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40). What is not stated is that the cases examined by the referees were persons whom the insurance officials suspected were not entitled to benefits and had called before the referee for examination. A similar referee report is given in the National Insurance Gazette for March 29, 1919, where the referee found, out of 105 cases sent to him by vigilant officials, that 62 per cent were fit for work; but to cite these figures without the text would give a false impression, as the referee states that in most of the cases (i.e., the 62 per cent) "there were reasonable doubts with regard to the capacity or degree of capacity, possessed by the patients at the date of examination. . . . Most of the cases were admittedly on the thin borderline that divides capacity from incapacity for work" (p. 112).

Another type of misleading argument is to take British official reports and claim that they are "cold" towards the insurance system, or credit it with no assistance in solving certain problems, when as a matter of fact there is no reason for these reports to refer to the system in any way. Thus page 9 of the pamphlet (repeated on page 14):

"The Final Report of the British Health of Munition Workers Committee, April, 1918 (Bulletin 249 of the United States Bureau of Labor Statistics), is equally cold towards the Health Insurance. It credits that insurance with no evidence or data bearing on sickness. . . ." In its introduction (p. 9) the committee specifically express their thanks to the "Home Office (factory department), the Ministry of Munitions, the board of education and the national insurance commissioners for the assistance afforded the committee by the loan of their officers and the supply of information." The officer loaned was the head of the department of physiology of the research committee of the system. And where there was any occasion for it, suitable reference is made to the insurance system, as "the experience of insurance authorities confirms the same view" (p. 128) and "medical attendance is obtainable under the national insurance system" (p. 134). Section X of the report, "sickness and ill health," covers only eight pages, because the principal purpose of the investigation was to study conditions of work and output in munition establishments and only rarely did the committee's problem touch the subject of health insurance. The same type of assertion is found on page 8:

"Not a single commendatory reference to National Health Insurance can be found in any of the reports of the Registrar

General for all the years since the insurance took effect, nor in any of the large number of local health reports for representative cities and towns." It is not the function of the Registrar General to commend or condemn the social legislation of his country; although a number of important health laws were enacted in the period referred to, he commends none of them, and no one expects him to do so. As to the local health reports, the Medical Officer of Health of Birmingham sensibly remarks: "Among the schemes brought into existence in 1913 were the medical, sickness and maternity benefits under the National Insurance Act. In time it is probable that these will have a profound influence on the public health, but results must not be looked for in this direction for a good many years to come" (Report for 1913, p. 6). In various local health reports are statements showing as a matter of course the connection between the health work and the insurance system; but most officials naturally do not consider it their business to condemn or commend the system. Thus the Nottingham Health Officer states (Report for 1914, p. 93):

In my report for 1913, I was able to point to the marked reduction of mortality from tuberculosis in recent years, as evidence of the good effect of the energetic and methodical crusade against the disease carried on by public and private persons and bodies throughout the country, which had reached their most promising development in the Medical and Sanatorium Benefit provisions of the National Health Insurance Act.

The Liverpool Health Officer states (Report, 1916, p. 50):

It will be noted that the percentage of births occurring in workhouses and other institutions has diminished considerably. . . . It is probable that the payment of the maternity benefit under the National Insurance Act is accountable for this (Report for 1913, p. 6). In a later report he says: At the request of the Insurance Commission and the Local Government Board, special arrangements were made to give sanatorium treatment to soldiers and sailors. . . . In suitable cases, "extra nourishment," in the form of milk, eggs and meat extracts, are given to insured persons. . . .

One of the false statements which the pamphlet quotes is: "Compulsory insurance will stimulate the needed campaign for the prevention of illness." To which is answered, "This is an assumption unsupported by reason or experience" (p. 12). In the report of the Departmental Committee on Sickness Claims, one of the members, Miss Mary Macarthur, who is by no means satisfied with the British system, states that the act of 1911 "has done

great service in bringing to light a mass of suffering and a number of social evils, as to which the nation as a whole was ill informed or indifferent. It will now be substantially easier than in 1911, both on account of the new knowledge available and of the state of public opinion, to make adequate provision to advance the health of the community" (Cd. 7687, p. 78). A recent report of the Ministry of Reconstruction makes the same statement. Another type of positive assertion is that on page 25: "Health insurance in Switzerland, except in one or two cantons, is voluntary. Since the Swiss system did not take effect until well in 1914, when normal operations were promptly disturbed by the war, there is as yet no evidence accumulated to show that it is successful or otherwise." The official reports of the Swiss system for 1914 and 1915 have been available in Washington for the last two years and others came in later. For the benefit of future editions of this pamphlet, it may be stated that the office in charge of the system, was created by the decree of December 12, 1912, operations of the office began on February 1, 1913, and the system began to operate on January 1, 1914. At present, six cantons have adopted compulsory systems. The success of any voluntary system can, in part, be estimated by the number of persons who, of their own accord, apply for admission to it; in 1914 the number of persons insured was 361,621; each year following showed an increase and at the end of 1917 the number was 530,329. The amount of federal subsidy granted increased correspondingly each year and for 1917 was 2,452,332.40 francs.

