Senator LEHMAN. The State of New York would not have to pay 20 percent on an insurance policy written for a man in Arizona. Mr. MEISTRELL. No; that is correct.

Senator LEHMAN. Then Arizona would not have to pay 20 percent for a policy written on a man in New York. So it seems to me it is a blocking operation. We will be discussing this, Senator, in a number of hearings, I am quite sure.

Senator BUSH. Yes. I am sorry if I, myself, am in disagreement with the chairman on this point, very strong disagreement, because it seems to me that it is not a question of blocking. It is a question of giving the States the right to get into this program and the obligation to do something about it so as the keep the cost down. So I think the shoe is on the other foot, very much so.

The States must and I think should very definitely have both the opportunity and responsibility to participate.

Mr. Chairman, may I ask a parliamentary question. How long are you going to run this afternoon?

Senator LEHMAN. I had expected to run for some little time more. But I have a hunch they are going to want you and me on the floor after a while. So that I will just keep you a very short time, Mr. Meistrell. If they should ring for a rollcall, I will immediately

recess.

Senator BUSH. Yes, sir.

Senator LEHMAN. Let me ask you this. Why did the administration remove section 407 from S. 2862 as introduced on January 5? This section protected indemnity and reinsurance claims from attachment or other legal processes in order to assure receipt of claims proceeds by the persons entitled to them under the indemity contract or reinsurance claim.

Mr. MEISTRELL. We removed that, Senator Lehman, because the Bureau of the Budget felt that it was an unnecessary provision to have in the bill. We have no strong feeling about it either way. I think that provided an exemption from attachment and levy, and I don't think there is any objection to having it included in the bill. Senator LEHMAN. In section 102 you speak of a reasonable period of years over which probable losses will be incurred calling for payment of claims. Can you tell us what period of years the administration would deem reasonable under these circumstances?

Mr. MEISTRELL. That is largely an actuarial and underwriting consideration. Underwriters and actuaries differ as to how long a period of time they think reserves, premium income, should be accumulated to take care of losses. That would be determined by the Administrator, and I would be expressing an uninformed opinion if I attempted to say what an actuary or an underwriter would consider reasonable.

Senator LEHMAN. I wonder whether Senator Bush could tell meI have been asked by some of my colleagues-under the definition of "flood" included in section 101 of the administration bill, would the Administrator be authorized to include mud slides?

Mr. MEISTRELL. That could be included, Senator Lehman, under this definition. It would be a matter for analysis and determination by the Administrator, by regulation, as to whether he would include mud slides or not.

Senator BUSH. That has been specified on the top of the page 4— what Mr. Meistrell has said.

Senator LEHMAN. They are not excluded.

Senator BUSH. I would say he is exactly right. It says such further meaning as shall be prescribed by regulation of the Administrator. So I certainly would think it would have that additional scope, if the mud slide came from water caused by tide, wind, or rain.

Senator LEHMAN. During the hearings at Raleigh, N. C., it was directed that the staff communicate with the appropriate authorities in South Carolina in regard to the hurricane losses sustained in that State. (See p. 872, pt. 1.)

I have a letter from Mr. J. M. Smith, State auditor, enclosing an estimate of damage. It will be inserted in the record.

(The information referred to follows:)

Mr. J. H. YINGLING,

STATE OF SOUTH CAROLINA,
OFFICE OF THE STATE AUDITOR,
Columbia, January 14, 1956.

Clerk, Senate Committee on Banking and Currency,

Washington, D. C.

DEAR Mr. YINGLING: Since writing you on January 5 concerning hurricane damage in South Carolina I have received the attached communication from the county treasurer of Horry County estimating hurricane damage in that county amounting to a total of $77,075,000.

I have not yet had any estimate of such damage in Georgetown County, but in my judgment I believe it would be safe to say that the damage in that county would not exceed one-half of the amount estimated for Horry County, or somewhere in the neighborhood of $40,000,000.

I hope this will help in your investigation.
Very truly yours,

J. M. SMITH, State Auditor. OFFICE OF TREASURER, HORRY COUNTY, Conway, S. C., January 10, 1956.

Mr. J. M. SMITH,

State Auditor, Columbia, S. C.

DEAR Mr. SMITH: The following requested in your letter of December 23, 1955, concerning damage caused by Hurricane Hazel in 1954, and Hurricanes Connie, Diane, and Ione in 1955.

There are other unestimated losses on which statistical information has not, and possibly cannot be compiled. An example of such is the owners of beach

lots whose intentions were to erect business establishments or dwellings and now find it practically impossible to secure a loan to build. These property owners are not eligible to borrow under the small-business loans through the Government because they were not already established before the storm. To secure a loan through other means involves the requirement of wave-wash insurance which is too high for the borrower to buy, and too risky for the lender to loan. Therefore, such property owners' hands are tied. They are unable to build or resell because the next owner would, subsequently, fall into the same circumstances.

