THE ROAD TO SOCIAL EFFICIENCY
Brandeis, Louis D.
The Road to Social Efficiency American Democracy rests upon the basis of the free citizen. * * * The cost of attaining freedom is usually high; and the cost of providing to the Workingman, as an...
...Indeed it has in it elements of great encouragement...
...But however large the cost, it should be fairly faced and courageously met...
...The Huge Present Waste THIS HUGE and apparently prohibitive expense should not, however, deter us from taking action now...
...The South Metropolitan Gas Company, which established, in connection with its system of conjBellsaiiQn.Jor;ja£.ci.d^nts, a system of inquiry into all accidents with a view to their prevention, reduced the number of accidents per thousand in seven years from 69 to 40...
...Politically the American workingman is free, so far as law can make him so...
...We urge strenuously upon every voter the duty of exercising this right...
...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...
...36 per cent, were mechanics, carpenters, brick layers, and others of unclassified occupations, and about 13 per cent, clerks and travelers...
...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...
...but had to be borne from day to day unless the inhuman conditions themselves were removed...
...we need a comprehensive system of workingman's insurance as an incentive to justice...
...The manufacturer makes an allowance for this in calculating the cost of production as an extra charge to be met from the earnings of active days...
...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 it...
...and yet the occupations of the inhabitants of Bourneville were fairly representative of the whole country...
...But this partial workingmen's insurance has served mainly in making clear the need of a comprehensive system which shall extend protection also to the wage-earner in case of invalidity, superannuation or unemployment, and to the widows and orphans left helpless by the premature death of husband or father...
...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...
...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...
...We insist that the voter should exercise it in the interest of others as well as of himself...
...3.00 1881-90...
...2.16 1891-1900...
...The achievement of these factory mutuals—the elimination of 90 per cent...
...An Essential of Democracy THE United States must follow on the same path...
...If the Government permits conditions to exist which make large classes of citizens financially dependent, the great evil of independence 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 would obviously vary greatly in different occupations and different communities...
...It will disclose how vast the waste incident to present social and industrial conditions is...
...Financial dependence is consistent with freedom only where claim to support rests upon right and not upon favor...
...We impose upon him a duty that can be entrusted with safety only to free men...
...And aiding them is a most efficient corps of inspectors...
...but it has been steady, as shown in the following table of net cost of fire insurance per $1,000 per year in two representative companies: Boston Manufacturers Mutual Arkwright Mutual Fire Years Fire Insurance Co...
...The set screw stands up from the surface of the rapidly revolving shaft, and as it turns catches dangerously hands and clothes...
...The loss in 1910 was estimated at $234,000,000...
...and the cost of providing to the Workingman, as an essential to freedom,—a comprehensive and adequate system of Insurance will prove to be no exception to the general rule...
...So far as is irremediable, it should be compensated for like the inevitable accident...
...0.43 The Good of the Insurance Premiums POSSIBILITIES no less alluring are open to the social and industrial engineer...
...The record of the "factory mutual" of Rhode Island and of some other States is similar...
...The progress of the factory mutuals in reducing fire losses was relatively slow...
...hundred men were killed or crippled for life 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 Example of the Factory Mutuals THE HUGE FIRE WASTE in America is a matter of common knowledge...
...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...
...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...
...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...
...The factories so immune were those owned by members of the so-called "factory mutuals" of New England...
...and freedom of the individual is as much an essential condition of successful democracy as his education...
...1.54 1901-1910...
...Unnecessary Unemployment AND UNDOUBTEDLY the paramount evil in the working-man's life,—irregularity of employment,—would yield in large measure to like treatment...
...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...
...In the scientifically managed business, irregularity tends to disappear...
...The premiums paid represent the cost of this advice, inspection and education as much as the cost of what is ordinarily termed insurance...
...Everybody recognizes the fire insurance premium as a current expense...
...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...
...It was done by recognizing that the purpose of these so-called fire insurance companies is not to pay losses but to prevent fires...
...Universal suffrage necessarily imposes upon the State the obligation of fitting its governors—the voters, for their task...
...In this movement to establish a comprehensive system of workingmen's insurance, Germany, France and latterly England have already advanced far...
...Society and industry would find how much cheaper it is to conserve than to destroy...
...2.27...
...But—however large the cost, it should be fairly faced and courageously met...
...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...
...The New York Commission in its recent report on unemployment gives data from the Trade Unions showing "that organized workers lost on the average twenty per cent, of their possible income through unemployment," and data from the charitable societies showing that "from 25 to 35 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 2,600 factories and their contents, valued together at about $2,220,-000,000 and scattered throughout 24 states and the Dominion of Canada suffered in the aggregate fire losses of about one-fortieth of one per cent...
