LIBRARY 
 
 OF THE 
 
 University of California, 
 
 Gl FT OF 
 
 lAa^. 
 
 .(^"^ 
 
 Class 
 
-- .A^^ 
 
 
 n Address on 
 
 ^he Qommerdal Aspects 
 
 of 
 
 \Federal Regulation 
 i Insurance 
 
 
 By JOUn F. DRYDEN, President of The Prudential Insurance Gompany 
 \of America, Delivered at the Thirty-eighth Anniversary Banquet of 
 [the Newark Board of Trade, January 18, 1906 
 
An Address on 
 
 The Commercial Aspects of Federal 
 
 Regulation of Insurance 
 
 By JOHN F. DRYDEN, 
 
 President of 
 The Prudential Insurance Company of America 
 
 Delivered at the Thirty-eighth Anniversary Banquet of the 
 Newark Board of Trade, January i8, 1906 
 

THE COMMERCIAL ASPECTS OF FEDERAL 
 REGULATION OF INSURANCE. 
 
 A National The proper supervision, regulation and control of 
 
 Problem. insurance companies have become problems of national 
 
 importance, chiefly because of the enormous extent of the business 
 and the fact that the contracts are, in the majority of cases, 
 made by parties resident in one State with parties resident in 
 another. There has, therefore, come about a perfectly natural 
 demand that insurance companies should be made subject to the 
 restrictive power and general supervision of the Federal govern- 
 ment, in much the same manner as the Federal government exercises 
 control over national banks and railways engaged in interstate 
 commerce. The proposition appeals with peculiar force to commer- 
 cial interests, since in one way or another insurance enters into all 
 of our commercial transactions and forms a substantial item of 
 expense in every mercantile account. Insurance constitutes a part 
 of the price of nearly every article sold for public consumption, and 
 while the unit cost is infinitesimal, in the aggregate the amount paid 
 out for fire, marine, inland and miscellaneous insurance amounts to 
 about three hundred and fifty million dollars per annum — a not 
 inconsiderable burden upon our commerce, both at home and 
 abroad. Insurance, in other words, is a factor in commerce and 
 peculiarly a mercantile interest, and in whatever way the business 
 can be advanced, the cost reduced and the security made more 
 safe, concerns all who are engaged in commerce, transportation or 
 mercantile transactions generally. 
 
 Necessity for For some ycars efforts have been made to secure 
 
 Federal Laws. £^^ insurance adequate and uniform national laws along 
 the same line as has been the case in interstate commerce 
 generally, in national banking, and since 1898 in bankruptcy. 
 In the last Congress I introduced a bill to this effect, but only to 
 
 174424 
 
secure for it a public expression of opinion as to its merits. The 
 new bill* introduced by me this week is a modified and materially 
 improved measure, which, if passed, will extend to the insurance 
 business the full scope and power of Federal laws. After carefully 
 considering the subject for many years, both in the light of theory 
 and large practical experience, I have become convinced that 
 legislation of this character is demanded by the necessities of our 
 national growth and progress in industry and commerce, and that 
 what is to-day a vast business of national extent is, as such, entitled 
 to the protection, care and solicitude of the Congress. 
 
 Our It is difficult to realize the immense growth and 
 
 Commercli ~ 
 Progress. 
 
 commerc profound changes in our position as a commercial nation 
 
 during recent years without the trying aid of a mass of 
 statistical data which would be out of place on this occasion. In a 
 general way, however, I may point out that this country is to-day 
 different in all essentials, save our fundamental political principles, 
 from what it was at the time when the Constitution was adopted. 
 In 1790 our population was four millions, as contrasted with more 
 than eighty millions at the present time. In 1790 the aggregate 
 value of our exports was estimated at $20,000,000, or a per capita 
 of about $5, in contrast with which we now export about $1,500- 
 000,000 per annum, or $18 per capita. The adoption of the Con- 
 stitution not only made us a nation, but stamped upon us our 
 commercial character, and the destiny, in due course of time, to 
 attain to the leading position in the world of commerce, trade and 
 industry. Chiefly, however, our growth has been in the direction 
 of internal development, and our inland trade and general business 
 to-day is of vastly greater proportions than both our exports and 
 imports combined. At the time of the constitutional convention 
 there were no railways, no canals of commercial value, hardly any 
 wagon-roads connecting one State with another, no business corpor- 
 ations of importance, and no insurance companies or insurance busi- 
 ness in the sense and to the extent as that term is now under- 
 stood in everyday language and as established by commercial custom 
 and usage. The times and conditions have changed, and, of 
 necessity, our earlier restricted policy has been replaced by a 
 broad conception of national interest and national expansion. 
 
 * Senate 3026, 59th Congress, ist Session, January 15, 1906. 
 
 4 
 
Insurance a With the era of internal improvements (1806) 
 
 Ne^ssir* commenced our internal expansion and development, 
 until the United States of to-day is an imperial domain 
 with more productive wealth per capita and a more general method 
 of distribution than any other country in the world. By 1800 only 
 nine hundred and three post-offices had been established, with an 
 annual revenue of $280,000, while to-day there are some seventy- 
 five thousand offices, with an annual revenue exceeding $150,- 
 000,000. There was then no telegraph, which to-day sends out 
 over one hundred million messages per annum, and no telephone, 
 the general utility of which can neither be expressed in figures 
 nor computed in monetary equivalents. There was then but 
 the very beginning of insurance, which to-day is the foremost 
 single financial interest in this land. Marine insurance was the 
 first to become a commercial necessity, perhaps more so at that 
 time than the present on account of the great development of steam 
 navigation, the more accurate charting of the coast, resulting in a 
 lesser number of shipwrecks, the extension and perfection of our 
 magnificent lighthouse service, and, last but not least, a more 
 intelligent and efficient pilotage. Fire insurance followed, and 
 soon became recognized even by moralists as a duty incumbent 
 upon the debtor to fully protect the interest of the creditor. 
 Without fire insurance protection the world's inland commerce 
 could not be carried forward to-day on anything like the existing 
 scale, nor would it be possible to secure the vast amount of mortgage 
 indebtedness at the low prevailing rates of interest. While it is 
 true that a considerable part of our inland commerce as such is not 
 specifically protected by insurance, an open policy of insurance, as 
 a rule, protects the carrier, who assumes the responsibility to the 
 shipper in the event of loss. In all our immense warehouse and 
 elevator transactions the policy of fire insurance, is as much a 
 necessity as the certificate establishing the ownership of the goods 
 in storage or awaiting shipment. In addition to these, numerous 
 other forms of insurance have been developed, all of which have 
 become a more or less indispensable aid to commerce and industry. 
 Among these I may mention fidelity and surety, employers' liability, 
 plate-glass, credit and general accident insurance. All of these 
 forms of insurance protection reduce the element of uncertainty in 
 commercial operations and increase commercial efficiency, and 
 directly or indirectly, as the case may be, increase to a con- 
 
siderable extent our commercial expansion both at home and 
 abroad. 
 
 Early This point of view is not new, but nearly as old as 
 
 Insurance 
 Problems. 
 
 Insurance ^^^ business of insurance itself, and commercial losses 
 
 due to fire, shipwreck and other casualties are no longer 
 met by general charitable contributions, but the reimbursement for 
 such losses is made through associated effort represented by corpor- 
 ations transacting the business of insurance. As earlj^ as 1796 this 
 aspect of the insurance problem was brought to the attention of Con- 
 gress in an attempt to secure pecuniary relief for the sufferers from a 
 great conflagration which destroyed the larger portion of the city of 
 Savannah. It was urged in the argument in favor of the plea that 
 not a public building, not a place of public worship or of public 
 justice remained, that all was a wide waste of ruin and desolation, 
 and the speaker expressed the hope that some relief would be 
 afforded to the city in its unexampled distress. In reply, however, 
 it was said, and very properly so, that if Congress were to set a 
 precedent in this direction and accustom the public to rely upon the 
 national legislature for relief in cases of this kind, there would 
 neither be any occasion for insurance companies nor any induce- 
 ment to improve the methods of building. This, I think, is the 
 first reference to insurance in the debates of Congress. 
 
