St. Gallen, a town of about 30,000 inhabitants, was the first to follow the example of Bern and provide for the insurance of workingmen against idleness. Its policy, however, differed radically from that of Bern in that it adopted the policy of compulsory insurance. Its institution was created June 23, 1895. After an existence of about a year and a half, its suppression, after June 30, 1897, was voted by a majority of the electors of the town November 8, 1896. The reasons for its abolishment were that the system of compulsion worked badly. It was difficult to compel the workingmen to become members; injustice was done by putting workingmen in industries in which the likelihood of lack of employment was slight on the same footing as those in industries, such as the building trades, where interruptions to work were of almost certain occurrence. Finally, it was claimed that the efforts of those out of work to obtain employment were lessened.

At Basel, though no scheme of insurance has as yet been put into operation, a proposition for the compulsory insurance of workingmen against lack of employment through a municipal institution has been elaborated, in which the attempt has been made to meet the objections that were urged against the St. Gallen experiment. The question of insurance against lack of employment has also received attention in other Swiss cities, notably Zurich and Lucerne, but no actual steps in this direction have as yet been taken. The Federal Government is now prosecuting an investigation of the whole subject of lack of employment and the means of preventing or lessening the evils resulting from it. The complete report of this investigation has not yet been made. (U. S. Labor Bulletin, vol. 2, pp. 169–172.)

ART. C.-STATE INSURANCE.

SEC. 1. COMPULSORY STATE ASSURANCE AGAINST OLD AGE,
DISABILITY, ETC.

In the introduction to the report to Parliament by the board of trade on the subject of "Provision for old age by Government action in certain European countries," Mr. Llewellyn Smith, of that department, says that of the 11 countries which have gone into the subject in their legislation only 2, Germany and Denmark, can be said to have adopted a general system of pension or relief in old age. This, however, was before the law just enacted in France, and I think before the latest statute in Italy. Under the German law (more fully discussed below) there is a general system of compulsory insurance against old age and invalidity, and in the year 1897 over 400,000 pensioners drew pensions, amounting to not less than £2,750,531, of which £1,079,823 was provided by the State. Of the above amounts about half was expended on old age and half on invalidity pensions. In Denmark the system adopted is very different, providing for a special form of old age or relief to necessitous persons of good character. There are no direct contributions by the recipient, and the amount of the pension is not fixed by law, though it must be sufficient for the needs of the applicant and his family, though receipt of this relief does not impose electoral disabilities. In 1896, 36,246 persons, with 14,223 dependents, were receiving pensions in Denmark under this

law to the amount of £216,317, of which, roughly, half was paid by the State and half by the communes. Mr. Llewellyn Smith follows this introduction with a detailed account of the old-age pension system of the following States, in so far as they have any system: Russia, Norway and Sweden, Denmark, Ireland, Germany, Holland, Belgium, France, Italy, Austria, and Roumania.

The following account of the German law is, however, based directly on the law itself as printed in the French translation, which appeared in the Belgian Labor Annual for 1899:

GERMANY.

As is well known the most momentous innovation in legislation affecting the well-being of the laboring classes that has been made in modern times is the assurance against disabilities law of the German Empire, passed June 22, 1889, and substantially amended July 13, 1899. This law comprises 194 sections, and fills about 150 printed pages. Its whole theory, being based on paternalism, not to say State socialism, is entirely foreign to American theories of government as well as legislation. Nevertheless, a law of such immense importance should be mentioned in this report, particularly as there is already English legislation tending in the same direction, and it is possible that the movement may extend to this country.

In brief, the law establishes a system of compulsory assurance against old age, illness, and disability, but with the State itself for insurance company, and the State itself or its functionaries charged with the receipt and management of funds, which are derived one-half from premiums paid by or withheld from wages of the persons insured, the other half being met directly by the State itself.

