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Senator LEHMAN. That was done by the Federal Government? Governor HODGES. That is right.

Senator LEHMAN. During the course of the hearings, it has been suggested that the State and local governments should assume responsibility for flood control. I have expressed very great doubts whether any State can do it. I am quite sure New York State could not. But I am going to ask you for the record whether in your opinion the State of North Carolina could protect its citizens and property against floods.

Governor HODGES. I don't think it is possible.

Senator LEHMAN. You have been talking about damage from floods, whether from encroachment of the sea or from overflow of the


Governor HODGES. Yes, sir.

Senator LEHMAN. I have referred in my earlier remarks to a number of bills that have been drafted. None of these bills has actually been introduced, of course, because Congress has not been in session. But I have referred to the bills drafted by me and by some of our colleagues, Senator Kennedy and Senator Saltonstall and Senator Carlson and Senator Bush. My bill goes very much further than the others, in that it includes not only natural disasters, protection against natural disasters, but against manmade disasters.

Have you any feeling as to whether this legislation should cover only flood disaster or natural disaster or whether it should include a much wider field of manmade disasters?

Governor HODGES. Senator Lehman, I think that basically the thing we're talking about is natural disasters, such as hurricanes, storms, floods, and so on. On the other hand, if you are going to face a modern situation of national disaster, you have practically got to include, it seems to me, the same kind of thing we had included in war disaster insurance during the past war, namely, atomic or whatever new development there may be of a manmade disaster.

Senator LEHMAN. We had war-risk insurance in the last war.
Governor HODGES. My company had a tremendous quantity.
Senator LEHMAN. It was no drain on the Federal Government.
Governor HODGES. We made money on it.

Senator LEHMAN. Yes.

Governor HODGES. I hope we do it on another one.

Senator LEHMAN. Of course, we have as yet no experience with regard to the extent of the coverage that should be made available. In my bill there is a limitation on the size of the risk, a limitation on the size of the coverage on any one particular piece of property. Also there is a limitation on the aggregate amount of insurance that could be outstanding at any one time. The limitation as to the individual coverage is $300,000. The limitation with regard to the aggregate amount for which the Federal Government would be responsible is $2 billion.

During the course of the hearings we have had very, very divergent comments or suggestions with regard both to the limitation on an individual piece of property and the limitation in the aggregate. Some people have felt that $300,000 was inadequate, that in many cases the damage to property would run much in excess of that. In many cases the suggestion was made that the Federal Government.

should not have any limitation on the aggregate amount of coverage that they would assume.

Have you any feelings on that?

Governor HODGES. I would not be able to discuss intelligently the question of those amounts. That is a little bit out of my field. I think when we come to the Federal Government limitation, however, and you limit it to $2 billion, you would probably have to separate manmade disasters, the atomic situation, as a separate group to do that.

Senator LEHMAN. That would be done. I don't think $2 billion would cover that. I should have explained to you, Governor, that when I talk about $2 billion that is only for flood insurance.

Governor HODGES. Oh, yes.

Senator LEHMAN. If we include manmade disasters-
Governor HODGES. It would be much more.

Senator LEHMAN. The limitation would be $10 billion of coverage.
Governor HODGES. That makes more sense.

Senator LEHMAN. That might or might not be sufficient. Of course, we realize that nobody has any knowledge of what the damage could be from an atomic attack.

Unless you have something to add

Governor HODGES. Nothing else.

Senator LEHMAN. Governor, may I thank you very much for appear here.

Judge Ervin? Senator Ervin? We very frequently continue to call the Senator "Judge."


Senator ERVIN. First I would like to welcome you to North Carolina and tell you how delighted we are to have you with us.

Senator LEHMAN. Thank you very much.

Senator ERVIN. Then I would like to thank you for so readily arranging a meeting here today at the request of Senator Scott and myself.

I would also like to congratulate you-I know you have plenty to do-on taking such an interest in this problem, which I think is perhaps the most crucial problem before the Nation today.

