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Senator LEHMAN. Well, under a program of wide coverage such as I understand you favor and which I included in the bill which I drafted, would you include crops both growing and stored under the program? I am talking now about a wide program.

Governor HERTER. If you are going to include personal property. I would; yes. I would provide the action on that particular crop was the same as other affected areas-as long as it was not confined to the agriculture alone.

Senator LEHMAN. Further questions, Senator?
Senator BUSH. No, sir.

Senator LEHMAN. Thank you very much indeed.

Mr. Preston, if you will just wait a minute, I am going to call Congressman Philbin and Mrs. Rogers and Congressman MacDonald. Commissioner PRESTON. Mr. Chairman, if I may, I have no statement, sir, other than that which the Governor made, and I simply would like to place at the disposal of your committee the Massachusetts Department of Commerce, as I offered to you before.

I will file this statement.

Senator LEHMAN. If there is no objection, so ordered.

(The prepared statement of Commissioner Preston follows:)


I am appearing as neither an insurance expert nor one fully qualified to speak on the relative merits of direct Government insurance, reinsurance, or like technicalities.

Rather, I appear as one who has been responsible for aiding commercial and industrial enterprises of all sizes to fight back in the face of great losses through tornado, hurricanes, and floods.

It has been my observation that the assistance the State and Federal Government can now offer commerce and industry are inadequate to the need. After a disaster strikes, speed of recovery is paramount. It is essential that men and women, victims of disaster, return to their remunerative positions as rapidly as possible. It is essential that commerce and industry return to normal productivity quickly and efficiently. Under our present system this essential need cannot be realized. SBA loans must be negotiated. Surplus property must be sought and procured. Reconstruction and repair machinery must be awarded on a priority basis. A market must be negotiated for damaged inventory, and lack of ready cash makes procurement of vital replacement raw materials often impossible.

Insurance would assure commerce and industry of known funds against which operations may be resumed immediately. It would cover costs of immediate repairs, clearance work, and the like, necessary to resumption of business. It would be an important psychological factor essential to morale in the face of seemingly overwhelming odds.

The best flood insurance is flood control. We all agree on that. The premium is Federal taxes and the payment is equitable return on the tax dollar in floodcontrol projects. Much of our industry is located along rivers and streams. It does not wish to move, but must in all commonsense if the necessary flood measures are not planned and executed with all possible dispatch. Movement of such industries is expensive to management and to labor alike. Loss of the industry to the community is often catastrophic to all concerned—weakening the economy and, therefore, a great national evil. In the fact of these facts and the stern reality of this year's disasters, we are confident that the Congress will make adequate flood control its priority concern in January. However, there is nothing yet known to control natural disasters, such as earthquakes or windstorms, and there is little that can be done in the next year to control flooding here in Massachusetts.

I, therefore, am convinced that disaster insurance must be written by the Government, or the Government and private insurance, or by private insurance alone. The premium must be within the reach of the smallest elements of com

merce and industry, and the necessary legislation must be enacted under emergency measures of highest priority. Surely the matter has been discussed in adequate detail to assure all concerned of necessary consideration.

Therefore, I urge the legislation be undertaken directly as soon as Congress convenes, and I place at the committee's disposal the facilities of the Massachusetts Department of Commerce to assist in whatever way possible to expedite these measures.

Senator LEHMAN. Does your statement include any figures with regard to the monetary losses in the State of Massachusetts?

Commissioner PRESTON. It did not, sir. There are others who will testify today on that who I felt were more competent to give you personal figures from the regions, so my statement is simply the same as the Governor's.

Senator LEHMAN. Can you provide that?
Commissioner PRESTON. I certainly can.

Senator LEHMAN. Will you do that promptly so we will have it for the record?

Commissioner PRESTON. Right. Thank you.

(Mr. Preston subsequently submitted as the estimated monetary losses in the State of Massachusetts as of September 22, 1955, $55,720,600.

Senator LEHMAN. You feel free to ask any questions you wish, Senator Kennedy.

Senator KENNEDY. Thank you.

Senator LEHMAN. We are very glad indeed to have Congressman Philbin and Mrs. Rogers and Congressman Macdonald with us.


Mr. PHILBIN. Thank you, Senator, Senator Bush, and Senator Kennedy. We appreciate it so much.

I have with me our distinguished and beloved colleague, Mrs. Rogers, and my distinguished colleague, Congressman Torbert Macdonald.

