I
EMPLOYERS' LIABILITY
and
INDUSTRIAL INSURAxNCE
K'
THE COMMERCIAL CLUB OF CHICAGO
The Commercial Club Organized 1877
The Merchants Club Organized 1896
United 1907
NORTHWESTERN
UNIVERSITY
LIBRARY
EVANSTON
ILLINOIS
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EMPLOYERS' LIABILITY AND
INDUSTRIAL INSURANCE
GEORGE M. GILLETTE
Member of the Minnesota Employes' Compensation
Committee
HONORABLE CHARLES NAGEL
Secretary of Commerce and Labor
The proceedings of the Two Hundred and Twelfth Regular
Meeting of The Commercial Club of Chicago, at
the Congress~Hotel, Saturday evening,
February nineteenth, 1910.
âà\ .■a s'-f4
CU 'í e
Haftntlie
R. R. DONNELLEY Ir SONS COMPANY
CHICAGO
EMPLOYERS' LIABILITY AND
INDUSTRIAL INSURANCE
PRESIDENT ROBINSON
Industrial life has ever exacted its inexorable toll of human
life, and this truth, old as the field of human endeavor, is but
accentuated by the intense activities of modem civilization.
Remove or disable the bread-winner, capitalist or wage-eamer,
it matters not, and from the family there radiates out through the
social fabric an undulation of mental, financial, and physical
distress, which, while it may disappear, leaves destruction behind.
Legislation can help minimize this casualty and determine how
the public shall absorb the loss, but it can do no more.
Employers' liability in its various phases is an important
public question and one that is rapidly pressing for settlement.
The purpose of this meeting is to promote a knowledge of the
facts, in order that publicity may lead to clear thinking and
intelligent understanding of the tmth.
To appreciate the active and widespread interest in this sub¬
ject, one has but to read the press to recall that nearly all Europe
has passed new accident laws; that less than two years ago. Con¬
gress enacted legislation concerning compensation to government
employés; that a number of our states have commissions at work
preliminary to proposed legislation; and that the present special
session of our own legislature was called in part to authorize an
Employers' Liability Commission for Illinois.
If it is a fact that the injured receive less than one half of the
vast sums annually expended in connection with personal injury,
if it is a fact that one half of all the courts in Cook County and in
the city of Chicago could be dispensed with, if personal injury
litigation were eliminated, then from the standpoint of economy
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EMPLOYERS' LIABILITY
and as affecting the law's delay, there is much to substantiate
Governor Deneen's recent statement that our personal injury
laws are unsatisfactory.
On the other hand, laws are not to be changed lightly, for the
function of law is not to satisfy the demands of class or individual,
but to promote justice as measured by the best interests of all
society. American institutions are not European institutions;
our traditions are not old-world traditions; and the American
spirit of independence and initiative is not in harmony with social¬
istic or paternalistic tendencies.
The Commercial Club holds no brief for either side of this
important question, but if, in the fullness of time, it proves wise
to modify our personal injury laws, too much emphasis cannot be
placed upon the extreme importance of there being uniformity
in state legislation. The interests of employer and employé
will both suffer if the industries of one state are discriminated
against by its laws being different from those of other states.
The State of Minnesota stands foremost in the constructive
work that has been done. It was on the initiative of the Minne¬
sota Commission that the necessity of national co-operation was
recognized by the late Atlantic City Conference. The country
owes much to Minnesota and Minnesota owes much to one of
her most progressive and loyal sons; to him, Mr. George M. Gil¬
lette, whom we have the honor of having with us to-night, the
Commercial Club extends a most cordial welcome. Gentleman,
it is my privilege to introduce Mr. George M. Gillette, member
of the Minnesota Employés' Compensation Commission. {Af-
flause.)
[4 I
EMPLOYERS' LIABILITY
mr. george m. gillette
About a year ago, the legislature of the state of Minnesota
authorized the appointment of a commission in that state. I
am rather inclined to think that the action of Minnesota may,
perchance, mark an epoch in this legislation and this discussion.
I remember that Sunday afternoon when, in the state capitol
of Minnesota, representatives of employing interests and repre¬
sentatives of the laboring interests met there, around a table,
and, from two until eight p. m., discussed their relations in
regard to this vital and important matter. They adjourned until
Thursday night, and on that night was perfected an agreement
by which, I believe, for the first time the employing and the
employes' interests went before the legislature of a state, united
in their demands, united in their requests for action. That
resulted, after quite a struggle, in the authorization of a com¬
mission by the legislature, and the appointment of the commission
by the governor.
We have a small commission there, one member a representa¬
tive of the employers, one a representative of the employés, and one
a representative of the State Bar Association and the non-related
public. Since that time, a commission has been appointed in
New York and also in Wisconsin. The Sage Foundation has
set aside a very generous appropriation to use in the investigation
and study of this most important subject. Doctor Frankel and
Mr. Miles M. Dawson spent five months of last summer in Europe
studying the working of the foreign compensation acts, and their
forthcoming report in my opinion will be one of the most valuable
contributions to the literature on this subject.
In July last, a conference was held between the representatives
of the commissions of various states, at Atlantic City. That
conference provoked much discussion and, in my mind, accom-
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EMPLOYERS' LIABILITY
plished much good. A later conference was held in Washington,
and it is a pleasure to me to say that when it adjourned, the next
conference on this subject was agreed to be held in Chicago on
June 10th.
It is a matter of disappointment to me that, at all these con¬
ferences, at all the discussions which have taken place, I have
been practically the sole representative of the employing interests
of the country. And I ask, at your hands, gentlemen, that you
do not neglect your greatest interests, and that you take a part
in this discussion and in the framing of this legislation which, in
my opinion, is bound to come.
