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I would appreciate it if the foregoing considerations were laid before the committee of which you are a member and which is considering the abovementioned bill.

Yours very truly,

B. B. SERVIES.

ILLINOIS BANKERS ASSOCIATION,
Chicago, Ill., March 15, 1935.

Hon. D. C. DOBBINS,

Member, House of Representatives,

Washington, D. C.

MY DEAR CONGRESSMAN: As soon as we learned of the activity in support of H. R. 6452, we wired you, as per confirming copies of telegrams herewith.

We are sure you believe that this association is not interested in the defeat of good legislation introduced for the purpose of protecting the public against mischievous schemes and doubtful business enterprises. Once in a while, however, a bill comes along that has just such a laudable purpose but which, in attempting to reach that objective, creates a hardship which the sponsors had no intention of imposing.

For many, many years the bankers in this State have been confronted with a problem of providing for themselves and for the benefit of their depositors adequate insurance coverage demanded by the State and national supervising authorities and endorsed by good bankers everywhere, at a price which would be reasonably commensurate with the risk. This problem is particularly acute with the smaller banks and only recently we have convinced a foreign underwriter, the oldest in the world and probably the most responsible, to provide blanket bonds for our small banks which would furnish adequate coverage at a price they were able to afford.

This insurance should be available to not only all banks but all people needing similar coverage throughout the country. The bill in question would deprive them of that advantage and force the banks, particularly, into either being stingy with insurance as they were before this situation was adjusted or meet with conditions which would be unbearable. This particular insurance, of which we are speaking, puts a premium on safe banking methods and penalizes unsafe by reducing the cost where individual banks have adopted certain safety recommendations and increasing it proportionately for those who do not do so. No one can question the integrity of this insurance concern, nor its willingness and ability to meet all claims made upon it.

A simple amendment probably to this bill might cure the situation of which we are complaining.

Just as a matter of historical interest, the bankers in this State a number of years ago, feeling overburdened with carrying the premium cost on insurance that was considered exorbitant, organized their own mutual casualty company, which was quite helpful in bringing about a better condition of competition.

If it would not burden you too much, I would like to send you a copy of a letter which was sent by the president of the La Salle National Bank & Trust Co., La Salle, Ill., to certain Members of Congress and others. This had to do with the bill over in the Senate known as "S. 60." The arguments which Mr. Sharpe advances, while his own, nevertheless express the situation lucidly and vigorously.

May we urge upon you that you prepare an amendment to H. R. 6452 which will permit this type of insurance to use the mails. Respectfully submitted.

H. C. HAUSMAN,
In Charge of Field Activities.

TELEGRAM CONFIRMATIONS

MARCH 12, 1935.

Hon. D. C. DOBBINS,

Member, House of Representatives, Washington, D. C.:

H. R. 6452, pending before your committee, will deprive banks from obtaining protective insurance except from companies qualified by State in which bank is located. In our opinion, this will have tendency to create monopoly, to detri ment of banks and others, and cause higher premium rates. A number of reputable companies of high standing with good loss-paying records will be excluded

by this legislation. There has been and continues to be efforts to prevent certain insurance underwriters from competing for bank business at the expense of the banks, and apparently this effort is now being made upon Congress to insure monopoly and higher premium rates. Understand hearing on this bill will be held tomorrow, and we respectfully ask that measure be rejected.

Hon. D. C. DOBBINS,

ILLINOIS BANKERS ASSOCIATION.

House of Representatives, Washington, D. C.:

MARCH 13, 1935.

Your telegram received. Thanks. Insurance bill would deny banks right to insurance with oldest and highly reputable foreign underwriters whose insurance capacity is greater than domestic companies and with whom domestic companies regular place a considerable portion of reinsurance. This bill would deprive banks of benefit of insurance coverage at competitive rates. Association unable to send personal representative to meeting. Delegation from American Bankers Association represent interests of Illinois banks in this matter. Letter follows.

ILLINOIS BANKERS ASSOCIATION.

LA SALLE NATIONAL BANK & TRUST Co.,
La Salle, Ill., February 11, 1935.

Hon. J. HAMILTON LEWIS,
Senator from Illinois, Senate Office Building, Washington, D. C.

DEAR SENATOR LEWIS: From the February 9 issue of the American Banker I observe that the Senate Judiciary Committee has reported favorably on Senate bill no. 60, introduced by Senator Neely, of West Virginia, which would prevent national banks from purchasing bank bonds and insurance from Lloyd's of London.

