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me in previous letters—that they have surveyed our entire area, they know every foot of ground, and when I say ground, I mean beach underneath the water, going out perhaps a thousand feet from the beach line. They know what it is. I don't want to quote the exact words of the letter, but it wound up by implying there is no sense trying to get any relief here, because we cannot do anything without special legislation. They know what the situation is, but they cannot do anything about it.

I might say that the State of New York, along with the city of New York, did come along and put in a new beach for us with hydraulic sand fill. That helped. Up to about 2 or 3 months ago, when the high tide came along and the water came halfway up that beachif the tide had risen 1 or 2 more feet, we would have been inundated again with 9 feet of water around our place.

Senator LEHMAN. May I answer that question, because I know something about the legislation in and for the State of New York. For the past several years I have had bills before the Appropriations Committee for an appropriation to prevent erosion at Fire Island and, I believe, Staten Island, and in other parts of the State. I have not gotten to first base.

Senator Bush. It has been a long, hard battle for everybody, including Connecticut. Last year was the first year we got any substantial funds at all for beach erosion control in our State. We got about $1 million altogether, for the whole long coastline.

Senator LEHMAN. You are $1 million ahead of New York.

Mr. Cully. To begin with, we were not supposed to get relief from the State of New York, because we were not considered as being on the ocean front, until an amendment was made to the laws in Albany, including Staten Island, the east and south shore of Staten Island, as being on the ocean front. Then we were able to get assistance, 50 percent from the State and 50 percent from the city, for the hydraulic sand fill. But that is only one section. We have practically three-quarters of the rest of it.

I am not talking just for Staten Island, because I appreciate the predicament that everybody that suffers a flood is in. It is only a matter of time, I am sure, whether you people put the legislation through or somebody else does, they will insist upon insurance at a reasonable rate.

I think I mentioned in my letter to you what the insurance companies call reasonable is not reasonable for the man in the street.

Senator LEHMAN. You will notice in my bill we talk about insurance coverage at reasonable rates. There is no use putting a prohibitive rate on it.

The last witness is Mr. Leo Honig. Do you have a prepared statement?

STATEMENT OF LEO HONIG, ANGLO FABRICS, WEBSTER, MASS.

Mr. Honig. I have no prepared statement. I am going to be very brief.

Senator LEHMAN. We are very glad to hear from you. Mr. HONIG. We are a New York corporation dealing in textiles. The name of the corporation is Anglo Fabrics. We have two mills in Webster, Mass. On the 19th of August we experienced this terrible catastrophe of the flood. In a matter of a few hours, we were flooded with about 8 or 10 feet of water. We were not able to save anything, to rescue anything, because the electric power went off. We could not move any elevator, anything. Whatever we had on the main floor, like goods for finishing or other goods, was all flooded and muddied. Also the machines, which are mostly precision machines, were all flooded. Later on, after the water receded, it was full of mud, and we had quite a job.

Naturally, the whole district suffered tremendously. We were living 3 days without electricity, without power. We went around with candles. It was terrible.

We are the only woolen mill in the town of Webster working 3 shifts and employing 300 people. That means 700 families are living from the wages they are receiving from us. There were other mills there, like the American Woolen Mill, which closed up, and over 1,000 people lost their jobs. When we were flooded, everybody was very upset, and everybody thought he was going to lose his livelihood. Governor Herter visited us in the whole area afterward. We were working very diligently and hard to restore everything so that the people would not lose a lot of wages.

For 15 years we have been talking about protection against flood. As you know from the papers, the dams all gave way, and this was actually the main cause for the sudden catastrophe we had.

We lost our water-filtration plant, our powerhouse. I have to say that the State of Massachusetts, the local community, the Army engineers, were very helpful. They helped with whatever they could to restore everything again so that we could work. And we succeeded in working after a very short period.

What I want to bring out is the following:

If we do not have any protection with regard to disaster insurance, or something like this, and this occurs again, I do not think that many mills will rebuild in this area where they are. Therefore, everybody will suffer, including the Federal Government. I am very strongly recommending that everything should be done to get this Federal disaster insurance.