What do we mean by a liability law? A liability law in its
simplest definition is a law which imposes, upon the master or
the employer, the obligation to furnish his employé a safe place
to work and safe appliances wherewith to work. It, perchance,
may best be defined by the defenses there are against the employer's
liability. Those defenses are three, and three only. If an em¬
ployer can show that the employé has contributed, by his own
negligence, to the accident; that he has assumed the risk of the
undertaking; or that the accident was the result of an act of a
fellow-servant, in most states he will be freed from his legal
liability.
What is our liability law ? Let me illustrate from one or two
instances under my own observation.
A machinist rolls a heavy gear along a floor; it strikes an
obstruction which he does not see, falls over and crushes a leg.
He is permanently disabled. The crushed leg shrinks and
shortens; he is a cripple for life. The employer does not think
he is at fault. He would like to contribute to the man's relief
and to the support of his family, but he shrinks for fear it would
be taken for an admission of fault, and a suit is brought for $20,000.
The insurance company defends and the case goes to trial. The
jury renders a verdict for $4000. The amount of the verdict
is paid ; the attorney and the claimant and the injured man divide
the proceeds. The costs of litigation are first deducted; the
[6]
MR. GEORGE M. GILLETTE
attorney then takes his toll, and the injured man gets what is
left. In the average case, out of a verdict of this size, he would
get from $1500 to $2000. That is the Employers' Liability Law.
A bricklayer is at work on the street front of a high building.
He lets two bricks fall ; one down on the sidewalk side falls and
hurts a passerby, who sues and recovers damages; the other falls
and injures a workman within the building. He also sues, but
the court says he is injured by the act of a fellow workman, and
that he cannot recover, and that, too, is our existing Employers'
Liability Law.
An oiler is charged not to do his work when the machinery
is in motion. A member of his family is sick at home; he wants
to go home at the noon hour and see the sick one, and he starts to
oil the machinery while it is still in motion. His fingers are caught
in the moving cogs ; his hand is crushed and he is crippled for life.
The employer would like to come to his relief, but he feels again
that that would be construed as an admission of liability. The
man brings suit to recover, and the law tells him that his injury
was the result of his own negligence and disobedience, and that
there is no relief. This is our existing Employers' Liability Law.
A man is working in a shop upon a defective machine. He
calls attention to the defect. The defect is not remedied, but he
continues to operate the machine. An accident occurs, and he
is seriously hurt. A repetition of the former scenes, he sues to
recover, and the court tells him that he has assumed the risk and
that there is no relief for him. This, too, is our Employers'
Liability Law.
And from the employer's standpoint, you can duplicate the
above cases, submit them to different courts and different juries,
and if liability is established against the employer, every different
jury on the same statement of facts will return widely differing
verdicts. This is our existing liability law.
What do we mean by workmen's compensation acts? In
its simplest terms, workmen's compensation acts mean laws
which fix an absolute liability against the employer as the nearest
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EMPLOYERS' LIABILITY
and most convenient person upon whom it can be fixed, and as a
means of transferring the charge in the cost of the product on to
the general public.
A German workman is seriously injured, maybe killed. He
has a wife and a boy and girl. No suit is brought, no warfare
started ; but weekly or monthly, as may be, the mail brings to the
wife and mother a regular contribution for the support of herself
and her children. This is the working of a compensation act.
Where did we get out liability law ? Our liability law comes
to us as an inheritance from other times and from other conditions.
It is a system but slightly modified from that in vogue at the very
beginning of the Christian era. Under the Roman law, the party
immediately at fault must respond. In the ancient days, labor
was the performance of a slave, and the motive for protecting the
laborer from injury was the instinct for the preservation of property.
In the feudal ages there was little law, and little liability. Down
to Blackstone's time there existed, so far as we can find, no legal
right of recovery, at least he mentions none. After the revival of
Christianity, and after the Magna Charta had been wrung from
King John, there grew into the common law the right to make
the employer respond in damages for a wrong which he had directly
or indirectly committed. Few laws have ever been passed chang¬
ing or affecting the common law liability. Practically all the law
we have is judge-made; and, fortunately, tliis judge-made law
goes to better the conditions of the employé.
I would bring the existing liability law before the bar of public
opinion, and I would charge it with serious crimes. I would
charge it with being the great disturbing factor to-day between em¬
ployer and employé. I know of no more disturbing factors under
our industrial conditions to-day than those which flow from and
grow out of personal injury suits. It breeds perjury. I ask any
lawyer before me to-night if the existing rules of negligence do
not place before every witness, be he for plaintiff or for defendant,
a greater temptation than he can withstand. It is too much for
any one to withstand the temptation to so color the evidehce that
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MR. GEORGE M. GILLETTE
it will bring the facts either within or without the rules of
negligence.
I would charge existing employers' liability laws with an
absolute failure to tend to prevent accidents. Study, if you will,
the comparative figures of industrial and railroad accidents in
America and abroad, and you have the justification of my state¬
ment. In our mines the accidents in America, with the number of
men compared, are as four to one. Run through all of our indus¬
trial undertakings and it is a sad commentaiy upon the American
disregard of the sacredness of human life, to think of the excess
number of deaths or of injuries which occur in this country.
Under a given statement of facts, divergent juries bring in
absolutely divergent verdicts. It is not adapted to new conditions.
It is a law and a system brought down to us from before the
time when the use of steam was discovered, when the power of
electricity was only known as we saw it in the flash of the
lowering summer clouds. It comes to us from a time before the
days of improved machinery; from a time, Mr. Chairman, before
the industry in which you are interested was developed. It
came to us in a time when cogs and wheels did not vie with
each other to see which could take the greatest toll in human
life and human limb. It interferes with the beneficent plans
which are established. I know a number of gentlemen here
to-night who are connected with a concern which has attempted
and which has established a most beneficent plan; a concern
which contributes possibly $75,000 a year to relieve the distress
of those who are injured in carrying on that great undertaking,
and still this existing liability law does not relieve that establish¬
ment one whit or one iota from the litigation and the results which
come from its existing liability.