 Insurance not Under modern conditions insurance has become 
 
 Na^onai* ^ necessity, for individual protection or that of the 
 
 family can no longer be left to friends and relatives, 
 with burdens enough of their own, but the risk inherent in the 
 uncertainty of human existence must be and is assumed by corpor- 
 ations engaged in the business of insurance. Contracts made to 
 this effect with,well established companies are carried out to the 
 letter, and very often beyond the letter of the mere written agree- 
 ment between the insurer and the insured. In whatever respect 
 insurance management may have failed to meet the highest expec- 
 tation or the most severe test of public criticism, it is something 
 very considerably to the credit of American insurance companies 
 that on the whole and with no important exceptions they should so 
 successfully have met their contract obligations dollar for dollar, 
 not only to the letter of the law, but in a spirit of justice and fair 
 dealing to the insured. It is due to this fact that insurance has 
 
become a national interest, now including practically every sphere 
 of human activity, every branch of trade and industry, every line of 
 progress and advancement, of which this nation, at a more rapid 
 rate than any other, has forged its way to the foremost position 
 among the civilized countries of the world. Insurance to-day is 
 not a local interest in the sense that this word is used in ordinary 
 English, but, on the contrary, it is an interstate or national interest 
 in the vast majority of the transactions which are carried on between 
 the companies and the policyholders. 
 
 Insurance in All of the large companies are practically national 
 
 Interstate 
 Commerce. 
 
 Interstate -^ ^-j^^ extent of their operations, transacting business 
 
 in every State and Territory of the Union, and this 
 because of modern necessities and not merely as a matter of profit- 
 able business extension. Goods shipped from Duluth or St. lyouis 
 to the seaboard to be transshipped to foreign ports are covered by 
 a single policy of insurance which begins from the time of shipment 
 in the West to the time 'the goods are delivered in foreign lands. 
 This, in the case of marine insurance, not only makes the business 
 national but international, and, as such, peculiarly a subject of 
 Federal supervision and control. Another element which enters 
 into the problem and which has often been ignored, is the fact that 
 our population is largely of a migratory character, and people in- 
 sured in one State, by removing to other States, while continuing 
 their contracts under existing conditions, become subject to different 
 laws, and often to a radically different interpretation of the law. 
 
 Insurance in Insurance is not a subject which should be exposed 
 
 LawT" ^ ^^ *^^ fluctuating state of public opinion as expressed 
 in the form of frequent statutory enactments under our 
 system of representative government in some fifty different States 
 and Territories. In conformity with the usage of other commercial 
 nations, it should be exclusively within the control of the State of 
 incorporation and the Federal government. This control, I am 
 convinced, will be effective and economical and produce a far 
 better state of affairs than exist at the present time. I have 
 it on good authority that during the last five years not less than 
 three thousand bills were introduced into the different State legis- 
 latures more or less affecting the interests of insurance companies. 
 This amount of legislation and remedial legislative action is utterly 
 
uncalled for and neither demanded by the growth of the business 
 nor by the contractual relations between the companies and their 
 policyholders. In other countries, such as Germany and Switzer- 
 land, where an earlier federation of states, or cantons, had produced 
 conditions similar to those existing in this country to-day, in the 
 course of time insurance has become the subject of exclusive 
 federal control. 
 
 Federal My vicws and convictions in this matter have not 
 
 and^Pubiic" wholly been the result of my personal experience in the 
 Opinion. business of insurance. To satisfy myself fully as to 
 
 whether my own views were sustained by those whose 
 business experience or personal interest in public affairs had given 
 them a peculiar opportunity to judge of the necessity and advantage 
 of Federal supervision of insurance, I addressed a carefully framed 
 circular to some eight thousand associations and individuals in all 
 parts of the United States, and of these I am now in a position to 
 state that nearly ninety per cent, favor the idea, and heartily 
 endorse, often by long letters, the effort to secure congressional 
 action upon this subject. 
 
 Federal My letter of inquiry was addressed, among others, 
 
 and*coinmer= *° some scvcn hundred commercial bodies or organiza- 
 dai Opinion, tions, and of this number ninety-six per cent, pro- 
 nounced themselves in favor of Federal supervision. 
 In many instances deliberate action was taken upon the matter and 
 a formal expression of all the members of the organization was 
 secured, emphasizing the widespread interest in the subject and the 
 deep conviction that Federal action upon this matter would be desir- 
 able and would be approved by the public generally. Hence, I have 
 fully satisfied myself that the commercial interests as represented in 
 well-established associations or organizations are practically a unit 
 in favor of the proposed regulation of insurance by Congress. As 
 to the further question, whether insurance should properly be con- 
 sidered an element or instrumentality of commerce, eighty per cent, 
 of the commercial bodies to whom the circular was addressed 
 replied in the affirmative. I also addressed my inquiry to a large 
 number of the presidents of national banks, upon the theory that 
 these institutions, having for many years been under Federal super- 
 vision and control, were in an exceptional position to express an 
 
 8 
 
opinion as to whether Federal regulation of insurance would be 
 desirable or not. In addition, it must be taken into consideration 
 that these banks, in a general way, are interested in insurance to 
 the extent that many loans upon goods in transit or in storage 
 require the additional guarantee of a certificate of insurance before 
 the loan will be granted or an advance will be made by the bank. 
 Of those making answer to my letter of inquiry, ninety-one per 
 cent, of the bank presidents were in favor of Federal regulation of 
 insurance, while seventy-two per cent, held insurance to be com- 
 merce or an element or instrumentality thereof. 
 
 Federal Super- These are but a few illustrations of the expression 
 
 Folic" hoiderg' ^^ public Opinion which I have collected to satisfy myself 
 Opinion. and others that the movement for Federal regulation of 
 
 insurance is a national one and has the hearty and 
 emphatic support of the interests specifically affected, as well as of 
 the large mass of our population generally. I may add that of a 
 large number of prominent policyholders, holding life insurance 
 policies of not less than $25,000, and in the aggregate approx- 
 imately $75,000,000 of insurance, and being therefore vitally and 
 financially interested in all that pertains to the solvency and 
 economical management of the companies, ninety-two per cent, 
 expressed themselves in favor of Federal regulation of insurance, 
 while eighty per cent, of this class held insurance to be commerce 
 or an instrumentality thereof. I am, therefore, not aware of 
 any measure which may come before Congress for serious and 
 earnest consideration which has so fully and heartily the endorse- 
 ment of intelligent public opinion. And I do not hesitate to say 
 that it is my belief that if the proposition could be submitted to a 
 popular vote, and if an expression of opinion could be secured from 
 the vast mass of policyholders of all branches of insurance, the 
 verdict would be practically unanimous in favor of the enactment of 
 a Federal law regulating interstate insurance transactions. 
 