From this example you can see there are other conditions equally as serious, and which needs some definite action in order to prevent an economic crisis. Yours truly,

W. H. JORDAN, Jr.,
County Treasurer.

Senator LEHMAN. I am not going to keep you any longer, or your associates. Thank you very much for coming. I enjoyed your testimony, even though I did not always agree with it. Mr. MEISTRELL. Thank you, sir.

Senator LEHMAN. I understand there is no objection to the inclusion in the record of all these documents.

(The documents referred to follow :)

THE NEW ENGLAND COUNCIL FOR ECONOMIC DEVELOPMENT,

Hon. HERBERT H. LEHMAN,

New York, N. Y.

Boston, Mass., December 1, 1955.

DEAR SENATOR LEHMAN: We at the New England Council were very pleased that you brought your Senate subcommittee to this area to discuss with New Englanders the very pertinent problem of flood insurance.

At the time you held your hearings in Boston we were unable to submit a prepared statement to you. We now would like very much to have the enclosed paragraphs read into the record of your committee.

Our sincere compliments for the splendid work you are doing.
Very truly yours,

WALTER RALEIGH.

STATEMENT OF THE NEW ENGLAND COUNCIL

The New England Council is a regional economic development agency. It is nonprofit and nongovernmental, financed by more than 3,000 members. Its relations with Government agencies-both State and Federal-are close.

The council integrates the development work of the business community, State and local Government agencies, the New England Governors' Conference, interstate official conference groups, and the New England congressional delegation. Interest of council members in the subjects of flood or other disaster insurance upon which your committee is holding hearings is obvious.

We believe that some type of insurance is necessary along with a program of flood control. We believe it should be a part of a general program for preventing flood damage wherever possible, for aiding in recuperation from damage when it occurs and for minimizing the seriousness of the effects of damage on the general economy.

We welcome the interest of this and other committees of the Congress in seeking to determine how best the Federal Government can assist in carrying out such a program.

The council already has had an opportunity to present its views on flood control to the Special Subcommittee on Water Resources and Power of the House Government Operations Committee. For your information a copy of the testimony presented to that committee on behalf of the New England Council at Springfield, Mass., on October 24, 1955, is attached.

As you will see, the major point made in that testimony is support of the program presented to the President of the United States and the Congress by the New England Governors' Conference (copy also attached for reference).

We believe that Federal participation is needed to solve New England's present and potential flood problems, because of the size and complexity of the projects. But we do not believe that recourse to any such device as a Federal river valley

authority or other imposition of Federal control over New England's natural resources is required to carry out this program. We believe that regional, State, and local agencies and private enterprise should be a part of the team which carries out flood control.

In the case of insurance we believe the same principle should apply.

We fully realize that the insurance industry is not at present in a position to cope with the enormous losses which can and have accrued from floods and rising waters. We also realize that these tragedies are not the problem of New England alone. The apparent shift in weather patterns has brought them into sharp focus, however, in an area which is heavily industrialized and extremely vulnerable to these onslaughts of nature. Controls and zoning will help, but it is not the complete answer to this urgent problem-no matter how thorough man's preparedness there will continue to be disasters from unforeseen sources. Another way to protect our economy is through some form of insurance.

At this time we would like to go on record with your committee as heartily endorsing your energetic search for some way to provide adequate disaster insurance for individuals and industry.

The council hopes that the insurance will cover disasters for which insurance is not now available and that private industry backed by Federal Government funds will offer the insurance. We are in favor of Government participation for so long as it is deemed necessary by the insurance industry.

The council stands ready to render any assistance and cooperation possible to your committee and thanks the committee for giving all New England the opportunity to express itself on this subject.

NEW ENGLAND COUNCIL STATEMENT PRESENTED TO THE SPECIAL SUBCOMMITTEE ON WATER RESOURCES AND POWER OF THE HOUSE GOVERNMENT OPERATIONS COMMITTEE, SPRINGFIELD, MASS., OCTOBER 24 AND 25, 1955

The New England Council is a regional economic development agency. It is nonprofit and nongovernmental, financed by more than 3,000 members. Its relations with Government agencies-both State and Federal-are close.

The council integrates the development work of the business community, State, and local government agencies, the New England Governors' Conference, interstate official conference groups, and the New England congressional delegation. The council itself is an example of the kind of nonpartisan teamwork which is operating in many fields in New England. We believe that private State-Federal teamwork is a sound pattern for flood-control programs.