And then its waste! The greatest indictment I would bring
against it is its waste. The other day the clerk of the District
Court of Hennepin County, the county in which Minneapolis
is located, gave me the figures which he had compiled, and which
showed that, in the years 1908 and 1909, in Hennepin County,
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EMPLOYERS' LIABILITY
the citizens of Hennepin County have paid out more money in
the cost of trials of personal injury cases in that county than the
total amount of the verdicts which were recovered by the plaintiffs.
And I believe if the same investigation were made here in Cook
County, you would find that in carrying on your courts and the
expenses attendant upon them; that speaking from the pure
matter of dollars and cents, Cook County would have found it
much cheaper to have paid, if settlements could have been made,
every verdict which has ever been recovered in Cook County,
than to have paid the expenses of the litigation which has been
carried on to recover those verdicts.
And then consider the waste and effect of existing lia¬
bility insurance system. During the past five years, or the
five years preceding January 1, 1910, the employers of the
United States have paid to the liability insurance companies,
as attested by the sworn statements of those insurance com¬
panies to the insurance commissioners of the various states,
$95,000,000. Those self-same statements reveal the fact that
out of that $95,000,000 they have only paid a little over
$45,000,000 in the settlement of losses. And to go still further;
that $45,000,000 has not all gone to the alleviation of those who
have sustained the physical injuries. I am not here to attack
the ambulance chaser. He is a necessary adjunct of the existing
system; but I am here to decry the waste of that system, for out
of that $45,000,000 which has been paid by the insurance com¬
panies in the adjustment of these losses, the best estimates which
I have been able to obtain, are, that not to exceed forty or fifty
per cent of the $45,000,000, or twenty-five or thirty per cent of the
whole, has gone ultimately to the alleviation of distress of those
who suffered the injury.
I submit to you, gentlemen, that if, say, not over twenty-seven
per cent, at the outside, of the money that has been paid for employ¬
ers' liability insurance in the past five years has ultimately reached
those for whom it was intended ; I ask you if there has been this
seventy odd per cent of waste in this system. Is there any other
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MR. GEORGE M. GILLETTE
line of modem undertaking which will stand it? I say that the
waste of the system in addition to its inhumanity brings to it a
condemnation to which it must plead guilty.
You may, perchance, ask, if that is so, why have not these
conditions been changed. There are many reasons. I am not
one of those who stand for the muck raker. I am an employer,
and I believe in American employers. I am not one of those who
believe that this condition exists and continues to exist because the
American employer is the most inhuman employer in the world.
I am one who stands here and is willing to assert without fear
of successful contradiction that this system is maintained not more
by reason of the employers' fault than on account of the attitude
taken by the employés themselves. I need only go back, Mr.
Chairman, into the history of Illinois, back to 1905, to show you
that when a compensation act was presented to the legislature o^
this state, the workingmen of this state, as represented by organ¬
ized labor, appeared before that committee and decried the passage
of such an act. It is a matter of humiliation and regret to me
to say that the inverse of that proposition was repeated in
Massachusetts, and their workmen's compensation acts were
defeated, not by organized labor nor by the employes, but by fear
on the part of the employers themselves. So, I say that the honors
are equal, or the dishonors, rather.
But there have been other reasons which have contributed to
this delay. First, our dual form of government. There are
great advantages in the dual form of government, I presume, but
oftentimes it delays prompt reform. Without my telling you,
you know that workmen's compensation acts, and legislation of
that kind, cannot be brought about by a single act and a single
stroke of the federal government. There is a serious question in¬
volved in the federal employers' liability act which has already been
passed, as to the extent of the power of the federal government
to legislate in regard to this, and a question has been raised which
never yet has been settled ; that is, as to whether the federal court
can not only control interstate commerce and the commerce itself,
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EMPLOYERS' LIABILITY
but the relations of master and servant in carrying out that com¬
merce. But, at any rate, the federal government cannot come
into the state of Illinois and legislate in regard to your purely
state and domestic institutions; and this means that legislation
of this kind must be brought about by the action of forty-eight
different legislatures.
And then, there are the constitutional questions involved. I
shall pass them on to the eminent gentleman who is to follow me.
I shall only state them. A compensation act implies the obligation
of an absolute liability upon the master, and it involves the accept¬
ance by the employe, or the servant, of a scale or measure of com¬
pensation which shall have been predetermined by a legislative
act. A mere statement of the proposition is a statement of the
constitutional diflSculties involved. Can the legislature impose
upon me as an employer, the obligation to respond in damages
for a wrong which I have not committed ? Or can the legislature,
in case you, an employé, have suffered a physical personal injury,
say to you that you must accept the scale of compensation which
the legislature has imposed ? Or have you a constitutional right
to go before a jury of your peers and have the measure of your
wrongs assessed ? I don't know. I believe, although I have not
troubled myself with the constitutional questions, that the neces¬
sary subordination of individual rights to the rights of society
as a whole, on the one hand, coupled vrith that broad reservation
of police power by the state, on the other hand, would be sufficient
to find a way by which the accomplishment of this great good
could be brought about.
And then there have been practical difficulties. There are
difficulties in relation to cost. What is the cost? Let me say
to you, to-night, that I have examined, or had examined, the
statistics of the labor departments and insurance departments of
practically every state. I have gone to the liability insurance
companies, and I wish to say to you, to-night, that in my opinion
there are no stiitistics in existence iii this country, either in the
hands of the liability insurance companies, or in the hands of any
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MR. GEORGE M. GILLETTE
department of any state, by which the exact resultant cost of
any given scale of compensation can be determined. This is a
cause for delay. We must wait until we know something about it.
