the casualty companies, writing workmen's compensation insurance. and most of the mutual fire insurance companies.

As a preface to my remarks and an outline of my position actually, with permission of the chairman, I would like to read into the record a very brief statement prepared and submitted by Mr. Loui Buffler, who is one of the executive heads of the New York State fund for workmen's compensation insurance.

Mr. Buffler was here yesterday, but could not stay over today. His letter is as follows:

DEAR MR. CHAIRMAN: Supplementing telegrams sent to you on December 6, 1950, in behalf of the State workmen's compensation insurance funds of the Nation and the American Association of State Compensation Insurance Funds, I submit this statement for the record of the hearings held by your committee:

1. That there appears to be absolutely no possibility that claims arising out of incidents created by enemy action being held not to come within the purview of State compensation laws.

2. That, as a consequence, the effect of a given set of events as presented to your committee by the casualty insurance industry could be catastrophic in nature to the casualty insurance field, including State funds, to employers of labor, and to injured workers.

3. That there is complete unanimity amongst the interests involved casualty insurance companies, State funds, and self-insured employers-that the remedy of reinsurance by the War Damage Corporation is simple and easily adopted. There need only be added to H. R. 9802 after the word "personal" on line 9 of page 2, the words "and through reinsurance (including the reinsurance of selfinsured employers) reasonable protection against liability imposed under any workmen's compensation act, occupational disease act, employers liability or similar law."

In conclusion, I call attention to the fact that the State fund position herein set forth is completely endorsed in a resolution unanimously adopted by the National Conference on Labor Legislation, such resolution to be submitted for the consideration of your committee.

We believe the suggested amendment to be vital to the interests of preserving the solvency of the Nation's workmen's compensation structure in the event of enemy action.

Respectfully submitted for the American Association of State Compensation Insurance Funds.

LOUI BUFFLER, Past President.

The resolution to which he refers was passed by this Conference on State Labor Legislation, which is a conference called by the Secretary of Labor of the United States. It was held here in Washington last month, I believe. It is a very interesting resolution and more particularly in view of the fact that this organization consists of State labor commissioners in the various States and labor union officials from the various States.

There are no insurance people it it and, in fact, it is interesting to show the unanimity in this field, that one of their resolutions is not very complimentary to insurance companies, so that this has nothing to do with insurance companies. I do not know whether that resolution has been put into your record or not.

The CHAIRMAN. I understand the resolution has been put in the record.

Mr. HENRY. Well, there will be no need of my reading it now. Now, our position, the position of the mutual casualty companies is the same as that of the stock casualty companies who appeared before you yesterday and presented their viewpoint. It can be very briefly stated.

We feel that there is a very real danger that these injuries will be held to be compensable under these State laws. I have several cases

that I could refer you to that we feel demonstrate this fact, the most direct case in point probably being a case where during World War I, or before we got into World War I, an employee was traveling on the Lusitania and lost his life. The courts held that that was a compensable injury because the employer should have known that there was very real danger in sending this man abroad at that time. There are other cases; there is a Massachusetts case where during the hurricane of 1938 an employee was in the plant. It was a brick building. It would appear that he was a great deal safer in this brick building than he would have been out on the streets or at home, but something blew loose from the building and he was injured and the court held that it came under the Workmen's Compensation Act and he was, therefore, entitled to workmen's compensation.

This relief we are recommending is not restricted to insurance companies. The primary liability is upon employers and we merely assume that liability by contract, but when we do assume that liability with an insurance contract, there is no possible way that this kind of loss can be excluded. The laws require the workmen's compensation insurance contract to cover the entire liability of the employer under the law, so that if these injuries come under the law, we are on and, as has been stated, the effect on employers, on State funds, on insurance companies, would be ruinous and the net result would be that the employees just would not be paid their workmen's compensation benefits.

Our second point is that bringing this within the scope of a reactivated War Damage Corporation need not delay the bill, need not hold anything up at all because it requires only a very simple amendment, inserting the language that I read from Mr. Buffler's statement merely authorizing the War Damage Corporation to make contracts insuring this hazard and details of that can be worked out with the War Damage Corporation very easily.

