workman should be allowed four years', five years' or three years' wages in cases of death, and whether the compensation should be 50, 60, or some other percentage of his wages in case of his complete disablement. Mr. THOм. We have not given consideration as yet to the scale of compensation. It is only to the policy and the principle that we have yet given consideration. The CHAIRMAN. Are there any other gentlemen who desire to be heard? STATEMENT OF JAMES A. EMERY, ESQ., COUNSEL OF THE NATIONAL ASSOCIATION OF MANUFACTURERS. Mr. EMERY. Mr. Chairman and gentlemen, I desire to make at this point, if I may, a brief preliminary statement with respect to the attitude of the National Association, representing employers of substantially four and a half million of men, with respect to the very interesting and important subject which this commission has before it. I shall represent, I trust, in further hearings to be had on this subject with reference to the legal and economic issues involved, not only that association, but a large number of industrial and commercial organizations throughout the United States, who have taken an exceedingly lively interest in the legislation of their respective States proposed with reference to it, and who are intensely interested in the opportunity to have a thorough discussion before this national forum of the important issues involved. I want particularly at this time to call the attention of the committee to the fact that the clients whom I have the honor to represent, especially in the National Association of Manufacturers, have endeavored to obtain at first hand authentic information with respect to foreign systems and their practical operation, by sending abroad last year a commission with full authority from them, and with every opportunity that our relations with commercial organizations throughout Europe offered, to obtain a practical notion of the working of European systems from the standpoint of those who had the contact with them which an employer necessarily has, and to further establish proper official relations with the administrative officials of such systems. Myself and associate in charge of that investigation visited Great Britain, Germany, France, Holland, Switzerland, Belgium, and Italy. I spent personally the greater part of my time in Great Britain, my associate especially doing his work on the Continent and in Germany. We had in each country the opportunity of associating in our investigation men selected by the authorities charged with the administration of compensation legislation in those countries; had the opportunity of selecting employees to conduct the work with respect to the practical working and administration of those systems, men recommended to us from official sources; and in Germany particularly we enjoyed the very closest cooperation of the German imperial insurance officials, and were the only strangers who were present at the twenty-fifth celebration of the inauguration of the German insurance system, when there were a great number gathered for the purpose of comparing notes on the operation of the German system, and every aspect of German industrialism was thoroughly presented and discussed by men who had spent their lives in the study of this subject. The information which we have gathered was primarily for the benefit of the members of our association, and it will be presented in a formal way to the association at its coming convention; but on behalf of the National Association of Manufacturers, I have the right to offer to the Federal Commission all the information that we have gathered from official sources in foreign countries that may add to our knowledge of the economic aspects of this problem. I had, too, the opportunity of attending the National Law Conference, at which workmen's compensation was discussed from the aspect of the various states of Europe by lawyers who had had experience with the practical administration of the law in their respective jurisdictions, and I should like at a later time, if the chairman will permit me an opportunity, to present the economic results of that study and the practical administration of those laws through a gentleman who has special training to equip him in the gathering and compilation of statistics of that character, and to present the same to the commission, not only in figures, but by graphic charts which will fully portray the operation of the more important systems of Europe, with special reference to those of Germany and England, which have received special attention from students of this problem in the United States. That is all I desire to say by way of preliminary statement to-day, except to offer to the committee the assurance that as far as possible the manufacturers here represented in the national association desire to cooperate most fully with the commission in working out constructive legislation on this subject. Senator CHAMBERLAIN. Have your associations attempted to formulate the law covering these subjects? Mr. EMERY. I would not say that we have attempted to formulate specific legislation, but we have endeavored to make up our minds as to certain chief principles which we believe such legislation should rest upon. These principles will be expressed at our coming convention. We have assisted in the formulation of legislation of a more or less tentative character in State jurisdictions. The CHAIRMAN. Mr. Emery, if the Federal Government should pass any law to regulate the subject at all, have you made up your mind as to which