 Constitutional Any new legislative proposition must, as a matter 
 
 Obstacles. ^£ coursc, be framed or designed to stand the final 
 test of constitutionality when interpreted by our court of last 
 resort. Some very plausible reasons have been advanced to 
 show that the proposed Federal regulation of interstate insurance 
 transactions would not be within the powers granted by the Con- 
 
stitution, and in particular not within the meaning of the commerce 
 clause of that instrument. Objections of this kind are properly- 
 entitled to serious consideration, but it is well to keep in mind that 
 similar objections have been raised against most of the great 
 measures which have come before Congress for consideration at 
 nearly every session from the very foundation of our government. 
 Nor could it well be otherwise. The Constitution is not a legal 
 code but a written instrument, general in its terms, every provision 
 of which is, and will ever remain, subject to interpretation by the 
 Supreme Court as cases or conditions arise which may make this 
 necessary. The Constitution is intended to endure and meet our 
 needs for all time, and from Marshall down, the interpretation 
 of the different clauses has, as a rule, been in a spirit of broad 
 construction, to give to this government the character of a nation 
 and not merely that of a federation of States. 
 
 Constitutional Constitutional objections, as I have said, have 
 
 History. been raised against most of the measures and legislative 
 
 acts which have received consideration by Congress and to which 
 we owe our growth and development as a nation. Washington 
 had hardly issued his famous declaration of neutrality, which, 
 without doubt, saved this country from a disastrous war, when 
 bitter accusations were made against him of an unwarranted exer- 
 cise of his powers. Washington was opposed by Madison but sus- 
 tained by Marshall, and the verdict of history is read in the language 
 of Justice Story,* that " Probably at the present day (1835) not a 
 single statesman can be found of any influence, in any party, who 
 does not deem the measure to have been as well founded in consti- 
 tutional law as in sound policy. ' ' Jay had not more than completed 
 his treaty with England when the point was raised, and sustained 
 by apparently irrefutable arguments, that the treaty was unconsti- 
 tutional and that Congress did not have the power to ratify it. In 
 fact, it was maintained that * ' The negotiation of a commercial 
 treaty by the Executive was an infringement of the Constitution 
 and a violation of the power given to Congress to regulate com- 
 merce." In all the many and perplexing questions which have 
 agitated our nation from time to time, the point of constitutionality 
 in legislative enactments has invariably been brought forward. This 
 
 ♦John Marshall, lyife, Character and Judicial Services, by John F. Dillon, Vol. Ill, 
 pp. 350-353- 
 
 10 
 
is true, for illustration, of the controversy relating to the assumption 
 of State debts, the several embargo acts, the enforcement act, the 
 bank charter, the militia question, the territorial extension and the 
 creation of new States, the conscription scheme, and many other 
 controversies and disputes. The point of constitutionality was 
 raised in the Missouri compromise, and not settled by a decree of 
 the Supreme Court until thirty-five years later. The great question 
 of internal improvements, than which, perhaps, not one during the 
 earlier years of our national existence was of greater importance, 
 was bitterly fought upon the ground of constitutionality, and had 
 the narrow spirit of constitutional construction been successful we 
 should be very far from having attained to our present imposing 
 position. Bitter, again, was the constitutional struggle over the 
 tariff laws, which, it was held, should be passed solely for the 
 purpose of raising revenue and not for the purpose of protection, 
 but fortunately for the best interests of the people and the nation, 
 the narrow spirit was set aside by the broad principles of liberal 
 construction of the constitution as an instrument designed to meet 
 our needs as a nation and not merely as a federation of States. 
 
 Supreme Similar constitutional objections have been raised 
 
 Decisions against the enactment of a Federal insurance law. It is 
 
 pointed out that there have been a number of decisions 
 of the Supreme Court to the effect that insurance is not commerce 
 and that, therefore. Congress has no power over interstate insurance 
 transactions. The fact is overlooked, or not fully considered, that 
 the subject has never been presented to the Court upon an issue 
 raised under a Federal statute, and that the cases which have been 
 decided have only an indirect bearing upon the point in view, and 
 do not warrant a negative policy of action on the part of Congress 
 any more than corresponding objections have prevented action in 
 other cases. The Supreme Court itself would not render an advance 
 opinion upon the subject, so it can not be held to be the duty of a 
 member of Congress to be influenced by mere theoretical speculations 
 of lawyers and laymen. 
 
 Constitutional As a matter of fact, it is a well-established pnnciple 
 
 ttons!**^^**' of the j udiciary department that * ' Every statute is con- 
 sidered valid as long as there is any reasonable inter- 
 pretation by which it may be held so. The Legislature is presumed 
 
 II 
 
to have acted within its powers, and only the strongest proofs to the 
 contrary are sufficient to nullify its act. Congress must wantonly 
 go very far outside the plain meaning of the Constitution before the 
 Court will interfere to prevent the operation of the law." In the 
 case of Fletcher vs. Peck (6 Cranch, 87), Marshall stated the pre- 
 ponderance of proof which shall be necessary to j ustify the Court in 
 ignoring an Act of the Legislature. He said: "The question, 
 whether a law be void for its repugnancy to the Constitution, is at 
 all times a question of delicacy, which ought seldom, if ever, to be 
 decided in the affirmative in a doubtful case. The Court, when 
 impelled by duty to render such a judgment, would be unworthy of 
 its station could it be unmindful of the solemn obligations which 
 that station implies. But it is not on slight implication or vague con- 
 jecture that the Legislature is to be pronounced to have transcended its 
 powers, and its acts to be considered as void. The opposition between 
 the Constitution and the law should be such that the judge feels a 
 clear and strong conviction of their incompatibility with each other. ' ' 
 
 Facts vs. Now, I would be unmindful of my own duty in 
 
 this respect, and my own sacred oath of office to 
 support the Constitution, if I had not made every reasonable 
 effort to convince myself by the necessary evidence that the 
 facts in the case, the indisputable fact's gathered from every trust- 
 worthy source, sustain the theory of this proposition and emphasize 
 its practical importance as a national necessity. And it is also well 
 to keep in mind that the Supreme Court itself has very seldom been 
 a unit in decisions upon the constitutional interpretation of the 
 commerce clause, and the legislative department could hardly be 
 expected to be unanimous upon a question upon which the Court 
 itself has as a rule been divided.* In nearly every case which has 
 been before the Court, regarding the power of Congress over inter- 
 state and foreign commerce, at least one, and in many cases several 
 dissenting opinions have been filed. The Constitution gives the Fed- 
 eral government specific power over post-offices and post-roads, over 
 patents and copyrights, over bankruptcy, and over commerce in 
 the broadest possible sense of the word. By implication, and not 
 by specific enumeration, Congress has established a system of 
 lighthouses and erected custom-houses, has authorized a coast 
 
 * James S. Rogers, on the Exclnsiveness of the Power of Congress over Interstate and 
 Foreign Commerce, in the American I^aw Register, September and October, 1905. 
 
 12 
 
survey and a survey of rivers and harbors, has erected a bank 
 and developed our national banking system, and by decisions of 
 the Supreme Court under the commerce clause Congress has 
 assumed power and control over railways, telegraphs, express 
 companies, and even over lottery-tickets. 
 
 Insurance a The Constitution has met our needs in the past and 
 
 Part of the ^-^j^ without question, meet our needs in the future. 
 Merchant. Interpreted, as it has been, in a broad and liberal spirit, 
 there is every reason to hope that the plain necessities 
 of the situation will justify a favorable opinion if one should be 
 rendered by the Supreme Court in the case of insurance. I 
 have no patience with mere hair-splittings over the possible 
 meanings of words, the more so as a rational consideration of 
 the subject makes mere vSpeculative considerations needless. That 
 insurance in everyday language is an element and instrumentality 
 of commerce is established by every treatise on commercial law 
 and usage, by every dictionary of commerce, and by the concensus 
 of public opinion which I have taken pains to secure upon this 
 point. Insurance is to-day, as it has been from time immemorial, 
 a part of the law merchant of the principal commercial nations, 
 and in every important country except ours insurance is the 
 subject of regulation by the national or supreme government. I 
 rely with confidence upon the theory of broad constitutional con- 
 struction in this as in all matters of doubtful constitutionality 
 which vitally affect our national welfare. 
 
