# Economic Development in Denmark Before and During the World War/The Commission of 1885 and the Development of Social Insurance

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The Commission of 1885 and the Development of Social Insurance
In 1885 a second Workmen's Commission was appointed in Denmark which had a more limited task than that of 1875. Its original aim was to formulate a proposal for an ​accident insurance, but this aim was afterwards extended to include a sickness insurance as well; and, indeed, it was only upon this point that the proposals of the Commission had any direct bearing. After two years of work the Commission handed in its report. With regard to sick funds, it proposed not to disturb the existing system of Friendly Societies, but rather to encourage this form of self-help in every possible way. When the guild system was abolished the majority of the compulsory journeymen's funds, which were often combined with extra voluntary contributions, had been taken over by voluntary journeymen's clubs. Besides these, however, Friendly Societies of another sort were then in existence throughout the country. In 1866 the total membership was estimated at 20,000, but after that it increased rapidly; in 1874 it amounted to 87,000, and in 1885 the total membership of about one thousand Friendly Societies was estimated at about 120,000. Generally speaking, therefore, the individual societies were small. Inasmuch as the system of Friendly Societies had led to such good results, it seemed quite proper to continue working along the same lines.
The Friendly Societies had not operated entirely without outside support. In the capital most of them were recognized by the municipality—which meant that their members, when their need was proved, received treatment at reduced rates in the Kommunehospital for themselves, as well as free cure and attendance for their wives and children. Moreover, physicians did a great deal of work for them at low rates. But the societies, although their payments to the members were ordinarily small, were often hard pressed for funds, so that it was sometimes necessary to raise money to cover deficiencies by extraordinary means, i. e. by festivals or otherwise. But while the activity of the Friendly Societies could not be extensive from an economic standpoint, great advantages of another kind were derived from this form of self-help. The administration and inner life of the societies ​was an excellent source of training for their secretaries, cashiers, district managers, auditors, etc., so that they must be credited with having contributed a great deal to the moral and intellectual uplift of the population. The Commission of 1885 consequently expressed a unanimous opinion in favour of their continuance and development as voluntary institutions, and this opinion was acted upon in the bill brought before the legislature. In this way were established lines along which Danish social insurance was to develop during the succeeding generation.
Some years passed, however, before this matter was finally adjusted. An act of April 12, 1892, made it possible for the Friendly Societies to secure government recognition, and they obtained considerable advantages in return for a certain control to which they had to submit. Individual societies were limited to a certain place or trade; only persons with a modest income were admitted; persons suffering from chronic diseases could be admitted as members only on certain conditions. The act granted a government subvention of 500,000 kroner to the recognized Friendly Societies an amount, however, which was soon considerably exceeded. The amount receivable by each society might reach a maximum of 2 kroner ($0.54) per annum per member, plus one-fifth of each member's subscription. Moreover, members and their children under fifteen years of age were to receive treatment in hospitals at reduced rates, as well as free transportation of doctor or midwife in rural districts, when they themselves had no horse or wagon. The help given by the societies was generally to consist of free medical treatment and a daily allowance of between 40 öre ($0.11) and two-thirds of their earnings. This help might be granted for a period of at least thirteen weeks in twelve consecutive months. An inspector was appointed to supervise the recognized societies; and to establish a contact between the societies and the inspector it was agreed to hold an annual meeting of delegates from the societies either for the various ​provinces or for the whole country. Furthermore, the several boards were to elect a general council for the discussion of questions concerning the societies, and this council was to submit to the government proposals for withdrawal of its recognition of any society which had acted in questionable or unsatisfactory manner, even if it had not openly violated the provisions of the act.
The last provisions especially contributed to further the development of the Friendly Societies. In their delegates and the council they now had a mouthpiece, and a system of common rules and regulations was established which proved to be of great value. The choice of Mr. Th. Sörensen as Inspector—a practising physician who had been a member of the Commission and who won the confidence of the Friendly Societies to a truly remarkable degree—contributed greatly to the thriving of their funds. He supervised the interests of the societies in a genuinely democratic spirit, and it was largely due to his influence that the delegates appointed were most valuable to the cause.
The rapid growth of the movement under this act shows to what extent the principles involved harmonized with the Danish way of thinking. At the close of 1893 there were 457 recognized societies, comprising 116,000 members. At the close of 1915, when the act of 1892 ceased to be in force, the number of societies had increased to 1,546 and the number of members to 892,000. Thus the time seemed near when half of the adult population of the country would be members of some Friendly Society. The female members slightly outnumbered the males; and it must be noted that, according to the act, a married woman had to be an independent member in order to participate in the advantages offered.