As a matter of fact, it will be a great deal simpler to handle this problem than it will be the problem of property, because in this case we will be dealing with reinsurance.

Instead of having 8,700,000 policies, as you were told yesterday, which the War Damage Corporation had during the last war here, they will have a few hundred with employers who are self-insured, with a handful of State funds and a relatively small group of insurance companies and that can be done very simply; it can be very easily worked out and the administrative problem is not difficult in view of the fact that it is reinsurance and not direct insurance; the agents will handle all claims and effect settlements and if they fall in this category, they will look to their reinsurer, the War Damage Corporation, for performance of the contract.

I want to make my statement very brief and, therefore, will conclude with the statement that it appears to us that the protection of the people who will sustain bodily injuries is certainly at least as important, and in our judgment even more important, than granting protection for property damage.

We do not mean to be interpreted as opposing the application of this to property. We feel that that should be adopted and most of our companies have fire insurance companies and we are completely behind the program, but we sincerely feel that this part of the problem

is of even greater interest and more urgent and that there is no need in delaying any legislation at all because of this particular problem.

The CHAIRMAN. Your organization is very much in favor of the immediate reactivation of the War Damage Corporation?

Mr. HENRY. We are, sir.

The CHAIRMAN. We will give consideration to your suggestions in executive session.

Are there any other questions? If not, you may stand aside.

The CLERK. Mr. Harry F. Perlet is the next witness representing the insurance department of the Chamber of Commerce of the United States.

The CHAIRMAN. Identify yourself.

STATEMENT OF HARRY PERLET, REPRESENTING THE CHAMBER OF COMMERCE OF THE UNITED STATES

Mr. PERLET. My name is Harry Perlet. I appear on behalf of the Chamber of Commerce of the United States to urge that you approve legislation for indemnification for war damage. I want to give you the benefit of research and study which the insurance committee of the chamber has conducted on the subject.

Our interest in this problem stems from two sources. First, persons and organizations affiliated with us have urged the establishment of some concrete plan to dispel the present uncertainty surrounding the subject.

Second, we seek adoption of the most efficient and inexpensive plan possible, using so far as practicable the facilities of private business. The chamber's board of directors, in September 1950, adopted the following statement of policy.

Congress should enact enabling legislation for the creation, within some existing Government agency, of a War Damage Corporation, to provide insurance against war losses.

The Government agency should use the existing facilities of Government and private business as was done by the War Damage Corporation during World War II. The insurance plan should be on a voluntary basis.

In our opinion, any plan which your committee finally approves should recognize two fundamentals:

1. War damage indemnity must be undertaken as a separate and supplementary coverage which, when written in conjunction with standard property damage insurance policies, will give complete but not overlapping coverage.

2. The Government should not undertaken to provide coverage against any peril or contingency which private insurance companies are willing to assume.

Because the subject of war damage indemnity covers such a wide scope of interests, including marine insurance, damage to real and personal property, personal injury to civilians and miscellaneous problems with respect to other economic injury, I want to somewhat limit my presentation.

The marine situation has already been adequately covered by Public Law 763 passed by this Congress. I understand that with respect to other elements, it is the desire of your committee at this time to confine consideration principally to that phase dealing with damage to real and personal property.

In considering the problem sometime ago, the chamber undertook a study of the war damage laws and their operations in several countries which had faced this situation. It was our belief that all too often the advantages of a study of comparative law, giving due recognition to a difference of environment, as well as other factors, has been overlooked. The results of our study have been summarized and set forth in a printed pamphlet, War Damage Indemnity. Copies of that pamphlet are now before you. In addition, we recognized that there might be interest in a more detailed report so we have prepared a mimeographed digest of the laws and exerience of several countries. Copies of this material are available if you wish them.

I would like to give you a brief chronological summary of the experience of some of these other countries as developed by out study. Britain has conditions most nearly simulating those existing in this country and for that reason her experiences are particularly interesting.

