mk. Hellmuth : Aud then we pay the money over to the men. 

All;, tiiuijoxs: The Commission handling the money will not make any additional 
cost, as I understand. 

Mr. Bancroft: If the C.P.K. comes under the act as a group in itself and pays 
the assessment into the insurance fund the only difference to you is this, 
that the lii.^nraiiee Commission holds the C. R. R. money in a fund, and in 
the way you \\ ant the C. P. R. itself holds the money. 

Mr. Hellmuth: Itself holds the money? 

Mr. Bancroft: Except the reserve. 

Mr. VrEGENAST : This appears to he the main point or the underlying reason, if 
I may attribute motives, for the stand of the C. P. E., that the men will 
not feel so free to claim their compensation if it comes directly out of the 
individual road as they will if they have to apply to a fund. 

The CoMMTSSiONEK : That kind of workman would be a rara avis. Is that not 
fanciful ? 

Mr. Wegenast: jSTo, I think that is apparently the basic reason. 

Mr. Bancroft: We have found out by some years of experience that it is very 
hard to get the workmen from big concerns to give evidence in the face of 
tiieir employers, because after all the employer has the last kick. 

The CoAiMissroxER: That is in favour of another employee who has been injured; 
they will in their own favour. I never knew them to fail. 

Mr. Bancroft : But what Mr. Wegenast is pointing out is this, that a workman on 
the C. P. R. would not feel as free to claim compensation from the company 
as he would from an Industrial Commission that was appointed by the Crown 
and which was a public concern. 

The Commissioner : I have not seen that workman yet in all my travels. 

Mr. Wegenast: I have seen a good many, Mr. Commissioner. We are giving as 
one of our reasons for acceding to the proposition of a Government fund 
that it will improve the relations between us and our employees. As it is the 
employee has to fight for his compensation, he has the employer against him. 
Under the system we propose we think that the employee will feel more free 
to claim his compensation, and judging from the experience under other 
similar systems the employer will give him every assistance in securing his 

The Commissioner: Do you really seriously suggest that the putting of three 
railways together will make the slightest difference? 

Mr. Wegenast: Yes, I do; with all respect, I want to say it with emphasis. 

Mr. Bancroft: The question I asked Mr. Hellmuth about the handling of the 
money is important inasmuch as the labour men of tliis country have con- 
tinually tried to get an amendment to the Eailwav Act whereby the com- 

pany will have to pay wages fortnightly, li is often six week.': before he 
gets any money, and the retaining of that money must mean considerable to 
the L\ P. K. In this case the objection seems to be against the handling of 
the money by the state, and 1 would like to point out that the amendment 
to the Kailway Act passed the House of Commons unanimously but has been 
defeated in the Senate. The point I wish to bring out is this, that the only 
difference as far as 1 can see is that if the C. P. R. does not pay the money 
into the Industrial Insurance Connnission that the C. P. II. will retain that 
money themselves and pay out the compensation as they desire to pay it out 
or as thev are directed by the act. Now, I do not think that is a good 
enough objection to allow them to be an exception to this legislation. I 
would be w^illing to listen to any real reason why tlie C. P. R. should be left 
out, but that seems to be the object, the retention of such a large sum of 

Mr. Hellmutii : We are not asking to be left out of the act. but out of the groups. 
The act can direct how tlie money shall be laid out. As far as the C. P. R. 
is concerned I would be quite prepared to undertake for them that they will 
pay a day earlier even to the workmen direct, so that there shall be no loss 
of time. 

^Ir. Baxcrofi : If you should handle your owm insurance fund as you suggest, whv 
should not another big corporation handle its fund? 

Mr. Hellmuth : I am not acting for other corporations. The Krupp people 
practically do it, and the Government railways in England do it. 

Mr. Hall : I think the railway employees ought to know their own business as 
well as somebody from the outside, as to what is i]i their interests, and they 
have been here and have represented their case to the Commissioner, and I 
think they are quite capable of doing it too. I w^ould like to know when the 
decision was come to to make this a pension fund instead of an insurance 

The CoMMTSsiONEi! : We are not going to waste time in discussing words. 

Mr. Hall: I would like to know if it is the intention to make it a pension fund. 

The Commlssioxer : It would be compensation by pension, or whatever you choose 
to call it; it would be so much money a month or a year, whatever you like 
to call it. 

Mr. Hall : It simply means this, that there is a difference between the words. 

The Co:\rMissioxER : Xot the slightest. 

Mr. Hatl: One is pauperizing the receiver and keeps his in a position where he 
cannot better himself. 

The Commissioner: That is another mistake as to what pension means. It is 
only a convenient term that is used here in the discussion; it does not 
amount to a row of pins. 

Mr. Bancroft: I would like to make this clear. In the railway transportation 
business of this country there are a great number of men. The conductors 
and the engineers are not the transportation system. They are numerically 


a big body, but there is iu the C. P. R. shops a bigger body of machinists, 
car men, moulders, boiler-makers, and others who belong to the C. P. E. 
federation, and who are alliliated with the Trades and Labour Congress. I 
would like to draw that matter to your attention, and that they should be 
considered in this matter, and not only the transportation end of it. 

The Commissioner: Have they expressed any opioion? 

Me. Bancroft : They have expressed their opinion through the Trades and Labour 
Council which has seventy per cent, of the members, and they are expressing 
their opinions through us here. The boiler-makers and machinists are all 
represented by the Trades and Labour Council, and they are the men who 
wanted the Eailway Act amended, which was defeated. 

Mr. Gibbons : I am informed there are only two of the smallest organizations that 
have had a chance to express their opinions to the men who are here to-day, 
and those men who are here to-day only represent forty-five per cent, 
of the conductors in the Province of Ontario, while the Dominion Trades 
Congress represents the whole number. 

Mr. Hall : I do not think they represent any of the train service organizations. 

Mr. Bancroft: You take the unorganized men even in the C. P. E. — take the 
freight handlers in this city who number six hundred, they have very little 
organization; should we not consider all these men also in a public matter 
of this kind? I think we should. There are thousands of men on the 
C. P. E. 

The Commissioner: Mr. Hall suggests that the Trades and Laoour Council does 
not represent any of the train service men. 

Mr. Bancroft: I mentioned that, that the conductor and the engineers and the 
train service men and the transportation end of the C. P. E. ; but the other 
end of the C. P. E. is a bigger body of men. 

Mr. Gibbons: There are the firemen and the brakemen that Mr. Hall does not 
represent either, and only forty-live per cent, of the conductors. 

The Commissioner: You say that the body Mr. Hall represents is only 45 
per cent, and that the rest of them are represented by the Tra3es and 
Labour Council? 

Me, Gibbons: I think we represent the biggest organization of them all. 

The Commissioner: Take t/he conductors; you do not mean the 55 per cent, not in 
that asi=ociation are represented by you? 

^\n. GrBROxs: Oh. no. I say they only represent about 15 per cent, of those. 

yin. Bancroft: ^Ir. TTall represents part of the conductors. 

The Commissioner: Which is this organization that T was spoakinir of this 
morning with its head oflTice in Ottawa, the Eailway Trainmen : wliat branch 
is that? 

Mn. BANCimFT: That is the transportation. 


The Commissioner: Have thej not a separate organization of these freight 
handlers ? 

Mr. Banceoft : Oh yes. 

The Commissioxer : \Yhy do they not speak ? 

Me. Bancroft: The freight handlers down at the C.P.R. in Toronto have very 
little organization. I will tell you another thing, Mr. Commissioner, as Mr. 
Wegenast has pointed out, it is not very easy for men employed by a big 
corporation to come and oppose that big corporation; it is a very dangerous 
thing for them to do. 

The Commissioner : I appreciate that. 

"What is the view as to tlie power of the board in case a workman has 
clearly brought about his own injury; would it do to reduce tlie amount of 
the compensation to which he would otherwise be entitled? 

Mr. Hall: In railway practice that is a very hard question to decide, because 
there is not a rule governing the operation of railv>'ay trains that a man can 
live under and not make a mistake; he is always guilty of some mistake. 
It is a very easy matter to take into the courts the rules governing the 
operation of the road and prove that the man did something wrong. 

The CoMMissroNEE : That does not hurt the man; it only hurts the railway when 
some third person is injured. 

Me. Hall: It hurts the man's family if he gets killed by some neglect or lack of 
memory, or something by which he makes a mistake. 

Mr. Hellmuth: I quite appreciate what Mr. Hall says. It has taken place I 
think some times before you, sir, if I recollect rightly, where the com- 
pany has put in a rula to show a man should not have done what he did, 
and the man has said, " Well, I had to do It or I wouldn't have kept my 

Mr. Hall : Another thing, he may have so many things to do that he forgets one. 

Me. HELL:xruTH : I understood this act was to cover compensation in such cases, 
but I do not think that is tHe case that has been presented. Supposing a 
man deliberately against the orders and the rules does something. I am 
not saying he should not receive compensation, but without any excuse what- 
ever he recklessly does something; I think tliat is the question. 

The Commissioner: Supposing a workman working on glass, or a workwoman 
more likely, has supplied to him glasses to wear for the protection of his 
eyes, and he deliberately refuses to wear them and does not use them, and a 
piece of, glass flies into his eye and injures it, what justice is there in that 
man getting compensation? 

Me. Wegenast: I am suggesting, Mr. Commissioner, that the voluntary associa- 
tions which we hope will be organized shall have the power to make rules 
which, when sanctioned by the board, shall have the force of law. These 
should be governed by proper penalties, and while not desiring to express 
a final opinion, it does appear to me that these penalties, if enforced, might 
be a sufficient deterrent. They would be penalties imposed regardless of 
whether an accident happened or not. 


The Commissioner : I think that would be a source of all sorts of irritation. 

Mr. Gibboxs: The different suggestions with regard to violating a rule might 
work out with regard to an injured employee, but if that employee were 
killed and not able to speak for himself then there might be various reasons 
given why he should not have violated some" rule, when possibly it might 
not be the fact and nobody would be there to dispute it. 

The Commissioner: The British act does not allow the exception where the acci- 
dent is facal. 

Mk. Hellmuth: And that is proper too; I quite agree with what Mr. Gibbons 

Mi;. Wegenast: I think it is improper and I quite disagree with what Mr. 
Hellmuth has said. The exception is purely arbitrary and has no founda- 
tion in justice; that it is that leads me to sugggest some other method of 

Mr. Hellmuth : I think perhaps we unnecessarily differ there. I am speaking of 
a case where the man is killed and nobody can speak as to how the accident 
occurred, or whether it was his fault or not. There they give him the 
benefit of the doubt; surely that is a reasonable proposition. 

The Commlssioner: It would be wider than that. In the British act it does not 
matter whetlier there is doubt or not. The British act says: serious and 
wilful misconduct bars the right to recover unless the accident results in 
death, when it is no answer. There are two reasons, it seems to me, why 
that exists ; the first is the one suggested by Mr. Gibbons, and the other that 
this is in part a social law and these dependants would be left upon the 
public if provision were not made. 

Mr. Wegenast: But in many cases where the man is not killed the dependents 
are just as badly off, or more so, such as in a case of total disability; the 
economic effect is as great or greater. It is a purely arbitrary rule, and 
due to the inartistic way in which the rule is worked out. 

The Commissioner: I think the reason that Mr. Gibbons has given is one of the 

^Ti;. : T have suggested in mv l)rief that perhaps the "Washington act 
could not be very much improved : it is a small percentage. 

Mr. HELL^ruTH : Tlio British act covers botli. Cnmnensation is not pair! when 
tlie injury was due to tlie .serious and wilful misconduct of the man unless 
it results in death or in serious and permanent disability: in either of those 
two oases unrler the British act he orets compensaterl. 

Mr. Weoenast : T stand corrected in tliat. 

Mr. "NfArMuRrHY: That was made in 1906. 

'^^R. GiRno^ss: We contend that the workman is penalized anvway because it 'is, 
onlv a fraction of his waees ; and then there is the suffering he has to 
endure that is the penalty* for hi? misconduct. 



Mr. Bancroft: Mr. Sherman says if a man gets 50 per cent, compensation he 
is contributing 50 per cent, to the fund. 

Mr. Hellmuth : Even where he is not in fault at all ? 

Mr." Gibbons: Yes, where he is not at fault he contributes 50 per cent., and where 
he is the other party contributes 50 per cent. ; so it is even. 

The Commissioner : Of course there are cases where such an exception is absolute 
injustice. Take the case of a man who deliberately gets drunk and goes to 
his work on a railway, with the result that he not only kills himself but 
kills twenty other people; does it not shock the conscience that the man 
should be entitled to claim compensation? 

Mr. Hellmuth: Of course those are exceptional cases. You cannot make a law 
that will absolutely fit every case. 

Mr, Gibbons : There is usually a way of preventing that man from going to work. 

Mr. Hellmuth : It does occur sometimes, of course. 

