An address before the National Congress of Charities and Correction at Boston on June 8, 1911. Published in The Outlook, June 10, 1911.

Throughout the civilized world a developing sense of social responsibility has compelled the community to support in some manner its needy members, whatsoever the cause of their inability to support themselves.

In granting this aid we are passing from sporadic, emotional charity to organized charities, and from mere relief to preventive measures. We have learned that financial dependence among the wage-earners is due, in large part, to sickness, accident, invalidity, superannuation, unemployment or to premature death of the breadwinner of the family. Contingencies like these, referred to in the individual case as a misfortune, are now recognized as ordinary incidents of the lives of the wage-earners. And since our existing industrial system is converting an ever-increasing percentage of the population into wage-earners, the need of providing indemnity against financial losses from such ordinary contingencies in the workingman's life has become apparent. So sickness and death benefits and methods of compensation for accidents have been resorted to. But this partial workingman's insurance has served mainly in making clear the need of a comprehensive system which shall extend protection also to the wage-earners in case of invalidity, superannuation or unemployment, and to the widows and orphans left helpless by the premature death of husband or father. In this movement to establish a comprehensive system of workingmen's insurance, Germany, France, and latterly England have already advanced far.

The United States must follow on the same path, for the conditions which have led to the introduction of workingmen's insurance abroad are universal in their operation. Besides, the form and aims of our Government should lead us to action, as well as the sense of social responsibility. American democracy rests upon the basis of the free citizen. We accord (to the men) universal suffrage. We urge strenuously upon every voter the duty of exercising this right. We insist that the voter should exercise it in the interest of others as well as of himself. We give thus to the citizen the rights of a free man. We impose upon him a duty that can be intrusted with safety only to free men. Politically, the American workingman is free—so far as law can make him so. But is he really free? Can any man be really free who is constantly in danger of becoming dependent for mere subsistence upon somebody and something else than his own exertion and conduct? Men are not free while financially dependent upon the will of other individuals. Financial dependence is consistent with freedom only where claim to support rests upon right, and not upon favor.

President Cleveland's epigram that "it is the duty of the citizen to support the Government, not of the Government to support the citizen," is only qualifiedly true. Universal suffrage necessarily imposes upon the State the obligation of fitting its governors—the voters—for their task; and the freedom of the individual is as much an essential condition of successful democracy as his education. If the Government permits conditions to exist which make large classes of citizens financially dependent, the great evil of dependence should at least be minimized by the State's assuming, or causing to be assumed by others, in some form the burden incident to its own shortcomings.

The cost of attaining freedom is usually high; and the cost of providing for the workingman, as an essential of freedom, a comprehensive and adequate system of insurance will prove to be no exception to this general rule. But, however large the cost, it should be fairly faced and courageously met. For the expense of securing indemnity against the financial losses attending accident, sickness, invalidity, premature death, superannuation and unemployment should be recognized as a part of the daily cost of living, like the more immediate demands for rent, for food and for clothing. So far as it is a necessary charge, it should be met now as a current expense, instead of being allowed to accumulate as a debt with compound interest to plague us hereafter.

Few intelligent property owners omit to insure against fire. Everybody recognizes the fire insurance premium as a current expense. And yet the chance of loss by fire is very slight as compared with the chance of loss of earnings by sickness, accident or premature death. Every intelligent manufacturer makes in some form a regular charge for depreciation of machinery and plant. And yet the depreciation of man through invalidity and superannuation is no less certain, and frequently more severe, than the depreciation of machinery. Every intelligent manufacturer recognizes rent, interest and taxes as current daily charges which continue although his plant is shut down or operates at less than full capacity. The manufacturer makes allowance for this in calculating the cost of production as an extra charge to be met from the earnings of active days. But the cost to the employer of carrying an unused plant is not as great relatively as the cost to the employee of carrying himself and family while unemployed. The manufacturer who fails to recognize fire insurance, depreciation, interest and taxes as current charges of the business treads the path to bankruptcy. And that nation does the like which fails to recognize and provide against the economic, social and political conditions which impose upon the workingman so large a degree of financial dependence.

