$12,954,092; public utilities, $2,986,440; private utilities, $1,000,000; and farms, crops, and lands, $10,000. No deaths were reported in New Jersey and only 10 persons suffered major injuries but 93 homes were destroyed.

New York suffered the least damage with total estimated at $16,284,000. This included industrial, $382;500; commercial, $1,353,500; roads and highways, $6,380,500; homes and dwellings, $967,500; public utilities, $5,000,000; and farms, crops, and lands, $2,200,000. New York also reported 1 death, 6 major injuries, and 26 homes destroyed.

Pennsylvania's total damage was estimated at $70,206,700, broken down as follows: Industrial, including commercial, $20,684,200; roads and highways, $16,937,000; railroads and railroad bridges, $14,617,500; homes and dwellings, $6,034,000; public utilities, $9,419,000; farms, crops, and lands, $1,082,000; and miscellaneous, $1,433,000. Pennsylvania also reported 88 dead and 94 major injuries.

Rhode Island's total damage was estimated at $18,000,000. It included industrial, $5,700,000; commercial, $2,200,000; roads and highways, $900,000; homes and dwellings, $3,000,000; and public utilities, $6,200,000. Rhode Island had 1 death, 32 major injuries, and 34 homes destroyed.

Senator LEHMAN. I do not know whether you have been in the hearing room for the course of this hearing, but the figures that you have given are at great variance with others that were given. The Chief of the Corps of Army Engineers stated that his preliminary estimates showed a damage from the August flood in the northeastern area alone of $1.6 billion. Yours, of course, I think, is something like $457 million. That, I assume, does not include the damage done in North and South Carolina, does it?

Mr. WILLIAMS. No; it does not.

Senator LEHMAN. Does it include the figures of the damage done 2 weeks ago?

Mr. WILLIAMS. No; it does not include those figures.

Senator LEHMAN. Can you tell us how these figures were arrived at? Mr. WILLIAMS. Well, I can tell you perhaps a little bit. I have been given to understand that the Army engineers' figure of $1.6 billion that you named represented a sort of horseback preliminary estimate at the time of the flood. Now, these figures that we have are figures that have been obtained from the State officials themselves after they had had time to do a detailed job of analysis. And those figures of the Department of Commerce, which, as you indicated, are four-hundred-and-fifty-seven-plus-million dollars, compare with the civil-defense figures of $464 million for the New England States. The civil-defense figures are $590 million if you include North and South Carolina. But you will note that the figures for civil defense are almost exactly what the figures are of the Department of Commerce for the New England States.

Senator LEHMAN. You say you obtained the figures from State officials. You did not have any staff people going into the States?

Mr. WILLIAMS. We did have a staff, and we sent teams up into the areas. That is a part of the work they did. Then close contact was had with the officials of these various States.

Senator LEHMAN. How much did you say the figures of civil defense were, including North and South Carolina?

Mr. WILLIAMS, Including North Carolina, in round figures, $590 million.

Senator LEHMAN. That does not include the damage done in the last 2 or 3 weeks.

Mr. WILLIAMS. Not as I understand.

Senator LEHMAN. As I understand, that was quite heavy.

Mr. WILLIAMS. I think these figures are preliminary to these latest floods.

This summary shows that 179 deaths resulted from the disaster and total damage was estimated at $457,674,044.

These great losses dictate a sympathetic attitude by the Department toward the aims of this committee in its effort to provide some form of protection against the financial impact of such disasters. As a result of the study of this problem by the executive branch, I would like to present our views of factors which we believe warrant special consideration by the committee in deciding whether or not the Federal Government should undertake a program of flood insurance, and the provisions of enabling legislation if decided upon.

We are informed that damage from floods is the only major damage caused by natural disasters for which commercial insurers do not generally offer coverage. There is a lack of actuarial data and of information concerning the extent of interest in the purchase of insurance in this field. Commercial insurers are uncertain of the risks involved, the rates of premium necessary to provide a compensatory program, and the reserves necessary to stand in back of liabilities incurred.