The Commissioner : I suppose the modern idea is that a man has a right to be 
drunk if he likes off duty. That is Mr. Keir Hardie's idea. 

Mr. Gibbons : He thought if the rich had the privilege the poor should have the 

Mr. Bancroft : This is a copy of the act that was sent to me quite awhile ago 
from the British House of Commons. This says compensation in the case 
of serious and wilful misconduct shall be paid in case of death or serious 
and permanent disablement. 

The Commissioner: That is what Mr. Hellmuth has said. 

Mr. Bancroft : Pretty nearly the whole defence of negligence in the British act 
has been wiped out. 

Mr. Hellmuth: We are still getting some litigation by reason of "arising out 
of or in the course of employment." 

The Co:mmissioner : I have a strong notion that if any classes are left out. it 
ought to be provided that if an accident happens in the course of employ- 
ment until the contrary is shown the workman is presumed to be injured in 
the course of his employment; and arising out of it, it is to be prima facie 
presumed that it arose in the course of emplo}TTient : leaving the onus on the 

Mr. Gibbons : There is one situation that seems to make it work out on one side. 
If the employee is guilty of wilful misconduct he is deprived of his compen- 
sation and that is a saving on the employer no doubt. If on the other hand 
the employer is found guilty of wilful negligence by reason of not employ- 
ing safety devices it is proposed that he should be penalized and pay into the 
fund. In either case the workman gets the worst of it, because he does 
not get any more compensation on account of the negligence of the employer, 
while if he is negligent himself he doesn't get anv compensation at all: it 
works both wavs to the benefit of the employer. Tlie penalty goes into the 


fund instead of to the workman, and in the other case if he is debarred from 
his compensation it still goes into the fund. 

Mk. "Wegenast : The provision in the Washington _act is that if the injury or 
death results to a workman from the deliberate intention of the workman 
himself that neither the workman or his widow or child or dependants of 
the workman shall receive any payment whatever out of the accident fund. 

The Commissioner: Without that act it would be so, if it were deliberately done. 

Mr. Wegenast : " From deliberate intention produces any such injury or death ;" 
that is section 6. 

The Commissioner: The eit'ect of that section, leaving in the common law lia- 
bility, is to make it necessary to insure. 

Mr. Wegenast : May I have some expression as to when it will be convenient to 
hear what I have to say with regard to Mr. Wolfe's brief? 

The Commissioner: I will hear you when we get through with the witnesses. I 
do not suppose Mr. Hinsdale's statement will take very much time. I want 
to bring this to a close as soon as possible. 

Mr. Wegenast: I have made arrangements for Mr. Hinsdale to stay a week or 
two so that he can give any advice if he is called upon. 

The Commissioner : I do not want any advice that is not given here. 


The Legislative Building. Toronto. 

Thursday, 9th January, 1913, 11 a.m. 

Present: Sir William R. Meredith, Commissioner. 
Mr. F. N^. Kennin, Secreianj. 
Mb. W. B. Wilkinson, Law Clerk. 

Mr. Wegenast : ^Ir. Commissioner, I have asked Mr. Hinsdale to appear before you, 
principally for the purpose of answering some of the criticisms of the Wash- 
ington system which have been expressed by the men who have appeared 
here on behalf of the C. P. R. and the liability companies. Since the 
system we propose is more nearly like the Washington act than any other 
existing system, the attack on our proposition has assumed to some extent 
at least the form of a criticism of the Washington act in the concrete, and 
it is for the purpose of allowing Mr. Hinsdale to set before you the actual 
facts that I suggested he sliould appear, and that I asked him to come. 

The Commissioner: Will you proceed to ask him such questions as you think fit? 

Mr. Wegenast: I think the questions T may ask Mr. Hinsdale will he largely in 
the form of asking his approval or disapproval of the criticisms. 


The CoMMissioxEK : Just go on in your own way. 

Mr, Wegexast : The first thing I would like Mr. Hinsdale to elucidate is the manner 
of fixing premium rates. There are certain premium rates given in the act, 
and the liabilit}' representatives have kept insisting that these are flat rates. 

The Com:missioxer : Just ask him the question. Do not state your proposition 
and ask him if that is right. That is not the right way to examine a 
witness. I am treating him as a witness giving his evidence before the 

Mr. "Wegexast: I thought it would save time. 

Well, Mr. Hinsdale, will you explain how the Washington system works 
in respect to the assessment of premium rates? 

The Commissioner: I am not objecting to your asking if it is a flat rate, but do 
not make your statement and then ask him to corrolx>rate it. 

Mr. Wegex'ast : I will adapt my question to your suggestion. 

Mr. F. W. Hixsdale: The industries of the State of Wasihington were divided into 
forty-eight classes, and rates were assigned for the operation of each class 
which were presumed to be in proportion to the hazard. The initial con- 
tribution was required to be at that special rate on the pay-roll for a period 
of three months. 

Mr. Wegexast: So it is not necessary for the Commission to levy the whole. of the 
rate specified in the act? 

Mr. Hixsdale: Only in regard to that first period of three months. For the first 
three months of the operation of the law they had to levy that rate specified 
in the act. These months were October, November, and December, 1911. 
After that calls were to be made on the various industries as the funds 
became depleted in any particular class, and unless the funds were depleted 
by reason of accidents, or unless they were at a point that was considered 
a reasonable amount, a call was made, and if months had been passed and 
no call had been made for a period of time tlie first call issued was to be for 
the first month elapsed. For example, if we did not call on a particular 
class until midsummer we would put out a call for January, or a call for 
January and February, as was necessary, and then no further call was 
made until it became necessary to replenish that class. 

Mr. Wegexast : Can vou illustrate that by reference to some of the classes in your 
report ? 

Mr. Hixsdale: "Well, I am speaking of any class. I may say, for example, in the 
printing class, to which printers and engravers contribute, they paid in an 
original assessment of one and a half per cent, of three months pay-roll. 
Since then they have not paid anything. "We have not asked them for any- 
thing, and we may not ask them for anything for two years yet, if the acci- 
dents continue to prevail, or not to prevail, as they have in the past. 

Mr. Wegexast: Just so as to make it clear on the record, the printers' rate as 
specified in the act is one and a half per cent.? 

Mr. Hixsdale : Yes, on the pay-roll. 


'Sin. Wegenast: You made a levy of three months of that one and a half per cent., 
which is tliree-twelfths of one and a half per cent., and that is all you levied 
for the first year? 

Mr. Hinsdale: The first year. Under our interpretation, so far as our levies were 
concerned, it ran from the 1st October to the end of January, and we counted 
the calendar year — ^we counted 1911 as our first year so far as the classes 
were concerned, and the law required that they pay for this three months, 
but so far this year we have not asked them for anything. For 1913 we 
have not asked them for anything. 

i\ri{. Wegenast: You treated the year as running from the 1st Octol)er to the 1st 
October. For the first year of the operation of the act you assessed only 
three-twelfths of one and a half per cent. ? 

Mr. Hinsdale : Yes, three-twelfths of one and a half per cent. 

The Commissioner : That is quite plain. 

^Ir. Wegenast: So that the system works absolutely on the assessment Fasis ? 

Mr. Hinsdale : Absolutely on the assessment basis. It is practically automatical 
as far as we are concerned. We call for money as it is needed. In the 
lumbering class, whicli is a very large class with twelve hundred separate 
contributors, nearly thirteen hundred, they have paid nine months out of 
fifteen. That is to say, their rate so far has been nine-fifteenths of two 
and a half per cent., making a net charge to them of $1.66 2/3. 

Mr. Wegenast: Then Mr. Wolfe makes a statement whicii is a very broad one: 
" This act became operative in the latter part of 1911. The published 
report shows its operations do not permit of an accurate determination of 
the true condition of the fund." Now, what do you say as to that? He 
goes on to say, ''^^hether enough has been collected from the fund to enable 
the losses which have occurred during the year to be met in full, or whether 
the funds on hand will be insufficient for that purpose are matters which 
cannot be determined from the published reports," and this was elaborated on 
both by Mr. Wolfe and ifr. Sherman. What do you say as to that, Mr. 
Hinsdale ? 

Mr. Hinsdale : Do I understand the question to be in regard to the payment of in- 
demnities on account of injuries? 

Mr. Wegenast: No, the sufficiency of the fund collected to meet the liabilities. 

Mr. Hinsdale: The fiincis have been sufficient in every class, with one exception. 

Mr. Hinsdale : Yes, the powder class. 

Mr. Hinsdale: Yes, the powder class. 

Mr. Wegenast: We will leave that over for the present and refer to it later. 

'Sin. Hinsdale: In every other class the firms have responded promptly and have 
sent in such monevs as were called for. Whenever the fund became low 
in anv class w."* have askod for more and have received it. It appears to 
mo thnt ciK'li fund is in good condition. 


. . — . — ^ 

AIk. Wegenast: What the eritit's of the system had reference to, I think, is the 
siitfioieni.'v of the reserves to meet deferred ehiims. Will you explain liow 
the reserves are calculated ? 

Me. HiNsnvi.K: The reserves that we cliarav art' with reference to fatal accidents 
and permanent total disability. Our law provides that $4,000 shall be set 
aside as a reserve to justify the payment of a pension to a widow thirty 
years of age. 

^Ik. Wegenast: On what ba^^is is that calculated? 

Mr. Hixsdvle: That is calculated on the basis of the American Table of ^lortality. 
with the expectation tliat the money shall be invested, and of conrse assum- 
ing tliat the money shall be invested and the fund shall derive an income 
and ffrow. We have during the first year up to October 1st set aside $243,- 
984.95 as a reserve. We have that invested at a little better than five per 
cent. — about five and a quarter or five and one-eighth, in such funds as 
State Treasurers are autliorized to invest state fu!ids. We set aside a re- 
serve of less than $4,000 if the widow is older than tliirty. of course. We 
have worked that out on a proportionate amount as age increased and her 
life expectancy naturally decreases or is less. We worked it ont on a basis of 
thirty years to ninety-five years. 

Mr. Wegenast: Wliat do you say as to the probable accuracy of your estimate? 

^Tr. Hinsdale : Our law provides if a widow shall re-marry we shall pay her 
a year's pension in advance, and shall continue such pension as may be pay- 
able to her children until they become sixteen years old. Of course the 
pension to the children is not affected by her re-marriage : we continue them. 
As soon as she re-marries we release any unpaid amount from that pension, 
from that reserve. If seemed to us that this was a suflficient amount: it 
was carefully thought out. Of course it may take a good many years to 
determine whether it is correct or not, but there are no statistics available 
whatever v.-ith regard to when widows re-marry. We have had two cases 
occur already. 

Mr. Wegenast: That is in the first year's operation? 

Mr. Hinsdale: Yes. Another thing, if a workman is permanently totally disabled, 
as we say, we set aside a reserve to justify his pension: naturally it is 
an impaired life and his expectancy would not be equal to that of the table. 

Mr. Wegenast: That is recognized by the insurance companies. T understand. 

Mr. Hinsdale: In Enjrland T think they set aside only two-thirds of the reserve 
tJiat would be recjuired on a normal life. We nave iriven it verv careful 
thought, and it seems to us that $t.000 is sufficient in view of the fact rliat 
many of these lives are impaired lives anyway. They are not selected. 

Mr. Wegenast: Then, in making your calculations you have made use of such 
experience as was available of insurance companies? 

Mr. Hinsdale: Tt was thought out very carefully. AVo get a ]iretty good rate of 
interest. I think most of those reserves iii the insurance companies are 
figured on a basis of a lower rate of income. We have !^?."T9.000 invested in 
municipal bonds, school bonds, citv securities and. as T said, our net rate of 
interest is about five and one-eighth per cent. 


^ _ ■ 

Mr. Wegenast : The rates of interest in the west, 1 presume, are a little higher 
than they are in the east? 

Mb. Hinsdale: They are. Of course some of the cities are able to borrow money 
at a very low rate, but with careful selection we can buy school bonds in 
the different cities, and municipal bonds. We do not bid on bonds unless 
they carry a good rate of interest; we let the low interest bonds be sold east. 

Me. Wegenast: Are you familiar with the methods of the liability companies in 
setting up reserves ? 

Me. Hinsdale : I cannot say that I am personally familiar with the methods of 
liability companies as regards to naming the amounts of the reserves. 

Mr. Wegenast : I understand that the rough method adopted by the liability com- 
panies in comparing the results of your system with theirs is to assume that 
a certain percentage of the amount of premiums collected will have to be 
set aside. I think the percentage usually spoken of, roughly, is 60 per 
cent.; that is 60 per cent of the premiums collected will have to be set 
aside as a reserve for deferred payments. Would you make any such rough 
estimate, and form any conclusion from it? 