The law applies to the following classes of persons: (1) All persons, male and female, employed under salary or wages as workmen, aids, journeymen, apprentices, or servants; (2) all industrial workmen, including submasters, mechanics, skilled labor of all kinds, clerks, porters, and assistants (with the single exception of assistants or apprentices in drug stores), and also all other persons whose occupation consists principally in the service of others, such as instructors or preceptors, so long as such persons do not receive an annual salary in excess of 2,000 marks (about $500); (3) the law also applies to all persons serving on seagoing vessels or ships for wages or salary, and also to persons employed in the internal navigation of the country, including all captains or masters whose salary or normal wages does not exceed 2,000 marks per year, and by the decree of the Federal Council the first class may be extended so as to include all heads of an industrial enterprise who do not employ regularly at least one salaried workman under their orders; and also, without regard to the number of workmen employed, to all mechanics, or wage earners working at home upon the order and for the account of other persons (sweat-shop labor), even when they themselves furnish their own materials and even for the time during which they may temporarily work for their own account. The Federal Council may also decree that the employers of such sweat-shop labor, etc., shall have the same obligation to see to the insurance of their help; that is, it may impose fines upon the heads of factories, etc.

So much for the persons to whom the law applies. It will be seen to be roughly all wage-earners, domestic servants, and small shopkeepers or mechanics who work for their own account, but employ on an average as much as 1 person throughout the year, and to the professional or personal service" class, and mariners who do not normally earn above $500 per annum.

The Federal Council has authority to determine how far the temporary occupation of such sort shall submit a person to the obligation of State insurance, and they have also authority to dispense a foreigner resident in Germany from complying with the obligations of this law, provided they have the intention of remaining, but usually the persons employing such foreigners are bound to pay a sum equal to their assessment into the State insurance bureau, presumably in order to avoid discrimination against German citizens. Officeholders and employees of the Government, as well as professors and instructors in state or public schools, are not required to insure themselves as long as they are only occupied in preparing themselves for the practice of their own profession, or when they have a right to a pension at least equal to what the invalidity pension would amount to. Under the "first-class" insurance law finally there is also dispensed from the obligations of insurance that class of persons whose capacity to work is reduced by reason of age, illness, or other infirmities permanently to less than onethird of the normal capability, that is, when they can not expect to gain more than one-third of what the same person normally would gain if well and of youthful age. There is also dispensed from the obligation to insure any person whose pensions, etc., or allowances equal the invalidity pension in the first class guaranteed either by the Empire or by any State of the Empire or by any local union insurance establishment or other authorized institutions of the sort. No one is obliged to insure beyond the age of 70, and no one is bound to insure who does not work in the employment in a required insurance class for more than 12 weeks or 50 days in each year.

There is also a complicated system by which persons in public employment may satisfy the insurance obligation by paying assessments to a local institution benefit society, etc., specially authorized under the name of "Caisses spéciales. It seems unnecessary to confuse the subject by going into these exceptional cases, though it may be noticed that under State regulations not only are such local institutions but trade unions, or what we should call trade benefit societies, recognized as corresponding to the duty of the State insurance, not, however, insuring to the full extent, that is, a larger assessment is usually required in such cases than when insurance is taken direct from the State. Finally, certain persons may voluntarily take the benefit of the State insurance provided they have not arrived at the age of 40, to wit: Employees, submasters, technicians, clerks, and others whose occupation in the service of others constitutes their principal profession, provided they do not receive a normal salary above 3,000 marks ($750), and the same privilege is given to persons falling under the exceptions noticed above in the insurance law itself.

THE OBJECT OF THE ASSURANCE.

The object of this assurance is to pension in case of age or in case of incapacity to work. There is also a system of accident insurance,

entitling the person injured to temporary benefits, but for this a different machinery is provided. Each person has a right to an allowance for inability without reference to his age who is afflicted with a permanent incapacity for work in the sense that he or she can not, in his trade, gain one-third of what he could normally gain if well in mind and body, as shown by what is paid to persons in the same trade and the same locality. Incapacity resulting from an accident does not, however, give right to an allowance for inability except when such latter allowance exceeds the amount of weekly payment made under the accident insurance mentioned later. Everyone has a right to an old age pension who is above the age of 70 years, whether able to work or not. Insured persons who can not be said to be permanently disabled and who for 26 consecutive weeks were unable to work have the right to an invalidity pension for all the remaining period of such inability. All insurance is forfeited if the incapacity to work was intentionally caused or by committing a crime, except that in the latter case the allowance may be assigned in whole or in part to the family of the delinquent. If an insured person is attacked by an illness likely to result in an inability to work of a kind entitling him to a pension under this law the State may insist upon his taking treatment in a hospital or upon other curative measures, but the consent of such ill person is necessary if he is married or has a family.

