GERMAN SOCIAL INSURANCE FROM WITHIN.

THIS remarkable brochure, which is a reprint of an essay from the last number of the Zeitschrift fur Politik, was described briefly in a letter in the Spectator of June 17th ; but both for its

intrinsic interest as an expert's view of German social legisla- tion and for its bearing upon British legislative proposals it deserves fuller treatment. The purpose of Privy Councillor Friedensburg is to expose the abuses of German State insurance as it has miscarried in practice, and not at all to express any opinion on its underlying principles. His indictment deals with a great many evils, and is extremely complicated and technical; but he explains at the beginning that all the evils arise from the one fact that the various State insurance systems have been administered in a spirit of charity which is flatly opposed to the intent of the original projectors. " The legal character of the whole of our working-class insurance," he says, "has not been realized as a living fact; and that is the root of the whole evil." By " legal character" he means that the relations between workmen claimants on the one hand and the pension funds on the other were framed according to juristic conceptions. State employers and working men were all partners in a common enterprise, and their various rights and obligations were rigidly regulated. This intention was accentuated by the fact that the procedure established for settling pension and compensation disputes was borrowed in the main from the civil code. The conception of beneficence was explicitly ex- cluded. The insured working man was given specific rights, which he could enforce in the courts, but he could not claim more. If he did make such a claim the pension arbitrators and judges could no more allow it out of a spirit of indulgence than a judge in an ordinary civil court could decide against the evidence merely because the party in the wrong appealed to him for sympathy.

That theory, says Dr. Friedensbnrg, has been ignored in practice. Charity crept in and corrupted the system at the beginning. The insurance judicature held that " in granting

pensions there is needed only a special, less convincing kind of proof." Considerations, " proper in a poor-law adminis- trator but not in a judge," governed their decisions. The State further made the mistake of propagandizing in a costly way for the new institution. "With full hands enormous sums were scattered in order to familiarize the people with the pension idea." The insurance judges, including the supreme Imperial Insurance Office, began by treating the workmen, not as litigants to be handled impartially, but "as fll-reared, fractious children, who could easiest be reformed

through kindness."

"The workmen very soon got accustomed to bringing their complaints, doubts, and claims of all natures whatsoever to the' Imperial Insurance Office, often without appealing to any in- termediate instance. The number of these appeals grew from 304 in 1887 to 3,303 in 1909. . . . Many documents teemed with insults, threats to appeal to the Emperor, to Bebe). to the "Forted rts In this wise there develops an absolutely monstrous quantity of clerical work (geradera ungeherertiche

Vielschreiberei)."

Of late years the craze for litigation over Pension and Com- pensation matters has become extraordinary

This easily explains why in 1909, out of 422,076 decisions by the industrial unions, 76,352, that is, 18.9 per cent., hare been appealed against ; that of the roughly 100,000 arbitration meats 2:3,794, that is, 27.74 per cent., were fought further. The figures for Invalidity and Old Age are not much better."

The Imperial Insurance Office, which is intended to handle questions of law, is overburdened with frivolous and unfounded claims. The problem of the exact amount of compensation "for a twisted thumb" is fought until it reaches this highest. Court :— " No less than 77.7 of the appeals to the highest instance in 1909 were on the question of the exact amount of a claimant's loan of earning power How greatly the claims for trifling injuries have increased is shown by the fact that from 1R88 to 1908, despite the increase of the total compensation paid from 5,900,000 marks to 155,100,000 marks, the average compensatiou

per accident fell from 232.19 marks to 155.53 marks There are men, particularly among the wood workers, who for three or four different injuries of a kind very common in their occupation draw part pensions of 30s., 40s., or more, and yet are earning their full wages. . . . It is no wonder that the number of

• Die Praxis der deutsche% Arbeitereersieherung. Yes Gebeimer Iterierringentt Dr. Ferdinand Friedenaburg, Senatsvorsitzenden iiu Reichaveraieherungsamic a.D. (Berlin, 1911.1 accidents grows with monstrous speed. In 1886 100,159 accidents were reported, and 10,540 compensated ; in 1908 the figures were respectively 662,321 and 142,965."

This is due, in part, to the leverage which an " accident " gives to a chronically sick man to get permanent support.

"Often an accident is actually sought for and arranged." The " victim " swears that his old illness is the result of the " accident " and gets consequential help. Whole pages of Privy Councillor Friedensburg's book deal with similar frauds. "It is a common experience," he says, " to find workmen doing everything possible to foster their illnesses ":

" The doctor, usually regarded as the sick man's best friend, becomes his worst enemy. The most embittered quarrels rage in the sanatoria, and complaints and grumbling over spoiled food and bad treatment appear, of course anonymously, in the form of newspaper articles."

