I have talked with the author of the bill respecting this matter, and I am very sure that it was not the intention of this law, which is designed to protect the public against frauds in insurance, to affect a company of the type and kind, and with the record of, the Iowa State Traveling Men's Association. While I am in sympathy with the general nature of the bill, I am sure that the committee and the author of the bill would not want to put out of business associations of this kind.

Mr. BRUNNER. Would you be opposed to the bill as it is now?

Mr. UTTERBACK. Yes; as it is worded at the present time. I think that there should be necessary amendments in there to protect associations like the Iowa State Traveling Men's Association that have done a clean, honest, and honorable business without complaint all these years to the benefit of these many thousands of people. Mr. HARTLEY. It is alleged that the purpose of this bill is to put of business those companies that are defrauding the public.

Mr. UTTERBACK. I am very much in sympathy with that.

Mr. HARTLEY. But do you not believe that the State banking and insurance commissioners or commissions, by reciprocal arrangements between the various States, could handle this problem better than it could be handled through national legislation such as is proposed? Mr. UTTERBACK. Well, I am not in a position to answer that yes or no, because I have not made any special study of this matter. But as a result of my own experience, I know that there are companies that have abused the privilege of the use of the mails, and I know that there are a few of these companies that have operated without proper assets back of them, because they have not complied with the law somewhere or at least with the law that ought to have been in existence to protect the public. When you bring suit against an institution that has been doing business in that way, and you find that the company has no assets, there is something wrong somewhere, and I am sure that you will find as a result of your investigation that there are companies of that kind, and I want to see them put out of business.

Mr. HARTLEY. Would not the banking and insurance department of your own State, under your laws, be able to adjust such a situation in the State of Iowa if the proper complaint were made by the banking or insurance commissioner of another State wherein a policyholder of a company in Iowa had been defrauded?

Mr. UTTERBACK. I do not think there is any question about that. There might be a question as to whether or not they are actually doing business in a certain place, if that policy were written in Kansas City or Des Moines or some place in Iowa where the application was being taken, where it would require a Federal statute to protect the public.

STATEMENT OF HON. EDWARD CLAYTON EICHER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF IOWA

Mr. EICHER. I shall not take the time of the committee to add very much to Judge Utterback's illuminating statement. I think he has covered the ground very well in his brief remarks.

I simply want to add a little contribution from my own personal knowledge as to the standing of this particular association in the

State of Iowa, the Iowa State Traveling Men's Association, which is dependent to a very large extent upon the mails both for the initiation of contacts with new members and for the paying of benefits to members who may have been residents of the State of Iowa when they joined, but who have since then moved to other parts of the United States, and it would be a serious handicap upon the public service that this institution does render at a comparatively cheap rate if it were deprived of the privilege of the mails on this business. I have personally been a member of the organization for upward of 25 years, and I have been paying from $9 to $12 a year as the cost of this insurance, and I have continued to belong to it because I was convinced that it was perfectly reliable protection, and much cheaper protection than I could get in any of the old-line companies. It is a recognized institution in the State of Iowa, and everyone in the State who is familiar with its operations is thoroughly satisfied that it is an honorable and public-serving institution.

I do hope that in the further consideration of this legislation, the committee will work out in detail a bill that will, as Judge Utterback says, operate to put out of business any fly-by-night and fraudulent companies that are using the mails simply for profit and without any expectation or intention of carrying out their contracts with their policyholders. There is probably room for Federal legislation to cure that situation where the States cannot alone or in compact with each other meet that situation.

I have this morning received in the mails a letter from the secretary of the Iowa State Traveling Men's Association which gives a very complete statement of the activities of the organization and the necessity, in carrying out its activities, for the continued use of the mails, which the Hobbs bill, as at present drawn, would materially interfere with, and if the chairman would permit me, I would like to have this letter inserted in the record.

Mr. ASHBROOK. That may be done.

Mr. EICHER. Thank you.

(The letter referred to is as follows:)

Hon. EDWARD C. EICHER,

Washington, D. C.

DES MOINES, Iowa, March 16, 1935.

DEAR MR. EICHER: Complying with your telegraphic request we well attempt to give you such information concerning our association for presenting to the committee having charge of the Hobbs bill (H. R. 6452) as we can include in a letter. Will suggest that perhaps Congressman Utterback could give you information as he is a member of the association and personally acquainted with its plans and workings and with the officers and directors.