Senator LEHMAN. You referred to the destruction or damage to your inventory, goods and equipment. Was that the only damage, or did you lose any of your buildings?

Mr. Honig. We lost our water-filtration plant completely.
Senator LEHMAN. And you referred to a powerhouse, too.
Mr. HONIG. This is in connection with that.
Senator LEHMAN. What is the value of those ?

Mr. Honig. We had a loss of approximately $1.5 million, in the entire plant.

Senator LEHMAN. Does that include inventory?

Mr. Honig. Including inventory. We had some insurance which we collected. We were lucky that we had some water insurance.

Senator LEHMAN. Do you mean flood insurance ?

Mr. Honig. Not flood—water-damage insurance. Flood insurance is unobtainable. And the Small Business Administration immediately offered us a loan, which we did not take because of certain restrictions, and as we got a certain amount from our water damage, we did not need it so badly. So we rather did not take it for the time being.

Senator LEHMAN. That loss that you suffered, is there any way of your getting any compensation from the Government, save through deductions on your corporate taxes?

Mr. HONIG. If we have profit, we can deduct it. But it is a question.
Senator Bush. I have no questions.
Senator LEHMAN. Thank you, Mr. Honig.

I have a statement that will be inserted in the record at this point together with any others that may be received.

(The statements referred to follow :)

STATEMENT OF AMERICAN INSURANCE ASSOCIATION, NEW YORK, N. Y. POSITION OF STOCK INSURANCE COMPANIES REGARDING FLOOD INSURANCE The American Insurance Association announced today that its member companies are prepared, together with their producers, to make their full facilities available to the Government and will cooperate should Congress see fit to enact a program of flood indemnity and request the aid of the industry in its administration.

The association has employed the firm of Parsons, Brinckerhoff, Hall & Macdonald to make an engineering study of the recent floods, supplementing a report the firm made for the stock companies in 1952. The completed report of the engineers has not been received and the association is continuing its current study of the subject. However, at a membership meeting of the association held toxlay. it was the consensus that the following represents the present position of the companies, based on current knowledge and subject to the final conclusions of the study now being made:

1. If flood insurance could be written feasibly, insurance companies would be not only willing but eager to provide such coverage (examples of this are to be found in the broad coverages, which do not exclude the peril of flood, available for movable property, such as the various forms of marine, inland marine, and automobile comprehensive coverage, and certain "floaters”).

2. The companies believe that specific flood insurance covering fixed-location properties in areas subject to recurrent floods cannot feasibly be written because of the virtual certainty of loss, its catastrophic nature, and the reluctance or inability of the public to pay the premium charge required to make the insurance self-sustaining.

3. Any insurance program which does not cover areas subject to recurrent floods will not meet the public need.

4. The companies believe that it is impossible to tie in flood coverage with other coverage on fixed-location properties generally because, unlike other natural catastrophes which are unpredictable as to place of occurrence, floods can occur only where water flows or gathers and only those properties which are in the path of the flow or gathering have any need for it; competition would foræ the sale of coverage ex flood and the buyers would make the adverse selection.

5. There is no way in which the purchase of flood insurance can be made mandatory (even by Government compulsion) consistent with our American concept of free government and competitive selection.

6. The companies believe that the Government would encounter the same obstacles if it undertook a program of specific flood indemnity by means of insurance on a self-sustaining basis.

7. Any Government promise of indemnity on a non-self-sustaining basis is "relief" under the guise of insurance. In our opinion, a direct program of relief and rehabilitation would be more effective and more equitable, particularly in restoring essential services and providing food and shelter, which are the first forms of necessary relief in the case of a major flood disaster.

8. In our opinion, flood control and prevention (rather than insurance, indemnity, or relief) are of far greater importance to potential flood victims, especial ly when the many forms of irremediable losses are also taken into consideration. such as death, bodily injury, loss of employment, and loss of income.

9. In view of the magnitude of Government expenditures which are involved in the event of a major flood disaster, it would seem prudent for the Government to avoid fixed advance commitments in order to be in a position to use available funds most expeditiously and to the best advantage when the emergency arises.

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