ILLINOIS. The act approved June 10, 1911, to take effect May 1, 1912, prescribes that the act binds both parties to the labor contract, unless either side files notice with the State bureau of labor statistics. The usual penalties follow the filing of a notice not to be bound-the employer loses many of his defenses and the employee is met by the defenses the consenting employer otherwise loses. The whole question as to whether the parties actually elected to give and take compensation is retained as additional causes of litigation. GENERAL. The short-comings of all these statutes, as measures of definite public policy, may be illustrated by many citations, one of which may suffice. The workman in the State of Illinois is bound by the compensation features of the act unless he file notice to the contrary within 30 days after the hiring. But what if he be hurt on the day of the hiring or during the first 29 days from the hiring? Consider the great public work in Chicago-say, the proposed subway. Gangs of men are "thrown in" to a job to work in an emergency or upon a fortnight's employment, then they are discharged and are hired again, perhaps by the same contractor or by another or by a subcontractor-a familiar procedure upon almost all great undertakings, even undertakings permanently conducted in permanent occupations. When does the hiring start and when does the period of 30 days or any other period expire or begin? Might it not be claimed the hiring is from day to day, or, more likely, from hour to hour? So-called "elective compensation" involves all this hopeless confusion. And it must be remembered that all the laws referred to were prepared by able, conscientious men, many of whom were learned in the law and who had the advantage of wide and informing discussion, which they sought and patiently considered. We are not criticizing their efforts; we are simply pointing out the things they all found necessary to insert in so-called "elective compensation" acts in order to give them the appearance and reality of being elective. From the inevitable result of their own work we must conclude that an elective measure does not effect a change from liability to compensation; that it does not represent a clear and definite rule of public policy; that it is no sort of a solution of the difficult and complex questions involved in the matters before this commission, and that the inevitable tendency of any elective act is to add one more litigious feature to the prosecution of suits for damages upon the theory of liability. There is another important aspect of the considerations herein urged. Whatever may be the industries affected by any law you may propose, your legislation is bound to be regarded by many as the model. Even if your bill be limited by affecting practically only great corporations conducting interstate traffic, your proposals will nevertheless constrain many State legislatures to adopt the fundamental scheme you approve. It is, therefore, important to consider how an elective plan will affect employers generally. It will no doubt continue to be the custom of most employers to put the burden of any such law upon responsible insurance companies. Gov. Woodrow Wilson, before the Congress of Governors, recently said that insurance underwriters were "singularly unwise" in increasing rates of insurance in the State of New Jersey, so that they were almost prohibitive. He claimed that in some cases the increase amounted to a thousand per cent. But the rates asked by insurance companies in New Jersey were fixed because of the elective features of the New Jersey act. A careful analysis of the New Jersey elective compensation law has led insurance companies to the conviction that they can not guarantee their assured the full protection required unless the policy covers indemnity not only for "compensation," but also as against the various forms of liability-the liability under the common law, under the employers' liability act of 1909, and under the vastly increased liability developed by the new law. In other words, as the cost of any such law will soon be discovered in the rates which responsible insurance companies charge for indemnifying against the risk. we think it may be claimed that upon economic consideration alone the elective compensation plan should not be adopted, because it is inordinately expensive to industry. This is demonstrated by the largely increased rates of insurance now being charged in States having "elective compensation" laws. Respectfully submitted. WILLIAM J. MORAN. OCTOBER, 1911. THURSDAY, DECEMBER 14, 1911. The commission met at 10.30 o'clock a. m. The CHAIRMAN (Senator Sutherland). This commission last week finished the draft of a tentative bill covering the subject of workmen's compensation, which has been sent out to those whom we thought might be interested in it; and this meeting has been called this morning for the purpose of hearing from anyone who desires to discuss the details of the bill. The chairman has not been advised of any particular person who desires to be heard, so that I will ask generally if there is anybody present who cares to be heard? STATEMENT OF R. M. SHAW, ESQ., OF CHICAGO, REPRESENTING THE CHICAGO GREAT WESTERN RAILWAY CO. Mr. SHAW. Mr. Chairman, my excuse for speaking with reference to this matter grows out of the fact that I am compelled to leave for the West on one of the evening trains. There are two features of this bill to which I desire to address myself. As one of the committee of twenty-one, representing one or more of the western railroads, I desire, first, to address myself to the compensation