suring the compensation obligation. Stock companies, private mutuals, and state funds all have their ardent proponents and equally ardent opponents, though the really big issue is between state-managed and privately managed enterprise. The literature which has appeared in support of any one of these forms (and this has generally meant in condemnation of all others) has been too evidently partisan to furnish a satisfactory basis for a decision and has likewise failed to take into consideration the viewpoints of all of the parties in interest. To arrive at any proper conclusion all of these viewpoints must be given their due weight.

In attempting to come to a decision respecting the relative merits of these three methods of insurance it should be remembered that there is being sought an answer to the question-which of these is best adapted to carry out the fundamental purposes of workmen's compensation. Which contributes most to the wellbeing of employer, of employee, and of society? A judgment of this sort must reflect not only theoretical possibilities but actual experience, for it is often found that unforeseen obstacles prevent the realization of expected advantages, while practical application may develop a means of counteracting objectionable features or disclose the remoteness of feared contingencies. Further, there may be a necessity of compromise between apparently conflicting viewpoints though, in the long run, provision for the welfare of any one class will probably redound to the benefit of all classes.

Before proceeding further the criteria to be applied to any given scheme must be determined. These

criteria should represent the viewpoints of the three great classes which are directly concerned in the decision and can best be stated in terms of their respective interests. The method of insurance which most fully satisfies all of these, always having proper regard for the relative importance of each, should be considered most worthy of adoption. All three classes, employer, employee, and society, are interested in the elimination of litigation and in the prevention of accidents. Society and the employer are interested in effecting insurance at the lowest possible cost, while both employer and employee demand a method of insurance which will furnish the greatest security and promote amicable relations between labor and capital. Lastly, the workman is peculiarly interested in securing a fair adjustment of his claims for compensation and in receiving prompt relief in case of injury.

Conclusions from Experience.-Whatever may be one's judgment on a priori grounds, it may be safely stated that the practice of workmen's compensation insurance in the United States has not demonstrated the superiority of any one form of carrier. Defects and advantages have developed in each method but in no case have they been essential. Stock companies and mutual companies have been forced to liquidate and state funds have been unable to meet their obligations in certain hazardous classifications. Yet these failures have meant inefficient management or improperly drafted laws, both of which can be corrected. In the majority of cases private and state institutions alike have met the financial obligations imposed upon

them.

Nor does the study of financial statements and of records of loss expense and dividend ratios yield conclusive material. Out of premiums received during the past five years reserves have been set up from which payments must be made for an indefinite future period. Whether these reserves are adequate is not definitely known, but on their adequacy depends in considerable measure the future financial status of the insurance carriers. It is evident, of course, that the carrier which has devoted the largest relative amount of money to reserves and surplus is, as regards those items, in the strongest financial position; but other carriers will argue that their reserves and surplus are adequate and that a larger amount only means an excessive premium charge.

It should be borne in mind also that ratios of loss, expense, or dividends mean little unless interpreted in the light of all the facts. A high loss ratio may mean adequate reserves, excessive reserves, poor risks, or lavish loss settlements; a low loss ratio may mean inadequate reserves, careful selection of risks, an efficient claim department, or extraordinary good fortune. A high expense ratio may be the result of inefficient management, careful provision for the future, or unusually good service to policyholders; a low expense ratio, the result of efficient management, unwise retrenchments, or inferior service. Similarly, large dividends may reflect real savings or speculative management; low dividends, a policy of thoroughgoing preparation for the future or managerial incompetence. These forces and others lie back of the bare figures and it is especially important to consider them

until sufficient experience has developed to enable more accurate conclusions to be drawn from simple ratios. Ratios, unless viewed in the light of the causes which have produced them, are never conclusive; they are least valuable when they are the result of limited experience.

The Future.-Owing to the inconclusiveness of available experience the question of what provision a compensation law should make for insurance is a mooted one and there is little probability of final answer in the near future. It is well that diverse experiments are being carried on, for they will gradually furnish material on which to base sound legislation. There is undoubtedly much cogency in the argument for competition, partly because it gives employers with varying types of mind and in varying industries an opportunity to select their insurance carriers, and partly because it tests out the different principles, one against the other. Against many present methods of competition, however, too much cannot be said; they savor of the political campaign and stress partisan conclusions rather than scientific evidence. Many broad statements have been made with small statistical backing and many generalizations have been drawn from preconceived ideas rather than from comprehensive data.

REFERENCES

Papers on "Merits and Demerits of Different Methods of Carrying Workmen's Compensation Insurance." Proceedings of the Conference on Social Insurance.

Dec. 5 to 9, 1916. Bulletin of the U. S. Bureau of Labor Statistics, No. 212. Washington (1917).

RYAN, H. E. sation."

"Methods of Insuring Workmen's CompenModern Insurance Problems, Annals of the American Academy of Political and Social Science (March, 1917), pp. 244-254.

DOWNEY, E. H. "The Organization of Workmen's Compensation Insurance." Journal of Political Economy (December, 1916), pp. 951-984.

RUBINOW, I. M. "Social Insurance." Holt, New York (1913). Chap. IX.

Insurance Year Book: Life, Casualty, and Miscellaneous Insurance. Published annually by The Spectator Co., New York.

Special Report on The State Industrial Insurance Department. Department of Auditor of State, Olympia, Wash. (1916).

Report of the Voluntary Investigating Commission on Workmen's Compensation. Frankfort, Kentucky (1916). Pp. 50-53, 60-63.

Report of the Joint Special Recess Committee on Workmen's Compensation Insurance Rates and Accident Prevention. Boston (1917).