Council members believe in planning public projects by seeing first how much of the project can be accomplished best by private citizens or private business enterprise; next, if necessary, by maximum use of local government agencies to supplement private enterprise; then, by turning to State agencies to meet the broader problems not confined to local government jurisdiction nor capable of being met with local resources.

On matters of still broader interest, New Englanders have developed interstate compacts to further regional projects.

Only after these steps have been taken and after the maximum use has been made of local, State, and regional resources to meet problems do we favor asking the Federal Government for assistance.

Our understanding of the purpose of the Hoover Commission is that it was authorized to review public policy from the same viewpoint. The policy of Congress set forth in Public Law 108 which created the Commission repeatedly uses such phrases as "reducing expenditures," "eliminating duplication," "consolidating services," "abolishing *** functions unnecessary to efficient conduct of Government"-and most important of all-"eliminating nonessential services, functions, and activities which are competitive with private enterprise."

Members of the New England Council believe these are worthy objectives and that all possible efforts should be made to accomplish them.

We believe, furthermore, that the Hoover Commission's recommendations, if adopted, would further these laudable purposes. Therefore, we support the recommendations of that Commission.

This approach to flood problems does not preclude the use of Federal funds. In fact the Commission's report to the Congress specifically recommends: "That the Federal Government should assume responsibility when participation or initiative is necessary to further or safeguard the national interest or to accomplish broad national objectives, where projects, because of size or complexity or potential multiple purposes or benefits, are beyond the means or the needs of local or private enterprise." We endorse that recommendation.

We believe that Federal participation is needed to solve New England's present flood problems and we are in support of the program presented to the President of the United States and the Congress by the New England Governors' Conference.

We do not believe that recourse to any such devices as a Federal river valley authority or other imposition of Federal control over New England's natural resources is required to carry out this program.

As Laurence F. Whittemore, a former president of the New England Council, once said:

"The more we study New England's economy, the more we are impressed with the fact that it has forged ahead despite a long history of Federal aid to other sections of the country. Our part of the country grew up and reached a high state of industrial development during that period of the Nation's history before Federal aid became fashionable and before the means to finance it-primarily the corporate and personal income tax-were available. We built our railroads without Federal grants, developed our water power with private capital, and our economy in each separate situation rose and fell under the free exercise of competition based on the laws of supply and demand.

"In progressive social legislation and in our treatment of labor we led the Nation, sometimes at the expense of our own pocketbooks. Partly because of a tradition of self-reliance and partly because we had already attained a high state of industrial development, we have not in recent years led the raids upon the Federal Treasury for aids and subsidies of every type and description."

On the subject of flood control (which we understand is the issue upon which the call for this hearing was based) the New England Council already has placed itself on record with the Commission on Organization of the Executive Branch of the Government. At a hearing in New York City, June 14, 1954, the council said:

"An 'ideal' flood-protection system for New England requires a combination of large and small dams on the region's principal rivers and their tributaries. Past developments have been in that direction, and the New England Council believes future installations should continue the same pattern.

"Under the Flood Control Act of 1944, the United States Army engineers have made a good start on flood-control work in New England. In addition to the Federal activities and in connection with their flood-control program, the legislatures and governors of the four New England States in the Connecticut River Basin have ratified an interstate flood-control compact which Congress approved in June 1953. Primarily the purpose is to formulate the means of reimbursing the States of Vermont and New Hampshire for their losses resulting from the taking of land for flood-control measures which benefit other States. "Since most flood-control projects are financed largely by the Federal Government, their costs are distributed by taxation over the entire country. Those persons located in areas subject to overflow pay through taxation but a small proportion of the bill for their own protection. Those who live in areas free from floods help pay for the protection of others. This is desirable if the determination of needed projects employs accurate and reasonable criteria of costs and benefits and if the criteria are applied uniformly in all parts of the country. "New England and its people should lend their continuing support to the design and construction of an adequate and fairly conceived flood-control program on a national scale. The standards of evaluating proposed projects are of particular importance. In its sharing of the costs through taxation and the benefits through new construction, the region should exercise the same restraint and objectivity that it desires in other parts of the country.

"The most important flood problem in New England is the protection of life and property. If shortages of water were foreseeable, extreme measures combining flood control and conservation might be justified. But at the present time a continuation of the compromise method followed in the past is clearly indicated.

"The interstate compact seems to us of the council to be the proper vehicle for giving full recognition to these problems, and it provides a most generally satisfactory basis for selection of sites, with equitable allocation of costs in proportion of benefits."

We still are of the opinion expressed at that time.

To this should be added the observation that interstate compacts also provide an excellent vehicle for regional cooperation with Federal Government agencies. And finally, we hope that the members of this subcommittee will lend their support to the congressional action which will be required to carry out the New England flood-control program recommended by the New England Governors' Conference.