FEDERAL DISASTER INSURANCE

MONDAY, DECEMBER 19, 1955

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,

Raleigh, N. C.

The committee met, pursuant to recess, in the Hall of the House, State Capitol Building, Raleigh, N. C., at 10: 10 a. m., Senator Herbert H. Lehman presiding.

Present: Senator Lehman.

Also present: Senators Ervin and Scott and Representative Cooley. Senator LEHMAN. The hearing will come to order.

May I say first how much satisfaction and pleasure I have at being here in North Carolina conducting this hearing, which, as I will explain a little later, is one of a number which we've been holding.

The first witness will be your Governor, Governor Hodges. But before hearing from him, I want to make a brief statement.

May I say too how happy I am to be here with your two very distinguished Senators, my colleagues whom I have had great satisfaction in working with in the Senate, Senator Ervin and Senator Scott. I would be very glad indeed if you would come up here and sit with us or sit with me-I am the only member of the committee here. I hope that you will sit with me. We have room for both of you.

Senator ERVIN. I appreciate that, but I am going to have to leave early.

Senator LEHMAN. I hope you will also not hesitate to ask any questions of the winesses that may seem desirable to you.

This is a meeting of the Senate Committee on Banking and Currency. I am acting as chairman for the purpose of taking testimony on the general subject of Federal disaster insurance.

This is the eighth hearing that we have had on this very important subject. Previous to this one, we have held 2 days of hearings in Washington and a day each in New York City; Goshen, N. Y.; Boston, Mass; Providence, R. I.; and Hartford, Conn.

The purpose of today's hearing is to receive testimony from representatives of the States of North and South Carolina.

I have offered a bill in draft form which I intend to introduce with some modifications on the reconvening of the Congress. In addition, the committee has before it draft bills prepared at the request of Senators Kennedy and Saltonstall, of Massachusetts, Senator Carlson, of Kansas, and Senator Bush, of Connecticut. I am sure other bills will be introduced when Congress reconvenes.

It is my hope that the Senate Committee on Banking and Currency will take up this subject as its first order of business when Congress

reconvenes.

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I want to make clear that all of the hearings we have held up to now have been confined to Washington, D. C., and to cities in the northeastern part of the United States. We are equally concerned with the impact of the recent flood on the people of North and South Carolina. We have been very aware of the disaster which struck in these States, and, as the record will bear out, I and other members of the committee, have frequently referred to the damage that was done here in our questioning of witnesses in other parts of the country. Indeed, this is not a problem localized in the Northeast or in the Carolinas either. This is a nationwide problem, since no one knows where the next disaster will strike. It might strike again here. It might strike again in the Northeast. It might strike in the Missouri Valley.

We are studying the establishment of a system of insurance which will provide minimum protection wherever disaster strikes.

In order to secure legislation on this subject, it is important that we have the broadest kind of support from the entire Nation.

We cannot get a bill through with just the support of the Members of Congress from the northeastern part of the United States or from the Carolinas. We must have the support of the majority of the Congress from all parts of the United States.

I emphasize this because there is a tendency in local areas to think that because a program of flood insurance, for instance, seems of utmost desirability in that particular area, all other areas think likewise. They should think likewise, but they don't. It is up to those who are interested to convince the other areas that this is their problem too. I may say that it is extremely difficult-my colleagues will bear me out on this to obtain passage of major legislation through both Houses of Congress in one session, which is all that remains of the 84th Congress. For this reason it had been our hope that the administration would be ready to present its recommendations for legislation to the committee when we began these hearings on October 31 in Washington. We had anticipated this because the President had written the chairman of the New England governors' conference on October 19 that the administration would present "specific legislative suggestions" to this committee when it began hearings in October. Notwithstanding the President's statement, the administration did not then submit specific legislative recommendations, nor has it to this date, notwithstanding my repeated urgings that this be done.

The fact that those recommendations have not come to this committee has very seriously handicapped us and caused delay at a time when really time is of the essence, and we should not have to submit to unnecessary delays. We are going to hold further sessions in Washington at which I very much hope that the representatives of the administration will present the recommendations of the administration and justify them.

The trouble is that that is going to cause further delay, because, naturally, we will have to give careful consideration-the committee and the Congress-to whatever suggestions will come from the exeentive branch of the Government.

I have urged at every meeting of this committee that we receive these recommendations as promptly as possible. I now take this opportunity once again to urge the administration to submit its proposals immediately. This delay, as I have explained, has already

endangered the success of this legislation in the next session. Furthermore, subsequent delay may well result in our inability to obtain passage of a satisfactory bill in the next session.