I do not have a prepared statement, and I do not care to state in detail my opinions about the problem. I have obtained copies of all of the proposed bills and have studied them, and all of the authors of those proposed bills, of course, frankly admit that they are tentative in nature.

North Carolina has been very hard hit during the past 2 years, starting with hurricane Hazel in October of 1954 and then followed this year by Connie, Diane, and Iona.

Our damage was threefold in nature as far as the causes were concerned. We had the encroachment of the sea upon the land. Then we had overflowing of the rivers. And then we had terrific winds which did tremendous amounts of damage particularly to crops and to timber.

I know from information received that others of the South Atlantic States and the Northeastern States have suffered tremendous losses. Having visited some of the areas after the hurricane last fall, a year

ago, and having visited some of them since, I would say that no one can appreciate the havoc that was wrought without seeing it.

I want to say that I agree with Governor Hodges in the proposition that it is essential for disaster insurance to be made available to the people of the Nation. I agree with you in the idea that this is a nationwide problem and can only be solved on a nationwide basis.

I hope that there will be some way to encourage private industry to handle this burden either of itself or in cooperation with the Federal Government. But I think that the problem is so acute that if private industry cannot handle it that it is going to be necessary for the Federal Government to step in and lend assistance to our people.

I will not elaborate further because I understand that General Griffin and others have prepared statements which give the complete details about the effects of the hurricanes I have mentioned in North Carolina.

Senator LEHMAN. Senator, no insurance company will write a policy on flood insurance and many of these other disasters. We have come far enough in our hearings to convince me at least that there is no way of giving coverage on disaster insurance unless the Federal Government assumes a very substantial part of the responsibility. Senator ERVIN. I realize that.

Senator LEHMAN. It just can't be done in my opinion. I am not critical of the insurance companies.

Senator ERVIN. Yes.

Senator LEHMAN. I hope we can work out something that will make this a cooperative effort. But I can understand the position of the insurance companies very fully in this matter.

With the exception of Lloyds of London, which for a time wrote some of these insurance policies at prohibitive cost, there is no way of insuring against such disasters.

I want to emphasize the fact very strongly to the country as a whole and to every part of the country that has been affected by these things that if we're going to do anything on this thing the Federal Government through the Congress and the Executive must be willing to assume a very substantial financial responsibility.

I think it can be done. I think it should be done without any question.

There is one other question I want to ask you, and I am going to ask the same thing of Senator Scott.

I said a few minutes ago, and I think that we can be in agreement on it, that this is not a local proposition. It is a nationwide proposition. You who have been sitting in the Senate as I have been realize that in many cases-and it has been a source of disappointment to me personally-members of Congress take a pretty local point of view with regard to the expenditures of money which cannot be proven to be of direct benefit to their States or to their districts.

My judgment is that this matter of disaster insurance is just as much a matter om concern to California and Arizona and New Mexico and Missouri and Minnesota and Iowa as it is to the Carolinas and to the Northeastern States. But I think we would be very stupid if we didn't realize that this parochial, local point of view does exist in the Congress.

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Have you any suggestions as to how to overcome that and persuade our colleagues to approach this thing from a national standpoint? It must be approached that way.

Senator ERVIN. I think you're everlastly right on that, and I think we are going to have to have a bill which will try to take care of and cover all natural disasters. We have different types. Some areas have cyclones which visit them and do a great deal of injury. We have, of course, along the Missouri River, flood problems. We have that problem.

So I think we will have to get a comprehensive natural disaster bill that will appeal to all, cover all natural disasters, and get the support of the entire country, because, as you pointed out, you have to get a majority of both the House and Senate behind a bill before it will become legislation.

I haven't thought so much about coupling the two propositions. I just question in my mind whether we should put in one bill the provisions to cover disaster insurance and war-risk insurance. I think maybe it might be better separated, but I haven't thought about that. It may be that coupling the two together you would get some increased support for each one.