What sum would be required annually to provide an adequate system of workingmen's insurance cannot be determined from existing data. The cost would obviously vary greatly in different occupations and in different communities. An amount equal to ten per cent of current wages would go far towards relieving in many industries the distress now incident to sickness, accident, invalidity, premature death, superannuation and unemployment of the wage-earner. But it is certain that the proceeds of even so large a charge as ten per cent of the average daily wage would, under present conditions, afford merely alleviation of, and not indemnity for, the losses now attendant upon those contingencies in the life of the workingman. The cost of providing complete indemnity would probably reach an amount equal to twenty-five per cent of the average daily wage. For the premiums requisite to secure indemnity from losses incident to sickness, accident, invalidity, premature death or superannuation would probably aggregate fifteen per cent of the daily wage; while the average percentage required to indemnify for unemployment due to lack of work would probably rise above ten per cent.

This huge and apparently prohibitive expense should not, however, deter us from taking action now. It should, on the contrary, incite us to immediate and vigorous measures. Indeed, it has in it elements of great encouragement. It will disclose how vast the waste incident to present social and industrial conditions is. And when the extent of that waste shall have been determined and made clear to our people, a long step forward will have been taken on the road to improvement and resulting social economy.

Some idea of the possibilities of improvement in this connection are indicated by the following data.

Professor Irving Fisher has compared the mortality record of the industrial life insurance companies, which provide life insurance to the workingmen in amounts of less than $500 on the weekly premium plan, with the mortality in the ordinary life insurance companies, in which the policies average $1,000 or more. The figures of deaths per year for each 1,000 persons insured are these:


Industrial Life Insurance Mortality

(Metropolitan Life Experience)

Ordinary Life Insurance Mortality

(English Experience)

20 10.5 7.3
25 14.1 7.8
35 17.2 9.3
55 35 21.7

The conditions under which that portion of our population live and work who are insured in the ordinary life companies are far from ideal, and leave open a great opportunity for reduction of the death rate. But here we have an average death rate among the workingmen at their most productive age—twenty-five to thirty-five years—which is nearly twice as great as the death rate among those engaged in other occupations. And this high death rate of the workingman is that of the average insured workingman, not the death rate of those engaged in extra-hazardous trades.

Can there be any doubt that, if this heavier mortality had to be adequately compensated for by the State or the industries, and the insurance cost paid from current earnings, its causes would be adequately investigated and the evil conditions of living and working which produce it would be remedied? Society and industry would find how much cheaper it is to conserve than to destroy.

How near at hand the remedy for high mortality lies is illustrated by the experience of the model factory village at Bourneville, near Birmingham. While the average death rate for all ages in England and Wales in the years 1902 to 1907 was 15.7, the death rate at Bourneville was 6.3; and yet the occupations of the inhabitants of Bourneville were fairly representative of the whole country. Over fifty per cent of the workers were factory hands; thirty-six per cent were mechanics, carpenters, bricklayers and others of unclassified occupations; and about thirteen per cent clerks and travellers.

Professor Fisher concludes also that, on the average, every American is sick thirteen days in the year.

Possibilities of lengthening lives and of avoiding sickness and invalidity, like the possibilities of preventing accidents, will be availed of when business as well as humanity demands that this be done.

William Hard quoted Edgar T. Davies, the Factory Inspector of Illinois, as saying that in the year 1906 one hundred men were killed or crippled in the factories of Illinois by the set-screw, and that for thirty-five cents in each instance this danger device could have been recast into a safety device. The set-screw stands up from the surface of the rapidly revolving shaft, and as it turns catches dangerously hands and clothes. For thirty-five cents the projecting top of the set-screw could be sunk flush with the rest of the whirling surface of the shaft, and then no sleeve could be entangled by it, and no human body could be swung and thrown by it.

The South Metropolitan Gas Company, which established, in connection with its system of compensation for accidents, a system of inquiry into all accidents with a view to their prevention, reduced the number of accidents per thousand in seven years from sixty-nine to forty.

