tled to $1,500 the compensation paid was only $380, leaving a shortage of $1,120. In another case where $1,500 were due to dependents of a workman killed the compensation paid was $650, leaving a shortage of $850. It is possible in some such cases, if we had heard both sides, that after the thing was analyzed and we were thoroughly acquainted with all conditions our computation might not have been absolutely correct, but in another case it would seem from the statements signed by the employers themselves that the figures we have arrived at are apparently correct, and in one case, according to all the records before us, the dependents were entitled to $2,700 and, according to the settlement, nobody got anything. The report was filed in the office at Trenton. These settlements are made out of court, and that is exactly what the law contemplates. It was not contemplated that every time a workman and his employer wanted to make such a settlement they must hire lawyers and go into court, but when they get together and make a settlement and the settlement is filed with the Department of Labor, I maintain that somebody should have authority to go over those figures and see that the poor man is getting his just due.

In Minnesota, while that State does not have an industrial accident board and the law is administered through the department of labor and industries, the commissioner of labor believes that the labor department "is watching the operation of the law as closely as any industrial commission could do, and that the courts are construing the law in a very liberal manner and are making awards in most cases in the interest of the employee." The provisions of the Minnesota law, designed to protect the employee against an improper settlement, require that settlements shall be substantially according to the provisions of the act and approved by the judge of the district court; that copies of settlements shall be filed with the commissioner of labor, and that he shall have power to assist employees in adjusting differences, shall observe in detail the operation of the act throughout the State and make report thereof to each session of the legislature, and shall make suggestions and recommendations as to changes to the legislature. This is an improvement on the New Jersey law in that it requires settlement agreements to be approved by the judge of the district court, whereas in New Jersey no official is charged with this duty.

Of the other States not having industrial accident boards, Rhode Island is the only one requiring that its settlement agreements be approved by public officials. In that State they must be approved by a justice of the superior court. There is no provision of law requiring the approval of settlement agreements in Kansas, Nebraska, Ñew Hampshire, New Jersey, and Arizona.

The States having compensation acts without industrial accident boards to administer the law are Arizona, Maryland, Nebraska, New Jersey, New Hampshire, Kansas, Minnesota, and Rhode Island.

In Ohio, Washington, and California the board of awards administers the insurance fund and also makes the award; that is, it fixes the assessment and collects the fund from the employers and also makes the legal award and payment out of the fund to the beneficiaries.

The wisdom of this system-that is, the system of empowering the industrial accident board to collect the premiums from employers and to administer the funds-has been called into question. In response to an inquiry in regard to this view of the Washington law one of the members of the Washington commission stated:

I have carefully watched the progress of the work for the last six months at least, and it seems to me there is a tendency to settle with the men before they are completely well, in the hope of getting them off the pay roll.

That is, the compensation pay roll.

In response to a question as to the advisability of having two commissions, one to administer the State insurance fund and the other to pass upon the awards, the answer was made very deliberately and after reflection:

I would answer this question thus: In my opinion the further the board dealing with the industrial unfortunates is removed from the board that has charge of the fund necessary to meet these obligations the better.

In Ohio, which also has a State fund administered by the industrial accident board, this commission heard no objections raised similar to those raised in Washington. As a matter of fact, Washington is the only State in which we heard this question discussed. This system only went into operation in California on the 1st of January, 1914.

Texas has an industrial accident board, although the law does not require the approval by that board of settlement agreements before they become effective.

While the Wisconsin commission is not required to pass upon settlement agreements, it has power to set aside, modify, or confirm such an agreement upon application made within one year from the time of the compromise. The commission, by its rules, requires the employer to file a report every four weeks during the continuance of disability, showing what payments have been made and the final disposition of the cases, and when the disability ceases to file a final receipt with the commission.

Under the present Illinois act, settlement agreements may be made without the approval of the State board, although the statute contains a provision forbidding any employee, personal representative, or beneficiary to waive any of the provisions of the act in regard to the amount of compensation which may be payable, except after approval by the industrial board.