The American people do not wish legislation founded on
uncertainty.
What advantages would accrue from a compensation act ? I
must hasten along, and I will just briefly state them, and not stop
to argue them. In my judgment, it would promote industrial
peace; it would benefit society as a whole; conserve true economy;
decrease pauperism; tend to restore the old relations between the
employer and employe; decrease the number of accidents; increase
the sum of human happiness. If you should agree with me —
and I do not ask you to agree with me — I simply state these mat¬
ters that I may provoke your thought, or provoke your criticism;
but if you agree with me that existing liability laws should be no
longer retained, and that following the example of every nation,
of every people, white and free, that to-day exist upon the face
of the globe, we ought to change our obsolete employers' liability
law to a scheme of compensation, then where shall we go for a
model for law ?
Shall we go to England, where we would naturally turn to a
people akin to us by lineage and by law ? I wish to say that in my
opinion, after such study as I have been able to give to this subject,
I am unalterably opposed to the English law. We should seek a
compensation act which would do away with litigation. The Eng¬
lish law preserves the double liability. The injured employé can
elect to sue and recover at common law, or he can accept the
compensations of the act. He can bring suit to make a common
law recovery and, failing in that, the judge, before he leaves the
bench, can award to him the compensations to which he would be
entitled under the act. I condemn it because it has not imposed
upon it proper and correct restrictions. The history of the com¬
pensation acts of England, both of 1897 and 1906, without question,
in my mind, goes to show that in spite of what has been hoped, the
compensation act has not accomplished very greatly decreased
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EMPLOYERS' LIABILITY
litigation; but, sadder still, the number of accidents under the
action of that law has very slightly decreased.
If not to England, then shall we go to Norway and accept the
monopolistic doctrine which Norway has adopted ? Or to Sweden
with her elective act, or over to Russia, or Finland, or down to
Greece and Italy; or shall we stop at Germany and Austria?
To my mind, there is no foreign law which is fully adapted to
American conditions, and I believe there is no law which we could
bring to this country and transplant bodily and as a whole, which
would find proper lodgment in American thought, American
traditions and American life.
If it were left to me, I would go to Germany and adopt there
the ilual contribution scheme of the German act. Under the
German act, the employés themselves contribute to the fund out
of which the first thirteen weeks of disability is paid. I would go
over to Sweden and take the elective insurance features of the
Sewdish act; and then I would go down to Austria and I would
adopt, from the Austrian law, that provision which it has always
been a surprise to me that the scientific Germans did not adopt,
that insurance provision by which each year, from the very begin¬
ning of their act, they exacted a sufficient toll upon the industries
to take care of the deferred obligations which would accrue from
the operation of that act.
I then would say that we must have a law of single liability.
I would say, because I can merely state these propositions and not
argue them, that I would have this law cover practically every
industry. For a scale of compensations, I would have it reason¬
able, in fact meager, in the first state which enacts such a law.
I would have the benefits paid, not in lump sums, but in install¬
ments.
The history of lump-sum settlements is this: that the per¬
sons receiving these benefits are not accustomed to the admin¬
istration of large funds. They are soon dissipated, and soon
again the persons become charges upon society. I remember
being told only a few days ago of a mining accident which occurred
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MR. GEORGE M. GILLETTE
in Wyoming, where forty men, fathers and husbands, were killed.
Settlements were made for $2200 each, and within a year not a
single one of the widows of those men who were killed had a
dollar left. These funds had been dissipated in mining schemes,
and in the purchase of pianos and extravagances of that kind.
Shall it be made an insurable proposition? I say yes, for
as I have studied the compensation acts of the old world, I find
that not a single one of them has operated with any degree of
success which has not been accompanied by an insurance scheme.
Insurance is necessary not from the employers' standpoint, but to
insure absolute certainty to the employés themselves. And after
all, I would make it uniform. The strict competition between our
states is such that the state which first undertakes to enact a work¬
men's compensation law should not be penalized therefor.
My idea is that it would be fair, as under the German plan,
for the workman to contribute a reasonable portion of the fund out
of which this compensation is to be paid. I believe that not only
the employers of Minnesota who have pledged themselves to it,
but that the employers of Illinois and of the states throughout the
Union would be willing and, not only willing, but glad to pay not
only what they are paying now, but a small amount beyond, if
they might be freed from legal liability, and if they might be assured
that every dollar, or practically every dollar which they are paying,
would reach the destination for which it was intended. But I
believe, after my investigation of this subject, that the cost of a
compensation act, however moderate the compensations may be,
cannot be defrayed even out of the waste of the existing system,
but that contributions from the workmen themselves will be
necessary. You will acknowledge this in a moment if I tell you
that, out of the industrial accidents which now occur, only eleven
out of one hundred are compensated. A compensation act would
multiply by nine the number of people who now recover for per¬
sonal injuries. And why should not the workmen contribute ? The
employers are only responsible for eleven accidents out of one
hundred which now occur. The statistics of Germany and of
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EMPLOYERS' LIABILITY
this country show that the employés themselves are responsible
for from twenty-two to twenty-nine per cent and that over fifty
per cent of the accidents which occur are accidents pure and
simple and due solely to the hazards of the industry.
But I must stop. You may, perchance, say that there is
danger in this agitation, and I appreciate it. There are men
who seek to take advantage of this discussion and seek, by it, to
create a scale of compensation which the industries cannot stand,
and seek to swing the pendulum so much farther the other way,
that the remedies which will be proposed will be worse than the
existing evils. It is time, in my opinion, that the sane, sober
thought of such men as you should take part in this discussion.
I believe that compensation acts are bound to come, and they
will not be directed right, they will not be formulated right, they
will not be just until men of conscience take part in framing those
laws. I thank you. [A'p'plause.]