 Insurance In the admirable and never-to-be-forgotten words 
 
 Constitution, of Chief Justicc Marshall : '*To say that the intention 
 of the instrument must prevail; that this intention 
 must be collected from its words ; that its words are to be understood 
 in the sense in which they are geiierally used by those for whom the 
 instrument was inteiided ; that its provisions are neither to be 
 restricted into insignificance nor extended to objects not compre- 
 hended in them nor contemplated by its framers, is to repeat what 
 has already been said more at large and is all that can be necessary." 
 And in passing upon the constitutionality of the law creating a 
 United States bank, Marshall gave utterance to words which have 
 been so often repeated that they have become an axiom in our 
 constitutional history, namely: "Let the end be legitimate, let 
 
 13 
 
it be within the scope of the Constitution, and all means which are 
 appropriate, which are plainly adapted to that end, which are not 
 prohibited, but consistent with the letter and spirit of the Constitu- 
 tion, are constitutional." When we consider the enormous extent 
 of insurance, how it affects every commercial and private interest, 
 how it enters every home from one end of the land to the other, 
 how it sustains individual effort, enhances individual credit and 
 provides security against possible contingencies not to be guarded 
 against by any other means yet devised, I question if the ingenuity 
 of man could invent or design another method so completely within 
 the spirit of our nationality and an interest of such supreme import- 
 ance to the people of this land. 
 
 National vs. A Federal insurance law will not deprive the 
 
 ^ ^ ** States of any rights specifically reserved to them 
 under the tenth amendment. The States, under the bill intro- 
 duced, will retain all the rights and powers over their own 
 corporations which constitutionally belong to them, but the bill will 
 put an end to the multiform system of State supervision and control 
 over insurance corporations, which has no justification in any sound 
 theory of constitutional rights or in any common-sense conception 
 of State duty. The bill will put an end to interstate chaos and 
 terminate an intolerable condition of affairs jeopardizing the 
 interests and at times the very existence of companies transacting 
 interstate business. The bill will establish insurance companies 
 upon a national basis and give to the business a national character. 
 The bill will bring insurance companies engaged in interstate 
 business within the power and control of the Federal government 
 and provide a system of supervision, examination and control, 
 thorough, exacting and complete. The bill will increase the value 
 of every form of insurance, materially enhance the security of the 
 policyholders, and broaden the field of business operations to an 
 extent impossible under the present system of supervision and 
 control by some fifty different States and Territories. The States 
 will continue to supervise insurance corporations of their own 
 creation, but they will be deprived of power to supervise corpora- 
 tions of other States and to legislate regarding them,, chiefly for 
 the purpose of raising revenue or of harassing the companies by 
 vexatious statutory requirements. It is not a theory, but a con- 
 dition, which confronts the companies and their policyholders, who 
 
 14 
 
in their aggregate capacity represent the nation and not individual 
 States. The policyholder is primarily and chiefly interested in the 
 security and value of his contract, in the rate of premium which he 
 pays, and in the safe and economical administration of the company 
 with which he insures. It is not a question with him whether the 
 company is located in the particular State in which he lives, or in 
 any other State. As a life insurance policyholder living to-day in 
 one State, he may to-morrow live in another, but his contract of 
 insurance goes with him and protects and sustains him in the event 
 of calamity or loss. It is not a theory that this business is national 
 in extent and character, but an incontrovertible fact readily within 
 the comprehension of any one who will carefully consider the vast 
 extent of the business operations and the true character of insurance 
 transactions. It is upon this ground that the advocates of Federal 
 supervision rest their arguments and anticipate a favorable ruling 
 from the Supreme Court in the event of the constitutionality of a 
 law to this effect being brought to a test. 
 
 Conclusion. This great interest is entitled to recognition by 
 
 the Federal government. It needs the goverment's 
 prudent, consistent and effective supervision. It is not confined 
 in its operations even to the limits permitted to our flag. It is 
 inseparably interwoven with our national prosperity on land and 
 sea. Until it is disposed of wisely and permanently it is a matter 
 that will not be laid at rest. 
 
 15 
 
APPENDIX A. 
 
 Under date of September ii, 1905, I addressed the following 
 letter of inquiry to some eight thousand associations and individuals 
 throughout the United States : 
 
 My dear Sir : 
 
 In his last annual message* President Roosevelt called the attention of 
 Congress to the necessity for Federal legislation providing for the regulation 
 and control of insurance companies transacting interstate and international 
 business. In compliance with an increasing demand from insurance policy- 
 holders and others interested in the public welfare, I introduced into the last 
 Congress a bill to this effect, providing that there should be established within 
 the Bureau of Corporations a Division of Insurance, and that policies of insurance 
 were deemed to be articles of commerce and instrumentalities thereof. The bill 
 was introduced too late to secure final consideration, but the demand for such 
 a measure has become even more apparent in the meantime, and I expect to rein- 
 troduce the same, possibly with slight modifications, into the Congress which is 
 to meet in December. 
 
 The bill will be introduced on behalf of the policyholders of all American 
 insurance companies, in the firm belief that their present and future interests 
 demand the additional protection of a Federal statute regulating insurance trans- 
 actions between the States, in addition, of^ourse, to such supervision and regu- 
 lation as constitutionally belong to the States from which the companies derive 
 their charters. Furthermore, that by eliminating a considerable amount of 
 needless State supervision the following important benefits are expected to 
 result : 
 
 1. An increase in the security of the policyholders. 
 
 2. A decrease in the expense rate and the cost of insurance. 
 
 3. A decrease in the burden of needless taxation. 
 
 4. A decrease in the amount of clerical labor now indispensable to meet 
 the requirements of some fifty States and Territories. 
 
 5. The stamping out of fraudulent insurance enterprises. 
 
 6. Adequate national protection for American companies transacting bus- 
 iness in foreign countries. 
 
 Since thus far interstate insurance transactions have not been brought 
 within the scope of Congressional action, I desire to secure an expression of views 
 
 * " The business of insurance vitally affects the great mass of the people of the United 
 States and is national and not local in its application. It involves a multitude of transactions 
 among the people of the different States and between American companies and foreign 
 governments. I urge that the Congress carefully consider whether the power of the Bureau 
 of Corporations cannot constitutionally be extended to cover interstate transactions in 
 insurance." — [December 6, 1904.] 
 
 16 
 
c ""^ 
 
 from the interests affected by such a measure, and I, therefore, take ^e liberty 
 of troubling you with a few questions to which I would like to have you reply 
 either YES or NO, as the case may be, together with any additional comments 
 of your own which you may wish to make upon the matter. 
 
 If entirely convenient, kindly fill in and return to me the attached blank 
 in the enclosed stamped envelope and accept in advance my sincere thanks for 
 your courtesy and cooperation in my effort to secure a comprehensive expression 
 of qualified public opinion upon a matter vitally affecting the welfare of the 
 American people. 
 
 I am, 
 
 Very truly yours, 
 
 JOHN F*. DRYDBN. 
 
 Federal Regulation of Insurance Companies. 
 
 Question i . Do you endorse the suggestion of President Roosevelt, that 
 insurance companies engaged in interstate insurance business should be regu- 
 lated by and brought under the control of the Federal government ? 
 
 Question 2. Do you hold the insurance business to be a national rather 
 than a local interest, and properly entitled to the solicitude and care of the 
 national government? 
 
