ficiaries of our workmen's compensation laws, not alone for current casualties, but, as well, for those who have been subsisting upon the benefits guaranteed by these laws for two and three decades.

The American Association of State Compensation Insurance Funds subscribes, without reservation, to the statement just presented to your committee by Mr. Stellwagen of the Association of Casualty and Surety Companies. The State funds of the Nation are joined with their contemporaries in the stock, mutual, and reciprocal fields, as well as with the self-insured employers of the Nation in the firm conviction that the problem affects deeply and directly the national economy and our entire social structure; that the liability for injury and death suffered by workers in the course of, and incident to, their employment resulting from enemy action is singularly and essentially a Federal problem which should be acknowledged through the enactment of a measure that will provide appropriate reinsurance to prevent the insolvency of the institutions and the employers here represented.

Labor expressed its deep concern in the matter at the Seventeenth National Conference on Labor Legislation held in Washington, D. C., on November 29-December 1, 1950, when the following resolution was adopted:

Whereas it is generally recognized that there exists a potential threat of enemy action against the United States of America, which attack may include atomic bombing and sabotage; and

Whereas atomic attack on the concentrated industrial areas of this country, if successful, would result in tremendous number of injuries and death as well as extensive property damage; and

Whereas under the workmen's compensation laws of many, if not all, of the States, injury and death to workers under such circumstances may entitle a worker or his dependents to workmen's compensation benefits; and

Whereas an effective atomic attack on one heavily populated area or even a single large industrial plant could result in so many industrial injuries as to exceed the resources and ability of a self-insurer or an insurance carrier of workmen's compensation insurance to furnish compensation benefits and might well exceed even the powers of an entire State to provide benefits: Therefore, be it

Resolved, That the immediate urgency of this threat to the safety and security of the workmen of this country be called to the attention of the President and the Congress of the United States to the end that appropriate legislation on a national sacle may be prepared and adopted without delay, so that adequate provisions may be made for protection, medical care, and indemnity to the workmen of this country and their dependents.

That is the end of the quotation of the resolution adopted by the Seventeenth National Conference on Labor Legislation.

As has been and will be urged by others, the immediate and essential relief proposed is the creation of a Federal instrumentality to alleviate some of the consequences of war. This is in the nature of taking care

of first things first-but without prejudice to the consideration due the whole field of war injuries. It is within your gift, gentlemen, to recommend action now that will preserve the solvency and security of the Nation's workmen's compensation structure.

Thank you, gentlemen.

Senator FREAR. Thank you. Senator Schoeppel?

Senator SCHOEPPEL. Mr. Buffler, at the beginning of this hearing, in trying to project my thinking into the future as we approach this matter, I am wondering if you have given some thought and consideration I hope other witnesses that appear before this committee will be able to give us some enlightenment on this phase of the thing, namely, while you testified here to the funds of the States, suppose a

war plant is bombed. Suppose there are thousands of people on the outer perimeter of this plant-women, children—that are insured by life-insurance companies? The witnesses appearing this morning are looking after their particular groups now, to have the Government step in and either indemnify them or work out some program for their protection. Is it not discriminatory, or would it not be discriminatory unless we took the other step and said what is going to happen to the life-insurance companies on those policies wherein they may suffer losses that might bankrupt those companies? Would that not be discriminatory? Have you not given some thought to that?

Mr. BUFFLER. We have given a lot of thought to that, Senator, and in degree it is discriminatory; but I think, as I said in my closing statement, our proposal is in the nature of taking care of first things first. The distinction between the class to which you have just drawn attention, outside the war plant, and others insured by lifeinsurance companies, is just one of a liability created by law, we believe, so far as those who are insured or killed within the plant at the time the bomb strikes. That is the distinction we make at the moment. We can measure that to a degree now because we know immediately that liability will arise so fast as the awards are made and the cases are adjudicated. The others, of course, that must be given consideration, but it is in the nature of a long-range program for which the over-all solution must be provided. Taking care of this particular problem, created as a result of existing State laws, would not prejudice that over-all problem. We have given very real consideration to that, Senator, and we are deeply sympathetic. We believe that the urgency of the one that we are advocating here now should be given attention first.