PRESIDENT ROBINSON
It is clear that the production of our necessities means life and
limb, whether it be in the field, on the rail, in the shop, or in the
home. The price must be paid by the public in the care of the
orphan, in the support of the poor, in the depredation of crime or
in the loss of financial return. Be that as it may, fihally to live
costs life, and society must pay the tax. No law ever has — and
no law ever can — change these two irrevocable facts.
The essence of any personal injury legislation is prevention
of accident, and the distribution of accident's loss. Justice and
temperance must be evoked if self-interest is to be subordinated to
public interest; if friction is to be replaced by harmony. Through
training, experience, and high office, no one is better equipped to
point the way to a sound public policy on this serious problem,
than is the man who holds the important portfolio of commerce
and labor. To him, success has ever meant public obligation;
leisure, public activity; reward, public progress. To the Honor¬
able Charles Nagel, The Commercial Club extends a most cordia
welcome. Gentlemen, Secretary Nagel. [A'p'plause.]
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EMPLOYERS' LIABILITY
HONORABLE CHARLES NAGEL
Mr. President, Members of The Commercial Club, and
Guests : I am greatly indebted to the main speaker of the evening
because, with you, I have had the benefit of facts upon which any
legislation that may be intended must necessarily be predicated.
In addition to that, he has relieved me of an obligation which
certainly I should not have been able for long to carry. The
fact is that I am a member of The Commercial Club of St. Louis
and I am here simply because I was not able to resist the tempta¬
tion of The Commercial Club of Chicago.
Naturally, we are all interested in the great problem which is
up this evening for discussion; and all of us have a certain super¬
ficial information upon the subject, I presume. In that sense we
are all representative Americans. We all know something of
everything, but I am not sure that we know enough of this subject
at this time to really formulate a theory.
However, the subject to which you have invited me to speak
this evening is strongly suggestive of the trend of modern legislation.
For a long period of time we were adherents of the laisser-faire
doctrine, but of late there is an unmistakable tendency to strengthen
the " direful belief in the omnipotence of legislation. " We are
now engaged in the task of separating the wheat from the chaff,
and when we consider the vast field of opportunity for experimental
legislation, we are bound to admit the difficulties of our task.
However far we may travel from the accepted theories of the
past, it will at least be well in the consideration of new measures
to keep in mind original landmarks.
No doubt most of you are prepared to admit that views once
entertained have undergone modification. Experience, after all,
is the effective teacher, to which the impressions of earlier life are
bound to yield. The teachings of Mill and Spencer have been
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EMPLOYERS' LIABILITY
virtually abandoned in England, as they are being neglected in
our country. We are brought more and more to concede the
limitations of the individualistic school, and to admit that every
community has members w^ho cannot keep up with the procession,
and who accordingly must be helped to their feet. At one time
our system was divided between the classes of personal inde¬
pendence on the one hand, and the charitable institution on the
other. But we now know that there is an intervening sphere
within which the government may well be helpful without assum¬
ing the entire burden. A man may be in the full enjoyment of
political rights, without being able to stand alone against a col¬
lective industrial system.
We are yielding more and more to the rule in legislation,
that whenever conditions become such as to leave the normal
citizen without redress, his cause becomes the common cause,
and it is proper for the state to intercede. It is hardly necessary,
at this time or in this place, to give illustrations of the application
of this doctrine. The statute books of every state, and of the
United States, furnish them in abundance. But we have still to
ask, how far shall we go,— indeed, how far dare we go ? May
there not be a happy mean, lest the American citizen, in accepting
protection, yield more than he receives ?
I have said that the subject to be discussed this evening suggests
this trend ; and I believe that some of the legislation bearing upon
this subject is justified by a wholesome modification of antiquated
theories, while some that is advocated may be in danger of shooting
beyond the mark of safety. Employers' liability and employés'
insurance are susceptible of clear distinction and of many degrees,
and accordingly it is impossible for any one to give a categorical
answer to the general proposition.
At the outset, I may say that my hesitation is not one of con¬
stitutional right so much as it is of sound policy. As a general
rule, the constitutional objections which have been urged to modern
legislation have appeared to be less serious than have the questions
of political and economical wisdom which these measures have
1 18 ]
HONORABLE CHARLES NAGEL
raised. As was natural, corrective legislation such as has engaged
public attention of late years, was first directed to organizations
of more or less public character. For illustration, public carriers
invited the attention, and remedies without limit were proposed.
As was perhaps equally natural, stubborn resistance was made to
all these proposals, and herein lay the chief vice of the situation.
There could be no question that conditions had arisen in this
country which called for relief, and there was as little question,
that thoughtless resistance to proper relief became a breeder of
more extravagant attack. Even the demand for the retirement
of the pass system and the rebate system was resisted, upon the
ground that such measures constituted an interference with prop¬
erty right. At this time it is scarcely possible to imagine that
those in charge of large institutions could have been guilty of so
short-sighted a policy. No thoughtful man now doubts the
propriety or the necessity of this relief, and yet it was resisted to
the utmost. When it came to the larger question — whether the
government should provide affirmative regulations for the control
and management of public carriers, the same resistance was
encountered. Experienced men, instead of lending their aid
to guide the demand into proper channels, improvidently spent
their strength in vain resistance. As a result, instead of helping
to shape measures, with the need of which they should have been
especially familiar, they permitted these measures to be framed
by their opponents, who, in the very nature of the case, were less
familiar with the actual requirements. Here, as everywhere, the
constitutional objections were urged. We were told that proposed
legislation involved a delegation of power to the interstate com¬
mission; that the federal government is not vested with police
power; that the fixing of rates involved a discrimination between
ports. These, and similar grounds were exhaustively argued
in briefs, presented before committees, and urged in the public
press, to be swept aside at the first opportunity by the highest
court of the land. If all the energy and intelligence that were so
employed and wasted had been devoted to assist in framing ade-
[19]
EMPLOYERS' LIABILITY
quate measures, it is entirely possible and likely that the results
for which we are still struggling would have been earlier achieved.
