I am sure at this hearing these various ideas will be helpful to you in amending the bill or will aid you to pass upon the merits of the proposed piece of legislation with justice to all.

Mr. ASHBROOK. We will now give Mr. Holt an opportunity to be heard.

STATEMENT OF HARLOW V. HOLT, VICE PRESIDENT, NATIONAL MUTUAL CHURCH INSURANCE CO., CHICAGO, ILL.

Mr. HOLT. This is a statement made in behalf of the National Mutual Church Insurance Co. of Chicago, Ill., with reference to H. R. 6452. This statement is submitted by Mr. Harlow V. Holt, vice president of the company, and addressed to the members of the Committee on Post Office and Post Roads, of the House of Representatives.

This company was incorporated under the laws of the State of Illinois in 1899, fulfilling all of the requirements of that State. Its cash surplus has gradually grown through the years until it is now $115,839.51, and installment notes for premiums amounting to $699,260.21. During this period of 36 years, we have paid in losses over 31⁄2 million dollars. Losses have always been paid promptly, and we have never made an assessment against any of our members. This is a mutual company, owned by its policyholders, and is not operated for profit.

During these years, the recent ones most trying, we have enabled churches to maintain their full amount of insurance, due to the fact that the premium payment is divided into annual installments covering the term of the policy. Thus the church has to provide in its yearly budget for one annual premium payment only. If they were compelled to write their insurance in other companies, they would be required to pay the entire premium for a 5-year policy in advance. This would mean for most of the churches insured with us a great hardship and would result in yielding to the temptation to reduce the amount of insurance carried which, in case of a fire or storm loss, might cause the church to go out of existence.

It will be noted that if this bill, H. R. 6452, is passed in its present form the work and future of our company will be very seriously affected. We have back of us 36 years of most honorable and successful history. All claims have been met promptly and our present financial condition and reputation are of the best. The Insurance Department of Illinois, one of the best administered among all the States, gives us full endorsement. Moreover, our record speaks for itself. Our company has outstanding policies at this time approximating 20,000 in number and totaling approximately $72,000,000. These policies are held in all of the States and in Alaska.

Our risks are very largely with churches and, therefore, constitute a preferred class of business. Our plan for paying premiums in annual installments is most acceptable with churches, especially in these strenuous times when they are having much difficulty in meeting their obligations. The life of our communities is very closely related to the church and its program. Whatever affects it affects our families and homes If a church building burns, or is destroyed by storm, and has no insurance or insufficient insurance, injury is done not only

to the local church and community, but to all the benevolent program supported by it.

The business of the National Mutual Church Insurance Co., of Chicago, Ill., is of necessity conducted from a central office by mail. We have no agents, as employed by most companies. We deal for the most part directly with church boards of trustees. This bill now before your committee, if it should pass without amendment, would make it impossible for us to continue this fine and appreciated service for the churches.

Not only the Methodist Episcopal Church, which authorizes the organization of this company in 1896 through its general conference, would be affected by the passage of the bill in its present form, but the Methodist Episcopal Church South, the Presbyterian, the Baptist, and other churches now insured in our company would be involved. It is our hope that the bill may be so amended that we may continue our business on its present basis.

We understand that the proposed bill, H. R. 6452, is designed in part for the protection of the public against the dangers of dealing with unscrupulous organizations which are not subject to the adequate supervision of the States or which may be financially unreliable. Of course there is no objection to laws which would prohibit unworthy operations. However, the proposed bill is so broad in scope that it affects all legitimate mutual companies doing business in other States direct through advertising or through correspondence.

The National Mutual Church Insurance Co. has the close and efficient supervision by the Insurance Department of Illinois and is glad to comply with all legal requirements, but we do not see why it should be necessary for this company, and other similar organizations in the country, to become amendable to a national law that would almost certainly force us to abandon a worth-while service to a cause affecting the property and personal interests of so many thousands of loyal citizens. The laws of many of the States would make it impossible for this company and several other similar companies to be entered therein however much it might be desired.