John Calder, of Ilion, New York, tells of the reduction of accidents in an American plant from a yearly average of two hundred to sixty-four.

Can there be any doubt that if every accident had to be carefully investigated and adequately compensated for, the number of accidents would be reduced to a half or a third?

And undoubtedly the paramount evil in the workingman's life—irregularity of employment—would yield in large measure to like treatment.

The New York Commission, in its recent report on unemployment, gives data from the trades unions showing that "organized workers lose, on the average, twenty per cent of their possible income through unemployment," and data from the charitable societies showing that "from twenty-five to thirty-five per cent of those who apply to them for relief every year have been brought to their destitute condition primarily through lack of work."

Some irregularity in employment is doubtless inevitable; but in the main irregularity is remediable. It has been overcome with great profit to both employer and employee in important businesses which have recognized the problem as one seriously demanding solution. Society and industry need only the necessary incentive to secure a great reduction in irregularity of employment. In the scientifically managed business irregularity tends to disappear. So far as it is irremediable it should be compensated for like the inevitable accident.

The social and industrial engineers will find much of inspiration and encouragement in the achievement of their fellow-engineers of the factory mutual fire insurance companies of New England.

The huge fire waste in America is a matter of common knowledge. The loss in 1910 was estimated at $234,000,000; and yet there is one class of property, in its nature peculiarly subject to fire risks, which was practically immune. Some 2,600 factories and their contents, valued together at about $2,220,000,000, and scattered throughout twenty-four States and the Dominion of Canada, suffered in the aggregate fire losses of about one-fortieth of one per cent of the value insured. The factories so immune were those owned by members of the so-called "factory mutuals" of New England. The cost to these factories for fire insurance and fire prevention in the year 1910 was only forty-three cents for each one thousand dollars of property insurance. Half a century before, the cost of insurance to the New England factories was $4.30, or ten times as great. The record of the "factory mutuals" of Rhode Island and of some other States is similar.

Now, how has this reduction of fire insurance cost been accomplished? It was done by recognizing that the purpose of these so-called fire insurance companies is not to pay losses but to prevent fires. These mutual companies might more appropriately have been called Fire Prevention Companies; for the losses paid represent merely instances of failures in their main purpose. In these corporations the important officials are not the financiers but the engineers—men who rank among the leaders in the engineering profession of America—and aiding them is a most efficient corps of inspectors.

The achievement of these factory mutuals—the elimination of ninety per cent of the fire risks—is the result of sixty years of unremitting effort in ascertaining and removing causes of fires, and incidentally educating factory owners and their employees in the importance of providing against these causes. The premiums paid represent the cost of this advice, inspection and education as much as the cost of what is ordinarily termed " insurance."

The progress of the factory mutuals in reducing fire losses was relatively slow; but it has been steady, as is shown in the following table of net cost of fire insurance per $1,000 per year in two representative companies:


Boston Manufacturers Mutual

Fire Insurance Co.

Arkwright Mutual Fire Insurance Co.
1850-60 $4.37
1861-70 2.79 $3.37
1971-80 2.54 3.00
1881-90 2.27 2.16
1891-1900 1.44 1.54
1901-1910 0.68 0.69
Year 1910 0.44 0.43

Possibilities no less alluring are open to the social and industrial engineer. Will the community support their efforts?

Consider how great would be the incentive to humanize social and industrial conditions if the cost of inhuman conditions were not only made manifest, but had to be borne from day to day unless the inhuman conditions themselves were removed!

Mere description of the misery unnecessarily entailed by the inhuman conditions, mere statements of cost, however clear and forceful, will fail to secure the removal of these inhuman conditions in industry and in the life of our people from which this misery springs. But if society and industry and the individual were made to pay from day to day the actual cost of the sickness, accident, invalidity, premature death or premature old age consequent upon excessive hours of labor, of unhygienic conditions of work, of unnecessary risks, and of irregularity in employment, those evils would be rapidly reduced.

We need a comprehensive system of workingmen's insurance as an incentive to justice. We need it, "lest we forget."

Go to next chapter.

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