head is not the same for all kinds of property. Classification is indeed necessary, but many owners of property object to the classifications sometimes made, because their property, though less exposed to the danger of fire, is classed with property more liable to the danger. The distribution of the burden of insurance thus unjustly affects the safer property. This alleged discrimination has led the owners of special kinds of property to adopt a means of mutual insurance among themselves.

Fire insurance may indirectly be the cause of increasing the number of fires. This may be brought about by the greater carelessness engendered in the owners of property in guarding against fire, and even by furnishing an incentive to incendiarism in the hope of acquiring the insurance money. When property is insured to its full value or, especially, above its value, the incentive is all the greater.

Industrial Insurance. (1) Workingmen's Insurance in General. Various systems for the relief of workingmen, in cases of accident, sickness, unemployment, old age, or death, have existed in the past, and exist to-day in the numerous workingmen's associations, trade unions, and benefit societies.

The benefit system is widespread in the United States in local and national labor unions, railroad unions, and local industrial establishments.

In several foreign countries, the government has insisted that the employers insure the life and limbs of the employees, and make provision for sickness and old age and unemployment. Such insurance in some form or other, and embracing different kinds of benefits varying in the different countries, is compulsory in Norway, Holland, Belgium (miners), Italy, Germany, Austria, France (miners).

The principle that the care of the workingman under all the vicissitudes to which he is exposed in the performance of his labor

accident, sickness, unemployment, old age, death - should become an integral and necessary part of the cost of production, and should be borne by the industries in which the workingmen are employed, and not wholly by the workingmen, has been

strongly insisted upon within the past quarter of a century, and has taken root in many foreign countries. It has not as yet been generally adopted in the United States.

To offset the claims that may be made by employees on employers for damages resulting from accident and death while at work, there exists the Employers' Liability Insurance. By such insurance, an insurance company assumes the responsibility for accidents to employees.

(2) Definition of Industrial Insurance. - Industrial insurance strictly so-called may be defined as "life insurance for small amounts, chiefly on the lives of wage earners and members of their immediate families, with premiums payable weekly and collected from the houses of the insured." (J. F. Dryden, Life Insurance and Other Subjects.)

Life insurance is ordinarily limited to well-to-do persons, who can afford to pay the semiannual or annual premiums to the insurance companies. Such insurance is usually beyond the means of the poor. Efforts, however, have been made to bring the benefit of life insurance within the reach of the poorer classes.

(3) Growth. The Prudential Assurance Company of London was started for the benefit of the poor in 1854. The English government sought to extend the advantages of this kind of insurance still further and established in 1864 a system of postoffice life insurance. Every postmaster became an insurance agent. The system met with but very little success, and although it is still in existence comparatively few policies are issued.

Industrial insurance was extensively taken up by private companies and has spread over the world. In 1909 there were about 58,000,000 industrial policies in force in the world.

In the United States, the Prudential Friendly Society was started in 1875, and in 1877 was changed into the Prudential Insurance Company of America. The aim of the company at its inception was to provide against sickness, accidents, old age, and to insure a burial fund for adults and children. The business came in time to be limited to the insurance of a sum certain

payable at death. In 1878 numerous other companies took up the business of industrial insurance, and it has grown immensely during the past thirty years. In 1912 the number of policies reached 24,708,499, amounting in value to $3,423,790,536. The policies written in 1912 amounted to $785,902,210. (Cf. Insurance Yearbook, 1912, p. 294.)

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(4) Advantages. The economic advantages of industrial insurance are very great. It engenders a spirit of thrift and self-respect among the poorer classes. It diminishes the rate of pauperism and reduces the expenditure of the state for the housing and the care of its helpless poor and their burial at death. It leads the way to ordinary life insurance, which opens up a means of saving and investing for persons of even small incomes.