If the question is asked whether the voluntary system of Friendly Societies has reached down to those classes for which it was intended, it must be admitted that we have no guaranty of it such as we would have in a compulsory system. But an examination of the social position of the ​members seems positively to indicate that the great increase in numbers during recent years is from the lower classes, the servants and labourers, and that the day is not far off when nearly all of the poor people will be members of one or another of the recognized Friendly Societies. While a few people still shun them, it is of very great importance that they have given the lower classes of the community an opportunity to exercise self-government and, through their delegates and the council elected by them, to contribute to the further development of the cause.
A committee was appointed in 1910 to amend the act, but the amendment was not completed until 1915; and the act which went into effect at the close of that year did not contain any essential changes. The rules relating to the government subvention were modified in various ways; for the capital the amount of the subvention was limited to 4.65 kroner ($1.25) per annum per member; for the provincial towns to 4.15 kroner ($1.11); and for the rural districts to 3.65 kroner ($0.98). A deficiency fund was also established which was to make up, during the first years, any deficit in the amount previously contributed in accordance with the old act. These limits will probably be abolished by further legislation. The act further empowers the municipality, within certain limits, to help poor members of recognized societies in the payment of their subscriptions, and to do this without the consent of the higher authorities. To this must be added the grants made in the last few years in conformity with the laws passed to alleviate the high cost of living—a matter to which we shall refer later. Of very great importance, moreover, is the duty which the law imposes on the municipalities to furnish free transportation to the sick, or to physicians and nurses, in rural districts, and to reduce hospital charges. The state further sets apart considerable sums for consumptive hospitals and for lunatic asylums. As regards membership, the new law contains an extension of the previous provision regulating the admission of persons ​suffering from chronic diseases, and imposes upon the societies the obligation to receive such persons when they otherwise satisfy the requirements of admission. The same paragraph of the new act contains a sort of promise of invalidity insurance, running: 'until in other ways means shall be provided by special regulations to help persons suffering from chronic diseases and the like.' Persons who cannot now be classed as poor may be admitted as 'passive' members (paying a subscription), with the right at a later period to participate in the advantages offered by the society in case their circumstances should necessitate it.
A very important point is the relation of the societies to physicians. Gradually, as the friendly societies extended further and further, the physicians found it more and more difficult to maintain their former philanthropic position. It consequently became necessary for them to present claims for money which the societies did not always understand, with result that disputes arose between them. The new law, accordingly, provides for the establishment of an arbitration council, that is, a conciliatory council, to which such disputes can be referred. While the societies are, of course, under the control of the state, they still have an independent administration to a great extent, both severally through their own annual assemblies and jointly through the co-operation which has come about in the course of years.
The several societies have combined in a number of Central Societies, each with its special board, and these again, through their chairmen, form a committee. Moreover, meetings of delegates are held to consider such questions as are of importance for the whole sick fund institution. Finally, there is the Friendly Society Council, previously mentioned, the membership of which is now fixed by the new law at nine.
Since the law went into operation, in 1916, the new arrangement here briefly described has considerably furthered the sick fund institution in Denmark. A few figures will bear ​out this statement. At the close of 1917 the 1,550 societies comprised not less than 991,000 members, or half of the adult population of Denmark. Of these 11,000 were victims of chronic diseases and were admitted only under reservation. Funds to the amount of 11,000,000 kroner (about $3,000,000) had been collected, while the annual income was 13,000,000 kroner, of which 3,700,000 came from the state and 300,000 from the municipalities. The largest outlay was for medical assistance, amounting to more than 5,000,000 kroner, i. e. about 5 kroner per member. This amount has increased at a rapid rate, since a few years ago it was only 4 kroner. The outlay for medicine, bandages, etc., was 1,200,000 kroner; for treatment in ordinary hospitals, as well as in consumptive hospitals and lunatic asylums, 1,700,000 kroner; and for pecuniary assistance (inclusive of help to women in confinement) 3,400,000 kroner. The administration cost upwards of 1,000,000 kroner.
A large number of recognized societies also established burial funds, and a very considerable number of these have combined in a reinsurance fund which has contributed still more to enhance the sense of union.
The above description will convey a general idea of the friendly societies of Denmark and of their value as means of self-help offered with the greatest possible freedom. In only one point is there an apparent breach of the principle of free determination. This is the law of 1908 (later amended) concerning the employment of foreigners, the so-called 'Polaklov'. It relates to a Friendly Society organized for the benefit of Polish workmen, the support of which is compulsory upon their employers, but is aided in part by a government subvention. These foreign workmen who live for a while in Denmark are of course entitled to effective protection, but they cannot be expected to possess that privilege of voluntary association which belongs to Danish workmen.