The New York statute, to become effective July 1, 1914, involves still a different method of protecting employees against the making of improper settlements. It goes further than providing a board or official with power to pass upon settlement agreements, in effect preventing the making of agreements of this kind by giving to the commission, known as the workmen's compensation commission, power to hear the evidence, examine the proofs, and make the awards in the first instance in all cases.

It also requires that all insurance carriers and employers carrying their own risk shall deposit with the workmen's compensation commission financial awards due, and that the same shall be disbursed by them to the beneficiary.

While the Massachusetts and Michigan industrial accident boards permit the employer or insurance company to pay direct to the employee, it protects him against fraud by requiring, first, that the settlement agreements be approved by the board and, secondly, that the employer or insurance company file weekly receipts showing that the payments have been made, and then, like Wisconsin, require the filing of a final receipt showing the final payment. In fact, all industrial boards or State commissions have power under the statute to make rules and regulations and can make rules similar to that of Massachusetts, Michigan, and Wisconsin, and, in most States having such commissions, rules of this general character have been made.

The New York statute goes a step further, and instead of relying upon the protection afforded by the filing of receipts showing that the compensation awarded has been actually paid, requires the employer to make the payments to the New York commission, which then pays the injured employee or his family.

The mere requirement that settlement agreements must be approved by a public official does not entirely protect the employee unless some provision is made for following up the settlement agreements and knowing whether or not the provisions of the agreement are carried into effect and the beneficiaries actually paid. The Michigan and Massachusetts commissions are required under the law to exercise more supervision in this respect than any of the other commissions. The statute of Massachusetts requires that within 60 days after the termination of the disability of the injured employee the insurer shall file with the board a statement showing the total payments made or to be made for compensation and for medical services for such injured employee.

The Michigan plan of having receipts filed with the board for each weekly payment, followed by a receipt in full when the final payment is made, was commented upon by the chairman of the industrial accident board at a conference with this commission, when, in picking up a file of papers, he said:

Here is a case that has been running for some little time that has an agreement in regard to compensation on the face of it, and here are receipts for compensation paid on the account. This continues right along until that checks out in full and the settlement is received.

Forms illustrating the methods pursued by boards or commissions are found in Appendix No. 4.

In conclusion, the States having various methods of supervising settlement agreements may be divided into groups as follows:

(1) Those States which, while permitting settlement agreements, provide no method whatever of supervising the agreements;

(2) Those States requiring the filing of such agreements with a public official without giving that official power to approve or disapprove them;

(3) Those States requiring the approval of such agreements by some official other than an industrial accident board;

(4) Those States which, though having industrial accident boards, do not require the board or any other official to approve or disapprove the settlement agreements;

(5) Those States having an industrial accident board and requiring the approval of settlement agreements by such board and the filing of receipts and vouchers with the board, showing the payments had been made pursuant to the settlement agreements; and

(6) Those States not permitting settlement agreements, but requiring that all cases be submitted to the State board and that the amount of compensation as fixed by the board be collected from the employer or insurance company by the board and in turn paid out by the board to the injured workman or beneficiaries.

XXIV. METHODS OF INSURING.

Under a compensation act weekly payments replace the lump sum paid under the liability law. But an employer solvent at the time of an accident, and hence competent to pay the full amount of a judg

ment for a lump sum, may become insolvent afterwards and be unable to meet the series of weekly payments. An employee who is incapacitated for only a few weeks may be able to stand the loss in case the employer becomes insolvent during that time, a circumstance obviously less likely to arise than in the case of payments running for a long period. In the latter class of cases the injury itself being serious, the need for certainty of payment of compensation is the greater.

That it is usually to the benefit of the injured employee and his family that payments be made weekly instead of in a lump sum is generally accepted. Employees while recognizing this fact demand. that they be secured in some way against the possible insolvency of the employer during the weekly payment period. The justice of this position was generally acknowledged by the employers when the commission met at its conferences. Many employers are but temporarily in a particular line of business or a special undertaking.

