will accomplish the purpose, if the legitimate purpose is to stop fraud and to enable people to claim on a legitimate policy.

Mr. ASHBROOK. H. R. 1431 is the Cartwright bill?

Mr. REED. Yes, sir.

Mr. ASHBROOK. That bill is not before this committee.

Mr. REED. I was going to suggest it in lieu of the present drastic bill.

Mr. ASHBROOK. If you will confine your suggestions and amendments to H. R. 6452, we will appreciate it.

Mr. REED. I would suggest this amendment to H. R. 6452, that it provide that an insurance company accepting a policy from any State shall file with the secretary of state of that State an agreement to accept citation of service for the account of that company upon serving the secretary of state of that State and, if you will do that, with your fraudulent statutes prohibiting the use of the mails for fraud, you will accomplish everything that needs to be accomplished to protect the public.

The remainder of the bill before you is for the protection of insurance agents, and nothing else.

Mr. ROMJUE. In section 1 of your bill it states

That hereafter it shall be unlawful for any individual, partnership, association, or corporation, to use the mails of the United States for the purpose of, directly or indirectly, soliciting, negotiating, or effecting insurance— and so forth; and at the end of the section it says

This section shall not apply to newspapers, magazines, or periodicals of general circulation or to contracts of reinsurance.

Does that mean that a fellow can go ahead and advertise his business in the newspapers?

Mr. REED. No, sir. That was put in there to prevent the newspapers, I imagine, from violently opposing this bill, because I expect that they write insurance with the interstate companies. [Laughter.]

Mr. ROмJUE. Mr. Hartley mentioned a moment ago some big company that had qualified in every State of the Union, but suppose that I represent an insurance company, and I do not want to qualify in every State of the Union, because I do not want to do business there, that there are but six States that I want to do business in, and that is all, and I am perfectly willing to obey the laws and to pay the fees in those six States.

Then what position does it leave me in when I advertise in a newspaper, soliciting insurance, and that gets into the mail and goes into States where I have not qualified and do not want to qualify, and I had no idea that the newspaper would reach that State? Mr. REED. I see the point..

Mr. ROмJUE. Have I not violated the law?

Mr. REED. You certainly have. Under this proposed act, you have solicited insurance through the mails.

Mr. ROMJUE. Now, if a fellow has a legitimate business, he ought to have the right to advertise that business in a newspaper, and he ought to have the right to say where he is going to do business, what States he wants to do business in. Now, if by legitimate advertising, that mailed matter is carried into some State where they had no idea it would go, it seems to me that he would be violating the law.

Mr. REED. I think that it would be a question of intent, to this extent, that if you accepted a policy as a result of that advertising, you would be violating the law. If you turned down the policy, I think perhaps they could not prosecute you merely because a newspaper had reached some State where you were not authorized to do business, but you would find this difficulty of keeping some of your agents from writing policies in States where you do not have that permit.

I want one other figure to go into the record. If this bill goes into effect, it will cost the cotton producers, and you can verify this with Mr. Rathell of the Commodity Credit Corporation, on the cotton now being held as a result of the Government 12-cent loan, somewhere between one million and one million two hundred thousand.

Mr. WITHROW. Would the gentleman give me the number of that Cartwright bill?

Mr. REED. H. R. 1431; and, Mr. Chairman, may I say in closing on this bill that there are many things that are affected by interstate business throughout the various States, and a precedent of this character prohibiting a company from doing an interstate business in many States would affect the cost of operating a large number of businesses other than insurance companies.

I thank you.

Mr. ASHBROOK. There are a very large number of gentlemen here who are interested in this bill, and no doubt many of them would like to say something upon it, but you will appreciate that we will not be able to give you very much time, and I would be glad if you would be as considerate of each other as you can and permit those from the more remote cities and whom it would inconvenience most to remain over to be heard first.

If there is somebody here who feels that he must leave soon, we would be glad to have him rise and to give his testimony.

STATEMENT OF HENRY P. MAGILL, REPRESENTING THE NATIONAL MUTUAL CHURCH INSURANCE CO., OF CHICAGO, ILL.