The association was organized in 1880 for the purpose of furnishing accident insurance protection to such traveling men as became members and paid their dues and assessments. You will thus see that it has a history of 54 years. For many years the membership was confined strictly to the traveling fraternity but in recent years owing to changes in general business methods taking many men from the road our rules were broadened so that we have accepted persons not strictly traveling men provided their occupations were such as to make them so-called "preferred risks."

There has never been a profit to anyone from this association. The accident insurance protection is furnished at actual cost and all expenditures are to pay such benefits and indemnities as are provided in the bylaws and the necessary operating expenses. After paying claims and expenses we have accumulated only about $3 per member which is only approximately sufficient to take care of claims in course of settlement. By this we mean that when a member is injured his claim accumulates to possibly several hundred dollars

before final settlement is made. We never know just what a claim will amount to until the disability ends.

In order to keep expenses at a minimum and furnish the protection at the lowest possible cost, we have no branch offices and employ no agents, all business being transacted from this office. Regardless of where one lives he may make application to this office; if his application is accepted, it is at this office; he pays his assessments to this office, and if he meets with an accident, he notifies us here when we send blanks on which to make proof and claim and check is sent from this office. Please note the enclosed list of claims paid by the association in February of this year which is only an average monthly list.

Our members are insured for $5,000 in case of accidental death and for $25 a week in case of total disability from accidental means, $12.50 per week in case of partial disability from accidental means. We give a general accident insurance coverage applying to all kinds of accidents to which the ordinary traveling man, business man, or professional man is subject in his daily life— applying even to travel by air.

Until automobiles became common, this protection was furnished at an annual cost of $9. In recent years we have needed to ask for more because of automobile accidents, which are increasing every year. The average annual cost for the last 5 years has been $12.60, which is the highest in the history of the organization. Assessments of $3 each are made quarterly or if claims make it necessary the assessments have been called within 22 months of each other. Members are permitted to make remittance of larger amounts from which we pay the assessments as they are called.

In the last 5 years this association has paid to the United States Government for postage $89,766. In that time we have received from members $4,888,000 and have repaid to members and their beneficiaries in the form of indemnities and benefits provided by the bylaws, $4,139,000. You will thus see that the association returns to its members about 86 cents out of each dollar paid in by them.

The first of this month the association had a membership of 61,805 scattered all over the United States. We receive applications from Maine to California and from Canada to the Gulf. We have few members who have removed to foreign countries but keep up their payments and enjoy full privileges.

The association is thoroughly examined by the insurance commissioner of Iowa every 2 years, and his reports are always favorable.

There are several other associations of a similar character in the United States; notably, the Commercial Travelers Mutual Accident Association of Utica, N. Y., the Illinois Commercial Men's Association, of Chicago, and several others. A representative of the Utica association, Mr. H. E. Trevvett, the secretary, is now in Washington at the Willard Hotel, and I trust he will get in touch with you as he will be able to give you much information that I seem unable to include in a letter, not only as to his own association, but the Iowa State, with which he is in close touch, as we work in harmony and for the good of business in general.

We enclose a small folder which briefly explains our plan, and enclose also copy of articles of incorporation and bylaws, and include printed copy of our last annual statement furnished to all members, which shows receipts and disbursements for 1934 and resources as of date December 31, 1934. You will recognize the four items in our resources as being the very best of investments.

We feel that passage of the Hobbs bill (H. R. 6452) would be a calamity and would work a great hardship upon hundreds of thousands of American citizens who are carrying their insurance in such associations as ours and who would be unable to carry an adequate amount of protection at the higher rates charged by the old-line companies.

Anything you can do to avoid this calamity will certainly be appreciated. Yours very truly,

IOWA STATE TRAVELING MEN'S ASSOCIATION, By H. E. REX, Secretary.

Mr. ASHBROOK. Mr. Biermann.

Mr. BIERMANN. I do not believe that I can add anything to what these gentlemen have said.

Mr. HARTLEY. Mr. Eicher, do you feel that the laws in your State would prevent one of these fly-by-night insurance companies from existing in the State of Iowa?

Mr. EICHER. Well, the law of our State, Mr. Congressman, would, in my judgment, prevent such an institution from existing in the State of Iowa, but it would not prevent the possibility of the perpetration of a fraud upon a resident of the State of Iowa, for example, who had taken out insurance in a fraudulent company that was incorporated in another State. The difficulty is that if this insurance company incorporated in another State did not comply with the laws of the State of Iowa, and did not have a branch office or an agent there upon whom service could be made so that the courts of Iowa could take jurisdiction, the insured member, living in the State of Iowa, as a practical matter, might be deprived of his legal rights, because he might conceivably be compelled to go to some far-away point in the Nation in order to bring his suit and establish his legal rights in court.