 Question 3. As a matter of personal opinion, do you hold the business 
 of insurance to be commerce, or an integral and indispensable element of 
 commerce, in the sense in which this term is used in everyday language ? 
 
 Question 4. Are you in any way apprehensive that it would be inex- 
 pedient or inadvisable to increase the power of the Federal government to the 
 extent implied in the regulation of insurance by Congress ? 
 
 In reply to Question i — "Do you endorse the suggestion of 
 President Roosevelt, that insurance companies engaged in inter- 
 state insurance business should be regulated by and brought under 
 the control of the Federal government?" — out of 7,454 answers, 
 6,581 were favorable, or 88.3 per cent, of all the letters received. 
 By principal States or geographical divisions, the results were as 
 follows : 
 
 Summary of Replies to Question 1. 
 
 Total Answers 
 Replies Yes No 
 
 New England States . 741 575 163 
 
 New York, New Jersey and Pennsylvania 2,491 2,213 266 
 
 Southern States 1,108 928 172 
 
 North Central States 2,624 2,402 206 
 
 Rocky Mountain and Pacific Coast States 490 463 26 
 
 Totals 7,454 6,581 833 40 88.3 
 
 17 
 
 Not 
 
 Per Cent. 
 
 Specified 
 
 Yes 
 
 3 
 
 77.6 
 
 12 
 
 88.8 
 
 8 
 
 83.8 
 
 16 
 
 91.5 
 
 I 
 
 94.5 
 
The returns by individual States and Territories were as 
 follows : 
 
 Replies to Question 1 by States and Territories: 
 
 Total 
 Replies 
 
 65 
 
 8 
 
 27 
 
 193 
 
 113 
 
 122 
 
 23 
 
 Auswers 
 
 No 
 
 Alabama 
 
 Arizona 
 
 Arkansas 
 
 California 
 
 Colorado 
 
 Connecticut 
 
 Delaware 
 
 District of Columbia 133 
 
 Florida 31 
 
 Georgia 116 
 
 Hawaii 2 
 
 Idaho 12 
 
 Illinois 429 
 
 Indiana 177 
 
 Indian Territory . . 6 
 
 Iowa : 287 
 
 Kansas 180 
 
 Kentucky 82 
 
 Louisiana 63 
 
 Maine 53 
 
 Maryland 113 
 
 Massachusetts 460 
 
 Michigan 249 
 
 Minnesota 
 Mississippi 
 Missouri , 
 Montana . 
 Nebraska . 
 Nevada . . 
 New Hampshire 
 
 146 
 
 35 
 220 
 
 18 
 195 
 
 33 
 
 New Jersey 203 
 
 New Mexico 8 
 
 New York 1,321 
 
 North Carolina 52 
 
 North Dakota 21 
 
 Ohio 488 
 
 Oklahoma 10 
 
 Oregon 52 
 
 Pennsylvania 967 
 
 Rhode Island 
 
 South Carolina 
 
 South Dakota 
 
 Tennessee 
 
 Texas 
 
 Utah 
 
 Vermont 
 
 Virginia 
 
 Washington 
 
 "West Virginia 
 
 Wisconsin 
 
 Wyoming 
 
 38 
 35 
 24 
 76 
 no 
 
 13 
 35 
 93 
 53 
 38 
 208 
 17 
 
 Yes 
 61 
 
 7 
 
 24 
 
 189 
 
 106 
 
 90 
 
 17 
 
 118 
 
 27 
 
 102 
 
 I 
 
 12 
 
 392 
 
 156 
 
 6 
 
 269 
 
 170 
 
 61 
 
 51 
 
 45 
 
 95 
 
 352 
 
 232 
 
 135 
 31 
 
 192 
 16 
 
 180 
 
 I 
 
 26 
 
 182 
 
 6 
 
 ^156 
 
 43 
 
 18 
 
 446 
 
 9 
 
 49 
 
 875 
 34 
 23 
 20 
 66 
 
 93 
 10 
 28 
 65 
 51 
 36 
 192 
 15 
 
 Totals 7,454 6,581 
 
 3 
 4 
 7 
 31 
 6 
 
 15 
 4 
 
 14 
 
 37 
 21 
 
 17 
 
 9 
 
 20 
 
 II 
 
 8 
 
 17 
 106 
 
 15 
 9 
 4 
 
 26 
 2 
 
 14 
 
 7 
 20 
 
 2 
 161 
 
 8 
 
 3 
 38 
 
 I 
 
 3 
 85 
 
 4 
 12 
 
 3 
 . 8 
 
 16 
 3 
 7 
 
 27 
 2 
 2 
 
 14 
 2 
 
 833 
 
 Not Per Cent. 
 Specified Yes 
 
 93.8 
 
 87.5 
 88.9 
 
 97.9 
 93.8 
 
 73.8 
 
 73-9 
 
 88.7 
 
 87.1 
 87.9 
 50.0 
 
 100. o 
 91.4 
 88.1 
 
 100. o 
 93-7 
 94-5 
 74.4 
 81.0 
 
 84.9 
 84.1 
 
 76.5 
 93-2 
 92.5 
 88.6 
 
 87.3 
 88.9 
 
 92.3 
 loo.o 
 
 78.8 
 89.7 
 
 75 -o 
 
 87.5 
 82.7 
 
 85.7 
 91.4 
 90.0 
 94.2 
 90-5 
 89.5 
 65.7 
 83.3 
 2 86.8 
 
 I 84.5 
 
 76.9 
 80.0 
 
 1 69.9 
 96,2 
 94.7 
 
 2 92.3 
 88.2 
 
 4^ ssii 
 
 18 
 
In reply to Question 2 — "Do you hold the insurance business 
 to be a national rather than a local interest, and properly entitled 
 to the solicitude and care of the national government?" — out of 
 7,454 answers, 6,543 were favorable, or 87.8 per cent, of all the 
 letters received. By principal States or geographical divisions the 
 results were as follows : 
 
 Summary of Replies to Question 2. 
 
 Total Answers Not Per Cent. 
 
 Replies Yes No Specified Yes 
 
 New England States 741 570 139 32 75.7 
 
 New York, New Jersey and Pennsylvania 2,491 2,197 229 65 88.2 
 
 Southern States i,io8 922 163 23 83.2 
 
 North Central States 2,624 2,394 189 41 91.2 
 
 Rocky Mountain and Pacific Coast States 490 460 24 6 93.9 
 
 Totals 7,454 6,543 744 167 87.8 
 
 In reply to Question 3 — *' As a matter of personal opinion, do 
 you hold the business of insurance to be commerce, or an integral 
 and indispensable element of commerce, in the sense in which this 
 term is used in everyday language?" — out of 7,454 answers, 5,300 
 were favorable, or 71. i per cent, of all the letters received. By 
 principal States or geographical divisions, the results were as 
 follows : 
 
 Summary of Replies to Question 3. 
 
 Total Answers Not Per Cent. 
 
 Replies Yes No Specified Yes 
 
 New England States 741 425 213 103 57.4 
 
 New York, New Jersey and Pennsylvania 2,491 1,795 437 259 72.0 
 
 Southern States 1,108 788 231 89 66.7 
 
 North Central States 2,624 1.955 429 240 74.5 
 
 Rocky Mountain and Pacific Coast States 490 337 93 60 68.8 
 
 Totals 7,454 5,300 1,403 751 71. 1 
 
 In reply to Question 4 — * * Are you in any way apprehensive 
 that it would be inexpedient or inadvisable to increase the power 
 of the Federal government to the extent implied in the regulation 
 of insurance by Congress?" — out of 7,454 answers, 6,047, ^^ ^^-^ 
 per cent., were in the negative, or, in other words, favorable to the 
 theory of Federal supervision of insurance. This question was 
 apparently misunderstood in quite a number of cases and the reply 
 made in the afiSrmative where the negative was intended. I, how- 
 ever, leave the results as they were received, without correction : 
 
 19 
 
Summary of Replies to Question 4. 
 