Mr. MAGILL. Mr. Chairman

Mr. ASHBROOK. Whom do you represent?

Mr. MAGILL. The National Mutual Church Insurance Co., of Chicago.

I would be pleased to present a very short statement, and to add to it anything that you may need.

This statement is made to the Committee on the Post Office and Post Roads of the House of Representatives with reference to H. R. 6452, introduced in the House of Representatives on March 6, 1935, on behalf of the Methodist Episcopal Church and the National Mutual Church Insurance Co., of Chicago, which the general conference of the Methodist Episcopal Church, held in 1896, ordered organized for the benefit of that denomination.

Said insurance company has outstanding policies now of approximately 20,000 in number, amounting to approximately $72,000,000. These policies are held in all the States and in Alaska. Thousands of them cover on properties that are located outside of the regions actively solicited by stock-company agents. The company estimates that fully one-third of its business protects properties that were previously uninsured, for the reason stated, or because the churches

were not financially strong enough to buy stock-company insurance, or thought they were not.

Mr. ASHBROOK. May I inquire whether this is fire insurance or life insurance that you represent?

Mr. MAGILL. Fire and tornado-windstorm.

When money is scarce there is a natural tendency to pay local expenses first, which leaves nothing for insurance.

Prior to the organization of the National Mutual Church Insurance Co. there were constantly appeals being made in church papers for funds needed to rebuild destroyed properties. Such appeals have practically disappeared because of the easy terms under which our policies are issued. Instead of requiring prepayment for a 5-year policy, which would call for a sum impossible in thousands of instances, we accept payment in five annual installments, the payments of the first instantly putting the entire policy into effect. Of the more than 14,000 losses paid, aggregating more than $3,500,000. many occurred before the second premium installment was due.

The laws of many of the States would make it impossible for th National Mutual Church Insurance Co. to enter, however much it might desire to do so. The requirement for admission to the States wherein the properties are located would, therefore, deprive thousands of Methodist churches of the insurance we are now able to grant under the Illinois law, which controls our action. This would inevitably result in the wiping out every year of a large aggragate of value, a loss to the States as well as to the denomination that would not be offset by any practical advantage whatever. When a church burns down, or blows down, without insurance, an injury is done not only to the local church and community but to all the benevolent objects that said church assists in supporting.

Legislatures have recognized the value to the State of the church, and its influence, by exempting their properties from taxation. Should the proposed bill be adopted, the exemption of all church insurance companies should by all means be incorporated in it.

Now, Mr. Chairman, I have asked Bishop Hughes, the resident bishop of the Methodist Episcopal Church, to join me here this morning. I am not sure whether he is present or not. I only learned about this hearing an hour before I was obliged to start from home. I had no opportunity to communicate with Bishop Hughes, and I wanted him to address you in the interest of the churches.

I have given you, briefly, information in regard to an insurance company which during its nearly 40 years has been sued only three times, and in those cases because of questioning principles that were involved, and has never owed one dollar for losses due to anybody for a single day.

Now, the reason that we could not enter that company in a large number of States-and that would include some of the principal States-is that there are laws in those States that would not admit us, and it is a long, expensive process anyway, Mr. Chairman. We have been for about 6 months now endeavoring to get papers in shape that would be acceptable to the insurance departments in three additional States. We are admitted now to Maine-that is the only State outside of Illinois-and now we wish to apply to three additional States, and it has taken months to whip these documents into

shape that would be acceptable to those departments, and this bill would practically put us out of business.

Mr. ASHBROOK. I would like to say to the gentleman that I am sure we appreciate your contribution, and, speaking only for myself and for no other member of the committee, I want to assure you that I will not be a party to doing anything that will injure a company such as you represent.

Mr. MAGILL. Thank you, Mr. Chairman.

Mr. ROMJUE. I understand that the Washington Post, a newspaper here in the city, puts out a policy, or did some time ago, and presumably it has some connection with some sort of an insurance company. They would be exempted under this bill, and your church, under the bill, would be caught.