First, Mr. Chairman, let me extend to you and the committee a very hearty welcome to Massachusetts. We are very happy to have you here this morning, and I want especially to express the gratitude of our delegation and the people of our State for the painstaking attention which your committee is giving to the very serious problems which confront us as a result of the recent disastrous floods in this


I am very thankful for the opportunity to appear and to present my views, as are my distinguished colleagues here, Mrs. Rogers and Mr. Macdonald. Mrs. Rogers is one of the members of our Flood Control Committee, and I know that you will be glad to hear from her and to hear also from Congressman Macdonald.

Let me state also that I have been very much gratified by the work to date of your distinguished committee under the leadership of our good friend, Senator Lehman, one of the outstanding members of the United States Senate, distinguished for his long

Senator LEHMAN. I have had fine cooperation from my fellow members on this committee.

Mr. PHILBIN. And I would like to say marked for his long, valuable service as Governor of the great State of New York as well as for his conspicuous service in the Senate.

I would like to say to you, Senator Lehman, there are many bonds of friendship and admiration which tie you to the people of Massachusetts and to our particular cause, and we appreciate more than I can say the thoughtful and forward-looking approach which you and Senator Bush and your committee are pursuing in these matters.

The great havoc wrought by the floods in our State and area, indeed throughout much of the Northeast, hardly requires any detailed description. It suffices for me to emphasize the fact that the ensuing destruction and havoc and distress were widespread and that the resulting problems of relief and rehabilitation and flood control and protection will have to be tackled vigorously and, in my opinion, on a very broad front.

Let me state further, gentlemen, that all our people are deeply grateful for the efforts which the Federal Government has made up to this time. At the President's direction, many Federal agencies too numerous for me to mention here have rendered invaluable and effective assistance to us, and plans are in being which, if they are carried out by the Congress, should be of immeasurable benefit.

First I should like to suggest, if I may, the real, genuine, unquestionable urgency of immediate appropriations by Congress of adequate funds to proceed as fast as we possibly can with studies and construction of flood-control projects already authorized and wherever necessary in the various river basins of our State and region.

Delay would be fraught with grave possibilities of fresh disaster. Our Flood Committee, of which I have the honor to be chairman, is intensively studying many necessary, specific projects, and the Army engineers are conducting exhaustive surveys. The earliest possible action is of paramount importance.

A second proposal is the one which you immediately have under such able study, and that is the urgent need for flood insurance and for disaster insurance. I am very glad that Senator Lehman and your committee have broadened your studies to cover complete disaster insurance as distinguished from flood insurance alone. Following the terrible Worcester tornado of 1953, I introduced H. R. 6129 which would create a Government-owned corporation to insure against all natural disasters such as floods, tornadoes, droughts, forest fires, earthquakes, hurricanes, and all disturbances and conditions of such impact and severity that it should become necessary for the President to declare disaster areas in any part of the Nation. I have previously submitted to the committee for insertion in the record the text of this


(The bill referred to follows:)


A BILL Creating a Government-owned corporation to insure against certain disasters Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "National Disaster Relief Corporation Charter Act."

SEC. 2. There is hereby created a body corporate to be known as the "National Disaster Relief Corporation" (referred to in this Act as the "Corporation") which shall be an agency and instrumentality of the United States.

SEC. 3. The Corporation shall have its principal office in the District of Columbia and may establish offices in such other places as it may deem appropriate in the conduct of its business.

SEC. 4. (a) The objects and purposes of the Corporation shall be to provide through insurance, reinsurance, or otherwise, reasonable protection to all persons against loss of or damage to property, real or personal, which may result from a catastrophe determined by the President to be a major disaster for the purposes of the Act entitled "An Act to authorize Federal assistance to States and local governments in major disasters, and for other purposes," approved September 30, 1950, as amended (42 U. S. C. secs. 1855-1855g).

(b) The Corporation shall establish, from time to time, uniform rates for each type of property with respect to which protection is made available under this Act, and, in order to establish a basis for such rates, the Corporation shall establish the average risk of loss on all property of such type in the United States. Such protection shall be available only to such property situated in the United States (including the District of Columbia) Alaska, Hawaii, Puerto Rico, and the Virgin Islands.

(c) The Corporation may insure or reinsure in whole or in part any company authorized to do insurance business in any State of the United States which will directly insure any person against loss of or damage to property resulting from any catastrophe of the type which may be determined by the President to be a major disaster for the purposes of such Act of September 30, 1950, as amended, whenever in the opinion of the Corporation such insurance or reinsurance is required to protect property which it is authorized to protect, and such insurance or reinsurance cannot be obtained at reasonable rates or upon reasonable conditions from approved companies authorized to do insurance business in any State of the United States.