Senator SCHOEPPEL. If we pass some type of legislation, it has obviously got to meet the requirements of the greatest number of the groups, of all their claims, but it certainly cannot be discriminatory or we will run right up against the proposition of hitting a stone wall here someplace. My attention was just drawn to the fact that about a year ago in a valley up here in Pennsylvania they had smoke damage, and I see in a morning paper of Pittsburgh that a steel company paid a little over a quarter of a million dollars to settle the claims of $4,600,000 due to smoke damage.

That could very well grow out of destruction of a defense plant that was making defense materials that would affect a lot of people that would not be covered by workmen's compensation, and would not be on-the-site damage.

Mr. BUFFLER. You are very right, Senator.

Senator SCHOEPPEL. Now, here we are, a committee, asked to pass on legislation to meet those various and sundry situations. It is almost like a chain reaction. Where are we going to stop? What are we going to charge for this coverage? How far can the Government be expected to go, or these companies be expected to go, in the event of a mass bombing or something like that? Some of the questions I am revolving in my mind-how I would like to have the answers. I do not have them. I hope you gentlemen, who appear before us, experts in your field, trained men, by experience and background, I hope you can give the committee some light on some of

those problems that we are going to have to cover by some type of legislation.

Mr. BUFFLER. I think those who would certainly be more expert in answering the question you have propounded, than I, Senator, will probably give you the same premise. Your smog illustration, in Pittsburgh, is probably the best that you could have given as to the timing of these things. There was a liability that had to be determined. Responsibility had to be fixed. It took time to develop that. The final and ultimate settlements were not made for some considerable period. Here, in workmen's compensation, we are concerned, however, with matters that are affixed at once, immediately, upon the occurrence of the event, by law. In addition to that a liability that was fixed years ago so far as the dependents and the pensioners of workmen's compensation laws are concerned, some of which, or whom, go back 10, 20, and 30 years in getting their liability. So we are alert to the broad problem that you emphasize here, Senator. We are simply trying to fix in our presentation here today, I believe, the urgency of taking care of that which is fixed by the laws of the several States, because it does not prejudice the other side of the plant line the civilians not engaged in work at the time, because their relief must be fixed in due time, but it is something like your smog case that has to be adjudicated and worked out. I do not know whether I have given you anything that is a real contribution, because it is a very broad problem.

Senator FREAR. Senator Ferguson?

Senator FERGUSON. I might say when I filed this bill I had in mind a thorough study be had of the entire problem. I see what the witness is driving at, but here is the statutory liability that you cannot avoid even by contract in a policy. It is statutory that the compensation must be paid.

Mr. BUFFLER. That is right.

Senator FERGUSON. That if it wiped out a segment of workmen, and so forth, the State, who may be carrying that insurance, would not have enough funds, nor could they raise enough funds to pay it. Now, in life insurance, and that is a problem also that must be considered here, if it is a voluntary contract between a life-insurance company and a person, they can provide in there that it shall not cover war risks, but in the compensation you cannot even provide for that. Therefore, it looked to me, when this provision was put in the bill, that we ought to start at least with this and then work out the broader problem of trying to take care of any person that is injured by the war casualties. Is that a fair statement?

Mr. BUFFLER. Thank you so, for stating our case better than I did. Senator FERGUSON. I thought the record ought to clear up at least what the author of this provision had in mind.

Mr. BUFFLER. You have made it very clear now, Senator. Thank you.

Senator FREAR. Thank you, Mr. Buffler.

Mr. BUFFLER. Thank you.

Senator FREAR. Mr. Walter Linn, secretary-treasurer of the National Council of State Self-Insurers' Association. Mr. Linn.

85516-52-3

STATEMENT OF WALTER LINN, SECRETARY-TREASURER, NATIONAL COUNCIL OF STATE SELF-INSURERS' ASSOCIATIONS

Mr. LINN. Mr. Chairman and gentlemen of the subcommitteeSenator FREAR. Mr. Linn, we are glad to have you.

Mr. LINN. Thank you, sir.

This is a statement for the National Council of State Self-Insurers' Associations by its secretary-treasurer, Walter Linn.

Senator SCHOEPPEL. Mr. Chairman, might I ask the witness to get into the record for us what groups he represents, to give us a little bit more orientation?

Mr. LINN. That is practically the substance of my statement here. Senator SCHOEPPEL. I see.

Mr. LINN. Our address is Finance Building, Philadelphia, Pa.

As one of the six signers of the general statement already submitted to you by Mr. Herbert P. Stellwagen, it would seem to be superfluous or me to repeat, or elaborate upon, a presentation which, I think, tells the whole story.