I am just wondering whether or not we thought this bill out clearly, or whether there is greater reason for suspecting that the Methodist Church will commit a fraud upon the people than would the Washington Post. [Laughter.]

Mr. MAGILL. Do not press me for an answer on that, Congressman.

STATEMENT OF A. C. CHARLES, REPRESENTING THE AMERICAN INSTITUTE OF MARINE UNDERWRITERS

Mr. CHARLES. Mr. Chairman and gentlemen of the committee, my name is A. C. Charles, representing the American Institute of Marine Underwriters.

The American Institute of Marine Underwriters is composed of practically all of the marine underwriters in the United States. Their membership is both stock and mutual. There are not very many mutual companies, but those that do transact marine insurance business are members.

We believe that this bill, in its present form, probably does not accomplish the purposes for which it was introduced. There are other classes of insurers who may be affected, and they will no doubt address you from their point of view, but we would wish particularly a marine exception to this bill.

To understand our reason for making this request, I would like to explain that marine insurance policies are not on property which has any fixed status or location. A merchant engaged in buying or selling of goods throughout the United States requires for the proper conduct of his business what is called an open policy, so that he may know, if he buys a shipment in Texas or in California, or makes a shipment to California or a shipment from Chicago, or wherever it is, that that shipment is immediately covered by insurance. Therefore, he has an open policy, which immediately attaches to any shipment which he may make, and it protects him. It may be 2 or 3 weeks after that shipment is made that he reports that shipment to his insurance company, and his bill for the premium is given to him, and, of course, he promptly pays.

This bill in its present form requires not that a company be licensed in a particular State, but that it shall first comply with the insurance laws. You gentlemen know how many States that there are in the Union, and there is a great diversification in the insurance laws in the United States. It is very difficult for a company to assure itself that in every transaction which might go into any State

of the United States, they have complied with all the laws of the various States. Some of our companies are not entered in all of the States of the United States to write marine insurance. Approximately 90 percent of the marine-insurance business in the United States is written in seven States. The other States of the Union write about 10 percent. You can imagine that the volume of business in some of these States does not justify the entry and the entrycharges to go into such a State.

Nevertheless, the merchant of that State is entitled to obtain pro-tection for his shipments, but there is one State where, in 1933, the marine-insurance premium was minus $250. That is not of a sufficient volume to attract very many companies to enter for the purpose of writing marine insurance in that particular State.

The shipments, of course, go through various States, and they have to be covered in the various States.

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You have used the word located here. How "located " can! be defined, I really do not know. Some States have defined "located" as a point where property is when the insurance attaches; it probably may be in a warehouse, awaiting shipment. Some States maintain that if it is located there, your marine policy will have to cover it there, and still it might not have been possible for you to comply with the laws of that particular State. Other States define "located" as a permanent situs. There is great difficulty with that particular word, as used in legislation.

We feel, and I do not wish to burden you or to take up your time, that we should be excepted from the provisions of this law. The volume of marine insurance is probably about 6 percent of the fire and casualty business combined. It is not purchased by the people who are apt to be defrauded. It is purchased by merchants, and each particular merchant will require a different kind of policy from his neighbor. He may be a man who is engaged in South American trade, or in foreign trade as well as in this country, and he will require a policy which will meet his particular conditions. His neighbor may do a slightly different business, and may do it in a slightly different way and will require a different kind of policy.. Any one of those might conflict with some of the State insurance laws, unintentionally, of course. We try to abide by them all, but it is very difficult.

Then, again, in the marine insurance business, we are faced with this proposition, that we have to do business with South America.. Within a year or so, the Argentine and also Cuba started to take some action against these so-called "unauthorized insurances ", which would have adversely affected our merchants and our marine insurance here. We had to make representations both in the Argentine and in Cuba against the prohibition against insurance by Americans for American merchants.

The volume of marine insurance is small, and this exemption,. if made, would not create any hardships.

Mr. ASHBROOK. Is Mr. Marshall, the superintendent of insurance,. here?

A VOICE. He just stepped out.

Mr. ASHBROOK. Is Reverend Wriston here?