to do would be first to figure out what the premiums should be. Maybe the premiums will not cover it all.

As to the differential setting up reserve, I would have Congress appropriate a sufficient sum each year to build up this reserve. You might then find you will have a revolving fund which can be used year after year with the reserves built up. But I do not think that you should try to put a special tax on for something that will continue for such a long period of time, because I am not convinced that the premiums themselves will be insufficient to cover this program. Senator LEHMAN. But you would favor a reserve fund? Governor RIBICOFF. A reserve fund. Yes, sir.

Senator LEHMAN. You would not favor specific appropriations sufficient to take care of the losses in any previous given period?

Governor RIBICOFF. I would rather have the reserve fund and the premiums and have this set up on a sound actuarial basis. I think at the beginning the Government is going to have to put some subsidies into this fund, but what I can say on that is this: Certainly the Government has paid out subsidies year in and year out for causes that are less worthy than this is. There has never been any hesitancy on the part of the Congress of the United States to vote these subsidies. In my opinion, what the Congress is going to have to do before this fund gets established, is over a period of years you are going to have to appropriate each year a sum of money to go into a revolving reserve fund, which over a period of time, with the premiums collected and the reserve fund, will be more than sufficient to carry it-just like the insurance companies carry a reserve against their potential losses.

As I said before, you have a very, very capable staff of economists. This can be worked out and I am sure the insurance companies would be more than happy to lend their own people who work out these actuarial figures and who know what these losses have been over a period of time, to make recommendations on what type of reserve fund should be set up and in regard to the revolving fund, as to how large it should be each year. But I would say this: In the event in the beginning stages of this reserve revolving fund, if in any one year the losses might exceed that amount, I would say under those circumstances Congress of necessity would be obligated to appropriate a sufficient sum of money to carry it through in case in any one year a disaster should strike which would take more reserves than the fund has at that given moment.

Senator LEHMAN. What I was trying to get at is whether this should be a direct subsidy limited to the actual losses for a given period, or whether the Congress should attempt to build up reserve funds sufficient to care for possible disaster losses in the future.

There has been some objection, or a great deal of objection, to the Government building up further large reserves, on the ground that it ties up a great deal of capital, and in that way the capital is taking out of the economy of the country.

I am looking for information. I have no very definite views on this subject. I think it is largely a matter which will depend on the advice of the Treasury Department.

Governor RIBICOFF. My feeling is, I would rather see personally a reserve fund which we know the Government is committed to a

continued policy on, because we are going to have a disaster somewhere in the United States every year. History shows that.

To depend on Congress for a separate authorization every year to take care of a disaster would be just like pouring a glass of water on the middle of Main Street. I do not think it would get you anywhere, Senator.

Then too you would have that great uncertainty in the minds of the people as to whether Congress will appropriate for this disaster. This is the great danger.

My feeling is that the people of the United States should be assured that in the event they take out a policy and disaster strikes there will be money available and not have to go year in and year out, hat in hand, to the Congress of the United States and say, "Please appropriate some money to take care of our needs."

My own personal opinion is, if I were in Congress and it came up to a vote as an alternative, I would rather have a continuing fund with the commitment by the United States Government and the assurance to the people of the United States that if disaster comes there is a fund to take care of it, just like there is for social security and unemployment. I look at it as being exactly of the same nature. I believe it would be unthinkable, Senator, for the Senate of the United States or the House of Representatives to say that we were going to vote year in and year out for unemployment compensation or social security, and then depend on the attitude of Congress year in and year out to raise those funds. I do not thing that would give the assurance to the people of the United States, because Congress is a shifting body. I mean, it shifts every year.

I think the United States should establish as a policy that it is going to make sure it has a special reserve catastrophe fund to take care of every victim of disaster, provided he wants to participate. This is the type of assurance that the people of the State of Connecticut want. This is the type of assurance I want.

