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ARTICLE VI (b).

PROVISIONS APPLICABLE TO FRATERNAL BENEFICIARY SOCIETIES.
Index

No.
96 I. Definition of, or limitations as to business.
97 II. Age limit.
98 III. Constitution and by-laws.

IV. . Exemptions. 99

(a) From general insurance law. 100

(b) Of certain societies. 101 V. Payments of benefits, endowments, etc., regulation as to.

ARTICLE VII.

SPECIAL LAWS.

102 1. Anti-coinsurance.
103 II. Anti-compact, or anti-trust.
104 III. Anti-rebate.
105 IV. Fire marshal.
106 V. Reciprocal or retaliatory.
107 VI. Resident agents.
108 VII. Standard policy.
109 VIII. Valued policy.

ARTICLE VIII.

SCHEDULES.

110

1. Schedule showing the amount of capital, deposits, and the date on which

the annual reports are required. II. Schedule showing the amount of fees, taxes, and charges required.

111

Under this plan compilations have been made of the laws of the
following States:
Connecticut.
Massachusetts.

New York.
District of Columbia. Michigan.

Ohio.
Florida.
New Hampshire.

Oklahoma.
Kansas.
Letters in the following form were sent to the commissioners of
insurance, or other insurance officials, of the several States:

Under the provisions of the act of Congress establishing the Department of Commerce and Labor--a copy of which is herewith inclosed—it is the duty of the Bureau of Corporations to gather, compile, publish, and supply useful information concerning certain corporations, specific mention being made of corporations engaged in insurance.

In pursuance of these requirements it is desired to obtain certain information from the constituted authorities of the several States and Territories, and you are requested to supply the following:

(1) In what official board or commission is reposed the supervision and regulation of insurance in the State of -?

(2) What are the powers and duties of said official or body?

(3) What distinctions are made between the several kinds of insurance in regard to the duties and obligations of the companies writing the same and their supervision and regulation by the State?

(4) What distinctions are made between foreign and domestic companies, respecting fees, taxes, and regulations?

(5) Copies of existing statutory enactments relating to the organization, conduct, management, and requirements of insurance corporations and the supervision and regulation of the same by the State.

(6) Fublications of the State containing the reports or returns made by or regarding such corporations, and copies of the blank forms used; or, if there are no such publications, what is required of such corporations respecting reports or returns.

(7) A list of insurance companies, foreign and domestic, within the State, giving the name, location, and character of each, and the officer to whom correspondence should be addressed.

(8) Information is requested and reference thereto is desired, if there are any of the following insurance laws in force in the State of — Valued policy laws, anti-compact or anti-trust laws, standard policy laws, resident agent laws, retaliatory or reciprocal laws.

It is further desired to obtain for the Bureau of Corporations all the information respecting the subject of insurance as dealt with in the State of that may be in the possession of the various State officers and which may be properly afforded. Attention is invited especially to section 6 of the inclosed act, which authorizes the Bureau to obtain the information asked.

Inclosed you will find frank envelopes for replies, and franks under which can be sent such printed matter herein requested as you may have.

This met with general response and placed the Bureau, so far as the insurance world is concerned, in an attitude that met the approval of those interested in this great business. These replies contain items of information of great value.

With a view of making an investigation of the effects of the valued policy law agents of the Bureau visited several States which have such law. The individuals interviewed included not only the officials of insurance companies, but also State insurance commissioners, officers of boards of underwriters and of associations of business men, bankers, insurance agents, etc. Their main object was to ascertain, if possible, the practical effects of the valued policy law as in force in the several States. This, however, was not the only object intended to be achieved.

This investigation served to bring this Bureau into closer touch with the prominent insurance officials and the interests that they represent. The interviews served the purpose of acquainting these officials with the general purposes for which the Bureau was organized, and its jurisdiction in gathering information relating to insurance. A great deal of information was secured, having both a positive and a negative value. It acquainted the Bureau with the methods of operation of certain great companies, their systems of keeping books, the character of the information possessed by them, and those things that they lack.

This Bureau has also made an investigation in other branches of the Government to ascertain what publications, statistical or otherwise, have already been prepared that may be useful for its work. Reports are frequently received from our foreign consuls that contain items of interest on insurance matters, and arrangements have been made to have such reports brought to the attention of the Bureau.

A large number of publications have been received from insurance officials of the various States bearing upon insurance. A number of periodicals issued in the interest of this subject have been carefully read, clipped, and indexed and important compilations and memoranda have been prepared and submitted on this subject.

COMPLAINTS.

As a natural result of the establishment of the Bureau, a number of complaints have been received by it from private persons: (a) Giving information on corporate matters; (b) asking legal or financial advice; (c) asking assistance against restraint of trade, exorbitant prices, or unfair competition; (d) asking remedial action by the Bureau in matters relating to internal management of specific corporations, e. g., to compel the issuance of reports or furnishing of information to the complainant on the business of such corporations. A classification of these complaints is as follows:

Subject matter.

Number of complaints.