As was inevitable, after the interests of the general public and
the shipper had received this attention, the next step was to under¬
take the regulation of conditions under which the employés of
these public carriers do their work. Still the quasi public institu¬
tion was kept in mind. But, confessedly, a new principle was
involved. Legislation aiming to abolish passes and rebates was
based upon the immediate right to control corporations charged
with a public duty. The regulation of conditions under which
employes worked for these carriers involved a somewhat different
principle. It was a clear recognition of the state's right to protect
citizens against the conditions which their employment necessarily
imposed upon them.
The first measures looked to the safety of the appliances with
which these employés are to operate. The inevitable question
is, if the legislature may go so far, why may it not inquire into the
conditions under which employment generally is had, and why
may not those conditions become the subject of regulation ? And
if the state once embarks upon that class of legislation, why does
it not become immaterial whether the employer is a quasi public
corporation or a private person ? In other words, may the state,
or would it be wise to have the state, legislate to protect the employé
against dangers and rights which are common to all laborers as
a class ?
To repeat, I have no question about the right, the propriety,
and the wisdom of such legislation up to a certain point. Take,
for illustration, the common law rule by which the employer's
liability was fixed in case of accident to an employé. It is hardly
necessary at this time to say that that rule was antiquated, and that
under modern conditions it rested upon a false premise. Its
very assumption was untrue. The rule was framed under con¬
ditions which find no practical application at this time. It rested
upon the theory that every laborer was not only acquainted with
the co-laborers, but that in some measure he had a right to elect
[20]
HONORABLE CHARLES NAGEL
his associate. It goes without saying that these conditions do
not generally obtain in modem employment, and that at this time
there is no reason in a rule which arbitrarily makes one employe
responsible for the conduct or misconduct of his co-employes.
The modification of that rule was a belated recognition of changed
conditions; and the long postponement of that modification had
much to do with inviting a greater demand for change than might
otherwise have been had. To-day the rule is abolished in Eng¬
land, and in many of our states. But with its elimination the
doctrine of contributory negligence still remained. This doctrine
had been carried to such an extreme and had resulted in such
practical hardship that the courts, without the aid of legislation,
had attempted from time to time to soften its severity. Dis¬
cussions of the question of comparative negligence were had, and
more and more the burden of responsibility was put where it
naturally belonged, with the employer.
At the present time legislation is endeavoring to formulate a
rule more in keeping with the modern conception of the true
relation between employer and employé, and it may be justly
said that these changes, wrought in part by the courts and in part
by the legislature, are in line with the standards which the most
far-sighted proprietors have quietly adopted. One difficulty
in judging of the abuses to which such a rule may have been put,
consists in the fact that we are apt to get a one-sided impression.
Here, as everywhere, our attention is called to the hardships, as
manifested in endless and costly litigation, and we are unmindful
of the multitude of instances in which proprietors, of their own
motion, have waived the technical rights of the law, and have by
their own consent shaped new rules and customs, affording a
larger measure of justice and equity to their employés. It would
be an easy matter to instance large concerns in this country which
for many years have scarcely appeared in court as defendants
in damage suits. These concerns, actuated perhaps by motives
of fairness and wisdom, perhaps in a measure by considerations
of economy, have broadly assumed that every accident and every
[ 21 1
EMPLOYERS' LIABILITY
injury upon their premises creates a presumption against them,
and that in consequence it is for them to make compensation
broader, more generous, more adequate, and more prompt than
the letter of the law seemed to tlemand. The policy of these
concerns was a forerunner of humane legislation. Such a policy
tended to revise custom, and after all, accepted custom, once
attained to proportion and recognition, is the true guide to intel¬
ligent legislation.
I have no hesitation, therefore, in saying that modifications
of this character, whether they be said to involve a mere change
in the rules of evidence, or a shifting of the burden of responsibility,
seem to me to be unquestionably wise. The question is, where
shall the line be drawn ? Shall the liability for accident or death
be made absolute in every case, and shall the employer be respon¬
sible for anything in any measure in a case in which the employé
is solely and exclusively responsible for the mishap? To put it
broadly, shall the employer be compelled to pay for the reckless¬
ness of his employé ? If that be the contention, we abandon the
basis upon which the employer's liability has so far stood. We
no longer trace it to his conduct or misconduct. It is no longer
a question of degree. Such legislation would plainly declare
for compulsory charity, paternalism pure and simple. The old
foundation would be abandoned, and the purpose would be, as
I see it, to make the employer bear a burden which belongs to the
state, and which should come, if paid at all, out of the common
revenue.
I have spoken of private employment. As is well known, the
federal government has adopted a system with respect to its
employés, and no doubt some of the states have done as much.
But the federal government stops short in case of recklessness,
and it may be assumed that at this time no state has gone further.
Nor is it believed that any government, federal or state, is prepared
to impose a liability upon a private employer which the government
itself would not assume as a public employer. Indeed, there does not
appear at this time to be a serious contention for so extreme a rule.
[22]
HONORABLE CHARLES NAGEL
I want again to call attention to the line of distinction. So
far the liability of an employer, however the rules may have been
modified, has been based upon the idea of his responsibility, —
his part in the act out of which the injury arises. We have not
traveled beyond that rule. The question is, shall we do it? For
we must remember that as soon as we abandon the old foundation,
we embark upon an entirely new principle of government.