 Total Answers 
 Replies Yes No 
 
 New England States 741 179 528 
 
 New York, New Jersey and Pennsylvania 2,491 400 2,007 
 
 Southern States 1,108 222 846 
 
 North Central States 2,624 344 2,232 
 
 Rocky Mountain and Pacific Coast States 490 49 434 
 
 Totals 7,454 1.194 6,047 213 16.0 
 
 Not 
 
 Per Cent. 
 
 Specified 
 
 Yes 
 
 34 
 
 24.1 
 
 84 
 
 16.I 
 
 40 
 
 20.0 
 
 48 
 
 13.I 
 
 7 
 
 lO.O 
 
 APPENDIX B. 
 
 Analysis of Senate Bill 3026. 
 
 Organization of Bureau of Insurance. 
 
 Section 14 — Article of Enactment. 
 
 Bureau of Insurance Established in Department of 
 Commerce and Labor. 
 
 Comptroller of Insurance in Charge. 
 
 Oath of Office and Bond. 
 
 Deputy Comptroller. 
 
 Actuary. 
 
 Clerks and Employees. 
 
 Appointments by Secretary of Commerce and I^abor. 
 
 Supervision by Secretary of Commerce and Labor. 
 
 Interest in Insurance Companies Prohibited. 
 Section 15 — Offices, etc. 
 
 Seal. 
 
 Fees to go to Treasury. Expenses to be Paid from 
 Appropriation for Department of Commerce and 
 Labor. 
 
 Reports to be made to Congress. 
 
 Scope of Act and Definition of Terms. 
 
 Section 16 — Scope of Act. 
 
 Corporations Defined. 
 
 Interstate Insurance declared to be Interstate Commerce. 
 
 Single State Companies Excepted. 
 
 20 
 
Section 17 — Fraternal Organizations Excepted. 
 Interinsurance Exchange Excepted. 
 
 Administration and Regulation. 
 
 Section 18 — Rules, Regulations and Fees. 
 
 Reports Required from Insurance Corporations. 
 
 Penalty for Failure to Make Reports. 
 
 Valuation and Reinsurance Reserve. 
 Section 19 — Authority and Power to Make Examinations. 
 
 Authority to Employ Special Examiners. 
 
 Aid of United States Courts. 
 
 Examinations upon Request of State Insurance Officials. 
 
 Companies to Pay Expenses of Examinations. 
 
 Fees and Charges to be Paid into the Treasury. 
 
 Lrimitation of Visitorial Powers. 
 
 Requirements of Corporations Transacting Interstate Insurance, 
 
 Section 20 — Filing of Charter and other Documents. 
 
 List of Stockholders or Trustees Required. 
 
 Deposit Required to be Made. 
 
 Certificate of Authority to Transact Interstate In- 
 surance. 
 
 Local Attorneys to be Appointed. 
 Section 21 — When Certificates of Authority shall be Revoked. 
 
 Proceedings in case of Receiverships. 
 
 Hearing to be Granted. 
 
 American Insurance Companies in Foreign Countries. 
 
 Crimes, Penalties, Etc. 
 
 Section 22 — Assistance of Attorney-General. 
 
 Proceedings by Attorney- General. 
 
 Penalty for Perjury. 
 
 Penalty for Accepting Bribes, etc. 
 
 Unauthorized Insurance. 
 
 Penalty for Unauthorized Insurance. 
 
 Repeal of Inconsistent Laws. 
 
 Transfer of Records. 
 
 When Act Goes into Effect. 
 
 21 
 
APPENDIX C. 
 
 Synopsis of Senate Bill 3026, Fifty-ninth Congress, First Session. 
 
 The bill contains some fifty separate provisions, of which the 
 first thirteen relate to the organization of the proposed bureau of 
 insurance in the Department of Commerce and Labor. The bureau 
 is to be in charge of a Comptroller of Insurance, who is required to 
 furnish a bond of $100,000. 
 
 In nearly all essentials, the bill, as far as possible, conforms to 
 the organic acts establishing other departments of the Federal gov- 
 ernment, but in particular, the national bank act. There is to be a 
 Deputy Comptroller, who is also to be a bonded of&cer, and an 
 actuary, who is required to be a person of recognized professional 
 ability and experience. The general supervision and control of the 
 bureau is under the direction of the Secretary of Commerce and 
 Labor, and all fees or other moneys collected are required to be paid 
 into the treasury. 
 
 The Comptroller must make an annual report to Congress, 
 including the details of all examinations made of companies during 
 the year, together with a complete statement of the receipts and 
 disbursements of the bureau. 
 
 The provisions of the act apply to all corporations, associations 
 or partnerships engaged in interstate insurance business, who make 
 and deliver insurance contracts outside the State of incorporation or 
 origin or authority, but have no application to fraternal societies or 
 organizations carried on for the sole benefit of members, and not for 
 profit. Such associations or societies may voluntarily take advantage 
 of the act, and, after complying with all its provisions, become duly 
 authorized by the Comptroller to transact interstate insurance. 
 
 The Comptroller is required to establish rules and regulations 
 and reasonable fees for conducting the business of insurance, includ- 
 ing annual and other reports to be made by companies. The 
 penalty for failure to make or transmit any report or statement 
 of fact required is $100 for each day of delay. 
 
 The Comptroller is also required to have a conservative valua- 
 tion made of the business of life companies, or determine the reinsur- 
 ance reserve of other companies, upon approved methods and tables, 
 and by such a standard of interest as may, in his judgment and 
 discretion, best serve the purpose to determine and establish the 
 true financial conditions and attendant liabilities of companies. 
 
 22 
 
Authority and power to inquire into the details and facts of the 
 management of all corporations engaged in interstate insurance is 
 given to the Comptroller, and he may have the companies examined 
 by special examiners whenever necessary or expedient. To this end 
 he may invoke the aid of any court of the United States, to require 
 the attendance and testimony of witnesses and the production of 
 books, papers and documents. 
 
 Failure to obey such order of the court may be punished as a 
 contempt thereof. It is also provided that companies may be inves- 
 tigated by the Comptroller upon the complaint of any State Com- 
 missioner of Insurance. 
 
 The actual and reasonable expense of every examination or 
 special investigation of the affairs of an insurance corporation en- 
 gaged in interstate insurance must be paid by the corporation so 
 examined. All charges and fees for making such examinations, 
 however, must be presented in the form of an itemized bill, approved 
 by the Comptroller of Insurance, and the amount thereof must be 
 paid into the Treasury of the United States. 
 
 Corporations transacting interstate or foreign insurance are 
 specifically exempted from making any other or separate statements 
 or reports, and are not to be subject to any visitorial powers or 
 examinations of their business and accounts other than by the Comp- 
 troller of Insurance, or by the proper authorities of the State of 
 incorporation or origin. 
 
 Corporations engaged in the business of insurance in more than 
 one State must file a copy of their charter or other documents of 
 local authority, and annually publish a list of. their stockholders or 
 trustees. They are required to make a deposit of $100,000, either 
 with the Commissioner of Insurance or with the proper official of 
 the State of incorporation or origin. 
 