The funds for this immense system are provided, as has been said, one-half by the State and one-half by assessments upon the person insured, which must be paid weekly and must be withheld from his or her wages by the employer. No person who has not thus duly paid his assessments is entitled to an inability or old age pension-that is, such assessments must have been paid for a certain period, which is usually in order to entitle to the inability allowance 200 weeks' assessments, if 100 have been paid on behalf of this assurance, otherwise 500 weeks' assessments. To entitle any person to an old age pension he or she must have paid 1,200 weeks' assessments; with various other provisions. For persons voluntarily insuring themselves the assessments must only be paid for weeks during which the person is actually employed, but there is counted in the preparatory period, although no assessments are paid, all weeks during which the person was serving in the army or navy, or was prevented from work by duly certified illness. As has been said these assessments must be withheld by the employers from each weekly payment of wages, under heavy penalties, but independent of this the person paying them either directly or through his employer is furnished with stamps which, being affixed to his employment card or otherwise, becomes a permanent record of the weeks of assessments paid. It seems needless to point out the necessary elaboration of this machinery or continual ticketing and billeting of a person, the needless requirement of certificates from doctors, hospitals, army officers, etc., which would make the system quite insufferable to an American.

AMOUNT OF INSURANCE.

We now come to the amount of this enforced insurance, or first, more properly, to the amount of the assessments. These are to be fixed by the Federal Council every 10 years, and have in fact been fixed up to December 30, 1910. The assessments are calculated in such

manner as to meet the obligations of the insurance department both for old age and inability pensions by investing the assessments received at interest in what we would call public or municipal securities. In theory, of course, when the system has been established a generation or more it should be necessary to carry little invested capital. The assessments received in each year normally balance the allowances paid out.

All persons having state insurance are divided into five classes, determined by the average or normal salary or wages received in each class, as follows:

The first class, up to 350 marks ($87.50) annual wages or salary; the second class, from 350 to 550 marks ($112.50); third class, from 550 to 850 marks ($212.50); fourth class, from 850 to 1,150 marks ($287.50), and the fifth class, above 1,150 marks; that is, from 1,150 to 2,000 marks ($500). Above 2,000 marks and up to 3,000 marks ($750), as has been said, the insurance is optional.

It will be seen that on the German wage scale the ordinary American unskilled laborer receiving $150 a year or more would belong to the highest class to which compulsory state insurance is applied in Germany, and the same, it may be said, would be true of all adult factory operatives, at least in the North.

Now, until the new arrangement to be made in 1910, the weekly assessment is prescribed as follows: Class 1, 14 pfennigs; class 2, 20 pfennigs; class 3, 24 pfennigs; class 4, 30 pfennigs; class 5, 36 pfennigs. In each case, of course, the weekly payment is meant. The law is established on a basis of a week as a unit.

One hundred pfennigs make a mark. Assuming, therefore, a person to work 50 weeks a year, the first class will pay a premium of 7 marks per year ($1.75); the second class, 10 marks per year ($2.50); the third class, 12 marks per year ($3.00); the fourth class, 15 marks per year ($3.75); the fifth class, 18 marks per year ($4.50). It will be noticed that the assessment is, after all, very light. In the highest class, corresponding to the ordinary American wage, it amounts only to $4.50 per year, which, on the average, would perhaps purchase about $300 of life insurance in an ordinary company for a person of age subject to compulsory insurance in Germany, but it must be noticed that this insurance is not against death, but only against old age or inability. There are many other complicated provisions for the cases of persons who begin to insure above the age of 40 or who have paid voluntary insurance, etc.

AMOUNT OF PENSION.

By the law of 1889 the annual allowance for inability is a sum determined as follows: Fifty marks per year, an arbitrary sum paid directly by the German Empire, and 60 marks paid out of the insurance establishment, which latter sum is augmented for the different classes according to the number of weeks of assessments paid, respectively, by 2, 6, 9, 13 pfennigs. The result makes quite a complicated sum, which can only be shown by a table.

In the same way the pension for old age: Besides the imperial subsidy of 50 marks, a product by the number of weeks of assessment paid, respectively, to 4, 6, 8, 10 pfennigs. The whole calculation was made upon the basis of 1,410 weeks, which, it will be noticed, is 30