Whatever the extent to which we may go, it is hardly necessary
here to add that the most important feature is the simplicity of
process. The mere creation of the right to recover without
protection against cost and delay affords little relief. The source
of greatest injustice has been the need for litigation, and the dis¬
proportionate and unfair burden which the employé has been
compelled to bear in his attempt to recover or to protect himself
against unfair settlements. I should say that measures looking
to the easy and ready adjustment of such rights as may be given are
as important as is the right to recover itself.
The suggestion for employe's insurance, for old-age pensions,
etc., of course depends upon different considerations, although at
a given point the question involved is similar to that which I have
just discussed. Arrangements of this kind between a private
employer and his employé present no question of legislation, but
purely one of private policy. As to their wisdom, perhaps no
one entertains serious doubt at this time. These arrangements
make for economy and for sustained good relations between the
parties to the contract. Perhaps one of the most significant
changes in modem industrial life in our country is the adoption
of the pension system by consent between some of the largest
public carriers and manufacturing concerns, and their employés.
To my mind, the adoption of so far-reaching a measure on so
large a scale is infinitely more significant and far more beneficent
in its results than similar arrangements would be if forced upon
parties by the mandate of the state.
Similarly, the government is contemplating the adoption of
such plans. Representatives of the federal government are
[23]
EMPLOYERS' LIABILITY
earnestly advocating thera upon grounds of justice, economy,
and good service; and no doubt the same idea is entertained by
state authorities. Again, as I underatand it, no difficulty is pre¬
sented, no constitutional law is involved. It presents simply
a question of wisdom and sound policy. It is true that, popularly
speaking, such a system has been called paternalism, but to my
mind this is clearly a misnomer. No citizen is compelled to take
employment with the government nor has he a right to obtain it.
He is at liberty to go or come and, when he comes, it is his privi-
ege to accept the terms of the contract offered, or to reject them.
The government, not unlike a private party, may say that for
reasons of economy alone it proposes to employ all its forces upon
a basis which looks to the ultimate protection of the employé
under certain prescribed conditions. Such conditions may
include a provision for the contribution by employes to the fund
out of which pensions are ultimately to be paid. It is true the
government may have broader reasons in mind; it may in the
exercise of its police power be looking to protection against its
ultimate responsibility for disabled employés. But that argument
would hardly hold true in case of the federal government, which
has no such responsibility to the general citizenship of the United
States, however true the reasoning might be in case of the individual
state. And in neither case would such a reason affect the character
of the agreement to be voluntarily entered into by the parties.
When, therefore, the general government embarks upon such a
plan, it may be said that no legal or constitutional difficulties are
involved, and the contract would stand by the consent of both
parties, without force or compulsion on either side. As much
would probably be true of such a plan if adopted by the state.
But, the advocates of this policy, impressed with its evident
wisdom and justice, are disposed to urge its adoption in a broader
sphere. The suggestion now is that the state shall provide for
compulsory pensions in private employment. It is insisted that
funds shall be created, either by contribution of the employer
alone or by the joint contribution of both employer and employé,
[24 ]
HONORABLE CHARLES NAGEL
out of which, under stated conditions, after the expiration of cer¬
tain periods of time or otherwise, insurance or pensions may be
paid to those who have served a given concern, or who for one
reason or another suffer disability. Other countries have adopted
this system, and the temptation is natural to build upon their
experience. But we should not be unmindful of the fact that
other countries have approached the question from the state of
absolute government, whereas we have advanced from the opposite
position. I cannot resist the conclusion that at this point we would
depart from accepted doctrine, and at this point a provision for
compensation in case of accident, attributable to recklessness on
part of the employé, and a pension, paid in obedience to the law,
without an agreement between the parties, stand upon similar
ground. The state assumes to dictate a liability which no longer
rests upon anything that the employer may have done. As I read
it, such a provision would amount to taking the property of one
man for the benefit of another. In the one case, the employer
has done nothing to which the loss of the employé can be traced,
beyond the bare fact of the employment itself. In the other case,
a distinct liability is attached by law to his agreement to pay the
wages contracted for. If the state undertakes to establish an
additional liability in either case, it appears to me that the doctrine
of paternalism has been adopted, and that to all intents and pur¬
poses the state has disposed of the property of one man to protect
the other.
The case would not in principle be far different if the employer
is compelled to contribute to the fund. He is not consulted, but
is compelled by a particular method to provide for his own security
and comfort.
Inevitably, the question is asked, " Would such a provision be
constitutional ?" I do not care to venture an opinion. I am
persuaded that the question of policy and wisdom is far more
grave than the constitutional question. I firmly believe that
there comes a stage at which the individual American citizen
cannot afford to accept the state's protection. But if such a law
[25]
EMPLOYERS' LIABILITY
should be enacted, it would no doubt be based upon the police
power of the state. The theory would be that the state is dealing
with general conditions and general classes, perhaps to protect
itself against the ultimate responsibility for disproportionate
court cost or for pauperism, perhaps to interfere for the immediate
protection of the classes concerned.
Most law is designed to protect against injustice and hardship.
In a measure, every one is in the enjoyment of that protection.
We have gone farther and have legislated to protect certain employ¬
ments against particularly hazardous conditions; sometimes
natural, sometimes artificial. We have legislated to protect
particular classes, — beginning with minors and women, and by
degrees, including other analogous cases. The question is, shall
we extend the rule of quasi guardianship, and undertake to pre¬
scribe for whole classes of employment, boldly announcing that
full-grown normal men may be benefited by such supervision of
their private affairs ? It is needless to prophesy what, in such an
event, the courts may say; but we may as well admit that the
doctrine of police power is extremely flexible. If public opinion
becomes sufficiently attuned to the doctrine, it is entirely possible
that such legislation may be justified as an exercise of the police
power, as to which the legislature enjoys a discretion with which
the courts are slow to interfere.
