and at pleasure remove a director of the Fund. The director so appointed should have full administrative power of the Fund. The terms of office of the board of managers should be rotating so that a majority of them could not be changed in any one administration. In addition to such policyholders as might be appointed by the Governor, it would be well to include as members of the board the Industrial Commissioner and the Superintendent of Insurance, as well as the State Treasurer, who is custodian of the Fund. These members would at all times represent the public view as distinguished from the policyholders' view.

STATE FUND MONOPOLY

In this connection it may not be amiss for me to express my views with regard to the constant agitation in some quarters for a State monopoly of Workmen's Compensation insurance. Heretofore I have refrained from speaking on this subject, feeling that as the state official responsible for the management of the Fund it was my duty to administer the law as the Legislature saw fit to direct. Inasmuch as I have determined to return my commission to the Governor at an early date and to retire to private life, I feel that I may in entire frankness express my belief, freed from official restraint and based upon my eight years of observation and experience in the administration of the law.

While under a monopolistic State Fund doubtless there might be an immediate reduction in the cost of compensation insurance, owing to the removal of competition and acquisition cost, such reduction would be temporary only, and would be followed by an ever increasing burden of expense to industry together with a lessening of efficiency in the prompt payment of claims and in service looking to accident prevention.

Much is heard on both sides of the economic policy of the State monopolizing such business; on the one hand a protest against the socialization of industry by the State and on the other hand a protest against private enterprise making a profit out of the misfortunes of the injured workers. If the latter argument is sound, it seems to me equally applicable to any trade or business or industry that makes a profit out of the manufacturing, producing or transportation and trade in any articles or commodities of necessity to the community or in common use by the people as a whole. If, therefore, we are prepared to accept socialization and monopolization of one great essential business, we must be prepared to meet the demand which, doubt not, will come for the socialization and State control of other forms of private enterprise. And when once embarked upon such a course, far from the landmarks established by good business judgment and sound economic policy, it is difficult to see to what lengths we may be led.

Equal competitive opportunity for all in the field of compensation insurance, and by that I mean a real equal opportunity for

the State Fund to compete, seems to me the soundest policy to pursue. If the State Fund is enabled to give real service and write its real proportion of the business in this field of compulsory insurance, it will become a great regulator of insurance rates and insurance costs, and will inspire ever increasingly better service on the part of its competitors, and the workman and industry cannot fail to benefit thereby.

Turning to the practical side of the question, it seems to me unwise to place the entire compensation insurance business of the State in one organization before it has been demonstrated that the State has the capacity to deal efficiently with it.

Ever since my earliest recollections of public affairs, and for generations before, we have heard expressed the popular notion, too often I fear well founded, of governmental inefficiency. There is spasmodically the cry for conducting the public business on the same plane of efficiency with private business. But rarely do we find it, and even when we do it is not sustained over long periods. Whatever measure of efficiency has been developed in the State Fund has largely been due to a consciousness that as competitors of the private companies they had to be alive and on the alert. Take from the Fund the element of competition you develop an army of clock watchers doing business in a dull routine. The work that now requires two persons will require three or four. The expense of administration will mount, and the quality of service will deteriorate. Claim payments, with governmental red tape to deal with, will slow up. And as for real helpful inspection service, such as is now obtained through the Compensation Inspection Rating Board, and the private companies, all with the view of preventing accidents, it simply will not exist.

From those who oppose the private companies we have heard much criticism of the abuses attendant upon appeals to the courts in compensation cases. But since when has it become American doctrine to preach distrust of the courts and set up judicial machinery over which there is to be no review, no check, and to take property from one and give it to another without due process of law?

If there is to be an unbridled quasi-judiciary, that is a law unto itself, made up of political appointees, possibly of partisans of one side in industry, what will eventuate? The sick man, whose malady has no relation to his employment, but who can testify to having had some sort of slight injury at one time, will find, if he presents a case that arouses sympathy, that the State Fund will have to take care of him during his illness. Or if perchance he should die of such malady, the industry through the State Fund will bear the widow's burden.

The man who was disabled and has recovered, but who can show that he cannot find a job, will find relief in the State Fund. The old man who, broken down in health and bodily vigor by reason of his years, meets with an accident, and never thereafter returns to work, becomes a life pensioner on the State Fund.

These cases are not exaggerated, they have all occurred, not once but hundreds of times. Sometimes awards have been made in them, and sometimes the courts have reversed them.

What then do they spell? They spell health insurance; they spell unemployment insurance; they spell old age pensions. Perhaps we have reached the time when we should have all such to relieve distressing cases. But let us in that event frankly enact laws to carry into effect such systems but do not by indirection do what we are not prepared to do by direct action.

Should such a situation eventuate, what then of the cost to industry and to the whole people? Will the elimination of competition offset the tremendously increasing cost of lax but sympathetic administration? I think not.

If I have spoken strongly on the subject, it is because I feel strongly that the State would be embarking on a most unwise and dangerous project wholly experimental and without adequate experience.

I have not touched upon the dangerously great political power that would be inherent in such a system. The political possibilities in a business handling fifty to a hundred million of dollars drawn. annually from the industry of the State can better be imagined than described.

