prohibit the operation of dishonest companies. As an illustration— I suppose the Globe-Rothery is one of the largest companies in the State, yet it has been involved in difficulties for years, and the superintendent of New York State took it over. This bill would not solve that problem. Dishonesty in management is not the question. The fact that the company was entered in many States did not do any good. I find some difficulty in seeing how that particular point is going to be solved by the provisions of this bill.

Mr. DOBBINS. You say that the State ought to prohibit the operation of dishonest companies? How can the State of California, for instance, prohibit a concern in New York State writing California citizens and the California citizens taking out insurance? How can the State of California get at that?

Mr. LOCKE. A company which is writing and licensed in one State can solicit business in that State but cannot solicit business in any other State in accordance with the provisions of the pending bill.

Mr. DOBBINS. You overlook a salient argument. This California citizen takes insurance with an approved New York company, and he has a dispute with the New York company. They have no way in California of serving a legal process, therefore the citizen of California must go to the courts of the State of New York. Mr. LOCKE. Yes.

Mr. DOBBINS. Would the Federal Government be going out of its sphere if it said that such agencies shall not be used to transact business in a State which transaction would be unlawful in that State if transacted directly? If a New York company has not secured a license in the State of California, and an agent goes there to solicit, he is violating the law of the State of California. Under the theory of this bill, if a company is licensed in the State of California it could solicit insurance business in that State. This simply denies the use of a governmental agency which would be unlawful if done directly.

You referred to this insurance being available to ministers and lay workers. Whom do you mean by lay workers?

Mr. LOCKE. Vestrymen and treasurer, for instance. The corporation was formed for the benefit of the church. The original idea was that the church pension fund under the charter could provide pensions for ordained ministers only. Deaconesses wanted to come in, but they were not allowed to do so.

Mr. DOBBINS. Who are lay workers?

Mr. LOCKE. Vestrymen and Sunday school superintendents. We would not call a communicant one. One does not necessarily have to be an ordained minister.

Mr. DOBBINS. The average church has many lay workers, has it not?

Mr. LOCKE. There may be 7 or 8 vestrymen and 7 or 8 others one way or the other actively engaged. This was formed for the benefit of the church and it was considered that we should not extend these facilities beyond those needed by the church to carry on its work. Mr. DOBBINS. Your statement provokes another question. By the terms of this bill it would apply to fire-insurance companies. Have you, Mr. Marshall, any difficulty in connection with fire-insurance companies?

Mr. MARSHALL. Not so much. The large difficulty arises from life, accident, and health insurance businesses. In subgrouping health insurance one may include casualty insurance arising from automobile hazards.

Mr. GOODWIN. Do you calculate that to obtain a license in every State and Territory of the United States would raise the price of your insurance 20 percent?

Mr. LOCKE. No; not in all cases. I was speaking of a typical situation when I spoke of the State of Pennsylvania. It would raise the cost of the premium in accordance with the additional

expenses.

Mr. GOODWIN. How much would it cost an insurance company?

Mr. LOCKE. It would make a difference according to the expenses involved in entering into a particular State, maintaining an office, an agent, and whatever else goes with the entry into that State.

Mr. GOODWIN. Do the laws and regulations of a State require that a company operating in that State under a license of the State maintain an office in the State?

Mr. LOCKE. There has to be an agent upon whom legal service could be obtained.

Mr. HOBBS. That is not the requirement. The requirement usually is that where a company does not care to designate an agent of its own selection, the insurance commissioner of the State is designated for the purpose of service, he being considered an agent of the company.

Mr. GOODWIN. Would there be any additional expense in connection with obtaining a license?

Mr. LOCKE. There would be a filing fee of $5 or $10.

Mr. DOBBINS. Are not insurance companies in many States required to maintain a certain fund in those States?

Mr. LOCKE. They are required to deposit with the insurance commissioner or a bank of their mutual designation a certain amount of surplus or capital in the form of bonds, United States bonds, or other acceptable securities.

As I understand, the interstate comity has been adopted in a reciprocal way, as Mr. Marshall outlined, so that a company organized in New York, for instance, may upon certificate of the commissioner of the State of New York obtain a reciprocal license in the State of say, Alabama.