It might be appropriate, however, for me to explain briefly why I am here and what I represent.

In all of the States except Washington, Oregon, Nevada, Wyoming, North Dakota, and Texas, self-insurance is recognized by law as one of the permissible types of workmen's compensation coverage. Naturally, the regulatory powers require that applicants for self-insuring permits shall have a spread of risk and a financial standing sufficient to make sure the payments of compensation claims.

This means that self-insurers everywhere are necessarily the larger industrial units. There are probably no more of them in the United States than there are insurance companies, but they have many millions of employees and billions of invested capital. No war effort and no peace effort could be successfully prosecuted if even a considerable percentage of the self-insurers were suddenly to become insolvent.

In seven of the States-New York, New Jersey, Pennsylvania, Maryland, Utah, Idaho, and California-there have been organized, for the last quarter of a century, State-wide associations of self-insurers. Six years ago, they united in the National Council of State SelfInsurers' Associations, of which I am the secretary-treasurer. Under our articles of agreement, the council cannot advocate or oppose any national legislation or regulation touching upon workmen's compensation or kindred measures until the proposal has been considered and. approved by each of the seven association members.

It is as a result of this unanimous action, representing self-insurer opinion from the Atlantic to the Pacific, that I am here today in support of the proposal to include possible catastrophic workmen's compensation hazards in any war-damage-insurance measure which may be enacted by your august body.

Now, if I might answer a little more fully the question that the Senator addressed to me, I do not know how many self-insurers there are in the United States. If we were to collect the number of selfinsurers in each State and add them up, that would not give the answer, because many of them operate in numerous States, at least one in all of the States, so that there would be duplications.

Senator SCHOEPPEL. Mr. Linn, I have just been sitting here thinking about one very important thing, namely, raising the funds to meet

all of these obligations that we hope never come into existence, but are likely to if all-out war should come. It was brought out here that the real-estate value of the country is about $400 billion. Something had been said a while ago about providing a fund, and, say, putting in I cent per $100. It just occurred to me, I wondered if you had any observation to make on this: Suppose we charged 1 cent on every thousand dollars of value of real estate, that would raise roughly, if my mathematics are correct, about $400 million a year. If we put in 10 cents per thousand, that would raise $4 billion a year. Now, if inflation continues to keep rolling along unchecked, might that not be a pretty good anti-inflationary proposition, or rather a saving that. might be practical? You have to delve around and get more money, everybody is asking for more.

Mr. LINN. I quite agree with you, Senator. I have been doing a lot of worrying about that too, personally. I think it is going to be expensive to move welfare into the chaos of all-out war, I admit it. But I think the suggestions contained in Mr. Stellwagen's paper are very apt to the point.

Senator FREAR. Mr. Linn, you are secretary-treasurer of the National Council of State Self-Insurers' Associations. I am not quite satisfied with the answers you have given to Senator Schoeppel as to who you do represent. Who are some of these self-insurers?

Mr. LINN. Well, I can name a number of the self-insurers. Practically all of the big steel companies, practically all of the big public utilities the Bell Telephone, the Western Union, the Philadelphia Electric Co., the Pennsylvania Railroad-all of the big anthracite and bituminous coal operators in Pennsylvania, the Westinghouse groups, Du Pont, people of that type, all over the Nation.

Senator FREAR. I thank you, sir. I think that clears the matter in my mind.

Mr. LINN. Thank you.

Senator FREAR. Thank you, very much, Mr. Linn.

Mr. Franklin J. Marryott, vice president and general counsel of the Liberty Mutual Insurance Co.'s., representing the American Mutual Alliance.

STATEMENT OF FRANKLIN J. MARRYOTT, REPRESENTING THE AMERICAN MUTUAL ALLIANCE

Mr. MARRYOTT. Mr. Chairman, honorable Senators, my name is Franklin J. Marryott. My office address is 175 Berkley Street, Boston. I am general counsel for the Liberty Mutual Insurance Co.'s. The casualty company of that group is called the Liberty Mutual Insurance Co. It writes a very large volume of workmen's compensation insurance, and, of course, this is vitally concerned with this legislation.

Today, I also speak for the American Mutual Alliance. The American Mutual Alliance is an association of 114 mutual insurance companies. Some of these companies are large and some are small. A number of them write workmen's compensation insurance, and a number of them write fire insurance.

I have a figure for the compensation writers that will give you some impression of the size of the companies. The aggregate premium vol