I agree with you that we need something in the nature of war-risk insurance such as we had during the Second World War. It is just a matter of whether it is better to couple them or leave them separate. Senator LEHMAN. Well, I hope you will give very serious and careful thought to the subject between now and the time Congress reconvenes and let the Banking and Currency Committee have the benefit of your advice.

Senator ERVIN. I would say this also, Senator: I have talked to a number of insurance men, and they have voiced the same opinion you express that private industry cannot handle this by itself and that the only basis on which it could be handled would be with substantial Federal aid.

Senator LEHMAN. Just one more question. At every one of these hearings there has been some confusion as between flood insurance, disaster insurance, and flood control. I think the opinion has been voiced by some, quite mistakenly, that flood control alone could handle this situation.

We developed in the course of our hearings, and this is based on testimony from the Chief of Engineers, that to care for or to complete the flood-control projects that have already been approved by the Corps of Engineers under definite rules laid down by the Congress would take 22 years. That is a long time.

What I want to emphasize here is that in my opinion-and this I think reflects the point of view of most of the witnesses who have appeared before our committee-there is no disposition whatsoever in advocating and pushing this disaster insurance legislation to reduce the efforts of the Federal Government to prosecute and complete flood-control projects. In fact, I believe, in view of the fact that it will take 22 years to complete even those projects that have already been approved, and there are many others that will be required in the future, instead of reducing, we should materially increase, the appropriations by Congress for flood control.

Flood control will not care for all the needs of this thing by any means. But there are many flood-control projects that will minimize the danger greatly.

Senator ERVIN. I think we need both. I think they supplement each other. Because by installing flood-control projects we will minimize losses under the insurance features. I think it takes both.

As far as North Carolina is concerned, I think we have several streams on which we need flood-control projects. I think also we need something too to prevent erosion of beaches and matters of that kind.

I think we need to continue the flood-control projects because they are, in a sense, an assistance in overcoming that same problem or meeting it, and they will minimize the losses of an insurance program. Senator LEHMAN. Thank you very much indeed, Senator. Senator ERVIN. Thank you.

Senator LEHMAN. Senator Scott, will you be the next witness? Do you want to sit down there or stay right here?


Senator SCOTT. I would like to stay right here. I want to stay close to you.

Senator LEHMAN. I'll have to turn my good ear to you.

Senator Scorr. If you'll just always do that, I'll be all right.

I would like to join in with Senator Ervin and Governor Hodges in what they have had to say in the way of welcoming you and your staff to this State. We are glad to have you. We are always glad to have visitors from the outside come in, especially coming on a mission of aid as you are here today.

I would like to join in and concur in their statements, the statements of both Senator Ervin and Governor Hodges.

I have a prepared statement that I will just give for the record to save some time here today.

Senator LEHMAN. There being no objection, so ordered. (The prepared statement of Senator Scott follows:)



In the past 18 months, rare weather conditions-resulting in several hurricanes have created an extremely serious situation in North Carolina. Until 1954, major hurricanes-with their accompanying devastation-were not a problem of consequence in our State. In the years 1954 and 1955 several hurricanes of major force caused many millions of dollars damage to croplands and business and residential property throughout the eastern part of the State. In several instances, loss of life was also accounted for by hurricanes and accompanying floods.

Although there is little or nothing that can be done about the frequency and extent of hurricanes and similar weather phenomena, I sincerely feel that much can be done to reduce the damages caused by them.

I hope that the committee will seek out ways and means the Federal Government and State and local governments-working hand in hand with individuals and private enterprise can reduce damages from hurricanes and other unusual weather conditions beyond the control of man.

I am glad that the committee is studying the possibilities of some kind of insurance program as a means to reduce storm damage.

If the committee finds that insurance is the proper approach, I feel very strongly that private enterprise should be given an opportunity to develop such a program, and in the event it is beyond the abilities or desires of private

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