In New Hampshire an employer who accepts the compensation act is required to procure a certificate from the commissioner of labor as to his financial ability to meet the payments or to give a bond to the effect that he will do so. Of the 21 employers in New Hampshire who have accepted the compensation act one has given such a bond, and the solvency of the others has been approved by the commissioner. Ohio met this difficulty by creating a State insurance fund, to be maintained by assessments on employers and administered by the State board of awards, the latter passing upon all claims for compensation.

Washington, adopting in principle the same method, also created a State fund, but made contribution to it compulsory by those employers covered by the compensation act.

Öregon, Nevada, and West Virginia also created State insurance funds, to which employers accepting the act must contribute. This constitutes the only method of insurance of those who accept the elective compensation acts of those States.

In Massachusetts, an employer accepting the act is required to insure his employees. The act provides for the formation of a mutual company. The directors of the company were appointed by the governor and afterwards elected by the policyholders. The act requires that employers accepting it must insure their employees either in this mutual company or in any other mutual company or a liability company authorized under the laws of the State.

Texas, whose act went into operation October 1, 1913, followed the Massachusetts plan.

Wisconsin provides that employers coming under its act, unless given permission by the State accident board to carry their own risk, must take out insurance with either a mutual or a stock company. The Michigan act, which was passed after the Massachusetts and Wisconsin laws, adopted all four methods of insurance; that is, it permitted employers whose solvency was approved by the State board of awards to carry their own risk but required others to take insurance in either a mutual insurance company or a stock company or in the State insurance fund, the latter being administered by the State insurance commissioner and maintained by assessment on the employers electing to contribute to the State fund.

The California act. in effect January 1, 1914, is similar to the Michigan law in that it creates a State insurance fund, but does not

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make insurance compulsory. It provides merely that the employer may insure in a mutual company, a stock company, or the State insurance fund.

Under the Connecticut law every employer accepting the act must furnish to the insurance commissioner satisfactory proof of his financial ability to pay compensation directly to injured employees or their beneficiaries, and file with the insurance commissioner acceptable security guaranteeing the payment of compensation, or else insure his full liability in a stock or mutual company or association. The Illinois act provides that the employer, upon written command by the industrial board, must: (1) File with the industrial board a sworn statement showing his financial ability to pay the compensation normally required; or (2) furnish security, indemnity, or a bond guaranteeing payment by the employer of the compensation normally required to be paid; or (3) insure to a reasonable amount his normal liability to pay such compensation in a mutual or stock company or association; or (4) make some provision, subject to the approval of the board, for securing payment of the compensation provided for by the law.

Under the Iowa act, which does not take effect until July 1, 1914, every employer electing to accept the act must insure his liability, either in some mutual or stock company, except upon proof of his financial responsibility, approved by the insurance department of the State and the industrial commissioner, or by depositing with the insurance department satisfactory security.

Under the New York act an employer must secure compensation to his employees either by insuring in the State fund, a stock company, or a mutual association, or by furnishing satisfactory proof to the commission of his financial ability to pay such compensation himself, in which case the commission may, in its discretion, require a deposit with it of securities of the kind prescribed in the insurance law, the amount to be determined by the commission.

Arizona, Rhode Island, New Jersey, Nebraska, California, Minnesota, and Kansas do not, under their compensation acts, compel insurance on the part of the employer.

Under the employers' liability law there had grown up in this and other countries a system of indemnity insurance by which the employer protected himself against losses from liability damages. This insurance was carried both in stock and mutual companies, though some States did not permit the organization of mutual companies, and whatever business employers did in such a case was by correspondence between the insured and the home office of the mutual company. These methods of insurance did not protect the employee, but were adopted by the employer for the purpose of protecting himself against large and unexpected losses which might be ruinous to his business and of permitting him to know to a certainty the amount he must pay yearly. This practice spread his losses over a term of years instead of subjecting him to damages at any particular time. While indemnifying the employer for any amount he might pay out under the law, the payments were generally made directly by the insurance company to the employee, and they were often made whether the liability actually existed or was probable through judgment against the employer in an action at law. In some cases small