(5) Objections to the System. There can be no doubt that industrial insurance is of immense economic and social importance, but it is claimed by many that the system, as at present carried on, is decidedly evil and a means of robbing the poor. The defects of the system may be thus summarized:

1. The premium charged the workingman is nearly double that charged in ordinary life insurance.

2. The benefit received by the industrially insured is but a fraction of that received for the same expense in ordinary life in

surance.

3. The benefit received is in many cases less in amount than the sum total of the premiums paid in.

4. The great spread of industrial insurance is due to the agents, who by specious arguments and persuasion induce ignorant workingmen to insure in industrial insurance companies. Indeed, it might be claimed that the great spread of industrial insurance is an indication of the ignorance of the poorer classes and of the weakness of human nature, that allows itself to be cajoled by persuasive agents into giving proportionately large sums, under the guise of small weekly payments, for a correspondingly small return.

5. The expense of maintaining the system of agents and col

lectors is great, and must ultimately be borne by the policyholders.

6. The rate of the lapsing of policies is high Fifty per cent of the policies written lapse before the end of the first year. When a person insured allows four weeks to pass without payment, he loses all he has previously paid in as premiums.

A writer speaks as follows of industrial insurance: It is unfortunate that the better classes, and the economists especially, are unfamiliar with that tremendous exploitation of the poorest and neediest which goes by the name of industrial insurance. A superficial study of rates will show that these poor people actually pay at least twice, or even three times, as much for the same insurance as the well-to-do man pays. Because he pays in weekly premiums, the poor man pays twice or three times as much for every $100 of insurance he carries. In return for these higher rates the terms of the contract do not give him half as good a chance of getting the money back. Most of the insured pay for years and years without the hope of ever getting a penny except in case of death. Stoppage of payment for five or six weeks, even after several years of regular payment, means forfeiture of all the money paid. It is a well-known secret that it is from these lapses that the fortunes of the companies are made. Personal acquaintance with many agents employed in this occupation has forced the writer to the conclusion that systematic deception of the insured is universally practiced." (I. M. Rubinow, in Journal of Political Economy, June, 1904, p. 379.)

(6) Answers to the Objections. In refutation of the foregoing objections, the friends of the system advance the following points in its favor :

1. Industrial insurance is essentially for the very poor, for those who are not able to invest in ordinary life insurance. For them it is industrial insurance or no insurance at all. If there is any social or economic advantage at all in insurance, industrial insurance brings that advantage within the reach of persons who otherwise could never profit by insurance.

2. Industrial insurance is primarily to provide a sum certain in the case of death, for the payment of the cost of last sickness, burial, and cemetery plot. The insured are anxious to obtain provision of this nature and seek no other advantage from their insurance.

3. Industrial insurance cannot be carried on without solicitors or collectors. Such is the improvidence and thoughtlessness of the class of people dealt with, that they will not of themselves take the thought and the trouble to pay in their weekly premiums. They need to be helped by the weekly visit of the agents. This fact was brought out in England when the post offices were made insurance institutions. The number of policies written by them was ridiculously small compared to the number written by private companies that employed the system of soliciting. 4. Industrial insurance costs more than ordinary insurance, because the accommodation granted in industrial insurance is greater. The insured are saved all worry about payment of premiums, since the collector comes to their homes at the time of the receipt of their weekly income and collects the premium.

5. Industrial insurance is installment insurance. The part payment plan in the case of all kinds of purchases supposes a higher price.

6. The risk in industrial insurance is greater, because the workingmen insured are more exposed to dangers of accident and death, and this greater risk justifies the greater cost of industrial insurance.

7. Lapses are a necessary element corresponding to the waste. occurring in all forms of industry. They occur as well in ordinary life insurance. Efforts are constantly made by the industrial insurance companies to reduce the number of lapses. Moreover, the insured who allows his policy to lapse has had, while he paid, the benefit of the insurance and the special accommodation in the method of paying his premiums. (Cf. J. F. Dryden, Life Insurance and Other Subjects, ch. IV.)

(7) Remedy. A remedy for the evils of industrial insurance was proposed and carried out in Massachusetts, in 1907. A