Mr. Hinsdale: It may be worked out that way, but that is not the way in which 
under our law it is done. Under our law a certain specified amount is 
named as to the amount that shall be set aside at the age of thirty or the 
other ages varying in accordance with the expectancy. But one could work 
it out differently; one could charge a rate,- of course, which would take into 
consideration the accumulation of a reserve, or the setting aside of a re- 
serve. In a sense one might create a sinking fund by an additional rate. 

Me. Wegenast: Then in estimating in that way you would be depending on ex- 
perience and not on an accurate calculation. 

Mit. Hinsdale: I do not think there are any absolute statistics available to make 
a perfectly accurate forecast. 

Me. Wegenast: You have spoken of the reserve set aside in the case of death and 
in the case of permanent total disability. What about reserves in cases of 
partial disability. 

Mr. Hinsdale: We do not set aside a reserve in the payment of partial disability. 
We pay a pension so long as the disability lasts. That pension is simply re- 
garded as an award to be paid and not carried in the reserve account at all. 
It is a direct charge against the fund of the class. 

Mr. Wegenast: That is in case of a temporary disability, hut what in case of a 
permanent total disability? 

Mr. Hinsdale: A permanent total disability, of course, would be a matter for a 
reserve. A permanent partial disability like the loss of an arm or the loss 
,of a leg would require lump sum payments. We have had very few perma- 
nent total disabilities. I think only two. 

Mr. Wegenast: And do you -set up a reserve? 

Mr. Hinsdale: We do. Wo set aside a reserve. 



Mr. Wegenast: On what basis would you calculate that? 

Me. Hinsdale : On the expectancy. 

Mr. "Wegexast : You make the best calculation you can ? 

Mr. Hinsdale : The same basis precisely as setting aside the reserve for the widow. 
"We learn the age of the injured man and what relation that is to the age 
of thirty towards his expectancy. 

Ml!. "Wegenast: Then in case of temporary disability you do not set aside a 
reserve ? 

Mr. Hinsdale: Xo, sir. That is a direct charge against the fund of the class. 

Mr. Wegexast: The probability is then that owing to the abrupt beginning of the 
act on the 1st October, 1911, there will be an over-lapping liability which 
will run from the first year into the second year, and which will cause the 
rate for the second year to be higher than the first; is that correct? 

Mr. Hinsdale : There is that, certainly. In other words, a man might now be 
temporarily disabled, in our opinion, and we might be paying him a pen- 
sion — we do not call it a pension — we might be giving him a monthly 
award. During the year it might develop that the man could not ever get 
well — iu other words, that he was permanently totally disabled. A man 
might have an injury to his sight and we might be uncertain whether it 
would cause total blindness or not, and we might be paying him his monthly 
award, and the next year we might discover that his eyesight is absolutely 
ruined. We would then put him on the total permanent disability list and 
set aside a reserve to justify the award that he is to receive eadi month. 

Mr. Wegenast: Then can you express any opinion as to the probable extent of the 
rise in the rate, if any, after the first year? I see you have the report now 
for the first fifteen months. 

Mr. Hinsdale : We have the report up to the 1st January, which has completed 
the fifteen months. 

Mr. Wegenast: Then on the basis of that, or any other information you have, can 
you express any opinion as to the probability of the rise in the rate? 

Mr. Hinsdale : I could not say how much the rise would, be. I think it is fair 
to assume that there will be an increase in the rate. The law is so young 
in its operation, only having been operating fifteen months, that we surely 
have not come into the normal year's work. When we first began on the 
1st October a year ago naturally there were no claims coming in that month, 
and almost none the next month. We did not begin to get into full swing 
in the claims department until this spring, I presume. In fact we are pay- 
ing occasionally a claim that originally dated a year ago for some, 
accident that occurred long ago. It is too early to take a certain year and 
say from January to January our expenses were so much, and that that is 
a fair indication of the future. It will naturally increase a little. 

Mr. Wegenast: Will that increase, in your opinion, be continuous from year to 
year ? 

Mr. Hinsdale: I do not think it should be continuous. I think as soon as a given 


yea'" is a fair estimate — in otlier words as soon as there is just as much 
unfinished business of tlie year before done that year as there is business for 
that year that cannot 'be done until the next year, then we will be justified 
in saying that between a certain date and another date was a normal 

Mr. Wegenast : Subg'ect, of course, to the gradual increase of industry ? 

Mr. Hinsdale: The gradual increase of industry and possibly the bad outcome of 
conditions that we think now are temporary developing into permanent in- 

Mr. Wegexast: Then there are, I suppose, some counteracting factors. For in- 
stance, during the first year would you get all the premiums you are entitled 

Mr. Hinsdale: No, that is another matter in which we cannot say the receipts 
from January to January, or October to October, represent a normal year, 
because when we first began there was nothing coming from the past. At 
the end of the year we had a large amount coming that had not yet been 
paid in. It was not due, but it was outstanding. 

Mb. Wegenast : Then I presume there would be a loss of some proportion of the 
premiums actually due the first year — a total loss. 

Mr. Hinsdale: Yes, in some cases. We have been fortunate in our collections. 
There are cases, however, when men have become bankrupt or absolutely 
unable to pay, when a judgment was worthless. 

Mr. Wegenast : Do you find any cases where a claim is made for compensation 
and it develops that no premium was paid in by the employer? 

Mr. Hinsdale: We do. We make a very careful search throughout the state for 
all industries, and yet it is natural that certain operations should be con- 
ducted for a length of time before we are able to discover them. A man 
might be logging up in the hills, and an accident might occur in his opera- 
tions and be reported to us, and we find there has been nothing paid to the 
fund on account of those operations. In our law there is no provision that 
a man is in default until a formal demand is made upon him and he has 
refused or failed to pay. We have had to hold that a firm was not in de- 
fault until they had refused to pay a formal demand, and therefore we have 
paid those claims and have immediately tried to find out what the employer's 
pay-roll was and made a claim from the 1st of October. 

Mr. Wegenast: By the way, would it assist the commission in its work if there 
were a provision m the law that the premium should bo due without de- 
mand ? 

Mr. Hinsdale: Very decidedly. T should heartily recommend an amendment to 
our law giving a constructive default, requiring a man to make settlement on 
his pay-roll, and requiring him to make contribution. 

Mr. Wegenast: That would also assist as against an under-estimate of Hie pay- 
roll ? 


Mr. Hinsdale : Yes. We have quite a heavy penalty for the under-estimating of 
a pay-roll. We have never had to inflict it. 

Mk. Wegenast: Then there is some loss incidental to the first year's operation 
owing to your not having fully covered the state and ascertained who the 
employers were? 

Mr. Hinsdale : Yes, there is some loss. 

Mr. Wegenast: And men are actually insured and are entitled to compensation 
without their employers having paid in the premium? 

Mr. Hinsdale: We consider that the workman is entitled to the payment of his 
claim regardless of whether the employer has paid the contribution or not. 
If the employer has not paid we try to make him pay; if he does not 
pay willingly we sue him. The only trouble is that we have no provision 
whereby he is in default until we have made the demand, and we cannot 
inflict the penalty. 

Mr. Wegenast: It is not incumbent on him io come to the board and report his 
pay-roll ? 

Mr. Hinsdale : No. It should be, and it will be, no doubt, after this session of 
the legislature; they will amend the act. Of course if we have made a 
reasonable demand and given him a reasonable time and he hafe failed to pay 
or refused to pay, and then the workman is hurt, if he wants to come to us 
and ask for compensation we give it, but we take his right of action against 
his employer and bring suit in the name of the state against his employer 
as though we were in his place, and the employer has been deprived of his 
old defences of fellow-servant and assumed risk and contributory negli- 
gence. The workman can either assign his right of action to us and we 
sue the employer, or the man himself may sue and not take compensation 
from us. He cannot do both. We had a case in Spokane where we asked 
a laundry to pay two per cent, of three months' pay-roll, the original con- 
tribution according to the act, and I think the payment amounted to about 
$69 if they had paid. We made a formal demand and they failed to pay 
it, after repeated notice. A man was hurt in November, and the law;\'ers 
sent over to find the condition of the record, to find if the firm was in 
default on a certain date, and we showed that they were in default on that 
date. The man sued the employer and recovered a verdict of $5,000. 

Mr. Wegenast : Then you have this additional hold on the employer, that if he 
does not pay his premium he is liable to an action at common law? 

Mr. Hinsdale: He is liable to suit by his employee, and if the employee does not 
want to bring a suit we will bring a suit. 

Mr. Wegenast : Supposing he recovers only part of what he would have got by way 
of compensation, then the board makes up the deficiency? 

Mr. Hinsdale: Yes; if we take his right of action and give him his compensation 
under the law and we recover more, we turn it in to the accident fund. 

Mr. Wegenast : Eeferring again to the loss because of not knowing of the existence 
of tlie employers, should that be continuous; should that be a continuous 
condition under vour svstem? 


* ■ 

Mr, Hinsdale: The loss on account of the employer not paying the premiuin? 

Mr. Wegenast: No, the loss incident to the beginning of the act and your not 
having covered the State fully and ascertained who the employers were — 
should that be a continuous condition? 

Mk. Hinsdale: No, tJie condition in that respect should be improved. 

Mr. Wegenast : So that that factor must be considered as counteracting to some 
extent the deferred liability ? 

Mr. Hinsdale: Yes. 

Mr. Wegenast: Now, Mr. Wolfe stated in connection with that that there was an 
a'ppropriation of $150,000 made the first year for the expenditures of this 
Washington compensation commission, and this year they have asked that 
this sum be increased to $250,000; have you any comment to make on that? 

]\Ir. Hinsdale : When the law was proposed of course it was absolutely unknown 
what the expenses would be ; there were no statistics on the subject, as far as 
we were concerned. The Legislature thought that $150,000 might be suffi- 
cient for a period of twenty-tw^o months until the next appropriation might 
be available. We had to equip the whole office and buy our books and 
stationery and machines, and so forth, and pay the auditors. Then there 
w^ere various otilier expenses that the Legislature did not contemplate, I 
presume. We found we had to pay all the expenses in regard to the in- 
vestigation of claims which were not good claims. Then we had to pay our 
own doctor's to examine a man, and we had to pay a great many different ex- 
penses. Of course $150,000 divided into twenty-two months gave a per- 
missible sum of $0,818 per month. We have kept within it, but if has been 
hard work. 

Mr. Wegenast : Why ? 

Mr. Hinsdale: Because we have had sometimes twenty auditors in the field, and 
w^e have a large office staff. We have had thirty-five employees, aiid^at one 
season we had forty-nine employees, and to pay all the expenses and salaries, 
and buy stationery out of $6,800 a month, was a difficult thing to do. 

Mr. Wegenast: In what branches do you expect an expansion of that expense? 

Mr. Hinsdale: Why, during the operation of the fifteen months of the law, and 
the preliminary four months in the preparation of its operation, when the 
commission w'as entitled to do business, or empowered to act, a good deal 
of that time there were no claims. Naturally the claims did not come in 
till the 1st January, perhaps, but now we are in full swing, in the full 
course of business. 

Mr. Wegenast: Then you had to pay for a certain period before the act went into 
operation ? 

Mr. Hinsdale: Yes, we had to accumulate the information in regard to the 
industries. We had to send out auditors throughout the state to list them 
all and to learn their pay-rolls. 

Mr. Wegenast: So that the expenses of the first year would naturally be consider- 
ably higher, other things being equal. tJian they would the succeeding years? 


Mk. Hinsdall: In some particulars the} would be higher; now every month may 
be called a normal month. In the first operation of the act there was no 
claims department practiciilly. the claims department did not get into its 

Mr. Wegenast: What I am trying to get at is, what do you expect to do with the 
money when you get more money; do you expet.'t to pay higher salaries or 
do you expeet to employ more otlicers? 

Mr. Hinsdale: Simply employ more men to do the necessary work of keeping in 
absolute touch with all building operations. We have had two men in our 
Tacoma district. The Tacoma district extends through from Puget Sound 
along the soutii and central portions of the state, and they have three men 
in the Seattle disirict, which extends through to the Columbia river, which 
is an immense area; and one man somewhere else. We need inore men. 
With the few men we can only get the well-established large firms, but it is 
beyond the power of two or three men in a district to keep in touch with all 
the activities. 

Mil. ^^'ECTEXAS'r: Thar, by the way, is a particularly important factor in connection 
with the building trades? 

Mr. Hixsdale: Particularly so. 

]\[r. Wegenast: Where a contract does not last more than a short period? 

Mr. Hixsdale: A man takes a short building operation, and it is just as necessary, 
we believe, to get the contribution due on his pay-roll as it is to get it from 
the well organized and well regulated firm to which you can go once a year 
and audit up their books. We would miss the small man, and it would not 
be fair to make the large firms contribute and let the small ones escape. 

Mr. Wegex'AST: So that you have had that question to deal ^\'ith in the first year's 
operation ? 

Mr. Hix^sdale- On account of the very small appropriation. 

