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at Providence, and I believe in New York also, but we will want to get more views because it is the desire of this committee to work just as closely as we possibly can with the insurance companies, and not do anything which the insurance companies can do if they are in a position to offer coverage at reasonable and adequate rates and conditions.

I ask my colleague, Senator Bush, if he wants to say anything.

Senator Bush. I want to say a word of welcome to the committee. We are very proud and happy that this distinguished committee with its able and distinguished chairman has come to Hartford to hear evidence and testimony on the question of flood insurance. It seems to me very appropriate for two reasons at least that hearings be held here.

First, because we have been the hardest hit of any State in these disasters in 1955; and, secondly, because we pride ourselves on the fact that this city is the insurance capital of the world. We are exceptionally interested in flood insurance for both reasons.

I thank you, Mr. Chairman.

Senator LEHMAN. I want to add one more word. I want to make it clear this hearing is not on one bill. It is on a number of drafts that have been submitted to the committee. Senators Kennedy and Saltonstall, of Massachusetts, have prepared a draft bill. I have prepared a draft bill. Mine is very considerably more comprehensive than the others. Senator Carlson, of Kansas, has also prepared a draft bill, and I understand that Senator Bush has had a bill prepared under his direction which he has not yet submitted, but which he may submit.

In addition to that, of course, we have already been advised there will be a number of bills presented in the House of Representatives. I know Congressman Dodd has a bill on which he will testify today, and other Congressmen in the northeastern territory also will submit bills which will be considered by the Banking and Currency (ommittee of the House.

Governor, we will be very glad, indeed, to have you testify in any manner you see fit.



Governor RIBICOFF. Mr. Chairman, first may I welcome you to Connecticut, not only as a distinguished Senator but as a personal friend. I am glad to see you in Hartford and also the members of your staff, whom I have known for many years and for whom I have a great deal of respect. We are glad that you and Senator Bush have come to Hartford in your hearings in this field of so-called disaster insurance. I would rather enlarge this to call it either catastrophe insurance or, what I am talking about basically, a catastrophe fund.

It is my opinion that no single domestic issue will be more important in the coming session of Congress than the one you are now talking about and thinking about and conducting hearings on. It is my hope that with all of the mass of work that Congress will have, that this important issue will not get lost in the shuffle because of its complexity. Having served in Congress, I am well aware of how you can shunt aside very complex and important matters because of the unwilling. ness really to get down and grapple with the hard facts and the hard conclusions, and sometimes the unpalatable ones that a congressional committee will have to face.

I am satisfied from the attitude as expressed by President Eisenhower when he met in Hartford with the Governors of the affected States and the congressional delegations, that President Eisenhower will recommend a comprehensive program along this line. The President expressed great sympathy and sincerity in this field, and I am confident that there will be forthcoming a program.

It is my hope that all people in Congress, irrespective of party, on a nonpartisan basis, will push for this program.

Here we are in the State of Connecticut-
Senator LEHMAN. May I interrupt you?
Governor RIBICOFF. Yes.

Senator LEHMAN. I understand, and it is a matter of record, that the President in response to a letter addressed to him by the Conference of New England Governors, again gave very definite assurance that their suggestions and plans will be in the hands of the committee very promptly.

Governor RIBICOFF. That is right. That is so. We have a copy of that letter.

Here we are a State which has gone through two floods. We in Connecticut are not whimpering about it. We are not crying about it, but we are doing something about it. Yet the great heartbreak of the two floods gave us a feeling and a sense of inadequacy.

Believe me, Senator, when I tell you that the people of the State of Connecticut are giving right out of their very guts and very hearts, and yet, you see, we are surrounded by complete and total tragedy.

What impresses you the most is the spirit and heart of the American people, and the way that they respond in the face of seemingly overwhelming burdens and tragedies.

The great problem we have is in trying to work out the economic factors and human factors in the State of Connecticut, as we see it. The Red Cross came in and has done, and will do, a very, very adequate job, with a certain type of recipient of relief. Ellsworth Bunker is here and he will testify as to what they have done in Connecticut.

The big employer has been hurt, and hurt badly, but he has one saving grace. If he is a going corporation doing a substantial business, then under our tax laws on the carry-back and carry-forward features there is a possibility and a probability that he can absorb some of his losses out of income-tax credits.