...And yet the depreciation of man through invalidity and superannuation is no less certain, and frequently more severe than the depreciation of machinery...
...In granting this aid we are passing from sporadic, emotional charity to organized charities, and from mere relief to preventive measures...
...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...
...2.79.................................$3.37 1871-80...
...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...
...1.44...
...American democracy rests upon the basis of the free citizen...
...Some idea of the possibilities of improvement in this connection are indicated by the following data: Prof...
...Insurance Company 1850-60........$4.37...
...9.3 55...
...These mutual companies might more appropriately have been called Fire Prevention Companies...
...The manufacturer who fails to recognize fire insurance, depreciation, interest and taxes as current charges of the business, treads the path to bankruptcy...
...7.8 35....17.2...
...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...
...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...
...for the conditions which have led to the introduction of working-men's insurance abroad are universal in their operation...
...0.68...
...of the value insured...
...So sickness and death benefits, and methods of compensation for accidents have been resorted to...
...0.69 Year 1910...
...2.54...
...Will the community support their efforts...
...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...
...Men are not free while financially dependent upon the will of other individuals...
...The cost to these factories for fire insurance and fire prevention in the year 1910 was only 43 cents for each $1,000 of property insured...
...0.44...
...and yet there is one class of property in its nature peculiarly subject to fire risks which was practically immune...
...We need it: "Lest we forget...
...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 qual-fiedly true...
...The High Cost of Adequate Insurance WHAT SUM would be required annually to provide an ade-uate system of workingmen's insurance cannot be determined from existing data...
...A Part of the Daily Cost of Living THE COST of attaining freedom is usually high...
...We accord (to the men) universal suffrage...
...Some irregularity in employment is doubtless inevitable...
...1861-70...
...We give thus to the citizen the rights of a free man...
...The figures of deaths per year for each 1,000 persons insured are these: Industrial Life Insurance || Ordinary Life Insurance Mortality || Mortality (Metropolitan Life Experience) (English Experience) Age 20____10.5...
...Fisher concludes also that on the average every American is sick thirteen days in the year...
...Prof...
...Besides, the foim and aims of our Government should lead us to action, as well as the sense of social responsibility...
...7.3 25....14.1...
...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...
...Consider how great would be the incentive to humanize social and industrial conditions if the cost of inhuman conditions were not only made manifest...
...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...
...but in the main irregularity is remediable...
...35.................................21.7 The conditions under which that portion of our population lives and works who are insured in the ordinary life companies are far from ideal, and leave open a great opportunity for reduction of the death rate...
...Society and industry need only the necessary incentive to secure a great reduction in irregularity of employment...
...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...
...and the cost of providing to the workingman, as an essential of freedom,—a comprehensive and adequate system of insurance,—will prove to be no exception to this general rule...
...Now how has this reduction of fire insurance cost been accomplished...
...But is he really free...
...for the losses paid represent merely instances of failures in their main purpose...
...Half a century before the cost of insurance to the New England factories was $4.30, or ten times as great...
...Few intelligent property owners omit to insure against fire...
...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...
...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...
...of the fire risks—is the result of 60 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...
...William Hard quoted Edgar T. Davies, the factory inspector of Illinois, as saying that, in the year 1906, on...
...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...
...In these corporations the important officials are not the financiers, but the engineers...
...But here we have an average death rate among the workingmen at their most productive age—25 to 35 years-—which is nearly twice as great as the death rate among those engaged in other occupations...
...Over 50 per cent, of the workers were factory hands...
...men who rank among the leaders in the engineering profession of America...
...We have learned that financial dependence among the wage earners is due, in large part, to sickness, accident, invalidity, superannuation or unemployment, or to premature death of the breadwinner of the family...
...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...
...Can there be any doubt that if every accident had to be carefully investigated and adequately compensated for, their number would be reduced to a half or a third...
...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...
...It should on the contrary, incite us to immediate and vigorous measures...
...The Economy of Humanity HOW NEAR AT HAND the remedy for high mortality lies is illustrated by the experience of the model factory village at Bourneville, near Birmingham...
...Every intelligent manufacturer recognizes rent, interest and taxes as a current daily charge which continues although his plant is shut down or operates at less than full capacity...
...By LOUIS D. BRANDEIS 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...
...while the average percentage required to indemnify for unemployment due to lack of work would probably rise above ten per cent...
...The cost of providing complete indemnity would probably reach an amount equal to twenty-five per cent, of the average daily wage...
...Every intelligent manufacturer makes in some form a regular charge for depreciation of machinery and plant...
Vol. 3 • June 1911 • No. 23