Mr. W^egexast: Then do you see any inherent difficulty in conducting the system 

Mr. Hinsdale: Xot a bit of difficulty if we have the men, and well equipped men. 
and political influence can be kept ont absolutely: and if we can select a 
man because he is an auditor and because his training has enabled him to 
know what a pay-roll is and to discover, if necessaiy. a concealed pay-roll — ■ 
if we have such men we can do good work. 

Mr. Wegexast: By the way, do you consider that these men ought to be appointed 
bv the Government, or bv the rommission which adininisters the fund I' 

Mr. Hixsdale: My opinion is that the auditors at least should be appointed by 
the Commission, subject to discharge by the Commission or. if it could be. 
by the head of the auditing department. 

Mr. Wegexast: And that is actually what is done under the Washington system? 

Mr. Hinsdale: Yes. 
20 L. 


Mr. Wegenast: You did not suggest any change? 

Mr. Hinsdale : We have not got as far as to permit the chief auditor to discharge 
an auditor, but his recommendation for the discharge as a rule is followed. 

Mr. Wegenast: Mr. Wolfe's next criticism deals with what is called the catas- 
trophe hazard, or in a mild form the danger of insufficient exposure. Mr. 
Wolfe criticizes your system because, he says, there are not enough firms, 
not enough employees, and not a sufficiently large pay-roll to afford a basis 
for an average. In the first place is it in your opinion necessary that an 
average rate should be maintained from year to year ? Take for instance the 
" lumber industries, would it do any harm if the rate for 1911 was one and 
a half per cent, and the rate for 1912 was two per cent.? 

^Ir. Hinsdale : I do not think it would do any harm at all. If the rate one year 
happened to be a little lower than another they would be pleased; I do not 
see why they should be disappointed if in some years it should be higher. 

^Ir. Wegenast : What do you consider would be the effect of that factor upon the 
activity of the employers in preventing accidents? 

Mr. Hinsdale : The cost to the employer depends altogether upon the number of 
accidents. The award to the workman is fixed by the act; if he loses his 
arm we give him $1,500. There is a basic rate stated in the law for the 
employer, but the true rate he pays depends altogether on the number of 
accidents. I think that is the finest and most important feature of the 
workmen's compensation acts, that it leads to the installation of safety de- 
vices, and there is a financial reason why the employer should do ever\'- 
thing possible to decrease the number of accidents, not only in his own 
plant, but in the plants of all those competitors in the same line of business. 

Mr. Wegenast: Then you do nofe agree with this statement which is from Mr. 
Sherman's address. I am not certain whether it was given here or in an 
address given elsewhere. He says: "This law is not only an accident 
breeder because it does not differentiate rates but also is grossly unjust to 
the employers and particularly to certain classes of employers." Referring 
to his charge that this law of the State of Washington is an "accident 
breeder," — and that criticism has heen made both by Mr. Wolfe and Mr. 
Sherman — what do you say as to that? 

Mr. Hinsdale : I cannot imagine wliy an employer who finds that his rate iS 
increasing, or who is confronted with a demand for a contribution to the 
fund would not say to himself, "■ what causes all these accidents ?" I cannot 
imagine why he should not immediately want to install every safety device 
possible, and after he has installed them in his own place I should think 
he would require them to he installed in every other place: I think it would 
lead to class organization. For example, the laundries would be in a class by 
themselves, and I think the laundry men would get together and would have 
an inspector go around and put in safety devices and see that they are put 
in. I think this law would lead to that; T think it will reduce the number 
of accidents to the minimum. 

Mr. Wegenast: Has it had any tendency in that direction as a matter of fact? 


Mr. Hinsdale: 1 cannot say it has as yet reduced the rate because we have only 
been operating a little while, but it has led to the posting of bulletin cards 
in every place of industry as to how accidents may be avoided, and quoting 
remarks made by thinkers and writers on the subject, and urging the nec- 
essity for every precaution to be taken against accidents. 

Mr. Wegenast : In general is it the opinion in your state ? I presume you are 
fairly familiar with the public opinion on this act. 

Mr. Hinsdale : On this subject I feel I am very familiar with the opinion in the 
state at large. 

Mr. Wegexast: Is it the opinion of the state at large that this act is conducive 
or does conduce to increase the number of accidents, to begin with? 

Mr. Hinsdale : Xot to increase the number of accidents, decidedly not. 

Mr. Wegenast: On the other hand is it the opinion that the tendency of the act 
will be to decrease accidents? 

Mr. Hinsdale : Decidedly to increase the number of accidents. 

Mr. Wegenast : Referring again to the question of the pay-roll exposure, have you 
any opinion to express on the question whether the pay-roll exposure in your 
state is as a matter of fact sufficient to enable you to arrive at averages ? 
Assuming that it is desirable to secure a uniform average is it sufficient ? 

Mr. Hinsdale: AVith reference to the number of firms and industries, and the 
size of the industry, and so forth? 

Mr. Wegenast: Yes. 

Mr. Hinsdale : As compared with other states I don't know. Of course the State 
of Washington is developing largely in large operations such as the con^truc- 

* tion of power companies, and milling and lumbering operations, I believe 

they are on a heavy scale as compared with any state, taking into consider- 
ation the size of the' timbers and the manner in which they are handled, and 
the use of machinery in logging, and it seems to me it should give us a fair 
basis for estimating. We have twelve hundred and thirty-seven separate 
contributors in that particular industry. 

The Commissioner : That is in the lumbering ? 

Mr. Hinsdale: Lumbering, milling, saw.-milling. We had 42,164 employees at 
the time of this list that I have. 

Mr. Wegenast: Then coming down to the smaller employers; take the one that 
has been cited as an example all over, the powder class. What do you say 
as tb the sufficiency of the pay-roll exposure there ? 

Mr. Hinsdale : Of course there is nothing more dangerous than a very small class. 
If there was only one contributor in a class under our act. why. he would 
simply be responsible for the accidents in his plant. 

Mr. Wegenast: As he has under the laws of some of your states? 

Mr. Hinsdale: Yes, except under our particular act his liahility would be less: 
that is, it would be limited. We would pay the damages and at the end of 


the Year; we would tell iiiiu what tlie deliciency was and he would pay it. 
As a matter of fact in the powder class there are four contributors. I have 
here an exact detailed statement of their pay-rolls and of how we have 
worked it out. The result of it in short is this, that the law provides that 
powder manufacturers in the State of Washington shall contribute at the 
rate of 10 per cent, and that fire-works manufacturers shall contribute at 
the rate of 5 per cent, for a three months' operation, the first three month:; 
of the law, and after that they shall be called upon as may be necessary. It 
happens tiiat the Dupoiit Powder Company is 92 per cent, of all of them, 
that is their pay-roll is by far larger than all the rest. If they had paid 
the 10 per cent, on their pay-roll for the first three months, and every 
other powder manufacturer had paid 10 per cent, on his pay-roll for three 
months, and in addition to that we had called for two months of the year 
1912, omitting the other ten months, we would have had enough to pay all 
reserves and all losses on account of the disaster which occurred in Chehalis 
where eight young people were killed. So that a 5 per cent, rate would 
have been ample even in the powder business during the 3'ear; less than that, 
•1 per cent, would have been sufficient. 

Ml!. Wegexast: So that a 5 per cent, rate would have been sufficient notwith- 
standing this catastrophe? 

Mr. Hinsdale: Xotwithstanding that catastrophe where eight children, prac- 
tically minors, were killed. I have a full statement of the powder situation 

: as far as our state is concerned. There were eight fatalities, and until such 

time. as those children would arrive at the age of twenty-one we would have 
had to pay them pensions — not them, but we would have to pay their parents 
amounts in the aggregate requiring a reserve of $^,659. Xow, the pay-roll 
expense was $600; we pay $75 each. 

Mk. Wegenast: What is the root trouble in this powder class incident? • 

Mr. Hinsdale: Simply that the Dupont Powder Company did not pay. Their 
pay-roll for three nu)nths was $36,630.13. Ten per cent, of that is 
$3,663.01. We made formal demand upon them to pay that $3,663, and 
they did not do it. They replied to us that they did not recognize our right 
to demand it; they denied the constitutionality of the act and refused to 
pay it. Others have refused to pay in other lines. We have sued many 
of them and in every case which has been determined judgment has been 
rendered in favour of the State. As to a foreign corporation, as far as our 
State is concerned we brought suit against foreign corporations in the 
superior courts, and an application was made to refer it to the federal 
court. The federal court has handed it bat-k to the superior court, and the 
superior court has tried the case. So that we have been getting decisions 
all along which have strengtlionod our position so far as the powder people 
are concerned, and it is only a matter of time before they come in. We have 
a very strong position, \vc think. 

Mk. Wi:oi:x.\st: Is the .■) per cent, an exorbitant rate or a large rate for a powder 

Mr. Hinsd.ale: Whv, so far as the rate is concerned, under our law it makes very 


little difference to our employers what the basic rate is, because we only 
ask them to pay as we need the money. 

Mr. Wegexast: Just exactly what it costs? 

Mk. Hinsdale : Just exactly what it costs. 

Mr. Wegenast : But in comparison with the rates of liability companies and the 
rates in other jurisdictions would you say 5 per cent, was a high rate? 

Mr. Hinsdale : Oh no. 

Mr. Wegenast : So that under circumstances which were peculiar, your system, 
if it had not been for this unfortunate mix-up owing to the doubt as to the 
constitutionality of the act, would have shown better results than the ordin- 
ary insurance companies? 

Mr. Hinsdale: The cost would have been very little. It happened there was only 
one very minor accident that occurred that was entitled to commission in 
the powder industries, and it only required a payment of less than $50. 
although the day I left Seattle one firm called the Hepp Fire-works 
Company had objected to paying the five per cent. Their rate was specified 
at five per cent, because they make fireworks. People who make powder 
are rated at 10 per cent. They have objected to paying even the 5 per 
cent., and were in default, but Saturday afternoon as I left Seattle a man 
came in with a cheque to pay it. We took the cheque. I went out on the 
street and found that one of tlieir men had been killed, at least fatally in- 
jured, that day. 

Mr. Wegenast : That is not the only incident of that kind you have had, a man 
coming in with hjs cheque when he found a workman had been injured? 

Mr. Hinsdale: No. 

Mr. Wegenast : Xow, I believe the opponents of the Washington system take that 
Chehalis incident as a text for the contention that one employer under your 
system, or that each employer insures not only himself but all the other 

Mr. Hinsdale : He is directly interested in the upkeeping of those establishments. 

Mr. Wegenast: Do you find in your state any objection to that condition of things? 

Mr. Hinsdale : We do, yes. We have some firms writing to us that they never 
had an accident, that thev have been in business for twenty years, they 
usually say, and have never had an accident, and they do not want to pay 
the e'xpenses of some other firm which has accidents. Tlie Hepp Fireworks 
Company told us they almost never had an accident. Tt is hard to tell 
who is going to have an accident. 

Mr. Wegenast: Is that opinion supported by general opinion tliroughout the 
state: is there any considerable feeling against the act on account of that 
feature ? 

Mr. Hinsdale: Xo, sir, I do not think that there is. I think it is so contrary 
to the spirit of insurance for a man to say tliat because he lias not liad any 


accident that he should not contribute to pay the expense of the people who 
do have accidents. We do not do it in any other line of insurance. 

Mr. Wegenast : What would be the influence of that feature on the prevention of 
accidents ? 

Mr. Hinsdale: It would make the man who has a well-conducted factory with 
every safety advice take an active interest in seeing that all other factories 
have similar devices, and that they use equal care with him in the prevention 
of accidents. • 

Mr. Wegexast: Is there any movement in that direction in your State? 

Mr. Hinsdale : There is, indeed. The Commission recognizes and is urging the 
creation of voluntary associations, trade associations, in the different classes, 
and to appoint safety engineers to inspect the safety of plants and to recom- 
mend the installation of safety devices, and to study the causes of accidents. 
Hitherto under the old system it was impossible often to find the causes of 
accidents. If an employer would admit it was his fault, or if it was proven 
it was the fault of his machine, it simply meant heavier damages, but under 
this system it makes no difference what the cause of the accident was, so far 
as the workman or the employer is concerned, or so far as the amount pay- 
able, but there is every reason for frank investigation and enquiry as to the 

Mr. Wegenast: So that one effect of the act is to remove the impediments in the 
way of investigation of causes? 

Mr. Hinsdale : Exactly, a frank investigation of the cause, and mutual effort to 
reduce the number of accidents. 

Mr. Wegenast: You regard the grouping of industries then as an important factor 
in preventing accidents ? 

Mr. Hinsdale : It has excellent results, I believe, and an excellent tendency. 

Mr. Wegenast: Mr. Commissioner, I do not think that there is anything 
in particular that I want to get from Mr. Hinsdale, although I think there 
is a great fund of information that he could .sfive which would be of benefit 
to the Commission. 

Mr. Hellmuth : There is a little information I would like to get from Mr. 