These factors which have prevented commercial insurers from entering the field provide a basis for our Government's proceeding with caution and for our recommendation that care be taken with respect to certain aspects of the proposed program of flood insurance. In such a pioneer program, consideration should be given to limits. or standards of action which might properly be provided by the enabling legislation to serve as guide lines in the administration of the program. These standards should, on the one hand, enable the administrator to develop data and know-how presently lacking, and on the other hand, should provide adequate restraints to keep the program within workable bounds.

A limit on the overall liability to be incurred, on the duration of the program, on coverage to be extended to a single insurer, and on the amount of self insurance or deductible required, should be carefully examined. Such limits may be necessary in a workable program.

Another factor warranting mention is the property to be covered. It may very well be that this coverage should be limited to real property and the category of goods best designated as business inventory. Agricultural commodities might also be included. Personal property, as such, warrants, in our opinion, special study before inclusion. because of the uncertainties attendant to this broad field. Accurate and current listings of personal property and evaluation thereof at a time of loss are examples of the administrative problems which must. be faced.

Standards should be considered which would allow the administrator of the program to exercise discretion in the class of risks to be assumed. A single example of the dangers inherent in this field may be found in real property which is located in an area where there is a real possibility of recurrent flooding. The value of such property and its original cost to the owner probably take this danger into ac

count.

Consideration should also be given to the drafting of any program which is decided upon in such a way as to allow for the use of facilities and services of commercial insurers to which the public looks

for general insurance protection. The convenience of this use to the public would be a real step toward the broadening of the base essential to an insurance plan. As data are obtained and as know-how increases, we would hope that a program would be worked out which would appeal to commercial insurers on a co-insurance basis; and that they would ultimately take over completely and provide adequate protection to property owners at acceptable rates.

It is our hope that our comments on aspects of this problem which in our opinion warrant special attention will be helpful to the committee.

For your further assistance, there is in attendance Dr. Helmut E. Landsberg, Chief, Climatological Services Division of the United States Weather Bureau, to answer questions which may have occurred to the committee in its study of certain statistics which, I understand, have been made available by the Weather Bureau.

That ends the formal statement.

Senator LEHMAN. Mr. Secretary, as I understand it, you favor some form of Government insurance on real property destroyed or damaged.

Mr. WILLIAMS. I would not say the studies have gone that far, Senator. We certainly favor the study of the whole problem. It may look to Government insurance or, as was pointed out, with the hope that ultimately it may become entirely a matter for private insurance to carry the risk.

Senator LEHMAN. We are going to give the private insurance companies every opportunity to be heard by the committee. But you say the problem merits study. That is what we are here for. We are making a study. We are going to continue making a study for some time. But some of us at least started with that idea, and I think I can justify it by the President of the United States, who certainly expressed great sympathy for the people whose homes have been destroyed or lost and where property has been damaged. He has urged us to continue to make this study. We had hoped we would get his views as to any suggestions that he has to make.

Of course, I must point out that if we are going to put in all the provisions and all the safeguards and all the conditions that are demanded by the private insurance companies, the lack of which has caused them to refuse to write this insurance, I do not think we are very likely to get any insurance.

After all, I think the Government owes considerably more to its people, people whom it encouraged to build or buy homes, people to whom it offered facilities to make the purchase or make possible the construction of homes. I think it owes them a little bit more in the way of protection than an insurance company.

Mr. WILLIAMS. Well, of course, the position that we are expressing here, and as I understand the administration's position at the present time, is that no conclusions have been reached yet as to what final recommendations would be in order. I understand further, however, and I suspect that testimony from the others today has indicated that it is the intention to have legislative proposals presented by the time the Congress convenes.

Senator LEHMAN. Yes. We are going to continue these hearings for some time. We already have 7 or 8 scheduled. As you may have

heard me say, however, we are deeply disappointed that the recommendations of the administration are not before us. We had hoped. and expected that they would be, due to the fact that we were assured by the President's recent letter of October 18 which he wrote to the governors of the New England States that we would have it in time for this hearing.

As I said before, the President is already on record as favoring an insurance program. We are trying to work it out. We want the help of everybody. We know that there are certain dangers. We know you cannot possibly write a bill which would take into account long actuarial experience, because there isn't any actuarial experience. So we realize that it is possible that such a program will cost the Government some money. But I think it is justified. If it is not, if you are not going to do it, and yet you decide to protect your people, it means paying all the losses or a great share of the losses out of tax funds, and that we certainly want to avoid.

