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Moreover, the importance of insurance has been impressed upon the country as a whole and upon the men in service in particular in such a manner that it should result in future expansion of the insurance business.

The act undoubtedly means the continuance of the government in the insurance business after the war. Private companies will find the government to be their most serious competitor, and the solution may be the creation of a state monopoly in the insurance field. Secretary McAdoo indeed seems to favor increasing the field of state insurance. (37)

Admirable as the act is, there are many defects which must be remedied and many administrative problems which must be solved before it can achieve all the purposes which it was designed to accomplish. Perhaps the most important defects are: (1) Officers are not compelled to allot pay to their wives or children. (2) Allotment of pay is not compulsory to dependent parents. (3) Compensation for death or total disability is not given to dependent brothers and sisters or to other near relatives. The force of this objection is somewhat negatived by the power of protecting these relatives by government insurance. (4) Compensation is given irrespective of pay. This violates all the canons of good compensation legislation (for compensation should take into consideration the previous standard of living). It is also likely to prove an entering wedge for future pension acts, for it will be an easy matter for a future Congress to raise the compensation scale. (5) The provision for basing compensation for partial disability is so loosely worded that much ambiguity is created. (6) The government has assumed all the overhead expenses of the insurance business both now and after the war. Some of this expense, such as the original medical examination, and the soliciting of insurance by officers and other government officials, is plainly in the nature of a joint cost and impossible to segregate. But part , such as the expenditure attached to the War Risk Bureau, can be easily segregated. To make no charge for this during the war may be justified because of the vital need for insurance. It is, however, impossible to approve of continuing this practice after the war. This would really amount to a subsidy to the government insurance business. It would thus give a false picture of the efficiency of government methods and would give government insurance an unfair advantage over private competitors. The case of state v. private insurance is one that should be decided in a fair field.

The chief problems of administration which must be solved are: (1) Working out, pending legislative action, of the standard to be used in computing the previous earnings of those partially disabled. As has been pointed out, the pre-war earnings seem to be the best base which can reasonably be applied. (2) Determining the "average" impairments of earning capacity. This is a task that will seriously tax actuarial skill. (3) Preventing policies from being abandoned after the war. Such a dangerous trade as war inspires men to take out insurance. With the coming of peace the burden of paying even such low premiums as those attached to the government policies will prove irksome to men who are carrying as much as $8,000 and $9,000 of insurance. A large percentage of the men will be tempted either to abandon their policies or to reduce them to a smaller figure. The Bureau must pursue a comprehensive and prolonged program of education if it wishes to avoid this probability.

Taken in its entirety the act bids fair to prevent the injustice which occurred during and after our Civil War from being repeated. It is also a very significant item in the state-socialistic program that is being adopted in America under the stress of war conditions.

Paul H. Douglas
Reed College