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managed, and whose machinery is in a defective state. Another difficulty in the way of mutual associations is the complex machinery which will be required to cope with all the details connected with the investigation of accidents and the settlement of disputed claims, often requiring exceptional ability and tact. Much will necessarily depend upon the official staff, as to whether there is to be a profit or a loss. Then there is the question of annuities payable for cases of permanent disablement, which will be a serious charge upon the trades affected, and may ultimately devolve upon the stronger firms associated in such a society; and these permanent pensions will no doubt soon tire out the patience of even the most long-suffering business men, who will seek refuge at last in the regular insurance offices. It is a well-known fact that mutual insurance, as applied to fire insurance, has never been a signal success ; and it will probably be found, in any such combination, that the natural result will be that the better employers will speedily retire from the association, and there will remain only those members who have a bad record, antiquated machinery, and loose methods of working. The majority of such attempts will only end in fiasco and disaster to those who join and remain members.
Thirdly, every employer may cover the risk by the method of insurance with the existing insurance offices, of which there are many possessing the necessary wealth and experience, as well as the necessary machinery for settling all claims that may arise under the Act. Since the passing of the Employers' Liability Act of 1880, a new branch of accident insurance has been developed; and during the past seventeen years a vast amount of data has been collected, and practical experience gained, which cannot fail to be of incalculable service to those offices transacting this class of insurance. There are many distinct advantages to be obtained by securing the policy of an established and substantial insurance company in preference to joining any mutual association or federation. (a) The capital and reserves of an established insurance company offer perfect security to the assured in the event of a disaster which would exhaust the funds or levies of most mutual combinations. Take the case of a big colliery explosion, or the collapse of a mill, in either of which cases many workpeople might be killed or maimed for life. (6) Insurance companies secure the services of officials who are trained to the business, and are skilled in the settlement of claims and in the prevention of imposition. (C) Insurance companies experienced in this class of business can better undertake this additional liability upon more favourable terms than mutual combinations guided by inexperienced persons. (d) They also generally select their risks, and consequently charge lower rates than mutual combinations, who have to include careful and careless employers on equal terms. (e) In the event of a dispute between the assured and
his company the former has a substantial body to proceed against, whereas with a mutual combination there is no one to sue. (f) With an insurance company the premium paid gives security for the whole of the period, whereas mutual societies are liable to extra levies
up to almost any amount. Speaking on the 20th of July, 1897, Lord Salisbury remarked :
To my n ind the great attraction of this Bill is that it will turn out a great machinery for the saving of life. It will throw the necessity upon insurance offices that they shall take the utmost means in their power to see that accidents are avoided. This is really the history of this law of compensation. The law of compensation at the beginning of the century was begun by the juries, and instead of compensation for all the real injuries incurred being given, it was used as a punitive instrument to force these great owners and railway companies to strain their efforts to the utmost in avoiding and preventing accidents, which at one time were so numerous. It has been used successfully as regards the ordinary passenger and the ordinary citizen, but the law of common employment has impaired its efficacy for the working man. We are now, by a wise and general revision of the principle on which the law rests, applying it for the purpose for which it was originally destined, and has been profitably employed, namely, the purpose of forcing all who by the process of industry or the accident of their position have the lives of their fellowmen in their power, to spare neither labour nor ingenuity nor money in making our industries as safe as possible for those by whom they are carried on.
One of the leading trade organs, The British Printer, has boldly shown the absolute necessity for masters providing against loss by adequate insurance, this being the only safeguard of their interests. The editor has no hesitation in advising that, whatever the rates, employers must consider whether it is not worth the cost, to be absolutely safeguarded in the question of damages.
There are in the United Kingdom some thirty or forty companies transacting this kind of business, and their combined capital and reserve funds amount to several millions, thus affording ample security for all possible contingencies. In addition to the regular accident offices there has lately been a tendency on the part of some of the leading life companies to embark in this kind of insurance business, and to utilise their surplus capital by starting a liability department, with all its attendant risks and obligations. How far the existing life policy-holders will like this arrangement remains to be seen. Whilst it is true that under the terms of the Life Assurance Companies' Act no life office can use its life funds for other purposes than the interests of the policy-holders, it is only to be expected that a number of the members will look forward to the new development with some degree of anxiety, and may rightly think that the energy of the officials might be more usefully employed in legitimate life assurance, than in competing in the more speculative region of liability insurance, where a special kind of astuteness, knowledge, and experience is required in the
settlement of the claims of large to lies of workmen not usually to be met with in an ordinary life assurance company with its staff of actuaries and clerks, all of whom are very prone to take merely an academic view of business matters. It is more than probable that after a year's experience the directors of those few life companies that have commenced accident departments will see the wisdom of retiring from the field, and of confining themselves to their original business, instead of imperilling their funds by underwriting colliery and other hazardous risks. One would think that their legitimate business must inevitably suffer, as many intending life assurers will probably prefer to take out policies in other offices.
