be left to individual initiative and responsibility. For long this was interpreted to cover only those affairs with which the government must concern itself in order to exist, such as the maintenance of order, the dispensation of justice and the carrying on of essential public works. Governmental interference with the affairs of the individual was not to extend beyond an unavoidable minimum. But now its function is of a more constructive nature, the actions of the individual are regulated to the end that greater social welfare may obtain and enterprises are undertaken by government which might be carried on, but less effectively, by individual initiative.

2. The development of the concept of liberty has been consonant with the change in governmental theory. The older and negative concept defined liberty as freedom from interference, the newer positive view recognizes that restraint and regulation may result in greater real freedom and wider privileges. In transportation, for example, regulation of common carriers has thoroughly substantiated this principle.

3. The elimination of waste through conservation of resources has its application to industrial accidents, for every workman lost through death or disability lowers the efficiency of the working force as a whole. Society has invested a certain portion of its resources in bringing men to the working age and social economy demands the fullest possible use of the productive capacity of each working unit.

4. In recent years there has been a considerably greater interest in the welfare of all classes from a humane point of view. The leisure class has to some

extent justified itself through the activities of some of its members who have become interested in social betterment and who have drawn attention to the suffering caused by industrial accidents. They have labored to improve industrial conditions by eliminating causes and securing remedial legislation.

5. The working class itself has done much toward accelerating investigation and improvement of conditions. It has organized and become educated both through its own efforts and through the aid of philanthropists and social scientists so that expressions of opinion on its part are something more than a forlorn cry for help. Education and organization carry with them a demand for recognition and a new kind of treatment, a demand for justice rather than mercy.

WORKMEN'S COMPENSATION

The application of modern social thought to the industrial accident problem and to the unsatisfactory conditions under the system of employers' liability resulted in the almost universal conviction that a radical change was necessary, that there must be nothing less than the elimination of the old system and the substitution of a basically new scheme. A complicating feature in the solution of the difficulty lay in the dual nature of the workman, who is both the means and the end of production. As a producer he is expected to make the greatest possible use of his productive capacity, as a consumer he is entitled to the greatest possible use of the product consistent with like enjoyment on the part of other members of society. The

balance must be struck in such a way as to reconcile these apparently inharmonious viewpoints.

The industrial world has quite generally agreed on the substitution of the principle of workmen's compensation for that of employers' liability and practically every European country and the majority of the states have adopted laws which, to a greater or less degree, apply the new principle.

Definition of Workmen's Compensation.-Workmen's Compensation is the indemnification of a workman or his dependents by an industry for any economic loss due to injuries suffered because of his connection with the particular industry.1 The burden of cost of compensation is usually placed upon the employer as the representative of the industry.

Basis of Workmen's Compensation.-Workmen's Compensation is variously defended on grounds of expediency and justice. From either viewpoint a strong case may be established; when both are considered the argument is irresistible. The leading points urged in justification of the principle fall under four heads:

1. Industry is responsible for the occurrence of a large majority of industrial accidents; 2 therefore, industry should be compelled to bear any loss which may result. The provable majority is so large and the de

3

In actual practice, of course, the working class is not indemnified for the entire loss. Practical considerations make it necessary to modify the ideal in some degree.

2 V. supra, pp. 10, II.

The principal argument in support of workmen's compensation is based on the principle of fault but the old narrow interpretation recognizing only personal fault has been superseded.

termination of fault in the remaining cases is so difficult that expediency demands the extension of the principle to all accidents. Further, an industry which is not able to bear the loss occasioned by its accidents and which exists only by forcing others to bear the loss is parasitic and its expenses of production are not a true measure of cost.

2. Any workable scheme of compensation necessarily involves medical and surgical care of the injured and such care results in a net gain to individual industries and to society. Discarding of injured workmen is no more justifiable than a refusal to repair damaged machinery.

3. Society has accepted the idea that the needy should be cared for in all possible cases. Workmen's compensation is an application of this idea to a specific problem.*

4

4. The provision in workmen's compensation laws that an industry shall bear the burden of cost of its accidents does not mean that the burden will be ultimately borne by the employer as such. It does mean that the expense of producing any particular article will more accurately represent its real cost and that the selling price will be fixed accordingly. The loss from industrial accidents will be borne by the consumer of the commodity the production of which has

* It should be recognized that compensation according to need is not justified by the argument that the industry is responsible for economic loss. For example, industry is responsible for the cutting off of a workman's wages through accidental death but is not. responsible in proportion to the size of the man's family. Compensation for dependents in proportion to their number can be defended only on grounds of expediency.

occasioned it. If the inclusion of this item in the cost of production makes necessary such an increase that ́the selling price becomes prohibitive, it is proved that the continued existence of the industry is justified only on grounds which would warrant governmental aid.

Conclusion.-Workmen's compensation is only one aspect of the gradual systematizing of human affairs. In private business cost accounting has succeeded in allocating many expenses formerly regarded as general and incapable of being charged to specific accounts. By this process the cost of conducting each separate department of a business becomes known. Likewise the capacity of each department to produce income is more accurately known and its worth is computed by a comparison of income and expense.

So organized society may be regarded as a huge business of which the various industries are departments. A comparison of the social cost of maintaining an industry with the return in terms of social welfare should be made to determine its net worth, bearing in mind that the apparent costs and returns in terms of money are not a final measure of either side of the account. The enactment and operation of workmen's compensation laws enable a more accurate estimate of the cost of carrying on industry and are an aid to a more equitable judgment of its net social worth.

REFERENCES

RUBINOW, I. M. "Social Insurance." Holt & Co., New York (1913). Chapters I, VII, and XXIX.

SEAGER, H. R. "Social Insurance." Macmillan, New York (1910). Chapters I, II, and III.