The Survey, Volume 30, Number 2, Apr 12, 1913

by Various

WORKMEN’S COMPENSATION

To the Editor:

In the March 8 issue of The Survey there appeared an article by Paul Kennaday, entitled Big Business and Workmen’s Compensation. This article is full of inaccurate statements and should never, in justice to your readers, have been printed.

On page 809, in the first column, it is stated: “Seized upon with alacrity by reformers, fought at first at every step by the casualty insurance companies and employers, ‘elective’ acts are now cherished like a prodigal son,” etc. This statement is unqualifiedly untrue. Employers generally have been notoriously in favor of elective compensation laws. Of course, they have been far from unanimous, and their expert advisers have generally been in favor of compulsory laws, but anyone familiar with the attitude of employers in the movement for compensation can bear witness to the fact that the majority of employers have throughout entertained a preference for elective laws. On the other hand, the casualty insurance companies have not fought such laws, nor have they generally specifically favored them. There has been as much difference of opinion among the insurance men on this question as there has been among all other classes of people. But in general the representatives of the casualty insurance companies have favored any kind of a law which would substitute the liability for compensation in place of the liability for negligence.

Of course, the casualty insurance companies have objected to such elective compensation laws as the Ohio Act of 1911, for the reason that that act gave the state insurance office a monopoly of the compensation insurance. That left the casualty companies to deal with the old negligence liability with all its abuses and consequent unpopularity, while it gave them no opportunity to demonstrate their ability to administer compensation insurance better than the State Office and without the abuses incident to negligence insurance.

The statement on page 809 at the bottom of the first column and the top of the second, that the “club” features of the elective compensation law has a peculiar advantage from the casualty companies’ standpoint is also diametrically the opposite of the truth. What the casualty insurance companies most desire is that the compensation law shall be so framed as to induce all employers, or all large employers, pretty unanimously to adopt one course or the other; that is, en masse to elect the compensation features of the law, or, en masse to reject them. Otherwise the casualty companies have to do business under two different laws, providing for two different kinds of insurance, the consequent of which is to duplicate the work and a large part of the expenses of the insurance companies. They naturally do not want a law which will cause employers to jump back and forth from the compensation features to the negligence features and vice versa, and experiment, but rather one which will induce all to come permanently under the compensation features or to stay out permanently.

On page 809, in the second column, it is stated, referring to casualty companies: “With equal determination they stop, where they can, laws which give the employer no election, but compel him to insure.” That is a purely gratuitous misstatement of the facts. The casualty companies have not—whatever some few exceptional representatives of some companies may have done—tried to stop the enactment of compulsory compensation laws. They have, on the other hand, opposed the enactment of so-called compensation laws which would give a monopoly of the insurance business to political boards. In so doing they have adopted the natural attitude of protecting their own business; and have done no more than would the persons engaged in any other business if it were proposed to transfer their business to politicians.

On page 809 in the same column, it is stated: “Prospective annual profits in enormous amounts are at stake for the casualty insurance companies in this fight.” That statement is a pure figment of the imagination. The writer cannot point out anywhere on this earth where casualty insurance companies have made profits in enormous amounts. What is at stake for the casualty insurance companies is the total value of the machinery and good will of their business, which ill-advised enthusiasts, under the secret guidance of Socialist agitators, are trying to destroy. But more important, the employes of such companies have their bread and butter at stake; it being proposed to transfer their jobs to political appointees and to leave them out in the cold.

Lower down in the column it is stated that “casualty insurance companies are to be found advising, wherever workmen’s compensation is under discussion.” As a matter of fact, the casualty insurance companies have been very reluctant about advising except when called upon; but their actuaries have been in constant demand, and naturally should be, since they are about the only persons except the officials of the state insurance departments, who know anything about the business and the subject matter involved. The further statement that “At meetings of bar associations their attorneys have resolutions passed deprecating state insurance” is a gratuitous insult. No attorney for an insurance company would offer a resolution at a meeting of any bar association affecting the interests of his clients without stating that fact; and thereupon the resolution would be considered on its merits and would express the opinions of the members of the bar unaffected by the interests of the casualty insurance companies.