I understand, Mr. Hinsdale, that your state system is on a capitalized 
basis, not a current cost basis? 

Mr. Hinsdale: If I understand yon corre-^tly the pavmrnt, so far as the injnred 
workmen are poncerned. is on a current cost basis; so far as the widows or 
dependant^ on ncr-onnt of fatalities; arc oonfornoil it wonld be on a canitali/^ed 

Mr. Hellaittttt: So that really as a matter of fact your svstem is a mixture of 
capitalized basis and current cost basis. It has sometimes been spoken of as 
pnrely a capitalized basis, but T do not think that is so from what T beard 
from you to day. 

Mk. Hinsdale: Xo. 

Mr. Hkllmith: It is partly eiirrent cost and partly capitalized. 

Hk. lliNsUAi.i: : If 1 understand the question, so far as the men who are hurt are 
concerned, short of fatal accideutft, and the employer, it is on a current cost 

Mr. Hellmuth : You do not provide a sutUcient assessment to capitalize at one 
time the whole cost of an accident which results in mere partial disablement? 

Me. Wegenast : Xot partial, but temporary. 

Mr. Hinsdale: Permit me, please. I think perhaps I did not quite understand 
the question, but 1 might say this, that the cost to the employer, the collec- 
tion, is the current cost of the accident, and it has also the amount, or it 
includes the amount which we set aside for a reserve, so that the current 
cost at this year, or at any time — or the. amount we charge may be con- 
sidered I should think the current cost. 

Mr. Hellmuth : Then you do not put it on the capitalized basis at all? 

Mr. Hinsdale: I do not think it is on the capitalized basis, if I understand your 

Mr. Hellmuth : Let me understand you. There are two ways, 1 think, of dealing 
with accidents. Take a concrete instance: an accident happens by which 
two men are killed and five men are permanently injured, or say two men 
permanently injured, and two men are partially injured. The total amount 
to meet the death claims, the permanent disability and the partial disability 
would take $100,000 we will say. You do not levy in one year that 
$100,000 ? 

Mr. Hinsdale: So far as that year was concerned — the year from October 1st to 
October 1st we levied all that was needed to pay the people wdio were hurt, 
their awards, and we levied also all that was needed for a reserve, which was 
$240,000. More than that we levied enough to maintain, as we believe. 
a reasonable fund to the credit of each class, so that year we did levy enough 
not only to pay the losses but to pay the reserve. 1 should think one might 
call that a current cost. 

The Commissioner : It does not matter what you call it if we know what the 
thing is. 

Mr. Hinsdale : No, it does not matter. 

AfR. HELL:\rrTH: That year you required to set aside out of that supposed $100,000 
$50,000 to meet the death claims we will say: now. you did set that whole 
amount aside? 

Me. Hinsdale : Yes. 

Me. Hellmuth: That was the reserves, and so on. for tlie 1.3i)7 deaths, taking it 
at $4,000. 

Me. Hinsdale: Yes. 


Mk. Hellmuth : You did, I understand from you, set aside a reserve based on the 
expectancy of life to meet the permanent disability? 

Mr. Hinsdale: Yes. 

Mr. Hellmuth : You did not set aside any reserve to meet the temporary disabil- 
ity; is that not the fact? 

Mr. Hinsdale: No, we did not set aside a reserve to pay temporary total 

Mr. Hellmuth : Now, there is a statement in this copy of Industrial Canada 
which is put out here, Mr. Hinsdale. I see that would show a net balance in 
the Accident Fund of $290,933.29. 

^Ir. Hinsdale: Yes. » 

Mr. Hellmuth : And you show in your summary of operations an accident report, 
incomplete, of 1703 cases. Do those mean accidents that have yet to be 
investigated and claims made or not made, as they may be allowed or 
disallowed ? 

Mr. Hinsdale: Those claims represent the element that I spoke of whereby you 
cannot take in the early operation of our law, or even a year from the 
beginning of the law — from the 1st October to the following 1st October you 
cannot take them and say that is a complete year. We do not receive claims 
usually until thirty or sixty days after the accident. We are almost always 
two months behind the accident. 

Mr. Hellmuth : You have not made any allowance, have you, for what may be the 
result with regard to these 1,703 claims in the appropriation of the moneys — 
I assume you have not mafle any allowance? 

Mi{. Hixsdale: This is naturally from the auditing department, and we do not 
in our books record any claim which has not been approved for payment. 
This is simply a matter of the records of payments. 

Mr. Hellmuth: If a number of these claims are allowed they will have to come 
out of that balance of $290,933.29. 

^Fr. Hinsdale: If they amount to anything more than we can collect. 

Mr. Hellmuth : Quite so, but I understand those were claims that were presented 
to you for the first fifteen months or a year and a half. These " Awident 
Reports, Incomplete, 17();>,'' llioy are for three months of the year 1911 
and the whole of 1912? 

IMr. Hinsdale: Yes. 

Mn. Hellmuth: Then I notice here that you have in your death claims an error 
in addition, the total (loath claims arc put at 372 instead of 282: I just ran 
it up. 

"NFr. Hinsdale: Pensions? 

^fit. llKi.r.MrTii: Tlicrc are 90 moiv among your doatli claims. 

Mr. Hinsdale: Well. I do not know anything about that magazine: there may be 
an error there. 


Mr. Hellmuth : You see "pensions awarded 131/' and then "suspended and re- 
jected. 191." I did not quite grasp the meaning of whether "suspended 
and rejected'' meant "rejected/' or whether there were still under the 191 
some of those might become valid. 

Mr. Hinsedale : Of course there are a great many claims come in and every claim 
is assigned a number, naturally, in the work. It might develop that it is a 
fictitious claim or a claim entitled to no consideration for various reasons, 
but we call that a " rejected claim." A " suspended claim " means if a 
claim comes in and it is incomplete — no report from the doctor, or no report 
from the employer — we call it on the waiting list. 

Mr. Hellmuth : It may become a valid claim ? 
Mr. Hinsdale: Naturally; yes. 

Mr. Hellmuth: You have not distinguished then in that 191 which are actually 
rejected and which are suspended as far as I can see it. 

Mr. Hinsdale: I have the report here in very much greater detail. 

^fi?. Hellmuth: Then you say "Under investigation"; I should have thought 
that would have been under the suspended one, 38, and incomplete, 
22. Now, has any report whatever been made in those nO claims — -that is 
the 38 under investigation and the 22 — has any allowance been made by way 
of reserves for these claims? 

Mr. Hinsdale: Ag they come in. For instance it is three months now since the 
1st October; during these three months we have been paying claims, and I 
presume that every claim we have paid for sixty days was on account of an 
accident previous to the sixty days, almost always. We are two months 
behind the accidents. 

Mr. Hellmuth : I am not criticizing it in that way at all, Mr. Hinsdale, what I 
merely wanted to get was, that this statement here which shows an oper- 
ation of one year and a certain expenditure during that year does not take 
into account any possible expenditure in regard to those sixty claims which 
matured or vv^ere brought in during that year. 

Mr. Hinsdale: No, I presume it does not. T do not know what that statement 
is copied from, but so far as the financial statement is concerned it has only 
reference to payments made and audited on approved claims. 

Mr. Hellmuth: Then I wanted to ask you a question or two, but perhaps my 
want of knowledge of arithmetic renders me incapable of understanding it, 
but in this Chehalis disaster or this powder class list which you deal with in 
this list, I cannot understand why you added to your receipts there what you 
allege to be a shortage, $4,302.86. You see the first item is ten per cent, of 
pay-roll for October, November and December, $3956.19. That I under- 
stand you to say includes the Dupont contribution. 

Mr. Hinsdale: Yes, at ten per cent. 

Mr. Hellmuth: Then if you will take the third item, ten per cent, of pay-roll 
from January 1st to October 1st $11,811.99. 


Mr. Hinsd4Le: Oh;, that was worked out as an estimate of what it would be for 
the year. 

Mr. Hellmuth: Those two together would represent, would they not, what would 
be the receipts — that is the first and the third items, — from the contribution 
on the pay-roll? Why you should put in $4302.86, which was a shortage, 
into your receipts rather got over my knowledge. 

Mr. Hinsdale: There is no difhculty about that in my mind. The situation is 
this: we were advised tliat the end of the year referred to in the law as the 
time when we should make good deficiencies, might require them to be made 
good, was the 1st January. The powder contributors or manufacturers 
owed $3956 on the first three months' operation of the law. Now, at that 
particular time we were supposed to find out what the deficiency was. I 
think probably it does not appear in that particular document, but we had 
imposed a penalty of $1297 on the Imperial Powder Company on account of 
two deaths of young people under age who had been employed in violation 
of the statute. 

Mr. Hellmuth : I see that here. 

Mr. Hinsdale : Well, the total amount then that would have been due on account 
of the operation for those three months was $5253. 

Mr. Hellmuth : You have taken that into account in the other page. 

Mr. Hinsdale : Now, then and there we had to figure out what the shortage was. 
Now, the shortage or the total liability was $8,259 and it left a net shortage 
of $3,005. 

Mr. Hellmuth : You take off your $1297 and you get your shortage just the sarnie. 

Mr. Hinsdale: We put out a call for shortage then and there; if that had been 
paid, and also we had found it necessary to call for all of 1912, there would 
have been a matter of wliatever it is stated here. 

Mr. Hellmuth: But none of these things were done? 

Mr. Hinsdale: No, that was put in there to show the situation, or what would be 
the situation. If thoy had paid the 10 per cent, and Ave had eolle<'ted the 
shortage and penalty there would have been in the fund $13,000. That is 
put in as a matter of general information ; we did not have to do that. 

Mr. Hellmuth : I understand now your explanation, but what I do not under- 
stand is this: You could in addition to the 10 per cent, make a further 
call to meet shortages? 

Mr. Hinsdale : That is provided in the law. If at the end of any year there is 
not sufficient in the fund on account of the regular contribution we then 
would tax the shortage in that fund pro rata amongst the contributors. 

Mr. Hellmuth: Is there no limitation iti the law a« to what an employer or a 
class of employers must pay? 

Mr. Hinsdale: He must pay the losses so far as his class is concerned, nrcording 
to our law. 


.Mi;. llKLLMiTH : Thero is no limitation V It' it ran to r)0 per oent. of the pay- 
roll owing to some terrible disaster all the eontribntors would have to pay? 

^Ik. Hinsiui.e: They would have to make good. 

Mr. HELOi'jTii : Then there is Just one other question. 

As 1 understand you there is no ilitYerentiation in the rates in the same 
class ? 

Mh. Hinsdale: In the same class, except as the law provides where there is a 
difference of occupation. For instance in the powder fund the man who 
makes powder pays 10 per cent, and the man who nnikes fire-works 5 per 
eent.; but they are in the same class. 

^1k. Hell:mutii : I am not dealing with that. If an employer has particular or 
special safety appliances in his particular class in a powder mill he has to 
pav the same rate as the employer who is minus the safety appliances? 

Mr. Hinsdale: He does, yes; that is true. 

Mr. Hei.lmuth: So that every one in the same class pays the same rat^ and there 
can be no differentiating by reason of safety appliances taken up or brought 
into force liy one employer. 

Mr. Hinsdale : There is none under our law ; there can be by amendment, but 
there is none. 

Mr. Hellmuth : I am speaking of your law as it is at present. 

A[r. Hin.^dale : There is none. 

Mr. Hellmutii : Assume that the Dupont Powder Company did not pay the 
premium to the State, who pays the loss? 

Mr. Hinsdale: We issue the warrant as the law provides and send it to the man 
for whatever he is entitled to, ten dollars a month or whatever it may be 
and we refer it up to the state treasurer " jSTot paid for want of class funds."* 

Mr. Hell:muth : If it is not paid then? 

Mr. Hinsdale: Our law further provides that if there is not the money in a class 
that the deficiency shall l)e made good by general assessment upon the mem- 
bers of the class, but meantime the concern in which the accident occurs 
shall forthwith make good or pay the warrants that are issued against it. If 
a man has a warrant drawn on the proper fund, or drawn on the general 
accident fund, and our State treasurer will not pay it. all he has to do 
according to law is to take it to the Imperial Powder Company and demand 
payment, and they by law are required to pay it. 

Mr. Hellmi'tii : That is to say the concern in which the accident occurred? 

Mr. Hinsdale: Yes. Then any payments made by them into such a fund shall 
be deducted from any further dues they may owe. 

M^. Hellmutii: T am only askinu' Ibis for information. Have yon any system 
of factorv inspection by the Commission in order to see what appliance? 
are necessary? 


t — 

Mr. Hinsdale: Not as yet. Under tJie state law there is a State Labour Com- 
missioner, a separate oflicial, who is charged with the duty of seeing that 
the laws are complied with in regard to such points as the law covers, the 
machinery laws. 

Mr. Hellmuth: You have a factory act? 

Mr. Hinsdale: Certain requirements about set screws and such things. 