The great tragedy, as I see it, in Connecticut, is the small individual, the middle-class individual, the small-business man, who has worked a lifetime to accumulate a business and all of his worldly belongings are tied up in a store, in his fixtures and his inventory. He is suddenly faced with the knowledge and the fact that the savings of a lifetime have been destroyed. Not only have they been destroyed, but the way back becomes a very, very difficult one.

It is easy to say that the SBA will come in and help, that the SBA will give this man a loan. The man may start with a business being left with debts and accounts payable of $25,000 or $30,000, and he needs $50,000 to get reestablished in business. He finds himself saddled with a burden where even with years and years of effort it will almost be impossible for him to make himself whole.

We in the State of Connecticut, as I say, have had a grim toll taken of us. Ninety-one persons are known dead; 12 others are missing or presumed dead; 86,000 persons are unemployed, and 1,100 families were left homeless; 2,300 families were at least temporarily without shelter; nearly 20,000 families suffered flood damage; 67 towns were affected by the floods and the damages ran into the hundreds of millions of dollars.

Where does the Government come into this picture, as I see it from my own experience? First let me say that I think catastrophe is national in scope.

I do not think you can isolate any one section of this Nation any more and say that this section of the country will be a section in which catastrophe will strike. The records of Connecticut show we have never had two disasters like this, or any disaster in the whole history of the State. I have talked to manufacturers with

I plants which go back a hundred and fifty years, and who keep accurate records along the river, who tell me that never have they suffered damage like this in the whole history of their companies or concerns. Yet it is not enough to say, as I read in the testimony in Washington, that the only way you can handle this problem is through flood-control measures and the building of flood works. That is only a partial answer. You will have to do that, but in any section of the United States, if nature decides to dump 14 or 15 or 16 inches of rain in 24 hours on 1 locality, you are going to have damage and suffering irrespective of the flood-control works on the main rivers, because much of this damage was done not on the main rivers, but was done on the small tributary streams, where the large concentration of rain overflowed those streams, which caused damage and opened up new streams where none existed before.

If you go back through the history of our Nation, I think you will see in the last 25 years we have suffered floods that have taken a toll of about $150 million a year. It is estimated that the annual toll of floods will be approximately $300 million a year for the foreseeable future. I do not think, coming from an insurance State, that the insurance companies are going to be able to handle this problem. I have talked to some of these insurance executives privately and personally, and it is well understandable why an insurance company for the protection of its stockholders and policyholders would find disaster insurance of this nature to be prohibitive. They could not carry it possibly because of the cost of premiums. People could not pay the premiums, because they would be so high.

Therefore, as I look at it, it is incumbent on the Federal Government to set up a so-called catastrophe fund covering all disasters. I think when you get down to it, if you find that you are trying to write an insurance program based just on floods, you will be limited in scope to sections of the country where people may suffer disasters which are beyond the scope of floods.

I think once we are looking into this field we should cover it all, and we should cover all catastrophes-hurricanes, windstorm, drought, flood, and even in the field of war damage, either through atomic bombing or other means of destruction.

In this way it is my opinion that almost every careful person and business house in the United States would take out insurance of this type. If the coverage were wide enough and large enough with a Nation of 160 million people, then you would find that the fund would be great enough to permit you to charge a very nominal premium with a great degree of safety.

However, let us assume that you find the premiums would not be enough. Out of the many communications which have come across my desk I have a most interesting one from a man by the name of Richard H. Whitehead, of Scott & Williams, of Laconia, N. H. Let me preface the reading of this statement with this remark: If you will look up my record in Congress you will find I have always been a strong advocate of our aid programs in Asia, and our military programs throughout the world. I do not think it is an answer to say that we are sending large sums of money abroad and therefore we should not do that and should make sure this money is spent at home, I think for the protection of our Nation these policies have been sound, and I think the United States as a world leader is going to have to assume many of these burdens throughout the world if we are to assume our position of leadership. But here is an important point made by this man, and when I read excerpts from his letter you will understand why it has significance:

After the first flood disaster this year hit Connecticut, I contacted Mr. Eyanson of the Manufacturers Association of the Valley of Naugatuck and offered them a lot of machinery. I also sent to Seymour a steam jet machine for cleaning up, which is still in use. My board of directors approved a gift of $5,000 for flood relief on my request. In addition, I wrote to Sherman Adams to forward to Val Peterson a copy of a book entitled "One Million Tons of War Material for Peace” which has recently been published in Germany. This particular book covers the activities by the German Public Corporation of which I was control officer under General Clay in the rehabilitation of Germany immediately after the war. The American public have an entirely inadequate knowledge of what was done by the United States in behalf of emaciated Germany to revive its industries. Surplus property was sold to them at around 10 cents on the dollar and all captured enemy material was redelivered to the economy; surplus incentive materials were poured into the economy; and this had nothing to do with GARIO funds. At the conclusion of the whole business we Americans gave the Germans a $2 billion rebate, waiving all claim to 63 percent of our dues from postwar deliveries to Western Germany.

This has nothing to do with captured material or indemnities, but is actual goods delivered by the United States after the war was all over.

I am only mentioning Germany because it is one activity I was concerned with, We have done much the same for other nations.

As an executive and president of a manufacturing company in New Hampshire, I am conscious that I am working not only for the stockholders but for the Government to whom we must pay 52 percent of our earnings in cash. The Government gets much more use from most companies than the stockholders do and in effect are preferred owners of American industry.

We gave relief to Germany and other countries to the extent of many billions of dollars where the Federal Government has no taxing power. The source of the wealth that we gave away to these countries was in the productive power of American industries and was obtained by the Federal Government's taxing power. It therefore seems axiomatic that the first duty of the Federal Government is to give away its funds in places to insure its ability to raise money for future economy by its taxing power. If the Federal Government should appropriate money to rehabilitate Connecticut industries and other States that have been hit by unusual disasters, it would seem that it was only acting sensibly as it would be protecting its source of wealth. It virtually is a majority owner of these corporations because of its taxing power, and in cases of disaster it would seem reasonable that it should prudently protect its source of income.

What do we have here! With this destruction we have a loss of millions of dollars of tax income to the United States of America. If these companies which were destroyed received a return through insurance funds, then of course the amount of destruction that they were compensated for would not be a deductible item, which they would be contributing then to the United States Treasury.

So in this instance, if the United States backed up this catastrophe fund with appropriations or the full faith and credit of the United States Government, it would be saving these funds which it would receive in the form of income taxes. Furthermore, the United States has come in and it will spend and has expended additional millions of dollars in rehabilitation work. If this were insured out of this fund it would not be necessary for the United States Government to make this expenditure.

Therefore, if the United States is faced with an approximate catastrophe loss of $300 million a year, it would seem to me that the United States, when catastrophes of this nature strike, would be in a position where if you would just take the direct loss to the United States, it would more than overbalance the amount that the United States Gorernment would have to pay into a catastrophe fund, let alone including the loss of business and loss of jobs and the other losses like the loss of income and the complete derangement of the American economy.

If the United States can go into Germany, France, and Italy, and all of these other nations, to make sure that their economies are viable and going economies, and if this is done in order to buttress the economic position of the United States on the world market-and I so agree, that the United States ought to do this and I do not criticize that program—then the United States Government certainly, with its total resources and assets, has the duty to protect the basic economy of its own people.

I say that because the economy of the United States must be solvent, and the United States economy must be able to throw off these taxes if we are to carry not only our domestic, but our international burdens.

I submit to this committee the United States Government is not doing this if they are allowing this suffering and this derangement of our economy, ranging from the small individual up to the large corporations. Therefore it is my hope that this committee will get a bill which would be a broad bill. It would be in the nature of a catastrophe fund. Premiums would be charged of a reasonable nature to anyone who would want to take out a broad coverage, and an extensive coverage, against catastrophes of all natures, including war destruction.

When the Government economists try to figure this out on an actiarial basis, if they say the funds and premiums are not sufficient, then I think that a case is made out for the l'nited States in its own protertion for its own people to make a contribution. That could be done either by an appropriation of X amount of dollars every year, or by the pledging of the full faith and credit of the United States in the event disaster strikes.

I know this would have to be supplied sometimes in a deficiency appropriation, but I have no question in my mind that should the United States declare it as its policy that it would back up this fund, that in itself, with the great credit of the United States, would be sufficient. I am sure that any succeeding Congress would vote the necessary appropriations to fill in these funds in the event the outgo, in case of a major disaster, would exhaust the fund. If it were a large catastrophe it would be ever a wide range of the people of our Nation.

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