Stockholders' rights..
R int of trade
Unfair competition..
Exorbitant prices
Insurance
General information only
Matters wholly foreign to Bureau's work.

处以62816

In dealing with such complaints the Bureau has acted upon the theory that it could offer no remedial action in specific cases, could not enforce publicity for merely private ends, could take no steps toward the enforcement of penal law (e. g., the anti-trust law) further than to refer the complainant in appropriate cases to the Department of Justice, and could give no legal or financial advice.

Believing, however, that such complaints have a distinct value to the Bureau, both in furnishing specific information as to given corporations, and also in showing generally the weak points of the present commercial system, it has been the policy of the Bureau to indicate to the complainants the desire of the Bureau for information.

GENERAL POLICY.

The study of the law and industrial conditions, as above outlined, resulted in the adoption of the following general policy regarding the Bureau and the conduct of its work:

As the Commissioner is not charged with the enforcement of any law nor with the prosecution of persons or corporations alleged to be

or found to be violating any law, the work of the Bureau is primarily an inquiry into the industrial and legal methods used by the agencies engaged in interstate and foreign commerce, and the purpose of such inquiry to afford accurate knowledge of industrial conditions upon which there may be based intelligent legislative action.

In the investigation of special corporations the Commissioner will necessarily acquire knowledge of business facts the publication of which would be an infringement of private rights. The method of reporting and making public the results of these investigations affords a means, through the President, for protecting private rights. In this particular the method of procedure is similar to the action and reports of the Comptroller of the Currency regarding national banks. There will thus be presented to Congress all relevant facts except such as would afford to any corporation information which would injure the legitimate business of a competitor and destroy the incentive for individual superiority and thrift.

While the purpose of inquiries and special investigations is not to discover violations of Federal statutes, yet, if facts are found showing such violation, they will be reported as other facts to the President for such consideration and action as may be appropriate or necessary.

Under present industrial conditions, secrecy and dishonesty in promotion, overcapitalization, unfair discrimination by means of transportation and other rebates, unfair and predatory competition, secrecy of corporate administration, and misleading or dishonest financial statements are generally recognized as the principal evils. It is admitted that the chief difficulty in the way of providing ample remedies has been the conflict between Federal and State authority as to jurisdiction over many of the acts of great industrial agencies, and the uncertainty of the extent of regulation exercised or to be exercised by the Federal Government over agencies engaged in both State and interstate commerce.

The immediate work is, hence, not to prove the existence of such evils and difficulties, but to find possible remedies for them. The remedies must not be simply to destroy existing bad conditions-mere destruction affords only temporary relief-but they must provide something better to take the place of what is changed. The imposition of severe penalties will not end industrial evils. We must find and remove their cause, leaving only the extreme or exceptional cases to be dealt with by criminal statutes.

The Government should secure means for fair business competition, freedom from unjust discrimination, such publicity of corporate organization and management as will disclose real financial worth and methods, should provide a jurisdiction broad enough to meet existing conditions, and then should fully protect the person or corporation obeying the law and promptly punish the violator of the law.

The facts upon which remedial legislation must be based are in the possession of persons and corporations engaged in business--some have been given to the public, others have been incidentally furnished through judicial and legislative proceedings, and others have been held as business secrets. As to the first two classes the Bureau has. been systematically collecting them from all available sources; as to the last class special inquiries have been made or are being made from particular corporations. In dealing with this class of facts it is recognized that there is a fair ground for discussion as to whether certain questions are infringements upon private rights; hence the following method of procedure has been adopted:

Inquiry is made directly from the persons or corporations under investigation; if it be determined that the Government is entitled to the information, it must be given voluntarily or the compulsory process of the statute will be invoked; if the Government is not entitled to the information, then no detective method will be used to discover it.

There has been no attempt to define the scope of the inquiry to be made, nor to limit it to certain classes of facts. All facts which will give information regarding interstate and foreign commerce, or will assist Congress in regulating such commerce, are subjects of legitimate inquiry.

One line of inquiry concerning which question has been raised is as to the cost of production of articles used in or subjects of interstate and foreign commerce. So far it has not been necessary to test this question in court, but it is believed that aside from any other reason the question is proper because of the power of Congress to impose tariff duties in the regulation of commerce. The ideal tariff duty is the difference between the cost of production at home and abroad; hence Congress has the right to know what is the cost of production. Furthermore, it is claimed that the tariff gives an unfair advantage to corporations and persons engaged in the manufacture and distribution of protected articles which are the subjects of interstate and foreign commerce. Congress has the right to know whether this be true or not, and this Bureau affords a most appropriate and efficient means for obtaining such information.

In brief, the policy of the Bureau in the accomplishment of the pur-, poses of its creation is to cooperate with, not antagonize, the business world; the immediate object of its inquiries is the suggestion of constructive legislation, not the institution of criminal prosecutions. It purposes, through exhaustive investigations of law and fact, to secure conservative action, and to avoid ill-considered attack upon corporations charged with unfair or dishonest practices. Legitimate business -lawrespecting persons and corporations—have nothing to fear from the proposed exercise of this great governmental power of inquiry.

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