I do not want to have to go year in and year out to the Congress of the United States, and I think it is cruel to expect every person who suffers a loss to wonder, will Congress appropriate for me this year? I think the people of the United States should have the assurance that if a disaster comes they will be compensated for their loss, just as I know now that if my house is on fire and suffers damage, my insurance company is going to pay my losses, so that I can make myself whole.

Senator LEHMAN. Governor, I think you know my deep interest in unemployment insurance and social security. I was the author of both in my own State while I was Governor. In those two bills I always favored a reserve fund, which has been set up.

However, speaking to you now as both a former Governor and a Member of Congress, I think it is fair to assume that there is a large segment of our people who feel it was not wise, or is not wise, to maintain the very large reserves that have been set up. I did not agree with that, but I want to be reenforced, and I am reenforced by what you have said. I think this is a question which will certainly be debated at a suitable time.

Governor RIBICOFF. All I can say is, in the present economy of the United States there seems to be, in spite of these reserves, enough

money for the basic needs to meet the growth of our economy and to keep our companies going. If this fund is of such a nature, I know nothing that will reassure the people of the United States as much as to know that in case a disaster strikes they have the money there, without having to go back to every Congress for appropriations.

Senator LEHMAN. Let me ask you another question? The bill I have drafted goes much further than the other bills.

Governor RIBICOFF. I have seen it.

Senator LEHMAN. The Kennedy-Saltonstall bill, I believe, covers only flood insurance. I am not sure what is in the Carlson bill and I do not know what you have in mind, Senator Bush. My bill covers disaster insurance, both natural and manmade. It sets a limit with regard to flood insurance or natural disasters in the amount of insurance that could be written or outstanding at any one time.

I think you make a very good case out for not having any limitation. My bill sets a much higher limit with respect to the damage that is brought about by manmade disaster, such as atomic attack.

In our hearings there has been a great deal of testimony given and advice offered, not against either one of these two classes of coverage, but to the effect that the manmade disaster insurance should be covered in a separate bill, rather than the two in a joint bill. Have you any thoughts on that, Governor?

Governor RIBICOFF. No. I think you could cover them both. I would say a disaster is a disaster. I think I know your attitude, and I know mine. The President of the United States and all of the people hopefully pray that an atomic bomb will never strike this country, or any other country. We hope we can work out a world at peace. But there is one thing we are certain of. We are certain nature is going to wreak its toll year in and year out.

I would say I would like to see all disasters in one bill. I have a very practical way of looking at it. If you have all disasters in one bill, Senator, under those circumstances I think you are going to have a much wider coverage, and you are going to have many more people participating. If it is an all-inclusive disaster bill I think it can go through Congress that much faster, and it will take less of the funds of the taxpayers and the Congress, and it will be more in the nature of insurance that can carry itself.

I would prefer the general purport of your bill over the KennedySaltonstall bill, but I would please urge upon you to take off the limitation in your bill, which limits the amount of insurance one can get. That is a feature that worries me a lot.

Senator LEHMAN. You mean the limitation on the amount of insurance?

Governor RIBICOFF. I think the limitation of the amount would be a great mistake. It would be my hope you would take under advisement and consideration, for the reasons I have given you, the taking off of that limitation. As I said, it is no good to give $250,000 to an industry or a company that has suffered a $10 million loss. I am thinking not only of the industry, but of the employees and the general State economy.

Senator LEHMAN. I think everybody on the committee, and virtually all of the witnesses who have appeared before us, felt the importance of continuing our flood-control movement. I not only

favor continuing it, but favor very substantially higher appropriations to prosecute the work at a much more rapid rate.

We have had testimony that you may be familiar with, because you have been in Congress so long, which testimony was to the effect that taking into account only the projects that have already been approved by the Corps of Engineers, and which appear to be practical from the standpoint of the costs and the savings or benefits to be derived from savings on later damages, that at the present rate of appropriations it would take 22 years to complete them. That is only the projects that have already been approved, and certainly not additional projects that will arise.

Under those circumstances, and in view of the experience which you have had here in Connecticut, where I understand there are many projects which would be of great value which have not been completed, but really in some cases have not been energetically prosecuted, is it not your feeling that flood control in itself would not be a substitute for disaster insurance?