 After these requirements have been met to the satisfaction of 
 the Comptroller, a certificate of authority and power to transact 
 interstate insurance shall be issued, whereby such corporations 
 are authorized to transact business in any State, Territory or 
 district of the United States, without further supervision or 
 regulation than by the Comptroller of Insurance or the duly 
 authorized official of the State of incorporation or origin. Pro- 
 vision is made for conditions under which the certificates of 
 authority shall be revoked and for proceedings in case of receiver- 
 ship. 
 
 23 
 
APPENDIX D. 
 
 59TH CONGRESS _. /Z 
 
 1ST SESSION S^ ^020 
 
 IN THE SENATE OF THE UNITED STATES. 
 
 January 15, 1906. 
 
 Mr. Dryden introduced the following bill, which was read twice and referred 
 to the Committee on the Judiciary. 
 
 A BILL 
 
 To amend an Act entitled ' ' An Act to establish the Department of Commerce 
 and Labor," approved February fourteenth, nineteen hundred and 
 three, being chapter five hundred and fifty-two of the United States 
 Statutes, enacted by the Fifty-seventh Congress. 
 
 Be it enacted by the Senate and House of Representatives of the United 
 States of America in Congress assembled^ That the Act entitled "An Act to 
 establish the Department of Commerce and Labor," approved February four- 
 teenth, nineteen hundred and three, be amended by adding thereto the 
 following : 
 
 " Sec. 14. That there shall be in the Department of Commerce and Labor 
 a division to be called the Bureau of Insurance, which shall be charged with 
 the execution of this and all other laws that may be passed by Congress for the 
 supervision and regulation of the business of insurance among the several 
 States. The Bureau of Insurance shall be in charge of an officer to be called 
 the Comptroller of Insurance, who shall be appointed by the President, by and 
 with the advice and consent of the Senate. He shall hold his office for the 
 term of four years, unless sooner removed by the President. He shall receive 
 an annual salary of dollars, to be paid in monthly instalments. The 
 
 Comptroller of Insurance shall, within fifteen days from the time of notice of 
 his appointment, take and subscribe the oath of office ; and he shall give to the 
 United States a bond in the penalty of one hundred thousand dollars, to be 
 approved by the Secretary of Commerce and Labor, conditioned for the faithful 
 discharge of the duties of his office. There shall also be in the Bureau of 
 Insurance a Deputy Comptroller of Insurance, who shall be entitled to an 
 annual salary of dollars, to be paid in monthly instalments, and he 
 
 shall possess the power and perform the duties attached by law to the office of 
 the Comptroller during a vacancy in the office or during the absence or inability 
 of the Comptroller. The Deputy Comptroller shall also take the oath of office 
 prescribed by the Constitution and laws of the United States, and shall give a 
 like bond in the penalty of fifty thousand dollars. There shall also be in said 
 
 24 
 
Bureau of Insurance an actuary, who shall be selected for his knowledge, skill, 
 and practical experience in actuarial duties, and who shall be a person of 
 established reputation and qualification, and who shall aid and assist the Comp- 
 troller of Insurance, in the capacity of an actuary, and perform the usual duties 
 appertaining to his ofl&ce. There shall also be a chief clerk to the Comptroller 
 of Insurance, and such special agents, examiners, clerks, and other employees 
 as may be authorized by law and may be necessary for the work of said Bureau. 
 All ofiicers and employees of the Bureau of Insurance other than the Comp- 
 troller shall be appointed by the Secretary of Commerce and Labor. The work 
 of the Comptroller of Insurance and his subordinates shall, in all respects, be 
 subject to the supervision of the Secretary of Commerce and Labor, and it shall 
 not be lawful for the Comptroller of Insurance or the Deputy Comptroller, or 
 any oflficial or employee of the Bureau of Insurance, either directly or indirectly, 
 except as a policyholder, to be interested in any insurance corporation, associ- 
 ation, or partnership. 
 
 "Sec. 15. That there shall be assigned to the Comptroller of Insurance, 
 by the Secretary of Commerce and Labor, suitable office rooms, and he shall 
 supply said Bureau with the necessary furniture, stationery, fuel, light, and 
 other proper conveniences for the transaction of the business of said Bureau. 
 The Comptroller of Insurance, with the approval of the Secretary of Commerce 
 and Labor, shall devise a seal with suitable inscription, a description of which, 
 with the certificate of approval of the Secretary of Commerce and Labor, shall 
 be filed in the office of the Secretary of State, with the impression thereof, 
 which shall thereupon become the seal of the office of said Comptroller of 
 Insurance. Every certificate and all other papers issued by him in pursuance 
 of any authority conferred on him by law, and sealed with his seal of office, 
 shall be received in evidence in all courts of law and equity and other places. 
 All fees or other moneys collected or recovered under the rules and regula- 
 tions of the Comptroller of Insurance, as approved by the Secretary of 
 Commerce and Labor, shall be paid monthly into the Treasury of the United 
 States, and all the salaries and expenses of administering this law shall be paid 
 by the Treasurer of the United States from the appropriation for the Department 
 of Commerce and Labor. The Comptroller of Insurance shall annually prepare 
 for the Secretary of Commerce and Labor, to be transmitted by him to Congress, 
 a report containing, in reasonable detail, an abstract of the statistical and other 
 reports made to him by corporations, associations, and partnerships, subject to 
 the provisions of this Act, together with a summary statement of the insurance 
 business in the United States, properly classified, and such other statements, 
 information, facts, or comments relating to insurance as he may deem to be of 
 public interest. The annual report of the Comptroller of Insurance shall also 
 include and contain the rules and regulations established by him, and approved 
 by the Secretary of Commerce and Labor, to carry out the intent and purposes 
 of this Act, and the facts and results of all examinations of insurance companies 
 which he may have made or may have caused to be made during the preceding 
 year, together with a complete and detailed statement of the receipts and 
 expenses of the Bureau of Insurance during the year from any source whatever. 
 
 '* SKC. 16. That the provisions of this Act shall apply to all corporations, 
 associations, and partnerships, including individual underwriters known as 
 
 25 
 
Lloyd's, engaged in interstate insurance business, or who make and deliver 
 insurance contracts outside of the limits of the State of incorporation or organ- 
 ization or authority, and their attorneys in fact, and all such are hereby declared 
 and held to be engaged in interstate or foreign commerce, as the case may be. 
 The term corporation, wherever used in this Act, shall include companies, 
 associations, societies, partnerships, and individual underwriters engaged in the 
 business of insurance, or in any of its branches, and duly incorporated or 
 authorized under the laws of the United States, or of any State, Territory, 
 District, or foreign nation. Policies or any other contracts of insurance are 
 hereby deemed and declared to be articles of commerce and instrumentalities 
 thereof. The delivery by said corporations of said policies or contracts of 
 insurance from the State, Territory, District, or country of incorporation or 
 origin to corporations or persons resident of or located in other States, Territories, 
 Districts, or foreign nations ; the transmission by the insured from such other 
 States, Territories, Districts, or foreign nations of the premiums or other valu- 
 able consideration for said policies to the home office of the company in an- 
 other State, Territory, District, or foreign nation, are hereby declared and 
 deemed to be transactions in interstate or foreign commerce, as the case may 
 be ; but the provisions of this Act shall not apply to any corporation trans- 
 acting the business of insurance exclusively within the State, Territory, or 
 District of its creation. 
 