We believe a bill can be written that would be substantially sound actuarially. Nobody can guarantee it would be fully sound until we have the actuarial experience. But I see no reason to suppose we cannot do that.

As I say, I am disappointed that we have not gotten the information from the agencies, from the administrator, on which we could proceed much more readily and, I may say, possibly more soundly, possibly more intelligently than is the case in the absence of that.

I notice, for instance, in your statement, that you raise the question about insuring personal property against damage. Well, the insurance companies do that very thing when they write their fire insurance. They write fire insurance not only on the structure, but on the furniture that is in the building and, what is more, on the damage that is sustained by the furniture or the personal possessions of the owner of the house because of water.

I am going to ask you a question which I have asked some other witnesses. You referred only to flood damage-insurance against flood damage. Would you think it should be limited to indemnity for damage caused by floods or damage caused by all natural disasters?

Mr. WILLIAMS. Well, I suppose everyone would have to be given a separate study on its own account. My understanding was that we were particularly and primarily concerned with the question of flood insurance growing out of these floods of recent times, and the comments that we have prepared in this report are directed to that particular point.

Senator LEHMAN. Assuming that such a bill is enacted, have you any ideas as to the best agency to whom the administration should be entrusted?

Mr. WILLIAMS. I do not know how one could too clearly know what would be the appropriate agency or agencies. I noted Mr. Mason's comment when you asked that question, and I can see where it would be quite logical, should there be measures of this general sort adopted, as they affect house damage, for this to fall into the category of the HHFA. Whether or not that would be the appropriate agency in the case of industrial damage, I do not know. I think that that is another one of the categories that should be given careful study to

see whether it should be a single agency or a combination of agencies, or maybe a special agency should be set up to handle that sort of thing, I have no clear-cut opinion on it at all, other than to suggest that would be one of the points of study.

Senator LEHMAN. What do you think of the idea of including manmade disasters, such as atomic attack or other manmade disasters? Mr. WILLIAMS. We had, of course, our war-risk insurance during the war, and I suppose that in other similar conditions of emergency it would be natural to expect something of that sort to be set up again. Whether it should be set up now in advance of the conditions, or whether we should wait, is again, I suppose, a matter for study and judgment. There are different kinds of manmade disasters, and I do not know that we could anticipate all of them in advance.

Senator LEHMAN. You say here that a limit on the overall liability to be incurred is one of the things that should be watched. "A limit on the overall liability to be incurred, on the duration of the program, on coverage to be extended to a single insurer, and on the amount of self-insurance or deductible required, should be carefully examined." I wonder whether you know that in my draft bill, and possibly some of the others, there are limitations. For instance, in my bill there is a limitation of $300,000.

Mr. WILLIAMS. Yes.

Senator LEHMAN. On each property, and liability for a particular factory or plant, and an overall limit of $2 billion. Would you consider that a fair reservation?

Mr. WILLIAMS. Well, I certainly do not mean to hide behind this study matter, Senator, but the honest answer is, I do not know, and I think it would take considerably more information than possibly any of us has at the present time to know whether such figures would be high or low. It would sound reasonable, but I don't know. That would be a horseback opinion that would not have much value until a good deal more study was made of the problem. I like the idea, of course, and it fits in with our notion that there be some limits set so that we are not just going off on an open-end sort of a deal. Senator LEHMAN. Well, you state here:

These great losses dictate a sympathetic attitude by the Department toward the aims of this committee in its effort to provide some form of protection against the financial impact of such disasters.

I gather from reading that that you would favor an insurance bill, assuming that it was sound and in the interests both of the man to be insured and the Federal Government.

Mr. WILLIAMS. Of course I believe in the general principle of insurance wherever it is a practical thing. I am a practical businessman in my normal business life, and I certainly believe in trying to cover one's self, businesswise or individually, against the hazards of transacting business or the hazards of living with practical limits and under a practical program.

Now, it comes right back down to the question of can we put together a program that adds up in this field. My understanding is that in the various attempts in the past to try to work out something of this sort, this problem of flood insurance always seems to become a stumbling block in finding sound answers, the simple reason being, of courts, primarily that the individual who needs the flood insurance