Governor RIBICOFF. That is right.

Senator LEHMAN. And in the second place, we should increase the appropriations for flood control?

Governor RIBICOFF. The answer is in the affirmative to both. I think flood-control works are absolutely essential. Flood-control works, though, are not and cannot be and never will be a substitute for disaster insurance. I think that the Congress would be taking the people down a blind alley if they gave them the impression that building more dams would mean avoiding disasters. We would not be leveling with the people. It is very obvious that you need more flood-control works. Flood-control works are definitely a function of the Federal Government. To protect the State of Connecticut and do it adequately, though, cannot be done with just dams. We have to have dams in Massachusetts and Vermont and New Hampshire in order to protect Connecticut. It is the waters up there that cause the damage down here, just as much as it is the waters which flow in the State of Connecticut.

Certainly when you see the devastating loss that a flood can cause to the economy of the people of the United States, then the expenditure for adequate flood-relief works is only a small fragment of the overall appropriation cost to complete those works.

I think what you have to make sure of is that money is not spent for useless projects when it is appropriated. From my experience I have found the Army engineers in this area are of good judgment and are men who are thoughtful and are interested in the economy of our Nation, and they do a good job. I know that the Army engineers have done an outstanding job in Connecticut, and I would take the recommendation of the Army engineers for this area where flood-control works are involved.

I may add this: I think outside of Delaware, no State has received as little back from the Federal Government percentagewise compared to its expenditures and taxes paid to the Federal Government as the State of Connecticut. It would be my hope that the State of Connecticut would receive not more than its share, but that the State of Connecticut would receive what is necessary to protect the people of our river valleys.

We are an old State; we are a beautiful State; we are a rich State; but the State cannot continue to take these losses. Not only that, but you have to keep in mind the damage to the State of Connecticut and its effect on the economy of the United States.

You take the Naugatuck Valley, which accounts for approximately 67 percent of the brass production of the entire Nation. You destroy the brass production and you cripple the economy of the entire United States not only of the State of Connecticut. Therefore it is vital that everything be done in all of the Connecticut valleys to make sure that we have proper widening and deepening of our rivers, and proper debris and silt removal, as well as building dams like Thomaston and other flood-control projects, which are needed to protect our people of Connecticut.

Again may I say that those works will be no substitute for a catastrophe or disaster-insurance program.

Senator LEHMAN. It is perfectly obvious, of course, that you could not possibly remove from the lowlands adjacent to the rivers and streams the many factories that have been built up and which have made New England prosperous, as well as New York. It is also perfectly obvious that you could not possibly move the many houses and homes of workers that have grown up in the lowlands around these factories. But it has been pretty persuasively testified to that if we had more stringent zoning laws the damage in the future could be minimized, not by affecting those houses and factories and homes that are there, but the new homes and factories and concerns which will be built in the future.

What is Connecticut doing about that?

Governor RIBICOFF. I would say Connecticut has done something. I have left with you a copy of the Knapp committee report, and a copy of my message to the special session of the general assembly, in which you will see we recommend just what you are talking about. This session of the legislature within a month will pass legislation giving towns authority to take care of buildings in the flood plains, and give the State water commission the right to take off encroachments and obstructions on the streams, and the right to widen the rivers. A full flood-control program on the State level where the Federal Government cannot move.

The State of Connecticut will have such a full program in completion before the next Congress of the United States meets.

Senator LEHMAN. I just want to read some testimony which we have previously taken which supports your claim that the New England States-and, may I say parenthetically, New York too-have received back only a small part of what they paid in in taxes. This is testimony given to us by Prof. Seymour E. Harris, of Harvard. It says here:

Over a recent period of almost 20 years the 3 major industrial States, Massachusetts, Connecticut, and Rhode Island, received back but one-third as much relative to what was paid in through Federal taxes as 5 major southern industrial States, North Carolina, South Carolina, Georgia, Alabama, and Tennessee.