It appears to me that for the present the wiser course would be
to have legislation of this character only permissive and not com¬
pulsory. If the opportunity is created, the law providing the
needed machinery but having the essentials still to be determined
by the parties themselves, it seems to me a positive gain will be
secured. If more should then be demanded, experience will at
least furnish a sound foundation for future building. Let the day
when the employé is forced to pay his premium, and when the
employer is compelled to write off for deterioration of his men
as he does his engine, be postponed as long as may be. For be it
remembered there is no cure-all for the lame and the halt, and
the right to life, liberty, and prosperity must not be trifled with.
[ 26 ]
HONORABLE CHARLES NAGEL
In any event, it is safe to express the hope that we proceed
with deliberation in the adoption of new measures. We are
broadening the sphere of legislation, and it is always well to re¬
member that every new law is fraught with surprise. Perhaps we
are not suflSciently mindful of the diflSculties which a purely
legislative system presents. The foundation of our system was
based upon custom. Experience was the guide, and law rested
in the conscience of the public and its administrators. A legisla¬
tive system does not respond so readily or so promptly to the
varying standards of a community. Our legislation is apt to be spas¬
modic, retarded at one point and overshooting the mark at another.
It is the subject of congratulation, therefore, that with respect
to legislation upon the subjects here under discussion, different
states have moved with caution, guided by scientific method. In
several of the states, commissions have been appointed, and the
reports of these commissions show exhaustive inquiry and thought¬
ful conclusions.
Of course, our difficulties are increased by the complicated
system of our government. For obvious reasons, the national
government will not play so important a part in this sphere,
because such legislation of general application can hardly be
brought within federal jurisdiction upon any of the recognized
grounds in the Constitution. It may be assumed, therefore, that
this burden will belong practically to the individual states. The
activity of forty-six different sovereignties directed to the solution
of this problem may of course result in great good and perhaps
in great injury. The several states have sometimes been likened
to experimental stations; by others they are called competitors.
In both instances, the hope is entertained that the result ham¬
mered out by their experience may be for the best. But we must
remember that hasty legislation, unwise experiment, may serve as
a permanent discouragement just as sane legislation and well-
balanced measures will serve to uplift human conditions.
In any event, contemplation of this field for new legislation
ought in itself to answer the eommon fear that the federal govern-
[27]
EMPLOYERS' LIABILITY
ment may encroach upon state authority. It is very true that
the development of our material interests has forced the national
government to call into play authority which so far had been
left practically unused. But it is equally true that there is a vast
field of legislative authority with respect to which there is not the
remotest danger of encroachment by the national government —
a domain which lies absolutely within the control of the states.
And if with respect to that, unity of purpose is to be had, we shall
have to look to the intelligent and tolerant co-operation of the
several states themselves. It goes without saying that the legis¬
lation of forty-six different sovereignties, depending for its unity
upon the present consent of the several authorities, can never
attain the continuity and stability which may be found in a federal
law ; the more cause, therefore, that we proceed with caution after
full investigation, in order that the results, when attained, may
find their strength and their acceptance in the native force and
reason of the laws themselves.
The federal government may no doubt do here what it has done
in other cases. It may be influential in furthering general legisla¬
tion by the adoption of measures within its own proper jurisdiction.
Such measures will not be controlling, but they may serve to
bring the public mind to the acceptance of our common standard.
The chief burden must however rest with those ten states
whose ability to argue upon a basis of co-operation may be put
to the supreme test. The methods so far employed by general
statutes seem to show a purpose to come to an understanding
along practical lines. The appointment of commissions not only
demonstrates that careful inquiries are to be made but renders
possible an exchange of views and the acceptance of final results.
I regard such co-operation among the states of great importance,
not only because the subject should be inquired into with uncom¬
mon thoroughness, but because the absence of a general agreement
upon substantially the same policy would leave the states in a condi¬
tion ofunwholesome competition, and would, in my judgment, greatly
discourage the adoption of progressive measures in any of the states.
[28]
HONORABLE CHARLES NAGEL
To repeat, the control and protection of the vast material
interests of this country may undoubtedly fall to the national
government, because these interests are assuming proportions
which carry them beyond the boundary and the authority of any
one state. But rules of action, be they in the nature of protection,
education, or regulation of any kind, that go to secure the fate,
liberty, and happiness of the individual man, must in the main
belong to the state. And thus, after all, in the fierce contentions
between Jefferson, the State Righter, and Hamilton, the Federalist,
and their followers, we may find satisfaction in knowing that
there is ample room and opportunity for the intelligent application
of the teachings of both.
Mr. President, and gentlemen, I want to say again what I
said the other night, when I accept an invitation of this kind to
speak to a subject of such moment, I must have it understood that
I speak strictly for myself. I am not here as the representative
of the Government in Washington or to express the view of any one
but myself. This is especially true with respect to your question
which pertains to state legislation with which in the nature of
things the federal government could have nothing to do.
I do not know what the views are in Washington. But this
I do know, and you know, that we have a President of the United
States who is very firm in standing for the fundamental principles
of the government of the United States; who believes in the
independence and integrity of the individual man, but whose
humanity is large and generous and who would never fail to lend
his aid and his support to any measure that would intelligently
and within the constitution contribute to relieve hardship and
distress. It appears to me, therefore, that if the time should come
when co-operation is called for, and perhaps the illustration or
demonstration on the part of the federal government may be
needed, we may with safety and confidenee look to the co¬
operation and support of the Chief Executive in Washington.
I ti ank you. [AppZoMie.]
29
PRESIDENT ROBINSON
PRESIDENT ROBINSON
It is a very great pleasure to express to you, Mr. Secretary,
and to you, Mr. Gillette, our appreciation and sincere thanks
for your courtesy in responding to our call. The subject of the
evening is an important one — one that is growing more important
— and I venture the prophecy that this meeting will bear fruit.
Gentlemen, we stand adjourned.
[30]
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