Mr. Hellmuth: But the Commission does not deal with it? 

Mr. Hinsdale: 'Not as yet. The intention is to make the labour commissioner 
an official of the Industrial Insurance Commission, to merge the two depart- 
ments, and to insist upon factory inspection. 

Mr. Trowern : I would like to ask if under that lumbering class everyone is 

The Commissioner: All the retailers are included in that. 

Mr. Trowern : I am pleased to know you anticipate my question. You said some 
4700, didn't you? Was that employees? 

Mr. Hinsdale: In class 10 which includes the saw-mills and shingle-mills and 
logging camps and the people who make spars with or wdthout machinery, 
there are 1237 separate contributors, separate eanployers. That does not 
include the people who run logging railways : they are separately listed. 
There are 42,] 64 employees. That does not apply in any sense to the 
retail hmiber yards in connection with no mill. 

Mr. Trowern: Have you a class for the retail people separately? 

Mr. Hinsdale: Under our act they are not considered unless they are in extra 
hazardous employment. 

Mr. Trowern: So that they are not included under your compensation act? 

Mr. Hinsdale: The retail lumber yard is not. If a saw-mill operates a mill and 
has a lumber yard, that is in connection with an extra hazardous industry, 
but if a man off at a little selling point has a little lumber yard we do not 
call that in connection witli an extra hazardous indu-try. 

Mr. Trowern: And he is left out from the operation of the act? 

Mr. Hinsdale: He is. 

Mr. Trowern : That is what I wanted to know. 

Mr. Hinsdale: But the man who operates a mill, we make him report his men 
in the yard. 

Mr. Trowern : Of course if the retailers do not come under your operation at 
all I have nothing further to say, because that is where we want to be put 
in Canada. We do not want any of this ^ort of thing in operation here 
*at all. We are not very pleased witli the whole thing. In fact I am freezing 
here this morning on account of the Government heating arrangements 
here, and I am not delighted with the manner in which the Government 
operates anything. 


Mr. Hinsdale: In connection with that last remark, if it would be agreeable, I 
would like to say a work as to the administration of this act by the State? 

Mr. Trowern : I am not referring to that. I am speaking of the Canadian law 
and not yours at all, but if the retailers are out of it I have nothing further 
to say. It shows the wisdom of your Legislators in the United States in 
leaving out the retailers, because I say it with all due respect, and I think 
Mr. Commissioner will bear me out, that if the retailers are put into the 
operation of this Canadian law at first it is going to give a great deal of 
trouble. They are a troublesome body of people wherever they get. I say 
that frankly. I cannot understand pulling the retailmen into this thing. 
Let the labour people, and the manufacturers, and the socialists, and those 
who want it have it. We are delighted to let them have it but we want to 
be left out of it. I am very pleased to know you have left them out in 
the L^nited States. 

Mr. Baxcroft: ;Mr. Hinsdale, I see you have railways tabulated in your schedule. 
What railways are there in Washington that are assessed under your act? 

Me. Hinsdale : Unless it is a logging railway, under our law, of course, and else- 
where in the United States for that matter, the transportation railways are 
under the Interstate Commerce Act. Naturally the state cannot conflict 
with that jurisdiction, but the act is considered as including the construc- 
tion of a railway until such time as it is turned over to the operating 
department; For example, if the Northern Pacific Eailway were renewing 
a bridge, taking out a trestle and putting in a new one we could not take 
it as it is under the operating system, but if they were building a neV 
branch line off somewhere we would take in that construction, we would con- 
sider that under our act ; or if a little railroad is running from one point 
in the state over into another state it is interstate, and we do not touch 
it, but if a logging road up in the woods is conveying lumber we do take it. 

Mr. Baxcroft: That is because of tlie law relating to interstate commerce? 

Mr. Hinsdale : We cannot conflict. 

Mr. Baxcroft : In the other States wJiere they have railways operating in the 
State they have included railways. 

Mr. Hinsdale: I cannot say as to otlier States. 

Mr. Bancroft: Is there any railway operating in Washington alone that is not 
under the interstate commerce act? 

Me. Hinsdale: I doubt if there is, because they are loading cars that are under 
the interstate act. 

Mr. Bancroft : That is the reason probably why you do not have the railways 
under the act? 

Mr. Hinsdale: As I say we do count the logorino- railroads, and it is possible that 
there may be a car on that logging railroad that might have been transferred 
from some interstate road. 

Mr. Bancroft: You say in your report, Mr. Hinsdale, "When the act was under 

discussion in the Lecrislaturc. even after it had become effective, the state- 


ment was made repeatedly that no State Commission without the spur of 
profit could administer the law witliout wasting thousands of dollars. No 
state, said the law's critics, can do business as cheaply as a private company. 
And yet where the private casualty company is spending over 60 per cent, 
to handle its business the State is doing it for 9 9/10 per cent." Who were 
the critics in that case? Whom did they represent? 

Mr. Hinsdale : Well, the periodicals containing criticisms that were mailed broad- 
cast over the state to encourage employers to refuse to comply with the act, 
and offering to protect them in the event of damages being assessed against 
them were naturally issued by men whose interest it was that such an act 
should not be parsed — by the liability companies. 

Mb. Bancroft : Do you remember, Mr. Hinsdale, I asked you about this part of 
the report where it says " Xo State can do business as cheaply as a private 
company. And yet where the private casualty company is spending over 
60 per cent, to handle its business the State is doing it for 9 9/10 per cent." 
Mr. Sherman, when he was here, in answering questions by Mr. Eitchie, 
who represents the accident insurance companies here, stated he thought 
this report was misleading, and seemed to emphasize particularly that that 
part of it was misleading. I would like you, if you will, to make that clear 
to the Commissioner? 

Mr. Hinsdale: I would like to state how we estimated that, and I think a simple 
statement will make it clear. In our report, for example, on the 1st of 
January it was thought that we had received contributions to the accident 
fund from employers of $1,356,457. During that time the expenses had 
amounted to $127,816. When I speak of the expenses I mean the amount 
we had spent out of the appropriation. The appropriation was $150,000, 
and it had to last us twenty-two months. We had spent $127,816, so that 
we had handled in fifteen months $1,484,274.20. Now, we wanted to know 
where to account for that money, where it was, so I figured the percentages 
on the cash that we had handled. We had 22 Vo per cent, in cash ; we had in 
the reserve 22 4/10 per cent. ; we had paid in claims 46 5/10 per cent., and 
the rest which had been expenses was 8 6/10 per cent, up to the 1st January. 
That was simply a method of accounting where all the money was, and we 
based it on all the money we had handled, every dollar we had handled — 163/2 
per cent, in claims ; 22 4/10 reserve invested ; 22^/2 in cash ; and the rest we 
hand spent. 

Mr. Bancroft: That was the way of estimating the operating expense? 

Mr. Hinsdale: That is the way. We simply figured on the amount we had 
handled. If one had wanted to, it could have been figured in some other 
way; they might have made a report that their expenses bore such a relation 
to the amounts that had been paid in claims. We simply said our expenses 
bore a certain relation to the amount of money we had handled. Person- 
ally, I would say it is proper to figure the amount of money for expenses 
on the amount you handle. It is part of our expense to get some of this 
money: we had to send out auditors to audit accounts. Supposing we had 
not paid anything ; supposing we had simply collected this money, our ex- 
penses would be that proportion of the money we had collected. It might 


» _ — 

have been figured the other way, and if so it would have raised it slightly, I 
presume. If we had figured the expense on the money we had paid out it 
might have brought it up to 13 or 13 per cent. 

Mk. Bancroft : Well, how would your way of estimating the operating expenses of 
the Industrial Insurance Commission compare with the casualty companies' 
way oi estimating the operating expenses, which is said to be sixty or sixty- 
six per cent? 

Me. Hixsdale : When we speak of the expense in connection with casualty pre- 
miums we refer to the premiums, the expense with reference to the amount 
they collect. For instance, as I have done hundreds of times, in a casualty 
policy, out of the premium I would collect my commission. Out of the 
premiuin they pay the legal expenses, their home office expenses, and all 
their expenses; so that they figure the same. 

Mk. Bancroft : That is what I wanted to get, that really the casualty companies 
for the purpose of comparison figure out their operating expenses by a. 
method similar to that of the Industrial Insurance ComisslOn? 

Mr. Hixsdale : I think they do, undoubtedly. 

Mr. Baxcroft : In this volume at page 46 there is shown two diagrams of the 
German Accident Insurance, does that compare also with the way you found 
out the expense of administration? I mean the diagram on the left hand. 

Mr. Hixsdale : That is the way. That conforms, I should think, to the way we 
did it; that is about it. 

Mr. Bax'CROFT : Then I would draw the inference, Mr. Hinsdale, that the state- 
ment made by Mr. Sherman that your report was misleading in that respect 
is not correct? 

Mr. Hixsdale: I do not regard it as a correct statement. We had no intention 
of making it misleading, and I do not think it is misleading to anyone who 
is familiar with the way of figuring expenses. 

The Commissioner: Did not Mr. Sherman say wliy it was misleading? If he did 
you had better perhaps look at it. 

^Ir. Hixsdale: Of course if we had figured the expense with reference to the 
claims paid it would give one result, it would put our expense account a 
little higher, but we figured the expense with reference to the amount of 
money handled. As it costs money to collect this money, and it made a total 
accounting of all (he money we had handled, I thought it was the only way 
I could make a report. 

The Commission'er : If they have adopted the other plan these percentages will 
not be a fair method of comparing? 

Mr. Hinsdale: If their method is the other it should be changed. 

The Commissioner: Are their percentages based upon the claims paid or as you 
have based it, upon the money handled? 

Mr. Hinsdale: Mv oninion. mikI T tliink T am right, is that the statement of ex- 
nenses is on the total monev handled. 



TiiK Co.M MISSION ek: That would be the total premiums received? 

Mr. Hinsdale : Yes. 

The Commissioner: One would suppose that would be the way they would do it? 

Mr. Ballantyne : They say the expense ratio as a rule is about 35 per cent. They 
never heard of any beyond 40, so that the 60 per cent, they are quoting 
must refer to something else. 

The Commissioner: Unless your information is inaccurate, or that is inaccurate. 

Mr. Ballantyne: Yes. 

Mr. Hinsdale : There is no other source of money to the companies ; that is the 
only source they have. In our business, as we conduct it, we not only have 
the money which is handed up in premiums but we have the appropriations, so 
it is only right and proper that we should include them both. 

The Commissioner : If you deducted the amount received from the State it would 
only make a fractional difference. 

]\rR. Hinsdale: Very small. 

Mr. Bancroft: What criticism has been made of the report by the accident in- 
surance companies doing business in New York? 

Mr. Hinsdvle: Criticism of our report on their part? 

Mr. Bancroft: Yes. 

Mr. Hinsdale: No criticism has been brought to my attention, sir, with regard to 
any part of the accountants' work or to the report. I am not aware of any 
definite points of criticism except the general objection to the law on the 
part of all liability companies. 

Mr, Bancroft: That would point out as far as the report is concerned, and even 
as far as the accident insurance companies are concerned, and the State 
of Washington is concerned, they seem to regard it as sufficient. 

Mr. Hinsdale : Oh, I think one has to, if one looks at the way the books are kept. 
We keep a daily balance; we are like a banking concern, we have a balance; 
there is no other way, it must be that balance. 

Mr. Bancroft : How did you arrive at the monthly payments that you make under 
the legislation, Mr. Hinsdale; on what basis did you start? 

Mr. Hinsdale: On account of injuries? 

Mr. Bancroft: Yes. 

Mr. Hinsdale: It is specified in the act; it is clearly specified and there is no un- 
certainty as to how much should be paid to an injured workman. If he is 
a single man we give him $20 a month. 

The Commissioner: You are speaking now of total disability? 

Mr. Hinsdale: Total temporary disability. To a man who is simply incapaci- 
tated we give $20 a month, and during the first six months of his disability 
it is increased 50 per cent., so that during the first six months he would 
receive $30 a month. 



The Commissioner: Regardless of the wage he was receiving? 

Mk. Hinsdale: No payment to him shall be over 60 per cent, of his wage, but 
the amount cannot be in excess of $20 per month plus 50 per cent, for 
the first six months, making it $30. Then if he is married it increases step 
bv step ; if he is married and has one child, or two children, and so on. The 
least amount is $35 plus 50 per cent., wliich would be $53.50 per month, 
provided that it is not in excess of 60 per cent, of his wages. 

Mr. Bancroft : What I wanted to get at really was how did you get that monthly 
rate as specified in the act.; has it any relation to wages? 

Mr. Hinsdale : You mean, perhaps, why did they assign that rate ? 

Mr. Bancroft : Yes. 