In World War I the British suffered relatively light home-front losses and there were no Government sponsored war damage-plans. Beginning in 1936, the insurance companies refused to write wardamage insurance on real and personal property on land. In 1937, the Government stated that it was of the opinion that no plan of insurance of property against war risk on land was feasible. In January 1939, the Government partially reversed its position by adopting a plan whereby they made no firm advance commitments, but did provide for the recording of all losses with a promise that compensation would be made available from public funds on the highest scale possible after cessation of hostilities. This was followed in August of 1939 by a plan for insuring essential commodities.

The original position of the Government with respect to the impracticability of advance commitments for war-damage indemnity was reaffirmed by the Weir Committee in October 1939. The Weir Committee apparently was so impressed by the estimates of potential damage placed before it that it concluded that coverage for war damage to property was not a reasonable proposition.

However, by late 1940 sufficient unrest had been created by the blitz of 1940-41 that the Government was virtually compelled to fill in the remaining gaps in the coverage. This resulted in the War Damage Act of March, 1941, which provided indemnity for real property and for most other personal property which had not heretofore been eligible to coverage. This plan was subsequently amended and finally repassed in 1943 and is still in effect.

All of the British plans were compulsory. The various plans covering personal property were supported primarily by premium payments with the Government committed to make up deficits, if any. Real-property premiums were to be adjusted in such a manner as to divide the cost of the losses 50 percent-50 percent between premium payments and Government contributions.

France suffered considerable property damage in World War I and passed a War Damage Act with retroactive provisions in 1919. In the period from 1919 to 1940 a few unrelated and relatively unimportant acts were passed.

In October 1940 the first comprehensive French War Damage Act was passed which provided for the reconstruction of habitable real property, including personal property contained therein. In 1942,

a similar act was passed dealing with the reconstruction of industrial and commercial properties.

In 1946, the foregoing laws and several intervening amendments were integrated to provide a single law covering both real and personal property.

The French plan contemplates reimbursement solely from the national treasury with no collection of premiums and no issuance of policies.

So far as could be determined, the Germans had no war-damage program in World War I. On September 1, 1939, they enacted a very comprehensive law providing compensation for real and personal property. This was subsequently amended in November 1940 and is still in effect and partially functioning.

Like the French, the German plan calls for reimbursement solely from the national treasury with no collection of premiums and no policies.

Mr. BUCHANAN. Neither of these plans was compulsory?

Mr. PERLET. In France and Germany?

Mr. BUCHANAN. That is right.

Mr. PERLET. They were not compulsory because the Government voluntarily accepted liability for everything in the country, so there was no question of compulsion.

Canada adopted a war-damage law in August 1942. This law provided for a voluntary, premium-paying plan with "free insurance" up to $3,000 on dwellings and approximately $1,200 on dwelling contents. Policies were issued under the law but few, if any, losses were incurred.

In our study of war-damage indemnity, several major points appeared to present themselves and I want to describe briefly what these are and our recommenations with respect to them.

The feasibility of a plan has been debated from 1935 down to the present day. It is our opinion that it is not of material practical importance for several reasons.

By way of illustration, it might be noted that in World War II the French had reported property losses of approximately 21⁄2 billion dollars, of which 2 billion dollars has already been paid even under the present conditions of the French economy. England, likewise, had reported losses of approximately 5 billion dollars, the greater part of which has been or is in the course of being paid. I believe this demonstrates that, so long as a country is victorious in a war, it can afford an indemnity plan.

In this connection, I might say that we recognize the destructive potential present in new weapons of war, which some people claim makes the experience of the past war inapplicable. However, we are unable to distinguish between a city 50 percent destroyed by highexplosive bombs over a relatively short period of time and a city 50 percent destroyed instantaneously by an atom bomb. The physical damage loss or indemnifiable loss will still be the same even though from a military or psychological viewpoint there may be a vast difference between the two types of bombing.

In the final analysis, I believe that the experience of other countries as well as our own, demonstrates that a theoretical, dispassionate consideration is of little value in weighing feasibility. It appears that once the public is sufficiently aroused, any question of feasibility is foreclosed and the only question remaining is that of method.