features of the bill. Yesterday there was held in Chicago a meeting of all of the western railroads, where the compensation features of the bill were considered and discussed, and the views of the western carriers, at least, formulated. Mr. Robert J. Cary is now on his way from Chicago to Washington, and will probably reach here at 10.40, and will express to you the sentiments of that meeting. On behalf of the company which I represent and others I desire to concur in the views which will be imparted by Mr. Cary when he arrives here. There is one feature of this bill to which I wish to refer. As I understand it, the reason, Mr. Chairman, of this proposed legislation is because the present system is economically and ethically unsound. This law is being passed, as I understand it, to remedy a wrong; to make what is now wrong right, and assuming that is soand I believe that can be the only possible excuse for the passage of this bill-I can not conceive why the bill should be limited solely to the railroads. If the present method of placing the burden of this wrong this injury to society-is not right, why do you go halfway in the remedy? The power to regulate commerce under the Constitution of the United States is not limited to the regulation of carriers. It is not limited to the regulation of transportation; it is not limited in any way whatsoever. The power under the Constitution under which this commission must act, and under which Congress must act, if it passes this bill, is just as broad as commerce itself, and I see no reason why you should go halfway in remedying this wrong. The CHAIRMAN. Mr. Shaw, may I interrupt you a moment? The CHAIRMAN. The commission very fully considered that question. It was discussed before the commission by Mr. Lathrop. This legislation is experimental to a very large degree. While we believe the Supreme Court will uphold the validity of it, the commission is unanimously of the opinion that if this law should be held to be unconstitutional it will be after a great deal of expense has been incurred. We provide, for example, for the creation of the office of adjuster, and there will be in the first instance at least eighty of these adjusters appointed, with salaries ranging from $1,800 to $3,000 per annum. If the question of the validity of this bill should not be determined by the Supreme Court for a year, that alone will entail much expense on the Government of the United States, in addition to a good deal of expense on the part of private parties. So the thought of the commission was that we ought to draw it along as simple lines as possible to begin with, until the principle is established, so that the argument in favor of it will be as clear as it is possible to make it, and we think in the case of the railroads the argument is fairly clear in favor of its constitutionality. We can say that it is a law to regulate interstate commerce, because the effect of it, according to our view, is to render transportation of persons and property more safe. As I understand it, that is the basic principle upon which the argument must proceed. That can not be said, at any rate with anything like the same force, with reference to any other person or corporation engaged in commerce. It can not be said with reference to a trading corporation. They are not engaged in transportation. So we felt that, in the beginning of this legislation, it ought to be confined to that class of employers where the argument in favor of its validity was reasonably clear. There will be no difficulty in extending the doctrine hereafter if it should be thought wise to do so. Mr. SHAW. Of course, Mr. Chairman, I do not wish to presume upon your time in arguing a question which has been finally settled and determined. So, assuming that that is so, I will not insist upon that; but I beg permission to leave one suggestion with you: If Congress can dissolve a trading corporation because it is engaged in interstate commerce, I see no reason why there is any more difficulty in regulating the employees of trading corporations which can be dissolved by Congress than in regulating employees of the other corporations. Mr. Moon. I do not think the chairman means by that to preclude any argument, because every feature of this bill is open. This question is not any more foreclosed than any other question. Mr. SHAW. Well, I could see from what the chairman said that this matter has been fully presented. I am sorry I have not been fortunate enough to be present at these hearings. The CHAIRMAN. I simply called your attention to that, Mr. Shaw, in order that you might see that the matter had not been overlooked by the commission. It has been quite fully considered. Mr. SHAW. My views upon it are unalterable. That if it is right for one, it is right for all; if it is wrong for one, it is wrong for all. The CHAIRMAN. Let me ask you this question. This bill is ostensibly a regulation of the relation of master and servant. Mr. SHAW. I understand that. The CHAIRMAN. But it is such a regulation as also amounts to a regulation of commerce, and it proceeds, as I understand it, upon the theory that if you say, by the law, to an employee of a railroad company, in case of injury to him or in case of death, "you will be taken care of hereafter by certain and definite compensation, or by certain and definite compensation for your family," that puts out of the mind of the employee to a great extent a feeling of anxiety, so that he will do his work more effectively, and that in turn tends to make the transportation of persons and property more safe. That can not perhaps be said of a trading