Mr. Hinsdale : I think one principle was that the rate provided must not be too 
much. It should not be so heavy that there would be a temptation for ficti- 
tious reports and malingering, or that it should be of advantage to a man to 
be laid off. We certainly did not want to have it high, and on the other hand 
they wanted to have it as substantial as possible, and between those two 
extremes they arrived at that amount, of about $1.00 a day to a single 
man, and about $1.50 a day if he has a wife and one child, and so on; 
$53.50 a month 3'^ou see would be a little more than $1.50 a day. 

Mr. Bancroft : How do those payments compare with the payments under other 
compensation laws? Take German}'-, or Great Britain, for instance. 

Mr. Hinsdale : The best knowledge I have is from reading and from hearing what 
has been said on the subject, and that is that our compensation is really 
heavier than any other country; that is, we give more. Of course we may 
not give as great a percentage of wages, perhaps, — I think some provide 
sixtv'-five per cent. — but in actual cash I think the compensation is heavier 
in Washington. 

!\Ir. Bancroft : That would mean where they pay sixty-six per cent, in Germany 
on a labourer's wages, if you take the average, your rates would be higher 
than the average in that country? 

Mr. Hinsdale : I thmk it is undoubtedly true our rates are liiigher, that they 
amount to more in dollars and cents, regardless of the percentage. 

Mr. Bancroft : You pay just as much to the poorly paid labourer as you do to the 
highly paid mechanic? 

Mr. Hinsdale : That is true. Our law does not distinguish hetween the wages 
men receive, as to the amount they shall get, except that no man shall be 
paid more than 60 per cent, of his wages. Of course a man might be 
receiving $6 a day in his ordinary work, and if he was hurt he would not 
receive any more than some other man that was receiving $4 a day. 

Mr. Bancroft: Speaking about the insurance again, I see here that the report of 
the superintendent of insurance for the Dominion of Canada for the year 
1911 shows that twenty insurance companies were engaged in liability busi- 
ness in Canada, and collected a total of $3,103,375 in premiums, of which 
$1,033,496 was written off as loss, and $937,774 was paid out in claims. In 
21 L. 


other words the money paid in b}' way of insurance premiums was so much, 
ana only 44 per cent, was actually paid out in compensation, and a 
considerable portion would go to the expense of the legal department, and 
I believe it is about the same as in the United States. So that in Canada 
it seems to be 49 per cent., wliich is getting very near the (i<> per cent, 

Mi{. Hinsdale: When the committee was appointed by Governor Hay of Wash- 
ington to make recommendations as to a law, they stated in their report 
that during the previous year — and by the way the lawv'er, Mr. Harold 
Preston, to whom is due a world of credit for the law as it is in Washing- 
ton, wrote that report, and he said that during the preAdous year the em- 
ployers of the State had paid in approximately $()()0.nOO in premiums to 
the liability companies, of which $5<»0.()00 was absolutely wasted as between 
the employer and the workman. He intimates that twent\' per cent, was 
all that really went to the workman. If T may I would like to say why 
that is true practically; but of $100 premium paid to a liability company 
in our State there used to be about $20 paid to the man who wrote it, to 
the agent who solicited; at least 10 per cent, to the general agent to cover 
general agency expense; a good 15 per cejit. at least for home office ex- 
penses, various expenses, legal expenses and so on ; and there was an ordinary 
margin of assumed profit to stockholders of lo per cent. You could 
easily account for 60 per cent., leaving a matter of 40 per cent, to be 
paid in judgments; so that out of the $100 which the employer paid there 
remains $40 presumably to go in judgments. I do not know how it is else- 
where, but I know under the system of fees that we have there at least half 
of those judgments go to the lawyer who conducts the case, and the injured 
workman does not receive more than $20 out of the $100. Under our law 
the claimant is under no necessity of paying one dollar to anybody : there 
are no fees for making his papers, no litigation, and there is no opportunity 
for him to employ an attorney nor to pay any third party anything. We 
cannot spend a dollar of that fund except to the injured workman, and if 
$100 is paid by the employer that much is paid to the injured workman or 
his dependants. 

Mr. Bancroft : Is there any way possible, Mr. Hinsdale, for the Industrial Insur- 
ance Commission, as has been charged by witnesses here against the German 
system, to favour one employer in the group system more than another as 
regards assessments, and so on? Is there any possibility for favouritism of 
one nature or another? 

Mr. Hinsdale: Under our law we could not give him a lower rate. If by the 
inspection of his record of accidents we discover — and we keep a se])arate 
account for every tirm and we know on the ledirer pa^e jnst the condition 
of affairs exactly, how many accidents occur — if we find there are a great 
number of accidents, we investigate, and if we find there is undue hazard 
in his plant we can raise his rate, but there is not a provision for lowering 
his rate. 

^Fh. Bancroft: Mr. Sherman, after referring to the Iowa law. spoke of the Wash- 
ington law. and said "The state guarantees nothing, but Wiere is only one 
fund for all injuries."' In the first place I think that would be correct, from 


the fact that each group maintains its own fund, does it not, by assess- 
ment ? 

!Mi;. Hinsdale: There is only one accident fund recognized by the Stale Treasurer 
and referred to in the law as tlie accident fund, but that accident fund is 
separated into a number of classes. We have from class 1 to class 48, and 
an accurate account of each is kept, and the law provides for that segrega- 
tion, but the warrants are practically drawn on the accident fund. If there 
is not any money in one class, as in the powder class, before issuing the 
warrant v»e would take it up to the State Treasurer and tell him there were 
no funds in that powder class, and he would endorse it " Xot paid for want 
of funds." 

Mr. Baxcp.oft: Each group under the Washington law bears its own burdens? 

IFe. Hixsdale : Absolutely, and no other burden. 

^Ir. Baxcroft: Xow, he says both the Washington and Ohio laws have been made 
attractive to the employers by exceptionally low rates, although through lack 
of discrimination their rates are grossly excessive in some cases. 

Me. Hixsdale : is it a comment on our Washington law as to the rate being very 

Mr. Baxcroft: To make it attractive to the employers. 

Mr. Hixsdale: Well, our experience during fifteen months is that exerj rate pro- 
vided by the statute is higher than necessary. We referred, I think, this 
morning to the powder firms : the law provided a rate of 10 per cent., if 
5 per cent, had been collected it would have been more than enouglt. 
Referring to the lumber industry, the rate provided by law is ":!^ per 
cent., and the actual rate charged during fifteen months is $1.66. The 
printing rate is 1^^ per cent., to really have paid the accidents that 
occurred in the printing business for the first year it w^ould have taken 
seven cents per $100 of pay-roll; that would have been enough. I will 
refer to another class that we did not mention, the street railway 
class. There are eigliteen separate street railway companies doing business 
in Washington with 3,700 employees. The specified rate in the law 
is 3 per cent. ; they are required to pay 3 per cent, of three months' pay- 
roll. Since that time we have not asked "for any money; the 3 per cent, 
of three months' pay-roll produced $"26,000 — I am speaking in round 
figures, it was in excess of $26,000 — and the total accident cost for the 
fifteen months was about $8,000. So that 3 per cent, of three months* 
pay-roll during a period of fifteen months is about three-fifteenths of 3 
per cent. ; it would be six- tenths of one per cent. 

Me. Baxcroft : But he goes further, and he says these are merely initial experi- 
mental rates for the first year and cannot be maintained. 

Mr. Hixsdale : The law provides for its atitomatic increase as required : if three 
per cent, is not enough, at the end of the year we charge them more. 

'Mr. Baxcroft: Tlien he goes on to say there are not sufficient details to lead to 
anv deductions. exccDt tlie deduction that sndi statements as are issued are 
.indifntive nf mismanasfement. 


f . 

Mk. Hinsdale: Of course we have had a very small amount of money available 
for the operation and maintenance of the department, and every man em- 
ployed has had to work very hard; we have been working night and day 
there. When it became necessary to have three people, instead of hiring 
them we would put up a notice and everybody had to come at eight o'clock 
in the morning, and come at night, too, if necessary. We have had men 
there worldng three nights a week for the last three months. 

The Commissioner: Have you any labour organizations? 

Mr. Hinsdale: There does not appear to be for state employees. We had to get 
that information and we had to go through every bit that had been done, 
all the records, and analyze them, and copy them off. I have brought with 
me a package of some five hundred pages of printers' proofs. The repott 
is not yet, sir, in the hands of our Government; I just waited until I could 
get it from the printer for your benefit. 

The CoJMAiissiONEE : Could you, while you are here, prepare from the figures that 
you have, a statement giving the details that the insurance companies give? 

Mr. Hinsdale: I think there is a statement in detail on almost every question. 

The Commissioner: Take one of their forms, Mr. Hinsdale, and see the items in 
their form of return. Could you cojnpile one of those? 

Mr. Hinsdale : I will do the best I can. I do not know just what questions they 
might ask. 

The Commissioner: Mr. Wegenast could get that. See if you could compile one 

in that form? 

Mr. Wegenast : Yes, if Mr. Neely will facilitate us. 

Mr. Bancroft : Do you mean that Mr. Hinsdale shall give to the Commission a 
detailed report, which may be a guide? 

The Commlssioner: No. They are complaining that this report does not con- 
form or does not give the particulars that they have to give to the Depart- 
ment of Insurance. It will answer that if Mr. Hinsdale will prepare a report 
itemized as the Government report is required to be in the case of insurance 
companies; that would meet that objection. You see thev are bound to 
return under certain headings, according to the regulations of the Depart- 
ment. If Mr. Hinsdale could prepare a return of the operations of his 
commission as if he were under that act, it might answer that point. I 
do not think it is a very elalborate thing. 

Mr. Ballantyne: The Canadian form is not very elaborate; I think Mr. Sherman 
referred to the New York State report. I could get a form that they use 

,Mr. Hinsdale: I will be pleased to answer anything I can. If there is a form 
provided I shall have the greatest pleasure in giving the answers. In this 
report there are hundreds of details given; it is the result of months and 
months of careful study and work. I doubt if there will be any charge 
of it being carelessly drawn, because we have taken great pains with it. It 
is at your service, sir. 



Mr. Bancroft: I saw a report that the manufacturers would not pay their assess- 
ments, and neither would they agree to come under the act in Washington. 
Have you found them in the first year's operation? How many are not 
under the act now that should be? 

Mr. Hixsdale : Whenever we have found that a man has not paid, and I am 
scrutinizing the accounts every day, I immediately send it to the Attorney- 
General to sue: I have referred, I presume, fifty cases there. In almost 
every case where judgment has been rendered it has been rendered in favour 
of the State, but in most cases the employer simply sends a cheque to pay 
I will not say there are none, because there may be somebody whoi has 
escaped our notice and attention ; but certainly there are very few who have 
not paid anything. 

Mr. Bancroft: How do you find the workers under the act? Have the workers 
registered any objection whatever? 

Mr. Hinsdale: The workmen as a class the State over, I am satisfied, are very 
much pleased with the act. There has been some criticism that our awards 
are not large enough — some workmen would like to have us pay larger in- 
demnities; I presume it would be impossible to have any act in which some 
complaint of that kind would not be made. The employers as a class, I 
am satisfied, like it. On Saturday I called on one of the largest mill men 
in Seattle and told him what his rate was; we were talking about it, and 
he said, "■' I am tlioroughly pleased with it ; I have no criticism or objection 
to make to it at all, in fact if it cost us twice that it would be a relief over 
the old system." I was talking with Judge Eeid, counsel for the North 
Western Improvement Company, which controls some large coal mines, and 
he said to me, " You are taking care of our coal losses for half what it used 
to cost us, all things being considered." There is some complaint about 
the amount of pensions we give on account of fatalities, but some complaint 
would be made, I presume, no matter what amount we paid. It seems to 
me that $20 a month is a small sum to a widow without children, never- 
theless it is 6 per cent, on $4,000, or 4 per cent, on $6,000. Of course 
it is not very much, but it cannot be lost, it is permanently hers; it cannot 
be assigned, and she never will become a charge on account of the lack of 

Mr. Bancroft: Are the rates that the employers now pay into the fund bigger 
than they were under the old employers' liability law, and the other remedies 
for damages that the workmen had in Washington ; are they bigger under 
the Washington law? 

Mr. Hinsdale: Of ^'onrse the liability rates have been increased greatly during 
a period of several years. Some years ago I have known a liability rate for 
lumbering, for instance, to be as low as a dollar, one per cent., but they 
greatly increased that as the laws abolished the defences, and as juries gave 
larger and larger verdicts. I think the liability rate is now about $1.50 on 
$100, about one and a half per cent., or was immediately before this act 
went into effect. Last year in the lumbering it cost, or for fifteen months 
it has cost about $1.66. Now, that is slightly in excess, but when one con- 
siders that under the liability rate if you did pay $1.50, it only protected 
you to the extent of $5,000, and if a verdict was rendered for $8,000 or 



. _ . 4 

$10,00(1, why, you did not get full protection. Another thing, you were 
at a certain amount of expense in connection with the case, and the mere 
actual rate for the liability charge wasn't the whole thing. In addition 
to that, I think even the $1.66 which the lumbermen pay is less than the 
total cost under the old system, and they have full protection. In other 
cases like breweries, creameries, laundries, and so on, our rates are ever so 
much lower. I would have pleasure in giving you the rate on any of our 
classes, and if you have before you the liability rate, the comparison will 
speak for itself. 