We respectfully suggest that the proposed legislation should be so amended that all legitimate church insurance companies such as ours should be exempted from its provisions in order that they may continue their helpful and greatly needed service to our American communities. I thank you, gentlemen.

Mr. ASHBROOK. I understand your company is a fire-insurance company?

Mr. HOLT. Fire insurance; yes, sir.

Mr. ASHBROOK. We will now hear Mr. Moses H. Hubbard, Jr. Mr. Hubbard, we heard you the other day and I am sure you will appreciate the short time we have for this hearing.

FURTHER STATEMENT OF MOSES H. HUBBARD, JR.

Mr. HUBBARD. I do.

Mr. ASHBROOK. And you will be guided by it?

Mr. HUBBARD. And the chairman will recall I said there were some things I desired to bring to your attention in more detail and one or two topics I wanted to cover.

I was interested in the remarks of the Congressman from Oregon (Mr. Ekwall) for two reasons: First, he said that six of his letters were

from representatives of insurance companies and that indicates what I have said in my brief, which I trust to submit to the committee, if they so desire, and call to their attention there, namely, that the insurance agents are very vitally interested in this measure, because of the fact it will give them an additional field of opportunity for earning further commissions.

In the second place, the Congressman referred to the fact that small claims which arise in a State cannot be sued in some other State, because of the fact it would cost too much to bring suit in the far distant State. What I would like to call to the attention of the committee is this, on that score, that taking the State of New York as an example, if one of the Congressman's constituents in Oregon has a claim with our company for $100, all he has to do is to send it to the Insurance Department of New York and, if that claim has merit, we will immediately be called in and be told to pay the claim, and the claim will be paid with no litigation. Consequently, probably 99 percent of any disputed claims can adequately be taken care of in that way, provided these insurance commissioners themselves will properly regulate the companies that are under their control and regulation.

Now with reference to litigation. It is true that, if an individual is obliged to come into the State, it will cost him some little more; but, in the case of our organization, there are so few of those that the the expense to the few is so far surpassed by the expense that would occur to the many members, there can be no comparison.

I call your attention to this fact, which is shown on the official records of the 10 leading life insurance companies in the United States operating on an agency basis, which may be sued in any State where their policyholder resides, that of those 10 companies the first 1 is at present resisting claims of $27,631,857; the second 1 with $26,934,732-all resisted claims. And the total of those 10 companies is $125,577,484, in resisted claims; whereas the resisted claims in organizations of our kind are practically negligible.

Resistent claims of 10 leading life insurance companies during 1933 in accordance with their own official statement

Now what is the record shown by the official reports of the leading companies? Our company, the company I particularly represent I am representing the federation here, but the company I am general counsel for has a membership of 210,000 and, in 1933, as shown by Best's Insurance Reports, which I have here and would be glad to have the committee examine, they received in income from policyholders $3,637,326. That is the second largest income of any insurance company in the United States doing solely an accident business and is only surpassed by one other company (I am not go

ing to name the company here, but I will name it in my brief), as shown by Best's Reports, and this is the record of the two companies: Our company returned $3,290,286 to policyholders, or 87 cents out of every dollar; this other, larger company, with which I am comparing it, returned to its policyholders 45.8 cents per dollar, as opposed to 87 cents per dollar which we returned.

Now what does that mean? It means this, that it costs the policyholders of this larger company $2.18 for every dollar they get back in claims. It means it costs our policyholders $1.15 for every dollar they get back in claims-a clear saving to them of $1.03 for every dollar they get back.

Now what does that mean in totals? It means that out of $3,637,000, had our members been insured in this larger company, instead of $3,637,000, they would have paid for that insurance $6,954,823-or a clear saving to our members of $3,317,497.

And if you take all of our organizations together, with a total combined income of upward of $8,000,000, it would mean had they been insured in these agency-operated companies they would have paid $15,165,223, instead of $8,000,000.

Mr. DOBBINS. Have you the figures as to the amount of benefits paid by the old-line companies on that same amount of insurance, as compared to what you paid?