One of the most frequent causes of the failure of banks within the last 10 years was the action of certain American insurance companies in suddenly canceling depository bonds which they had previously eagerly solicited. In many cases these bonds were canceled without adequate notice, resulting in Public Treasurer's precipitate withdrawal of funds on deposit at banks previously insured by American casualty companies. In some instances the banks were unable to meet these withdrawals and were forced to close at once; in other cases they substituted their liquid bonds and securities in place of the surety company's guaranty or bond, thereby exhausting their reserves and resulting in wholesale bank closings a little later on when deposits tended to dry up, and leaving them without means of borrowing.

Presumably it is these same American companies who are now active in support of the Neely bill. In addition to this, the American companies' rates have, generally speaking, been considerably higher than those of Lloyd's of London; and certainly with the curtailed earnings which banks have undergone in the last few years, and which bid fair to become more or less permanent, first consideration, it seems to me, should be given, not to the insurance companies which are fathering this proposed legislation but to banks whose business is being regulated in this fashion by the insurance companies. Moreover, the policies of Lloyd's of London have always been more comprehensive, in comparison with the American companies' policy of being rather "choosy" about the extent and nature of the risk. From experience, we find that Lloyd's of London policies come nearer covering the risk that it is desired to cover.

We wish to vigorously protest, as one of those whose business is sought to be regulated by those who, in the past, have done more to bring about bank failures than any other single interest, and we would like to solicit your active support against this Senate bill no. 60 by Neely, or other legislation that seeks to bring about the same ends. We would appreciate hearing from you as soon as you have had time to study the real merits of this bill.

Yours very truly,

J. H. SHARPE, President. Copies also sent to William H. Dieterich, Senator from Illinois, Washington, D. C.; the American Banker, 32 Stone Street, New York City; M. A. Graettinger, executive vice president Illinois Bankers Association; Scarborough & Co., Chicago, Ill.; and Wayne Hummer, care of Wayne Hummer & Co., Chicago, Ill.

Mr. ASHBROOK. Has any other member of the committee anything that he wishes to offer into the record?

Mr. MITCHELL. I have a letter from the Department of Insurance of the State of Illinois that I would like to offer; and I have two telegrams, one from the pastor of the Second Baptist Church of Chicago and one from F. A. McElwain, bishop Episcopal Church, Evanston, Ill.

(The letter and the telegrams referred to are as follows:)

Hon. ARTHUR W. MITCHELL,

DEPARTMENT OF INSURANCE,
Springfield, Ill., March 11, 1935.

House of Representatives, Washington, D. C.,

MY DEAR CONGRESSMAN: My attention has been called to H. R. 6452, which is before the Committee on the Post Office and Post Roads.

I want you to know that I believe it to be a good bill, which if enacted would help to renove some of the abuses of recent years on the part of unauthorized and unsupervised companies.

One of the greatest problems we have, from a department viewpoint, is handling the activities of unlicensed insurance companies which do business by mail. There is no way we can prevent them from sending mail into the State to our citizens; and further, there is no way we can stop them under the present law from having an office here so long as they do not solicit or sell insurance in this State. It isn't possible to handle the situation in any way except through the Federal Government restrictions on the use of the mails.

If you have not already done so, you will be interested in reading an article in the March issue of the Readers Digest, on page 77, entitled "The Flood of Insurance Rackets." I have read this article carefully, and I do not believe it is overexaggerated.

We are enacting a complete insurance code at this session of our legislature, which has been very carefully drawn, but obviously the problem above discussed cannot be met by State legislation.

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Please use your influence against Hobbs bill (House bill 6452) or exempt companies serving special professional interests. Otherwise thousands of men will lose much insurance. Please kill blanket ruling.

R. G. SCHELL, Pastor Second Baptist Church of Chicago.

CHICAGO, ILL., March 16, 1935.

Hon. A. W. MITCHELL,

House of Representatives, Washington, D. C.:

Hobbs bill (House bill no. 6452) would be fatal to all insurance companies doing business by mail. Trust you will vote against it or modify it to exempt organization serving single profession.

F. A. MCELWAIN, Bishop Episcopal Church, Evanston, Ill.

Mr. CHRISTIANSON. Did I understand you to make the announcement that Members of Congress might place in the record communications that they have received?

Mr. ASHBROOK. Yes.

By the way, at this time I wish to place in the record, at the request of Mr. Tillman B. Parks, a letter received from the insurance commissioner of the State of Arkansas.

(The letter referred to is as follows:)

Hon. TILMAN B. PARKS,

STATE OF ARKANSAS INSURANCE
COMMISSIONER AND FIRE MARSHAL,
Little Rock, March 13, 1935.

House of Representatives, Washington, D. C.

DEAR TILMAN: I am writing you with reference to a bill in the National Congress (H. R. 6452), making it unlawful to use the mails to solicit or effect insurance in any State without complying with the insurance laws thereof.