form would be better for us to adopt, whether the workman's compensation plan, which prevails in England, or some insurance system? Mr. EMERY. If you will permit me, Mr. Chairman, I believe that insurance as important as it is in relation to this entire problem should be regarded as a means to an end and not an end itself. I think we are to distinguish forms of compensation from employers' liability by recognizing that compensation legislation of any kind, as I understand it, is to provide a systematic recovery for persons injured in employment, as distinguished from any system in which. recovery is predicated upon fault, and to which we apply the term an employers' liability system as distinguished from a compensation system. I can not imagine any successful system which provides for the systematic compensation of injuries received in the course of employment which must not be predicated, in order to lessen the shock of so great a primary burden upon a system of insurance. As to the particular system of insurance that should be adopted, I think that should be left as flexible as possible so as to provide for the widest possible experimentation, within reasonable limits. As to the particular form which the remedy is to assume, I have myself arrived at a conclusion that I intend to recommend, but I can not say that I am quite satisfied as yet with respect to the Federal jurisdiction in the matter, but I have thought of it largely in terms of State legislation while realizing at the same time the difficulty of securing recognition of uniform principles of legislation in 46 sovereignties and I have given considerable thought to the question of Federal legislation, but the subject is a very large one, and I am sure that an humble member of the bar like myself hesitates to formulate an opinion, or a definite proposition on so important a subject without the fullest opportunity to gather the views of my professional brethren. I must confess that I have been very much interested and feel that the profession is indebted for a very interesting discussion of this subject which has been recently offered by a distinguished member of the Illinois bar, whom I see here, as counsel for the New York Central lines. Mr. LEWIS. Mr. Chairman, in that connection, I have had in my own experience the question whether it ought to be insurance or whether it ought to be the English method. I have had considerable difficulties with reference to general industry because of the notorious fact that employers sometimes may be almost as poor as the employed injured, but with reference to the railroad subject the difficulties seemed to all disappear in the fact that railroads were generally financially competent to deal with it. [Laughter.] I am afraid perhaps my spirit is not wholly appreciated-financially competent to deal with the questions as they arise. In coal mining, for example, a corporation of $100,000 capital may have a gas explosion that will sweep away 300 men. A compensation system based on the English method will more than sweep away the corporation with the men. But accidents on railways do not happen in that way. They scatter themselves throughout the year, and scatter themselves measurably in proportion to the traffic. Accordingly it does not seen to me that the railroads would need any insurance; that the possibilities of financial danger are not imminent in their cases except as the general tax itself might affect the general receipts or net receipts. In the meantime any insurance system that is adopted necessarily achieves but one end-compensation of the victim-while the English system, especially as applied to the railroads, would achieve two ends; first, the probability of greatly diminishing the accidents through penalizing them, and, second-not less worthy, of course the compensation of the victim himself. I should be, so far as I am concerned, very much opposed to the insurance principle as applied to railroads, at any rate, as long as accidents show the tendency to run to averages with the traffic that they now show. The CHAIRMAN. You think, Mr. Lewis, that if the railroad companies were compelled to pay compensation for every injury which resulted to an employee, that that would have a tendency to make them more careful than under the present system, where they are simply liable in case the employee is able to show that the company was negligent. Mr. LEWS. Yes; I think I have a right to feel confident in that position from the existence of an abnormal rate of accidents here, and then from the experiments that have been made in increasing efficiency of management by employers and the reduction in the ratio of accidents resulting from it. Mr. EMERY. Mr. Chairman, may I ask whether it is the intention of the commission to go into the question of accident prevention as distinguished from accident compensation? The CHAIRMAN. This commission desires to go as far as possible into every phase of the subject. We want to obtain as comprehensive a view of it as we possibly can, and we shall be glad to hear you upon any phase of it that occurs to you. Mr. EMERY. While the discussion does not approach that line at this time, I am very much interested in what the Congressman from Maryland has just said. It is, nevertheless, worthy of remark, under practically every European system, I think-and every system that I know of here where there has been an increase of personal liabilitythat the more widely extended the assurance of compensation for accident, the greater the number