Most of the accident companies have formed a tariff association, and the rates of premium have been calculated and circulated throughout the country. The sub-committee charged with the duty of compiling the rates have not under-estimated the risk. Indeed there are many cogent reasons for believing that they have, if anything, taken a somewhat exaggerated view of the matter, and have, in many instances, fixed the premiums at too high a level; so much so that it is found that many firms object altogether to pay the rates now being asked by the tariff companies. Of course, an important factor in estimating the premiums has been the annuity payable to the injured workman, in certain cases during the remainder of his life, not exceeding ll. per week, and which may run to a period of sixty years. There are a few offices doing business on non-tariff principles, and these companies profess to take into account any special features rendering the employment less dangerous, and in this way aim at fixing equitable rates, based upon the merits of each particular risk. Employers are therefore in the happy position of being able to choose their offices, and will no doubt select the company which seems best adapted to meet their particular needs. It would certainly seem advisable that every company affording indemnity under this Act should render their accounts annually to the Board of Trade, as is done by the life offices.
The main point is for the employer to seek protection against the liabilities connected with the Act. Very few firms are in the enviable position of being able to incur an almost unlimited risk, with its train of possible litigation, without having recourse to some form of insurance. In the case of private firms a serious accident involving several fatal injuries might mean insolvency, while in the case of limited liability companies it would mean reduced profits, and the compensation might have to be taken from the paid-up capital. One can fancy the look of dismay on the countenances of the expectant shareholders as they peruse the balance-sheet! It may therefore be assumed that no employer can afford to be his own insurer in respect of this Act, and whilst he has the proverbial three courses open to him, we think there can be no reasonable doubt that the insurance companies offer the most satisfactory means of protection, always provided the rates of premium are not exorbitant.
R. T. THOMSON.
NOTE.—In the fourth edition of Mr. Addington Willis's book on the Workmen's Compensation Act he deals with the question of what constitutes a warehouse within the meaning of the Act, and he comes to the conclusion that it may be taken to apply to practically every kind of warehouse, whether there is machinery on the premises or not.
THE DIFFICULTIES AND THE LIMITS
When the historian of the future passes in review the age in which we live, some dark and gloomy pages will be filled with the constantly recurring disputes between Capital and Labour. For months the daily journals have recorded the melancholy incidents of the strife between employers and employed in the trade in which it is our pride and boast that we pre-eminently excel. The occasion seems appropriate for a review of the progress which has thus far been made in co-operative and profit-sharing industries. Statesmen, political economists, men of business, and the great body of workers are alike looking for remedial measures. Under the wages system the interests of workers and employers are in a sense inevitably conflicting. Under the co-operative or profit-sharing system it is contended that unity of action and purpose will be secured.
Dealing first with co-operation, it may be defined as the union of small capitalists for the purchase, production, or distribution of goods, and for mitigating the baneful consequences of heartless and wasteful competition. Experiments in co-operation were first attempted at the end of the last century both in England and in Scotland. The results were unsatisfactory. The profits in those earlier societies being distributed to shareholders and not to purchasers, no special inducements were held out to the poorer class. In 1828 the movement for social improvement set on foot by Robert Owen was extended to general trading. Once more the results proved disappointing. Commercial experience was wanting. Agents unworthy of confidence were employed. Undeterred by many discouraging experiences, the friends of co-operation, of whom some were to be found in high places, persevered in their endeavours. At a meeting called by Mr. Owen, shortly after the accession of our gracious Queen, the Duke of Kent commended the principle of co-operation as conducive to the well-being and good order of society.
In establishing an industry on the co-operative plan a difficulty is encountered in the initial stage. Under any method of conducting the operations of trade and industry it is essential to have capital at command. For the working-man the process of accumulation by