Mk, Gibbons: What is the rate for the street railways? 

Mr. HiNSDALJi: The basic rate is 3 per cent, on the pay-roll. The law requires 
that three months' contributions should be paid at that rate, and it produced 
$26,000. The accident costs have been about $8,000, and there has been 
no further assessment. They have run fifteen months now for ;l per cent, 
of three months' pay-roll, that is one-fifth of 3 per cent., or six-tenths of 1 
per cent. 

Mr. Baxckoft: That is all they have paid? 

Mr. Hinsdale: That is all they have paid, and they have now two-thirds of their 
money still on hand. There will be no charge on them at all for the opera- 
tions of last year. 

Mr. Bancroft: Mr. John Mitchell vv^as there last summer — Mr. Mitchell, of 
the American Federation of Labour. Did he speak of the Washington act 
when he v/as there? 

Mr. Hinsdale: Do you know' I cannot answer that question. 

Mr. Bancroft: I told the Commissioner at a previous sittino- that he expressed 
his approval to me in New York of the Washington act. He was on the 
Wainwright Commission in New York State. This Mr. Schwedtman, who 
I think was sent by the manufacturers of North America to Europe to study 
the question, compared the compensation insurance rates in the State of 
New York and in Germany, per $100 of pay-roll. Of course there is con- 
siderable difference in the value of the actual wages in New York and in 
Germany, that is in the purchasing power. 

Mr. Hinsdale: Surely. 

Mr. Bancroft: He says for carpenters under tlie German system the rate is $2.57, 
in New York $5; masons, Germany $1.43, New York $6.25; painters. Ger- 
man rate $1.12, New York $5. This is in Germany where the compen- 
sation is guaranteed through a mutual trade association of employers, 
and in New York it is the old employers' liability law. Plumbers. German 
rate $1.50, New York $3.25: steam pipe fitters, German rate $1.50, New 
York rnte $6.25. 

Mr. Hinsdale: I would like to say in regard to this question of rates that if tihe 
collections arc made onlv as the money is needed after the first installment 
whicli is required then it is in a manner automatic, and it makes to m!y, 
mind no difference about the rate. 


The Commissioxer : What they do is simply maxe a deposit in the first instance, 
and then it all wipes itself as it uoes alon/; it does not make any difference 
what rate you have got. 

Mr. Hinsdale: Xo, not a bit under our act. 

Tre Commissioxer: I'nless you too little to pay for the first three months. 

Mr. Hixsdale: That is the danger. 

Mr. Bancroft: I suppose the criticism will be on the rates published; we ought 
to have that clear. 

The Commissioner: It is perfectly plain to anybody who thinks for a moment. The 
amount of the rate makes no difference when a man pays Just exactly what 
the losses are. 

Mr. Hinsdale: That is true, Mr. Commissioner, and it is very plain to you and 
to us as we think of it. I have discovered in most cases that where 'em- 
ployers have objected to the law they have failed to understand that, and 
notwithstanding the fact that it has been published and they have been 
written to and they should have understood it, nevertheless when our auditors 
go to them to-day to audit the pay-roll for the whole of last year they in 
their minds apply the rate to that whole pay-roll and say we will have to 
pay $30,000, when as a matter of fact they may not have to pay anything. 

The Commissioner : It is perhaps unfortunate that they put it in that form. 

Mr. Hin^sdale: It is a matter of education. I came in on the train from the 
west with a gentleman who had made bitter objections to this law when it 
was first passed, — we had all manner of communications from him and 
his attorneys, but he pays because he had to pay. I found he had quite 
changed his mind. '"Why," he said, ^T totally misapprehended that law, 
it is a fine law. We have just started a new mill over there and the first 
thing I did was to put ourselves on record as coming in under that law." 
It is a matter of education. We have tried to be very patient with all 
enquiries and we have carried on a campaign of education. Before the law 
went into effect each one of our commissioners travelled about over the 
state, as far as he was able, conferring and talking and explaining, and 
trying to get the employers into a proper understanding of the principles of 
this act. 

Mr. Bancroft : The Washington act Just merely covers hazardous or extra hazar- 
dous employments? 

Me. Hinsdale : As specified in the act, extra liazardous employments. If a class 
in addition to whjit is specified explicitly in the act should arise it shall be 
classified, and a rate assigned proportionately to the true hazard. 

Mr. Bancroft: Will you explain then why the act is limited in its application; 
is it a constitutional limitation that you have in that State that would not 
apply here? 

Mr. Hinsdale: I think, sir, if a law were passed in Washington applying to all 
employments generally in every form of work that it would be declared un- 
constitutional. The underlying princi])le of this law, and possibly its only 


justification is it works for tlie best interests of the industries. It is in 
force under the police powers of the State, and supposed to be the thing 
whicli shall best promote the welfare of its citizens. Now, in considering 
the extra hazardous industries of the state they are considered to just that 
extent a menace. This is a tax upon them for conducting that kind of 
business; it may be legally regarded possibly in that light. I think Mr. 
Preston carefully excluded all kinds of business except the kinds of business 
which in a sense created hazard or created loss to the State. 

The Commissionek : Does not every business create more or less hazard ? 

Mr. Hinsdale: There is hazard due to all business, doubtless. 

The Commissioimer: So it is only a question of degree in the end? 

Mr. Hinsdale : In the industries the hazard is so enormously increased and creates 
such great loss. 

The Comimtssioner : I do not see how that could affect the constitutional question ; 
if it is right to protect against one hazard it is equally right to protect 
against another. 

Mr. Bancroft : Where everything is free to go ahead and pass a workmen's com- 
pensation act such as you have there in a measure, would you apply it to 
the whole industries of the State irrespective of extra hazardous industries; 
would you make it general? 

Mr. Hinsdale : It would vastly increase its scope and the work of administering, 
and there would be such a multitude of oases turning up all the time in re- 
gard to difficult points. For example, men will get sick; they catch cold at 
their work ; everybody has troubles, and there would be such a multiplicity 
of troubles reported to the commission that unless there were some limit 
it would fall of its own weight possibly. It would be very hard to ad- 
minister, I think. 

Mr. Bancroft: The Grerman method is to cover everybody. 

Mr. Hinsdale: In addition to that there was bitter opposition on the part of the 
farmers to include them in it; they did not want to be included. Now, the 
work of teaming under the German and other statistics is a hazardous occu- 
pation, but we do not consider the work of teaming a hazardous occupation 
unless that work of teaming is in connection with an extra hazardous in- 
dustry. If a saw-mill has a team we call that in connection with an extra 
hazardous industry, and if a packing house has a team we call it an extra 
hazardous industry, but if a dry goods company has a team we do not 
consider that inciuental to an extra hazardous industry. I do not know if 
we are justified, but that is how we do. 

The Commissioner: You do not take the teamster doing his own business? 

Mr. Hinsdale: No, excepting the law provides moving sinks is a hazardous occu- 
pation, and we enlarge that to include moving heavy machinery, but that 
is one of the difficulties. There are many little difficulties. 

Mr. Bancroft: It says in the report that the preliminary figures in one thousand 
cases indicate that less than 3 per cent, of all accidents reported under 



the workmeu's compensation act show a liability that would be good for a 
verdict under the old law, and 47 per cent, of all the above cases would be 
probably unc-ompensated under the casualty system. 

Mr. Hixsdale : In this report I refer to the particular committee in which Mr. 
Preston was very active in recomonending an act. He says that observation 
shows that in accidents about one in eleven was followed by a lawsuit, and 
in the suits brought but one in ten was successfully prosecuted and led to i 
verdict; that would be one in one hundred. 

The Commissioner : That must be under the common law system. 

Mr. Hixsdale : Yes. 

The Commissioner : Your law before tliis was passed was the old common law ? 

Mr, Hixsdale : Yes. 

Mr. Baxcroet : Mr. Sherman called it the tort law. 

Me. Hixsdale : There has been a somewhat careful study of these from that point 
of view; of course it has not been exhausted, but it has been referred to 

The Commissioner: The cases where they recover can be counted on your fingers. 

Mr. Hinsdale : We figure that not over 3 per cent, could be successfully prose- 
cuted at common law. 

Mr. Bancroft: We have the Factory Act of Ontario, Mr. Hinsdale, and 
it shows last year 985 accidents in Ontario and I believe, if my memory 
serves me aright, only fifty of them were fatal. How does that compare 
with your State ? Have you anything like that ? 

Mr. Hinsdale : I believe the fatalities in the lumbering in our State, owing to the 
enormous size of the trees and the fact that all work in the woods is done 
with machinery — the team work has all gone — I think there are a great 
many more fatalities. In the work of logging, saw-milling, shingle-milling, 
and so on, we had 129 deaths, fatal accidents, during the first year. In this 
connection I may say that we had 42,000 employees listed during the year, 
and 129 fatalities. A great many of those men left no dependants entitled 
to pensions ; we are only paying pensions now on account of fifty-five deaths 
in the logging industry, so that a great many of those did not require a 
pension. There must be a wife or there must be children under sixteen, 
or there must be parents who are dependent, and not only dependent but 
who did receive compensation from this man during the previous year. It 
is not enough simply to show he had parents who are needy, it must be 
shown he had contributed. 

The Commissioner : Is there a table in this report showing the number of fatal 
accidents in respect to which claims are made ? 

Mr. Hinsdale: 1 think there is, sir. 

Mr. Bancroft : This is just a list of the accidents reported to the accident in- 
spectors' department; there were 985 in Ontario reported this year. I sup- 
pose there are many, of course, that would not be reported? 


Mb. Hinsdvle: We had for the first year G,3UU that we paid ou. 

Mr. Bancroft : Our population here is about twice yours. 

The CoMMissioxEK : Those 985 would he accidents in factories coming under the 
act where five or more are employed. 

Mk. HixsDALE : There are lots of accidents. I doubt if there are accurate, really 
accurate statistics in any State about accidents. I think when a com- 
pensation act is nassed you would have a great many more accidents. 
You will find it ^at pages 120 and 121 of the report of the State of Wash- 

The Commissioner: 279, is that it? 

Mr. Hinsdale : Yes, and 129 in the operation of Class 10, and cost us $172,000. 

The Commissioner: What is the total accidents of all kinds? 

Mr. Hinsdale: 279 during the year. 

The Commissioner : But of all kinds of accidents ? 

Mr. Hinsdale: We have tiiem on a different page; it will run to 3,650. 

Mr. Bancroft: I was tokl in Washington, D.C., by a supposedly reliable authority 

• that there had been 50,000 fatal accidents in the United States in the last 

year. It would require a Federal compensation law to compensate them. 

Mr. Hixsd/.le: Of course tliere has been a great deal written on the subject. 

"Mr. Bancroft: Here is Clause 16, with reference to coal mining. The legal rate 
is $3.00 per $100, and it took $1.50, which shows you only have to assess 
them at half the legal rate. They have only collected six months. The 
same thing applies to the legal rate of $4 in quarries. In Ontario we have 
a considerable amount of mining, and there are many workmen who will 
probably come under this act. Take for instance the silver mining and 
nickel mining and gold mining, or any other mining industry. The argu- 
ment has been used that the fundament^al basis on which the experts have 
gone is that in the last analysis the consumer pays the cost of compensation. 
The argument has been used and the question has been asked here. "Is the 
employer who is engaged in mining any of these commodities able to raise 
the cost of his commodity as a manufacturer would be?" How did you 
come to include the coal mining under the act. nnd assess them, if it was a 
burden upon their slioulders? 

Ml!. lli\si).\i,i: : T ;ini -atisfiod tliat so far as [lie coal miners are concerned they are 
pleased with the act. 

The Co^[MIssIoxEl{ : Coal is a local production. That is not a fair comparison. 
None of the coal of your State goes out of the United States, does it? 

Mr. Hixsdai.h: 1 presume not. 

Tin; CoM^rissiONER : It is not like the silver, where the world markets govern. 

Mr. HixsDALi:: What I meant to express was that the cost to the coal mining in- 
dustry in Washington sin^e this law went into effect is so much less than it 

Ml!. fflXSPALE. 


was previously that they are pleased with it. As I have said, Judge Reid, 
now the Third Vice-President of the Xorthern Pacific Railway, an eminent 
attorney, told me- that we were taking care of his coal mine cases for half 
what it used to cost them; so they like it. 

The Commissioner: You take in quarries and smelters? 

Mr. Hinsdale: Yes. 

The Commissioner: Do they like it? 

Mr. Hinsdale : The Taeoma smelter is the largast contributor in the smelting class 
and they do not object; I have not heard any definite objection from them 
at all. They are rather critical, whic