If you could review the files in this office, they would be convincing that some legislation along this line is badly needed to protect the citizens of this State from being victimized by irresponsible companies. A number of the States permit companies to be organized, which are essentially insurance companies, that do not come under the jurisdiction of the insurance department and, therefore, the commissioner of the respective States cannot protect citizens of other States.

In the very outset a company that will not comply with the laws of the State in which it proposes to do business is immediately under suspicion. Thousands of our citizens are being victimized by so-called "insurance companies", and we never know of it until complaint is made after the loss occurs, and we are then powerless to render any effective aid.

I hope you give this legislation your favorable consideration, and with best personal regards, I am

Very truly yours,

I heartily endorse H. R. 6452.

U. A. GENTRY, Insurance Commissioner.

TILMAN B. PARKS.

Mr. BIERMANN. At this point I would like to put into the record the telegram I received from the Iowa State Traveling Men's Association, if this is a proper time.

Mr. ASHBROOK. You may have that privilege.

Mr. BIERMANN. Thank you.

(The telegram referred to is as follows:)

Hon. FRED BIERMANN, M. C.,

The Raleigh:

DES MOINES, Iowa, March 15, 1935.

Hobbs bill, H. R. 6452, before Committee on the Post Office and Post Roads, hearing set for 10:30 March 18, is legislation which would put the Iowa State Traveling Men's Association out of business. This company has for 54 years conducted successful accident insurance business at cost, doing all of its business by mail and not operating for profit. Represented for years by Senator A. B. Cummins as general counsel and later by Judge Jerry Sullivan, now on Board of Appraisers Port of New York. Will you come to our assistance and help to see that this bill does not become a law? Our membership is over 60,000, scattered throughout the United States.

IOWA STATE TRAVELING MEN'S ASSOCIATION.

Mr. ASHBROOK. Now, there are some Members of the House here this morning, and while we realize that these other gentlemen are likewise busy, yet the pursuit of our duties here keeps the Members of the House so extremely busy that I will give them the opportunity to be heard first briefly.

STATEMENT OF HON. HUBERT UTTERBACK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF IOWA

Mr. UTTERBACK. Mr. Chairman and members of the committee, I represent the Sixth Congressional District of Iowa, in which is

located the city of Des Moines, which is the capital of the State of Iowa, and also the home of the Iowa State Traveling Men's Association. If I may, I would like to say just a few words for the recordMr. ASHBROOK. We are very glad to have you do so.

Mr. UTTERBACK. The Iowa State Traveling Men's Association is a mutual association of traveling men in our State, with members scattered, I think, pretty much throughout the entire United States, because the association has been in business for some 54 years successfully, and traveling men of our State have joined and then moved to the different parts of the Nation, and the result is that it has grown until today they have some 65,000 active members of this association. It is a nonprofit association. It is operated at a minimum of expense, the members, of course, receiving the benefit of accident insurance at a very low rate.

They are very much concerned about the possible effect of this bill upon their association and upon their business, and with Congressman Biermann, representing the Fourth Congressional District of Iowa, and Congressman Eicher, representing the First Congressional District of Iowa, I wanted to appear here this morning to present their situation and say just a word, to suggest that the bill possibly ought to be amended in such a way as not to put out of business associations of that kind, that have conducted a clean and honorable business over a period of years successfully, to the benefit of hundreds and thousands of their members and families.

This association has had very little litigation during all of the At the present time they have just four losses pending in the courts of original jurisdiction, and two in the courts of appeals, and that is very little controversy or difficulty with respect to a great business of that kind.

Not only that, but in the State of Iowa all of our insurance associations of every kind are examined by our State insurance department. We think that we have very strict insurance laws in Iowa, and we think that we have good examinations of those companies. There can at a later date be placed in the record here the report of the examinations by the insurance commissioner, and letters expressing commendation of this Iowa State Traveling Men's Association, because of the fact that they have conducted their business at such a low expense to their policyholders, and at a later date, to suit the convenience of the committee, I am sure that some members representing directly the Iowa State Traveling Men's Association would appreciate the courtesy and privilege of appearing before your committee and presenting this matter, I know, in a more thorough and more proper way than I can.

We have with us here this morning_Mr. Mills, of Des Moines, Iowa, who is the general counsel of the Iowa State Traveling Men's Association. He understands that you have others who have come here particularly to be heard this morning, and he is not asking for any of your time now, but would appreciate the opportunity of making arrangements with the committee for appearing at a later date. I think that that is all that I ought to take the time of the committee to say this morning. I will appreciate it, however, if you will call on Congressman Eicher and Congressman Biermann for just a word, for they know of this association's activities.

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