BUREAU OF INSPECTION

Attention is invited to the report of the Director of the Bureau of Inspection submitted herewith. All divisions of the Bureau have been conducted efficiently and the inspection of work places. in the state has been carried out satisfactorily, although with the reduced number of inspectors necessarily fewer inspections were made. None the less the conditions found in work places indicate that there is a better recognition of the law and compliance with its provisions than ever before.

This department has always been the recipient of many complaints of unlawful, dangerous or unhealthy conditions. Many of these complaints are anonymous, but recognizing that workers may hesitate to sign complaints against their employers, we have always accepted such complaints and have investigated every one of them to the end that conditions if wrong can be corrected. It is a most significant fact that this year we have received fewer complaints than we did when a greater force of inspectors was turned loose on the industries.

To some doubtless the total number of inspections made will always be the test of efficiency and enlarged figures of orders issued. the test of vigilance. I do not so regard it. Inspection like every other activity can and sometimes is carried to absurd lengths. The true test of efficiency is to be found in the conditions of factories and mercantile establishments. If they are conducted in a safe, healthful and lawful manner, then the full benefits of the law will be reaped by those employees who work therein,

The extravagant statements made by certain elements of labor that this part of the work of the Department had broken down, made very evidently with prejudiced viewpoint and for partisan purpose, are not borne out either by the records of the Department or by an examination of the work places of the State.

In this connection, however, I desire to recommend that the authority and jurisdiction of the State Department of Labor be extended over the entire State, including the City of New York. The Legislature in 1916 took from the Department jurisdiction over factory and mercantile buildings and conferred such jurisdiction upon the city officers. This has led to conflict of jurisdiction, the city officials possibly engrossed in other matters of more moment to them, have permitted lax enforcement of the Labor Law provisions, and conditions have been permitted to grow up in the city that would not be tolerated elsewhere in the State. Because of the popular belief that the Labor Department is responsible for all factory conditions, the Department is daily blamed for conditions over which it has no control. The Law of 1916 was sought by interests that were not friendly to the Labor Law, and it is evident that they knew what they were about.

Factory laws and enforcement are a matter of concern to the whole people of the State and should be enforced uniformly. That can only be done by bringing the whole authority under a single department of the State government.

Progress has been made during the past year in the matter of eliminating duplicate inspections. Mercantile inspectors and factory inspectors now cooperate together, none inspect the same places, and the supervising factory inspectors outside of New York City have been given full supervisory control over mercantile inspectors operating in their territory the same as they always had over factory inspectors.

INDUSTRIAL RELATIONS

I invite attention to the recommendations submitted by me a year ago for strengthening the work of the Department in the field of industrial relations. Sufficient use of the power of investigation has not been made in the past. Neither are we making any general use of the abilities of private citizens of standing and of knowledge of industrial affairs. Such persons could I believe render valuable aid to the State. But some adequate machinery should be established by which the organization will be ready for use instantly at the time of necessity.

The report of the Director of the Bureau of Industrial Relations is submitted herewith, and attention is invited to it.

EMPLOYMENT

The Division of Employment is a part of the Bureau of Industrial Relations and functions under the supervision of the Director of the Bureau. Owing to a vacancy that existed for a considerable part of the year in the position of Chief of the Employment

Division, the work has not received as close supervision as it should.

I believe, however, we should consider whether or not our theory of public employment offices is not founded on a mistaken idea of the function of the State. The State unquestionably should take the lead in employment matters, and coordinate all State and local activities. It should also, as it now does, be the medium for cooperation with the Federal government through the United States Employment Service. At present employment offices are established at such places as the Commissioner may direct, the expense being borne by the State at large. No provision is made in law for the cooperation of the localities with the State. This I believe is necessary if the public employment offices are to render a real service. The State should appropriate its moneys for employment work in a lump sum, with certain obvious safeguards, and then permit the Commissioner to use such part of it as may be wise to join with a local office in a joint effort carried out by the State and the locality. There is no reason why the locality should not share the expense. It derives the chief benefit of the employment office, and should pay some part of the cost. Local pride too will then assert itself in endeavors to make the office a complete sucess.

PRIVATE EMPLOYMENT OFFICES

It is clear that the time has come when there is an imperative duty on the State to take over the licensing and supervision of all private fee charging employment agencies. The present fee, where one is charged, is ridiculous. A fee of not less than $250 should be charged annually and the Industrial Commissioner should have the right to suspend or revoke a license. He should also have power, within certain limits, to regulate the fees and practices in such agencies.

The funds derived from such licenses should be applicable to the expense of the supervision of such agencies and might also be used toward developing public employment service.

There is no more crying need at the present time in our industries than the efficient regulation by the State of these private agencies.

BUREAU OF RESEARCH AND CODES

The Bureau of Research and Codes is directed by the Deputy Commissioner in addition to his other duties. I respectfully invite attention to the report of the Deputy Commissioner submitted herewith.

The work of investigation and preparation of Code rules has gone on as rapidly as can be done with intelligence and thoroughness.

New codes and revisions of codes adopted have been considered and public hearings have been held by the Industrial Board. New rules were adopted by the Board, as proposed by the Code Bureau, relating to tunnel construction, to work under compressed air,