This last is a characteristic feature of all pauperizing enterprises. But at heart, says Dr. Friedensburg, workmen prefer the hospitals and sanatoria to their own homes, "and

no longer feel well at home, but continue to hanker after the flesh-pots of Egypt." The laxity which has neutralized the benefits of State insurance, however, is not confined to the workman and to the special insurance authorities. The employers and the minor local officials have fallen into the same pit. The legal and ethical conceptions of in- surance, as an institution in which two sides are mate-

rially interested, required that employees should de facto pay their shares of the premiums as prescribed by the law. That was essential to the working man's self-

respect. It has not been realized. In domestic service the employer out of a sense of charity habitually pays both halves of the premium ; and many employers of industrial labour, especially in the country, do the same. The local non- pension authorities are similarly demoralized; and they oppose the basic idea that State insurance is a matter of legal right and not of charity or of class exploitation :—

" The communal chiefs (Am tsvorstehern) act entirely under the belief that they ought to help their local residents. They get this belief as a result of the communis opinio that the insurance funds have more money than they know what to do with ; and this idea strikingly deadens the conception of legality and love for the truth."

Naturally the universal laxity, the payment of unjustified claims, and the extravagance practised in equipping hospitals and sanatoria impair the integrity of the insurance funds. Employers do all that is possible to escape their burdens, which they feel to be unjust, and in vain enormous sums are annually exacted from them in fines. The higher insurance authorities are repeatedly being called upon to remedy the evils due to such causes :-

"Only those who have taken part in these quarrels—I might call them battles—have any idea of their depressing effect and their costliness. This alone makes it understandable why in- dustrial unions and insurance institutions, in particular those at work among the agricultural population, have been repeatedly on the brink of bankruptcy. To effect any improvement in their position there are needed month-long tours both of the officials of the organizations themselves and of the officials of the Imperial Insurance Office."

Dr. Friedensburg says that the excessive cost of the insur- ance system, which is one result of the degradation of the system into charity, is complained of by employers ; and that State insurance, therefore, reacts injuriously upon the Empire's industry :— " Unluckily, it is just the middle and patty employers who feel as most oppressive the percentage increase of their working ex- penses caused by the payments they must make to the various systems of insurance. As a result of the cost of insurance which has gradually become monstrous—it amounts to 2,000,000 marks a day—German industry is put at a disadvantage and is hampered to the extreme in its competition with foreigners. The institution is held first of all responsible for the marked rise in prices, which is felt as oppressive by all classes of the population."

It is impossible here to deal with the evidence given by Dr. Friedensburg of wholesale dishonesty and of the painful

tolerance shown by the public to frauds against the Pension Funds ; that is, against the State, the employer, and the workman as the three contributories. Numerous men, he says, live by travelling about the Empire fabricating pension and compensation claims for others. An official gives false

evidence for a claimant on condition that the claimant shares the proceeds : he is sentenced only for " negligent perjury." No serious attempt is made to suppress insurance frauds

by penal methods, because " if all the untruthful statements made in pension matters were criminally brought before the Courts, the number of our State procurators and criminal judges would have to be doubled and trebled." The original provision that claims could be fought cost-free was so abused by the making of baseless claims that it had to be abolished by amendment in 190). The amendment allows the Courts to impose costs on a litigant who obstinately persists in hopeless appeals. But the Courts, under the ban of " charity," interpret this amendment by imposing costs upon the Pension Funds when these are the losers, but by allowing costs to litigious workmen. The result is that the latter

"come with absolutely hopeless claims across the whole of Germany to Berlin : their expenses to Berlin are borrowed, but the cost of sending them home has to be recovered from the Poor Law administration, after infinite letter-writing, explanations, and misunderstandings."

It is curious, in view of the careless statements which are habitually made in England, to find the "Poor Law administra- tion" playing this important role. But Dr. Friedensburg shows that neither of the two evils against which State insurance was directed has been exorcised. Class opposition (i.e., Socialism) has not been weakened, nor has pauperism been diminished. In February, 1910, the Imperial Secretary

of State for the Interior admitted the first. As for the promise to kill pauperism, "it is remarkable," says Dr.

Friedensburg, "how little of that promise is heard to-day." He refers to Herr Zahn's recent study intended to prove the contrary, but quotes Herr Zahn's admission : " In reality the poor expenditure, both as regards the number of beneficiaries and as regards the number of individual allowances, has almost everywhere increased."

The system, concludes Dr. Friedensburg, is a circulus vitiosus. Charity, pauperism, and fraud are the segments of the circle ; and " to those who do not see in their country- men a mere mass it is a deeply painful experience that the insurance has directly led to a general alienation and de. moralization."

Such is the view of Germany's social legislation, as seen by a high official who has been administering it for twenty years. As to how far it can be taken as a final word, and a sufficient demonstration of the worthlessness of the system, the writer reserves his opinion. But it is at least a remark- able exposure of the delusion, common in England, that the German system is so admittedly and unqualifiedly a success that it is outside the sphere of native criticism.