of accidents occurring and being compensated upon the face of the reports. The CHAIRMAN. What the commission is principally anxious about just now is to ascertain how far, as a matter of law, it can go in dealing with this question. As a tentative proposition it occurs to me that we have only the power to deal with the question in perhaps three phases; first, we have unlimited power undoubtedly to deal with employees of the Federal Government, to make almost any law we please with reference to their compensation; second, we probably have as much power-perhaps more power-to deal with the question as it affects the Territories of the United States and the District of Columbia than the States would have. At any rate, it occurs to me that we could pass any law regulating this matter in the Territories and the District of Columbia that a State could pass in regulating the matter in a State; third-and it seems to me most important the question is how far we can deal with the employees of the interstate carriers. I am unable myself to see just now how we can deal with any other industry, or any other employer of labor in a State, except the interstate carriers, and it occurs to me that we would only have the power to deal with the interstate carriers under the commerce clause of the Constitution. So that really the prime object of this investigation just now is to ascertain how far we can go in dealing with the interstate railroads of the country under the commerce power of the Constitution, and I should be very glad to hear from anybody-who has given that subject any study-on that particular phase of the question. Mr. LEWIS. Just another suggestion. In going over the national civic federation act I have found a provision giving the employer and the employed the privilege of adopting what are called alternative schemes. Accepting for the moment, what I guess is so, that any compensation scheme passed here with respect to the States must be limited in its effect to employees while engaged in interstate commerce, of course a very serious restriction upon the application of the act follows. It occurred to me, especially in view of the magnanimity which the railroads are really displaying in this matter, that under the alternative scheme proposed in this civic federation act, the railroads and the employees could get together upon schemes of compensation that would embrace all accidents, whether arising in interstate or intrastate traffic. I make that suggestion because it occurred to me, and it may be of some value to those present. The CHAIRMAN. Does your bill, Mr. Lewis, to which you have referred, provide for the alternative scheme? Mr. LEWIS. Yes, sir; see Article V, section 31, of bill attached. The CHAIRMAN. Does your bill allow the employee either to accept the compensation provided for by the bill or to bring his action under the common-law rules? Mr. LEWIS. Yes, sir; see Article I, section 2. Mr. Moon. Keeping alive the common-law remedy. Mr. MooN. Is not one of the chief things we are seeking to abolish the common-law remedy? Mr. LEWIS. It has been the judgment of those who have most carefully studied this subject that some reservation of the common-law rule with regard to accidents would be necessary to insure the validity of the act, and I believe that was the motive for leaving in a very limited reservation of the common-law liability of the employer. The CHAIRMAN. Mr. Lewis, if we have the power to pass a hard and fast compensation law, would you think that would be preferable to allowing the common-law remedy as an alternative proposition? Mr. LEWIS. Personally, yes, sir; and if it were freed wholly from constitutional questions, that would be my idea of policy and of justice. But the judgment of those who have studied this subject has been that some reservation of a liability upon the employer is a necessary concession to what I may call our common-law sociological prejudice. Mr. THOм. I would like to ask The CHAIRMAN. Under the common-law system, by which the injured employee can bring his suit against the railroad company or the employer, he must show that the employer was guilty of negligence. There is a great waste of money in such litigation. In the first place, the workman makes an arrangement with a lawyer by which he pays him, say, 50 per cent of the amount received-that is the case in my own State at any rate, and I suppose it is pretty much the case everywhere-and at the end of the litigation he may recover from the railroad company a substantial judgment, the greater proportion of which has been paid away, and he does not get the benefit of it. Out of a judgment of, say $5,000, which has cost the railroad $8,000 or $9,000, the injured railroad employee gets about $2,000. That is certainly a great waste. Now, if you perpetuate that by an alternative remedy, I do not see that we have advanced very far, because, it seems to me, that wherever you give the employee the alternative he is going to be subject to the impor tunities of the ambulance chaser, precisely as he is now. A lawyer will come and insist "you have a good case against the railroad company. The compensation act allows you, we will say, the equivalent of $2,000 for your injury; you have been seriously injured, and we can recover $10,000 for you if you put the case in our hands," and the workman is prevailed upon to have the suit brought; and if so, then he is in precisely the same position as he is under the present system. It does not seem to me and I am speaking tentatively; I |