Mr. GOODWIN. I think that something should appear in the record as to the cost of obtaining the licenses and the objection of insurance companies to taking out these licenses. That goes into the argument made by Mr. Locke.

Mr. HOBBS. There is no objection to giving that information. I shall be glad to try to do it. There is no objection whatever to an amendment such as the one suggested by Mr. Dobbins to eliminate church groups.

Mr. GOODWIN. And fraternal groups?

Mr. HOBBS. Any group which is bona fide in its service to its own particular group, which is financially solvent and otherwise qualified. I have no objection to that.

Mr. ASHBROOK. From what has been said here this morning, and I think the other members of the committee share the opinion, I

believe that these church organizations, fraternal organizations, and the like, are not intended by the author of the bill or this committee to be included in the bill. If representatives of those organizations could be advised that they will be excluded, that would save them the expense of appearing here. I should like to have the consent and approval of the committee to so advise them and thereby save them that expense.

Mr. DOBBINS. How broad would the exceptions be? Mr. Locke has indicated that certain lay workers of the church should be included among the exceptions. The Elks, the Masons, and the Odd Fellows have organizations. The Democratic Party might have an organization; and we might get the exceptions so large as to defeat the purpose of the bill.

Mr. ASHBROOK. If you think it is better to let them appear and present their individual cases, I have no objection. I thought we might possibly save them the expense of coming.

Mr. THOMAS. I am wondering whether we will take care of the Grange by an amendment. Again, I am a pharmacist. I carry that insurance. I am going to be importuned as to why they have not had an opportunity to appear. Just how far will these exemptions go?

Mr. DOBBINS. Could a person by membership without regard to organization become eligible for an exception that does not apply to a citizen generally?

Mr. ASHBROOK. Perhaps it would be safer and wiser to permit all those who desire to come before the committee to do so.

Mr. DOBBINS. I think we are agreed that the exception should cover ministers and teachers.

Mr. ASHBROOK. I have a few friends who carry the Presbyterian insurance and I know that it is an old company or old organization and that it is performing a very wonderful work for the ministers of that denomination. I certainly would want to see that that organization is protected. If it has a representative here this morning, we will let him speak briefly before we adjourn.

STATEMENT OF JOHN L. MILNE

Mr. ASHBROOK. The next witness is Mr. John L. Milne, actuary of the Presbyterian Ministers' Fund, of Philadelphia, Pa.

Mr. MILNE. Mr. Chairman, I appreciate your sympathetic observation, and I am wondering whether other members of the committee know as much about our organization as does the chairman.

Our company was organized in 1717 by ministers in this country who were once missionaries to the Indian tribes. That was a hazardous type of insurance in 1717. The ministers would start from Philadelphia and other seacoast places, leave their families and they would not come back. The insurance organization which I represent was organized primarily for that purpose.

By 1759 its scope was such that it was deemed desirable to incorporate. We received a charter from Thomas and Richard Penn, proprietors of the Province of Pennsylvania. We are the oldest legal reserve life-insurance company in the world, and naturally, the first in America. Today our insurance is available to ministers, their wives, and theological students of all Protestant denominations.

While our charter permits us to insure all human lives, yet our actual bylaws limit us to those three classifications. We have 22,000 policies outstanding; we have assets of $23,500,000; our income last year was more than $4,000,000; last year we paid out to ministers and their families more than $3,000,000. Those sums were greater than in any other previous year. Again, our dividends last year were greater than in any previous year. The amount set up for distribution this year is greater than in any other previous year.

Our company has grown continuously since its inception. The nature of our business is this: Ministers are scattered so widely throughout the country that it is not feasible to have an agency operation. We do not see anything wrong with the agencies, but they are not suitable to our purposes.

Today we insure missionaries wherever they may go. Our insurance follows the Cross. We are doing a bigger international business than any other United States company. We insure ministers in all the 48 States and the District of Columbia. We have missionaries insured in every territory, in all foreign countries to which missionaries from American organizations go-to Africa, to South America, to Asia. Our objection to this bill is

Mr. DOBBINS. Whom else do you insure?