Now, as I have said, the first witness will be Governor Hodges. Governor, I don't know whether you have a prepared statement

or not.

Governor HODGES. I have, yes.

Senator LEHMAN. If you have, if you will read it and then if you desire to enlarge on your remarks, please do not hesitate to do so. Treat this matter in any way that seems desirable to you.

STATEMENT OF LUTHER H. HODGES, GOVERNOR OF THE STATE OF NORTH CAROLINA

Governor HODGES. Thank you very much.

I would like to thank you, Senator Lehman, and Senators Ervin and Scott, for providing the people of North Carolina an opportunity to express themselves on the need for disaster insurance.

For 2 consecutive years our State has been the victim of natural disasters in the form of hurricanes, and our people can give you a firsthand story on what it means to have farms, homes, businesses, and all other kinds of property suddenly destroyed by the winds and waters of these violent storms.

I wish I could take you gentlemen to the individual farmer, the commercial fisherman, the man who lost his house, or the man whose lifetime savings invested in an inventory vanished in the floodwaters.

I personally saw and talked with hundreds of such people during and immediately following the recent hurricanes, and I hope we can today get across to you something of what actually happened in our State. We must think of people, of individuals, who look to an uncertain future without present protection.

Many of our citizens, whose spirit we point to with great pride, can tell you what weariness and discouragement there is in efforts to rebuild and replace lost property when there is the ever-present knowledge that at any time in the future, and through no fault of anyone, all such efforts can be undone and the job will have to be done over again.

We here in North Carolina know that unless some method is provided by which private property can be insured, a point must eventually be reached when repeated rebuilding cannot go on, and the homes and lands and resources which lie in the areas subject to disasters. will have to be abandoned.

I will not attempt, Mr. Chairman, to describe the details of the damage eastern North Carolina has suffered. I won't even attempt to go into the question of the economic growth of this great State, or credit, which can only be secured through insurance, through people lending money to people who have houses and property. Our experts from the State civil defense agency and from the office of the commissioner of insurance and other witnesses will do this for you. I'd like to point out, however, that North Carolina is not sitting back and waiting for someone from outside to do for us. We have brought, at State expense, experts from all over the country to study the damage and to give us practical recommendations as to what we

here on the scene can do to minimize the harmful effects of future disasters.

We organized representative citizens from eastern North Carolina. to work with these experts. We expect a report on this subject within the next week or two.

You Members of the Congress may be assured that this is one State that will assume its full share of responsibility in the matter to the very limit of our ability. However, I would like to emphasize that our citizens must be provided some method of financially protecting themselves in some measure against future losses. And so far as I can see, disaster insurance is the only way that this can be accomplished.

There seems little, if any, disagreement with the proposition that it would be preferable for a disaster insurance program to be carried out by private enterprise. Current newspaper reports indicate that part of the insurance industry at least are making plans. It may be that there is a determined, concerted effort of the industry as a whole to meet this national problem. If this is true and I am not presently informed as to it-the industry will probably need help in the way of Federal reinsurance.

If industry doesn't do it, Mr. Chairman, either in whole or in part, the Federal Government must provide the necessary disaster insurance for this Nation.

Mr. Chairman, we don't need to discuss details here today. The technical experts can do that. But we do need to agree that this prob lem must be met and be met promptly.

I want to thank you for your courtesies.

Senator LEHMAN. Thank you very much indeed for your statement, Governor.

Can you make any estimate of the extent of the property damage in North Carolina?

Governor HODGES. We will have the whole detail for you from the witnesses following me.

Senator LEHMAN. May I ask whether possibly you will want some of your experts to answer the next question, too? Was the damage largely from the overflow of rivers or the encroachment of the sea? Governor HODGES. Both of them, sir.

Senator LEHMAN. In some of the seaboard towns?

Governor HODGES. Much of it started from the sea, from the high waves, and then, of course, coming repeatedly, two within a week in fact, two of the hurricanes, it filled up all the rivers and sounds, and then from there it pushed up into the inland towns. And, of course, we had some very heavy rains, almost to flood extent.

Senator LEHMAN. But North Carolina has in the past in this particular disaster and other times suffered a great deal, as I understand it, from the overflow of rivers due to the lack of adequate flood control, Governor HODGES. That is right.

Senator LEHMAN. Have you any idea how much work has been done by the Federal Government in flood control?

Governor HODGES. The Federal Government has done that for one area, which Senator Scott probably can tell you about, the Roanoke River. It has been pretty well handled. We have 1 or 2 other basins. The Government has done a good job on the Roanoke River. That was our worst flood situation, and that has been controlled.