The general establishment of the factory system, together with its necessary concomi tants, mining and railway transportation, intro duced a new element into the labor problem, mainly that of danger to life and limb. Until comparatively recent years it was generally assumed by those responsible for legislation that the wage-earning classes were fully capa ble of taking care of themselves; that placing the risk of the industry upon the employers would be sure to result in carelessness on the part of the operatives and high cost of produc tion for the goods sold. It was, therefore, the established rule of law in all countries that the employer would be held responsible only for damages to life and limb due to his own negli gence, while the employees must suffer those resulting from their own lack of care. To secure redress for injuries due to the careless ness of the employer the employee was obliged to bring a suit at law, stating the cause for his complaint and offering evidence to show that the employer was legally responsible for the acci dent that caused the damage. In the litigation that arose over such cases the judges in the absence of specific statutes to the contrary de veloped a series of common-law doctrines which to a large extent modified the original theory of the law. These doctrines are: that of con tributory negligence, of assumption of risk, and the fellow-servant rule. Under the common law the employer could be held liable only when the accident was due to his own fault or neg lect, but not when the negligence of the em ployee contributed to the accident or when the accident was due to a natural risk of the employment, nor when the accident was due to the act of a fellow-servant. Under these conditions the employer was legally respon sible for damage resulting from certain classes of accidents; but even when legally responsible it was not easy for the injured employee to prove his case and collect compensation for the damages. Moreover suits against the em ployer were not conducive to pleasant relation ships and gradually it became the custom for the employer to take out liability insurance under which the insurance companies undertook to defend all suits as well as to pay all dam ages incurred. Thus, while the liability to pay damages on account of accidents was a real factor in the cost of production, viewed from the employers' standpoint, comparatively little of this expense filtered into the pockets of the employees as compensation for their injuries. With the growing appreciation of the unfairness of the common law, the social reformers of the revolutionary type proposed and finally secured remedial legislation by the passage of the so-called workmen's compensation acts, by virtue of which the common-law rules were largely and in some cases fully abrogated, and in their place a system of direct compensation for various accidents substituted. In this movement Germany took the lead, establishing the first system of accident compensation on a large scale in 1884.* Since that date 48 other countries, including the United States, have adopted the same national system, and in the United States 35 of her Commonwealths and Territories had, on or before the first of Janu ary 1917, enacted either compulsory or elective compensation acts. In general, the administra tion of the compensation acts is entrusted to a commission, that established in Wisconsin in 1911 beinggenerally regarded as an efficient type.
1. (b) State control of wages has for rea sons that are readily appreciated made much less progress than public regulation of the con ditions under which the laborer works. The movement of establishing public control of wages began in New Zealand in 1894, and for 15 years thereafter was confined to the coun tries in that corner of the globe. Since 1909, when the first minimum wage act in any of the older countries was passed by the enactment of the Trade Boards Act of October 1909, in Great Britain, the system has been extended in that country to coal mines by the act of 29 March 1912, and in the United States to various lines of work in certain of the com monwealths. The arguments relied upon to defend the system of minimum wages are similar in their nature and in their validity to those advanced in favor of the compensation acts, namely, the failure of competitive forces to insure a fair distribution of wealth for those engaged in certain occupations. While no method has yet been devised by which a reason able wage may be determined by law it has not proven impracticable to establish minimum wages in the sweated industries on the basis of wages for similar work in the non-sweated industries. The object and the natural results
of minimum wage legislation then is found to be the restoration of normal competitive con ditions by state action in those industries where the system has for reasons that are sometimes obscure, but more often patent, failed to work.
Z (a) From the age of Elizabeth, when the English patents of monopoly threatened to be come a prominent feature of the Crown's pre rogative, up to the period of the Civil War in the United States, competition between indus trial and commercial enterprises was suffi ciently active and at the same time sufficiently moderate to prevent the growth and develop ment of industrial monopolies in a large way. Immediately after the conclusion of the Civil War conditions began to change, the new con ditions tending to promote the growth of large combinations and consolidations in various fields of industrial activity. The first of these conditions was economic, the second moral and intellectual. With the development of steam as a motive force, the larger factories were found to be more efficient as producers of standardized commodities, and a process of elimination thereupon followed, the smaller fac tories giving way to the larger ones. At the same time the proprietors and managers for merly abnormally hostile and suspicious began to get acquainted with each other at the clubs and at informal gatherings, and as a result of this acquaintance they discovered that, contrary to their •former beliefs, co-operation was often times more advantageous than open and con tinuous warfare. As a result of these two con current forces the consolidation movement be gan first among the railroads and later among the industries. The railroads began consoli dating even before the Civil War, while the first of the great industrial consolidations began with the union of the interests of the Rocke fellers, Andrews, Harkness and Flagler, in 1867. From that date until 1904, when the govern ment became active in controlling the forma tion and operation of various kinds of combi nations, the consolidation movement was unin terrupted in its progress when measured either by the number of enterprises united or by the size of the resulting organizations. The trust movement began to attract public interest in certain sections of the country as early as 1877, although it was not until 10 years later that the problem became a national one. As a re sult of the investigations made by Congress in connection with the preparation and enactment of the Interstate Commerce Act of 1887, pub lic attention became more intensely focused upon consolidations, their nature and import, and after two years of discussion the Sherman Act of 1890 was enacted into law. During the same period the State legislators were engaged in investigating combinations and in passing certain acts to protect intrastate business from monopolistic enterprises, so that by the end of the 19th century 32 of the American States had anti-trust acts on their statute books. Not withstanding the legislation prohibiting such organizations, the trusts continued to develop, and it was not until the creation of the Bureau of Corporations, 14 Feb. 1903, and the simul taneous adoption of a vigorous administrative policy by the Department of Justice, that the trust movement began to abate. Since 1903 a considerable number of combinations have been dissolved, several of the corporate consolida tions have been disintegrated and at the same time the formation of new combinations and new consolidations has generally ceased. When America entered the World War, suits then in progress, directed against several of the larger consolidations, were by action of the Supreme Court, on motion of the Attorney-General, postponed for the duration of the war. It may be inferred, as a result of the better knowl edge of co-operative effort engendered during the World War, that the policy of the adminis tration and of the courts will be affected in such a way that decisions like that rendered in the Northern Securities case of 1904 will no longer be possible. On the other hand, combi nations will be judged from the efficiency standpoint and government control established in such a way that their efficiency may redound to the common good.