Mr. HARTLEY. The reason that I am asking that question is that on the day of our last hearing, as I recall, the commissioner of banking and insurance of the District of Columbia said that other abuses of insurance companies were eliminated by agreements and reciprocal arrangements among the various States, and between the District of Columbia and some of the States, and I am wondering whether a situation such as this bill attempts to correct could not better be handled by agitation in the various States along that line, rather than to come here and set a precedent that may be used to find other means of correcting other abuses through the use of the mails.

Mr. EICHER. I am frank to say that I have not had an opportunity to go into the matter far enough so that I could give an opinion that would be worth while. I think that a committee of the American Bar Association, on uniform State laws, has for some years past been giving that matter some consideration, but how far they have progressed in working out a uniform program for adoption by the various States, I am not able to say.

Mr. ASHBROOK. Is there any other Member of Congress who would like to be heard?

Do you wish to be heard, Governor Pierce?

STATEMENT OF HON. WALTER M. PIERCE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON

Mr. PIERCE. This is on bill H. R. 6452?

Mr. ASHBROOK. Yes.

Mr. PIERCE. I do not know much about it, but I have a wire from a very warm personal friend in Portland, Oreg., asking me to protest on the part of those people, claiming that it would increase their costs very materially.

Mr. ASHBROOK. If you wish, you may insert the wire in the record. Mr. PIERCE. Yes; that might be quite a good suggestion. That is from a very warm personal and business friend in whom I have great faith.

(The telegram referred to is as follows:)

Hon. WALTER M. PIERCE,

Washington, D. C.:

PORTLAND, OREG, March 16, 1935.

Referring to House bill 6452, this legislation would greatly increase insurance rates on export flour and grain, which would react against producers. Kindly explain other Northwest Representatives. Appreciate your cooperation. HUGH A. MARTIN.

128691-35

Mr. PIERCE. This is the same subcommittee that I appeared before the other day, and I wish to say that Mrs. Moore was just in my office, and before you finally pass on that bill, she would like to appear before you and make a further statement with respect to the wording of the amendment that I suggested. That has not been disposed of finally?

Mr. ASHBROOK. No.

Mr. PIERCE. Will you give her a further hearing on it?

Mr. ASHBROOK. That bill has been reported by the subcommittee to the full committee.

Mr. PIERCE. Then could we have a minute before the main committee?

Mr. ASHBROOK. I think that there would be no trouble about that. Mr. PIERCE. All right.

Mr. ASHBROOK. I hope that no one present will inject into the hearings this morning anything that has to do with any other bills that may be before this committee. Let us confine ourselves to the Hobbs bill.

STATEMENT OF HON. THEODORE CHRISTIANSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA

Mr. CHRISTIANSON. Mr. Chairman and gentlemen of the subcommittee, I wish to place in the record a telegram from the Minnesota Commercial Men's Association.

Mr. ASHBROOK. That may be done.

(The telegram referred to is as follows:)

Hon. THEODORE CHRISTIANSON,

Member of Congress:

MINNEAPOLIS, MINN., March 15, 1935.

Hobbs bill, H. R. 6452, would destroy our association. We have for 30 years provided legitimate protection to our members and have disbursed 31⁄2 million dollars largely by mail. Present laws should be adequate to prevent or prosecute fraud by mail. Destruction of a legitimate mutual business enterprise to get a certain few lawbreakers seems unconscionable. We are a Minnesota corporation and hope we may have your support in opposition to passage of this bill.

MINNESOTA COMMERCIAL MENS ASSOCIATION.

Mr. CHRISTIANSON. I will say that the Minnesota Commercial Men's Association is represented here this morning by former Congressman William I. Nolan, of Minnesota, and I trust that the committee will give him a hearing.

There are also present representative officers of the Ministers' Life & Casualty Union, of Minneapolis, and I trust that they can be heard also.

Let me remark that in my opinion it would be a serious mistake to report this bill favorably without first so amending it as to exclude from its provisions such organizations as the Minnesota Commercial Travelers' Association and the Ministers' Life & Casualty Union, which are composed of members of professional and occupational groups, some of which exist for purposes among which insurance is somewhat incidental. A distinction should certainly be made between occupational organizations and insurance companies that solicit business from the general public. I can readily see how com