corporation or of other persons or corporations engaged in interstate commerce, but not in transportation. Mr. SHAW. The power to regulate commerce, Mr. Chairman, in my judgment, does not depend upon a question of safety. The power to regulate commerce is not limited to the regulation of railroads. There is nothing about railroads in the Constitution. The power to regulate commerce is to regulate commerce itself, and you can regulate the relation of master and servant or any other persons engaged in interstate commerce to the same extent, in my judgment, as you can regulate the relation of master and servant in the case of railroads. I can not find any logical or legal distinction in my mind between those two relationships. It is a regulation of master and servant by law. The constitutional provision under which you act is not limited to the regulation of railroads. In fact, railroads were not known at the time of its adoption. It is a regulation of commerce, and if a railroad is engaged in commerce, by reason of that you can regulate the relation of master and servant in the case of any trading industry which Congress can dissolve, engaged in interstate commerce. If you can do it in one case, in my judgment, you can do it in all. However, we will leave that subject, and again expressing my hearty concurrence in the views of Mr. Cary, which he will express when he reaches here, for all of the western railroads, I thank you for your attention. STATEMENT OF MR. CHESTER M. DAWES, GENERAL COUNSEL OF THE CHICAGO, BURLINGTON & QUINCY RAILROAD CO. Mr. DAWES. I do not know whether you have orderly procedurewhether you wish to take this matter up section by section or not. What I wish to do is to address myself to the provision with reference to relief departments, if it is in order at this time. The CHAIRMAN. Yes; proceed, Mr. Dawes. Mr. DAWES. I do not wish in any sense to criticize the scheme which has been suggested, but I do wish to discuss it with reference to a further suggestion upon lines which seem to be equitable. The commission has in the tentative draft indicated a willingness to substitute for the compensation schedule those advantages of relief-department schemes which are in addition to the contributions made by the men themselves; that is, if I understand it, the under lying idea of the tentative scheme proposes to protect the railroads for these relief departments to the extent to which out of their own pockets not out of the pockets of the men-they contribute advantages to the men. To carry out and effectuate that idea this tentative draft suggests that a certificate be issued by the Interstate Commerce Commission which shall determine whether the advantages conferred by the railroad companies are equal to the compensations provided by the proposed bill. In that case they shall so certify if they so find and then the advantages of the scheme, as the draft says, may be substituted for the compensations of the bill so long as the scheme remains in its integrity. Of course, the principle of the recommendation is that the railroads shall have, so to speak, credit for what they furnish. It would be proper, it seems to me further, to effectuate the idea advanced therein, that we should have proportionate credit. This is a hard and fast determination as now drawn. It might be that under the limitations provided by the tentative draft the railroad would be able to show that it had a scheme 90 per cent as good, furnishing 90 per cent of the advantages which your compensation act will provide. Under the determinative method here that is absolutely rejected and no credit is given therefor. I beg to suggest-and I will hand to your secretary an amendment which makes no change whatever in the idea which has been promulgated, but will tend to give a proportionate credit, if I make myself clear. If the advantages of our scheme, provided out of our own pockets, is 50 per cent as good as the advantages of the law, we should have 50 per cent credit. I repeat, we should have 50 per cent credit. There can be no difficulty, it seems to me, on the part of the commission, if they are able to determine by any method the value of the entire scheme, in determining what the proportionate value of the scheme may be if it be not entirely equivalent. Senator CHAMBERLAIN. Have you suggested a place where you would insert it? Mr. DAWES. Yes, sir; I will hand to the members of the commissior some drafts here which have been made up. Mr. Moon. I wish you would illustrate just what you mean by taking a concrete example. Mr. DAWES. Well, I am granting at once that no dollar should be deducted from the contributions of members to the relief fund to reduce the compensation of members under the compensation act. Mr. MOON. That is the primary object. Mr. DAWES. The tentative scheme proposed by the commission protects that idea. It is intended so to protect it. For example, suppose that as the relief department operated by the railroad which I represent does-the men contribute in a lump sum $500,000 annually for the personal-injury side of the contract. That goes back to them without deduction or diminution. Suppose pari passu with those contributions there is a contribution of $250,000 by the railroad company for administration, advantages of life insurance, for sickness, for many things which are not included in the employers' compensation act which you contemplate, and which are not paid for by the men. Assume, now, just for the sake of the illustration-mind you, I am not saying this is an accurate statement of the condition of the relief department, but for the purposes of illustra |