Mr. HUBBARD. In the figures I am referring to now, it will make no difference what the benefit was. It is the amount the policyholders get back.

It so happens that the accident policies which are written by this company I have referred to are very similar to the type of insurance we write, but we could write a much more limited policy or a much broader policy and, under our method of operation, the return to the policyholders would be exactly the same per dollar of income as it is at the present time. In other words, our return to policyholders is based upon our cost of operation and they get the amount of portection that they do based upon the amount it costs to do business.

Now this particular company I referred to spends 23 cents, or nearly 24 cents, out of every dollar they receive for agent's commissions and that, added on to our total gross amount of business which our organization does, had it been written by them, would cost $15,000,000 and the agents would have received almost $5,000,000 of that money. That would have left $2,000,000 which it cost the old-line companies more to do business than it cost us to do business, because of advertising costs and complying with the regulations of all of the other States, being established in the other States, and so forth. It costs them about 14 cents, in addition, because of that fact. But when you figure we save our members a gross of $7,000,000 a year and there are around 600,000 of those members, it is a saving well-worth while considering and one which shows that the benefits which they derive far offset the small inconvenience which a very, very small percentage of them, which I think figures about one-twentieth of 1 percent, are put to who have to indulge in litigation.

Now that, I think, covers the situation rather thoroughly. I said I would like to discuss, briefly, the constitutional question involved here, for this reason: I appreciate any committee may say "Well, we will pass the bill and then let the Supreme Court decide whether or not that bill is constitutional;" but, if the committee were to do that,

by the time the Supreme Court acted upon the constitutionality of this bill, our companies would be out of business; because, in the meanwhile, they would have been required to comply or have been shut down by exclusion from the mails and would be no longer in business to carry on by the time the Supreme Court got around to deciding the constitutionality of this bill.

Consequently, it is my thought, knowing the committee is desirous of treating all of us fairly, if we can convince the committee this bill would be entirely unconstitutional if adopted and, therefore, would not accomplish the purpose so far as the "fly-by-night" companies are concerned, therefore it is our purpose to convince the committee that this bill, in its present form or in any amended form, is legislation which is beyond the power of Congress legally to adopt. So I would just like to call attention of the committee to the fact that the business of insurance, in the early case of Paul v. Virginia, found in 8 Wallace

Mr. DOBBINS. May I interrupt you there to say it seems to me you ought to direct your argument to this question, that this bill is not predicated upon the insurance business being interstate commerce, but this bill is predicated upon the right of the Post Office Department to exclude from the mails that which ought not to go through the mails in the public interest.

Mr. HUBBARD. That is correct, and it is upon that basis that I am predicating in the first instance the principle that insurance is local business. I will simply refer to that generally, as I do not believe it is to be found in my brief. In the first instance, in the cases that have been brought to the attention of the Supreme Court, it was held that insurance was not an interstate business, but it was held that insurance was purely local in its character and subject only to local regulation. This first case I referred to was a fire insurance case. Then followed a life insurance case, and a marine insurance case, so that eventually the decisions of the Supreme Court held that all insurance is purely local in its character, subject only to local regulation.

Therefore, the question arises as to whether or not the Congress can in any way regulate local business. It has always been assumed, up to the present time, that Congress could not regulate purely local business; consequently, if now it can be found that local business can be regulated by the prohibition of the use of the mails, then for the first time Congress has found a means whereby they can give local regulation to any type of business which heretofore it has been assumed could be regulated only through the States. And that involves consequences of so serious a nature that it might be well for any committee to consider the matter very seriously before they endeavor to adopt that type of legislation; because, if it applies to the insurance business, which is the most strictly regulated business that we have operating in the United States today, with the possible exception of the banks, then certainly it could be applied immediately to all of the other types of business who are doing an interstate business and using the mails and flooding the country from coast to coast with literature regarding their capabilities, and in any type of which business you will find a very small percentage of those who are actually fraudulent.