The tone of the pamphlet is extreme throughout; the statements of the persons named above are referred to as "malicious untruth," "rhetorical assertion," "pure demagogism," etc. A careful reading of the pamphlet is all that is necessary to convince one that there is a larger measure of truth in the statements so violently denounced than in this refutation.

HENRY J. HARRIS.

Effects of the War upon Insurance, with Special Reference to the Substitution of Insurance for Pensions. By WILLIAM F. GEPHART. Carnegie Endowment for International Peace. Preliminary Economic Studies of the War, No. 6. (New York: Oxford University Press. 1918. Pp. vi, 302. $1.00.) The volume may best be described as a compendium of infor

mation on insurance presented in a thorough, scientific manner, with a careful analysis of the preliminary effects of the war.

The topics covered include the following forms of insurance: life, marine, fire, and social insurance, and pensions. At the time of writing (December, 1917) it was, of course, too early to discuss anything but the first effects of the war on these branches of insurance, but Professor Gephart has nevertheless succeeded in bringing together in compact form a wide range of information and has presented it in an interesting manner. The addition of a certain amount of foreign data has enabled him to draw some conclusions as to the effect of the war abroad as well as at home.

The general plan of the work is to give a statement of the information available on each branch of insurance and then to give the details for each country. Particular stress is laid on reproducing the text of laws, executive decrees, official statements, and especially the text of the policies used. Following these documents is usually given a brief analysis of their important features. At the close of each chapter the author summarizes the effects of the war on the branch of insurance treated.

The longest chapter, about 100 pages, is that devoted to life insurance, and this naturally forms the most important part of the discussion. The effect of the war on the finances of the companies is discussed under the captions of premium income, depreciation of securities, and increased taxation. The most serious of these is the depreciation of the bonds and other securities in which the reserves are placed; for some groups of conservative investments used by British companies, the depreciation has been as much as 25 per cent. The American companies have also felt keenly the changes in bond values; thus railroad bonds, a favorite type of investment, which yielded 4.10 per cent in 1903, declined so much in value as to show a yield of 4.91 per cent in 1917, while industrial bonds in this period increased in value so that the yield fell from 5.69 per cent to 5.25 per cent. Participation in liberty loan subscriptions has also meant a lower yield than the average secured by the companies. In general, the war has affected the finances of the life companies in a distinctly unfavorable manner and these influences will continue for a long time.

Prior to 1914 the history of life insurance in this country was marked by a progressive liberalization of the terms of the policy, caused principally by the competition between the companies. One feature of this movement was the conviction of the managers

of the companies that restrictions on military service were unnecessary. Of course, the action of the companies was by no means uniform, but at the beginning of 1914, companies having about 77 per cent of the insurance in force issued policies with no restrictions as to military or naval service, while companies with about 22 per cent had some kind of limitation in their policies. Beginning with the outbreak of the war, practically all the companies inserted in their policies some sort of war clause, calling for extra premiums in case of such service. No uniform rate was adopted, but typical rates used by certain prominent companies ranged from 50 to 100 dollars extra per 1,000 annually. In Great Britain, one of the largest companies charged from 8 to 15 per cent for the war risk; in Canada contracts were placed with four United States companies for large groups of enlisted men at an increase of 25 dollars per 1,000 above the usual rates.

Serious losses are expected from the mortality due to war, but at the time of writing no reliable estimates could be made of the loss from this cause.

Marine insurance was affected more directly and extensively than any other branch of insurance. However, as the governments of the leading countries all coöperated with the marine companies in caring for the war risk, the net result has been that the companies have been able to operate with even better profits than in normal times.

Fire insurance had to face a variety of new hazards; airplane raids, new industrial hazards, arising from the munitions industries, the moral hazards due to the presence of disaffected elements in the population are instances of new risks which could hardly be estimated on a scientific basis. Besides these factors, the increased costs of operation, the depreciation of securities, and the difficulty of raising rates supervised by state officials, added to the problems to be solved.

HENRY J. HARRIS.

NEW BOOKS

BASYE, W. History and operation of fraternal insurance. (Rochester, N. Y.: Fraternal Monitor. 1919. Pp. 224. $1.60.)

BURNET, P. The probable trend of life insurance production in the immediate future. (Chicago: Assoc. of Life Agency Officers. 1919. Pp. 8.)

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