SEC. 5. The Corporation shall have the following general powers in carrying out the objects and purposes set forth in section 4 of the Act

(1) to have succession until June 30, 1964, unless sooner dissolved by Act of Congress:

(2) to adopt, alter, and use a corporate seal, which shall be judicially noticed;

(3) to adopt, amend, and repeal bylaws governing the conduct of its business, and the performance of the powers granted to it by law;

(4) to sue and be sued in its corporate name in any court of competent Jurisdiction;

(5) to determine the character of and the necessity for its obligations and expenditures and the manner in which they shall be incurred, allowed, and paid, subject to the laws applicable specifically to Government corporations; (6) to acquire, in any lawful manner, any property-real, personal, or mixed, tangible or intangible-to hold, maintain, use, and operate such property; and to sell, lease, or otherwise dispose of such property, whenever any of the foregoing transactions are deemed necessary or appropriate to the conduct of the activities authorized by this Act, and on such terms as may be prescribed by the Corporation;

(7) to execute all instruments necessary or appropriate in the exercise of any of its functions;

(8) to use in the United States mails in the same manner and under the same conditions as the executive departments of the Federal Government; (9) to settle and adjust claims held by it against other persons or parties and by other persons or parties against the Corporation;

(10) to appoint such officers, agents, attorneys, and employees as may be necessary for the conduct of the business of the Corporation; and to delegate to them such powers and to prescribe for them such duties as may be deemed appropriate by the Corporation; and

(11) to take such actions as may be necessary or appropriate to carry out the powers and duties herein or hereafter specifically granted to or imposed upon it.

SEC. 6. The Corporation, including its franchise, its capital, reserves, surplus, and income, shall be exempt from all taxation (which shall, for all purposes, be deemed to include sales, use, storage, and purchase taxes) imposed by the United States, or any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority, except that any real property (or buildings which are considered by the laws of any State to be personal property for taxation purposes) of the Corporation shall be subject to State, Territorial,

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county, municipal, or local taxation to the same extent according to its value as other real property is taxed.

SEC. 7. The Corporation shall be managed by a board of directors of the Corporation to be appointed by the President, by and with the advice and consent of the Senate, and to consist of five directors. The term of office of each member of the board of directors shall be five years except that the terms of office of the directors first taking office after the date of the enactment of this Act shall expire, as designated by the President at the time of appointment, one at the end of one year, one at the end of two years, one at the end of three years, one at the end of four years, and one at the end of five years, and whenever a vacancy shall occur in the office of director other than by expiration of term, the person appointed to fill such vacancy shall hold office for the unexpired portion of the term of the director whose place he is selected to fill. Any director may be removed by the President for inefficiency, neglect of duty, or malfeasance in office. Each director shall receive compensation at the rate of $17,500. No director shall engage in any business, vocation, or employment other than that of serving as a member of the board of directors.

SEC. 8. (a) There is hereby created the "National Disaster Relief Fund" (referred to in this Act as the "Fund") which shall be used by the Corporation as a revolving fund in the performance of the powers and duties granted to or imposed upon it by law. There is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $5,000,000 to be allocated to such Fund.

(b) Insurance premiums and any other revenues derived by the Corporation from its operations shall be deposited in the Treasury of the United States to the credit of the Fund, and all moneys in the Fund not needed by the Corporation for its current operations shall be invested in bonds or other obligations of the United States guaranteed as to principal and interest by the United States.

SEC. 9. Section 101 of the Government Corporation Control Act is amended by inserting after "Tennessee Valley Authority;" the following: "National Disaster Relief Corporation;".

I think we all realize that it is impossible to secure flood insurance or disaster insurance from private insurance companies because its cost would be prohibitive. We have had such testimony from the distinguished Governor of our State, and I am sure that you have had other testimony along that line. Under the proposed bill which I introduced, the Government would reinsure disaster policies, as well as insure them, designed to cover every part of the United States against the ravages of all natural disasters.

I am desirous, as apparently Senator Kennedy is and you gentlemen are, of having the private companies cooperate with the Federal Government in this coverage. It would not interfere in any way, as has been pointed out here, with current private insurance coverages wherever they may exist of storm, wind, and hurricane damage and the like, because the proposed insurance, the proposed disaster insurance, would not go into effect in any area until the President has declared an emergency.

I note from the press, Mr. Chairman, that you are considering a measure-I believe it is your own measure-to include damage from atomic attack and possibly other war damage, and so far as I am concerned I believe that this proposal is not only sound and feasible but vitally necessary if we are to be prepared for any great national emergency that might strike us like a bolt from the blue with devastating


In this connection it might be relevant-it is relevant-to refer to the War Damage Corporation organization during World War II on the theory-and this was the theory-that war risk is catastrophic in nature, that it arises out of a single peril-war-and that war-risk losses are unpredictable as well as impossible for private companies to undertake by themselves.

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