Mr. MILNE. Ministers, missionaries, the wives of these, and theological students. The students must be in a recognized theological seminary. We do not insure lay workers or social workers. I am not an ordained minister, and, therefore, I am not insured.

Our objection to this bill is primarily this: We sympathize with the purposes of the bill, but we do not think the bill particularly meets those purposes. Specifically, in our own case, we are working, so to speak, in 48 States and all the Territories in which this bill is interested. We may insure one or two ministers this year, say, in some of the Western States. There may be only one missionary going to Alaska this year and we would insure him. Puerto Rico is a good illustration. We listed a case down there, and he will be the last missionary going to Puerto Rico during the next year or two. To take out a license and comply with the insurance laws of Puerto Rico or the insurance laws of the various smaller States where not much insurance business is done, would place upon us an unnecessary burden. Complying with the law is relatively easy so far as living up to it is concerned. Each State requires certain detail work, a convention report of 50 or 60 pages. It requires complicated accounting which is not warranted. The expense is not warranted for what is accomplished. We will live up to any set of laws which the Government might enact for companies who wish to use the mails to do insurance business, but we do not think it is necessary to live up to some fifty-odd different sets of laws. We think that one set of laws should suffice.

We are licensed as a legal reserve life insurance company by the State of Pennsylvania. Every insurance policy that we issue is approved by the State of Pennsylvania. Every schedule of rates has been approved by our actuary. Every transaction is audited by the insurance department. Regardless of that question it is definitely under the Pennsylvania insurance department. In other words, we are not doing anything which nobody can touch. Every transaction in which we engage is definitely under insurance supervision of the

State, which would be blamed if anything should happen to us. Our activity is not under the supervision of some foreign State.

The legal status of our operations is, first, one of the chain of cases follows the Paul v. Virginia decision which says that insurance is not interstate commerce; the other is the chain of cases which says that a citizen of a State can contract with a citizen from any other State for any legal purpose, anything recognized in common law.

Suppose a citizen of the State of Ohio wants to transact business with us, the State of Ohio has no power to prevent his contracting with us. That is the legal basis on which we are operating and on which all such mail-order companies are operating.

I have heard that there are many fly-by-night concerns. They are mainly the ones offering a penny-a-day policy that is advertised in various newspapers and periodicals, or accident policies in which there are many restrictions. For instance, one must fall off a ledge of a building a certain distance before he can collect.

There are in the ministerial companies in whose behalf I want to protest this bill, the Presbyterian Ministers' Fund, the Missionary Mutual Life Insurance Co. of Boston, and the Ministers Casualty Life & Casualty Union. They have not had time to be represented here this morning. The last-named company has 30,000 or 40,000 policyholders throughout the country.

I believe I am expressing their wish and my own when I say that we desire to live up to every requirement of law, but we should like to have a reasonable law and one that really cures the evils that exist, but not one that prevents a minister in, say, Arizona enjoying the economies we can offer.

If this bill became a measure of the Government without amendment such as Mr. Hobbs has suggested, we should be compelled to give up doing business in many States because the number of ministers in them to be insured would not warrant the paying of the annual fee required, to say nothing of the cost of making reports. and necessary contacts with State officials and keeping up with the State laws.

Mr. Marshall has said that the State laws are in the main uniform. That is true. It would seem that if we live up to the law of the District of Columbia, for example, that should define rights that we should have all over the country. Forty-eight separate laws seem to be a burdensome requirement for doing insurance business.

A man from Arizona, for instance, may write us about insurance; we will tell him that we cannot insure him in Arizona, but if he will go into Texas or New Mexico we can give him the insurance. That raises misunderstandings which cause him to doubt.

Mr. DOBBINS. Do you ever have disputes about payment in connection with policies?

Mr. MILNE. In 200 years no policyholder has ever sued us to collect money and I do not believe one ever will do so.

You ask what rights policyholders have in other States against us. Their own insurance department would transmit any protest to the State of Pannsylvania, which has jurisdiction over us, and the Federal courts are open to all such claimants.

Mr. ASHBROOK. I am of the opinion that, so far as your own company is concerned, you need not have any concern.