On page 810, in the first column, it is argued that no doubt big business and the insurance companies would be glad to see the pending constitutional amendment defeated. That is a pure assumption. Inasmuch as said amendment goes infinitely farther than authorizing a compensation law, and generally repeals the Bill of Rights in application to the relation of employer and employe, there may be many conservative opinions opposed to its enactment. But big business, the casualty insurance companies and a host of conservative people have been most active in the movement for an amendment permitting the enactment of a compensation law in this state in such form as the judgment of the legislature might decide, without any restrictions in the interests of any party.

On the same page, near the top of the second column, it is objected to the insurance committee’s compensation bill now pending in the Legislature that it leaves the function of fixing rates in the State Insurance Department. Why not! Is the objection to that provision that the Insurance Department, being already constituted and being composed of officials expert in the subject of insurance, will fix rates properly and not use state-administered insurance as a political weapon? Why create a new body to deal with the technical subjects with which the Insurance Department is qualified to deal?

Further down it is stated, sneeringly, that “three constitutional objections to one bill is good measure.” The objections are then stated. Now as a matter of fact three constitutional objections to one bill don’t amount to much unless these objections are valid. All the objections recited in this paragraph have been carefully considered and the overwhelming weight of opinion is that they are not valid.

It is then stated that a certain change in this bill from its earlier form has “in effect, turned the whole rich New York field over to the casualty companies.” And the reason for that conclusion is stated to be that the employers will do nothing until the casualty companies’ agents come to them, and will then do what the casualty insurance agents advise. That is nonsense. When the casualty insurance agents go to the employers under a law such as is proposed in this bill, they will go with a proposition involving an extremely large increase in rates. Employers throughout this state have been aroused over the subject of compensation and have studied the question of insurance sufficiently to turn out en masse against a proposition to give a state office the monopoly of insurance. Does it seem probable that when they are approached by the casualty insurance companies’ agents they will suddenly turn into fools and in effect submit to a monopoly by those companies? On the contrary, they will study the problem of mutual insurance very hard, and there will undoubtedly result many experiments in that line. Large establishments also will study out the problem of carrying their own insurance. It is also probable that a few employers may venture to experiment with state insurance. But the fact is, as the writer of this article knows, that no well informed and substantial employer will have anything to do with state insurance except as a last resource, or unless he is compelled.

Finally it is stated that no spokesman for the casualty insurance companies appears upon the field in New York. That is rather ridiculous. Officially, the two best informed persons upon casualty insurance in this state should be Mr. Hotchkiss, the former, and Mr. Emmet, the present, state insurance commissioner; and they both have spoken for, although not as the representatives of, the casualty companies of New York. At the same time, Frank E. Law, of the Fidelity and Casualty Company, and Edson S. Lott, of the United States Casualty Company, have made many addresses and published a considerable amount of literature on this subject. Naturally, the insurance companies have sought to avoid anything that would cause the false impression that any bill was in their particular interest. They have therefore rather confined themselves to opposing thoroughly bad measures than to advocating anything that they particularly desire or recommend.

The whole animus of this article is clearly betrayed in the opening words of the last paragraph, where the writer says, “while men are deliberately and openly planning the utter rout of the casualty companies....” Who are these men that are deliberately and openly planning the utter rout of the casualty companies? The writer is among them. They are those who seek to destroy private business in all its forms and to substitute state management and control in its place. Their activities in the present campaign have nothing to do with the particular merits or demerits of the compensation measures in question. Their whole attitude is false, in that they do not admit their motives, and besides wantonly misstate facts as to their adversaries.

F. Robertson Jones.

[Secretary-Treasurer Workmen’s Compensation Publicity Bureau.]

New York.