 "Sec. 17. That this Act shall have no application to any corporation, 
 society, order, or voluntary association formed or organized and carried on for 
 the sole benefit of its members and their beneficiaries, and not for profit, having 
 a lodge system and representative form of government, making insurance pro- 
 vision for the payment of benefits in case of death, sickness, disability, accident, 
 or old age. But the Comptroller of Insurance shall be authorized and have 
 power to determine upon the facts whether the corporation or association or 
 organization is in fact of a purely religious, charitable, or benevolent character : 
 Provided, That any such corporation, association, society, or order transacting 
 fraternal or mutual benefit insurance in more than one State may voluntarily 
 take advantage of this Act, and after complying with all its provisions, and with 
 the rules and regulations of the Bureau of Insurance, be duly authorized by the 
 Comptroller to transact interstate insurance: And provided further, That the 
 provisions of this Act shall not apply to associations known as interinsurance 
 exchanges, the members whereof indemnify one another against loss by fire, 
 organized for the purpose of saving expenses and diminishing losses, and not 
 for personal profit or gain or as commercial undertakings. 
 
 "Sec. 18. That the Comptroller of Insurance, subject to the approval of 
 the Secretary of Commerce and Labor, shall from time to time fix and establish 
 such rules, regulations, and reasonable fees for conducting the business of the 
 Bureau and for carrying out the provisions of this Act as he may deem neces- 
 sary and proper for securing an effective, uniform, and economical adminis- 
 tration of the Bureau. Said rules and regulations shall provide methods and 
 forms for annual or other reports to the Comptroller of Insurance by corporations 
 transacting interstate or foreign insurance, which annual or other reports shall 
 be duly attested under seal by such corporations and sworn to by the president 
 vice-president, secretary, or some other officer thereof before an oflScial duly 
 
 26 
 
authorized to administer oaths who is not an officer or employee of the corpora- 
 tion reporting. And the said Comptroller shall forward, in December of each 
 year, to every corporation authorized under this Act to transact interstate insur- 
 ance, or its agent or attorney, the necessary blank forms for the annual state- 
 ments of such company, which shall be returned to the Comptroller on or before 
 the first day in March of each year, signed and sworn to by the president, vice- 
 president, or secretary, or, if a foreign company, by its manager or proper 
 representative within the United States, showing its true financial condition as 
 of the next preceding thirty-first day of December, which shall include a correct 
 and detailed statement of the assets and liabilities of that date, the amount and 
 character of business transacted, losses sustained, and money received and 
 expended during the year, and such other information as the said Comptroller 
 may deem necessary. Every corporation transacting interstate or foreign insur- 
 ance which fails to make and transmit any report or information or statement 
 of fact required by this Act shall be subject to a penalty of one hundred dollars 
 for each day after the periods therein respectively mentioned that it delays 
 to make and transmit its report. And whenever any corporation refuses to pay 
 the penalty herein imposed, after it has been assessed by the Comptroller of 
 Insurance, the Comptroller shall have authority to recover the penalties im- 
 posed by due process of law, but he may, in his discretion, extend the time for 
 making such report for a period not exceeding thirty days. All sums of money 
 collected for penalties under this section shall be paid monthly into the Treasury 
 of the United States. It shall be the duty of the Comptroller of Insurance to 
 require of each corporation transacting interstate insurance, preliminary to the 
 granting of a certificate of authority to engage thereafter in such insurance 
 among the States, a true and complete statement as of the thirty -first day of 
 December next preceding of all policies or other contracts of insurance in force, 
 together with their valuation or reinsurance reserve, made or determined 
 according to the laws of the State, Territory, District, or foreign nation of its 
 incorporation, origin, or authority, and annually thereafter the Comptroller 
 shall cause to be made, by and under the direction of the actuary of the Bureau, 
 a true and complete valuation or determination of the reinsurance reserve of all 
 policies or contracts of insurance in force with any corporation subject to the 
 provisions of this Act, upon such approved tables and methods and by such a 
 standard of interest as may in his judgment and discretion best serve the 
 purpose to determine and establish the true financial condition and outstanding 
 liabilities of the same. 
 
 "Skc. 19. That the Comptroller shall have authority and power to 
 inquire into the details and facts of the management of all corporations subject 
 to the provisions of this Act, and he shall keep himself informed as to all 
 business matters of said corporations, and he shall have authority and poweu to 
 obtain from them true and complete information and facts necessary to enable 
 him to properly perform the duties and carry out the objects for which this 
 Bureau of Insurance was established. And he shall have authority and power 
 to examine, or have examined by the Deputy Comptroller or any other quali- 
 fied employee or special examiner designated for the purpose, all books, 
 papers, and everything pertaining to the business or management of said 
 corporation at any or all times when he may deem this necessary or expedient ; 
 
 27 
 
and he shall have the power to require the attendance and testimony of wit- 
 nesses and the production of books, papers, and documents relating to any 
 matter under investigation. And to that end he may invoke the aid of any 
 court of the United States to require the attendance and testimony of witnesses 
 and the production of books, papers, and documents. And any circuit court of 
 the United States within the jurisdiction of which such inquiry is carried on 
 ma}', in case of contumacy or refusal to obey a subpoena issued to any corpora- 
 tion or person subject to the provisions of this Act, issue an order requiring 
 such corporation or person to appear before said Comptroller and produce books, 
 papers, and documents, if so ordered, and give evidence touching the matter 
 of inquiry ; and any failure to obey such order of the court may be punished 
 by such court as a contempt thereof. The Comptroller of Insurance shall also 
 investigate any complaint, made in his own behalf, or forwarded by the com- 
 missioner, superintendent, or other official charged with the execution of the 
 insurance laws of any State, Territory, or District, at the request of such 
 commissioner, superintendent, or other officials, and may institute any inquiry 
 on his own motion in the same manner and to the same effect as though 
 complaint had been made ; and the result and findings of such examination or 
 investigation, upon having been approved by the Secretary of Commerce and 
 Labor, shall be communicated without undue delay to the commissioner, 
 superintendent, or other State official making the complaint or requesting the 
 investigation to be made : Provided, That the actual and reasonable expense 
 of every examination or special investigation of the affairs of an insurance 
 corporation authorized to transact interstate insurance under the provisions of 
 this Act shall be borne and paid by the corporation so examined : A7id 
 provided further, That no charge shall be made for any examination of an 
 insurance corporation by the Comptroller or his deputy personally, or by one 
 or more of the regular clerks or employees of the Bureau, except for necessary 
 traveling and other expenses. All charges and fees for making any examina- 
 tion, and all charges and fees against an insurance corporation by an attorney 
 or appraiser of the Bureau of Insurance, shall be presented in the form of 
 an itemized bill approved by the Comptroller of Insurance ; and the corpora- 
 tion examined, on receiving a certified copy of such bill, so approved and 
 properly audited, shall pay the amount thereof to the Comptroller of Insurance, 
 to be paid by him into the Treasury of the United States. No corporation 
 examined shall, either directly or indirectly, pay, by way of gift, credit, or 
 otherwise, any other or further sum to the Comptroller or Deputy, or any clerk 
 or employee of the Bureau of Insurance, or any examiner, for extra services, or 
 for purposes of legislation, or on any other pretense whatsoever : Provided, 
 That no corporation transacting interstate or foreign insurance shall be 
 required by any other than the State, Territory, or District of its incorporation 
 or origin to make other or separate statements or reports, or held to be subject 
 to any visitorial powers or examination of its business and accounts other than 
 such as are authorized by this Act or as are within the constitutional rights 
 and powers of the State, Territory, or District of incorporation or origin. 
 
 " Sec. 20. That every corporation transacting interstate or foreign insur- 
 ance shall, within sixty days after the passage of this Act, and every corpora- 
 tion hereafter formed shall, before engaging in interstate or foreign insurance, 
 
 28 
 
comply with this provision by filing with said Comptroller a certified copy 
 of its charter and by-laws or deed of settlement, or other certificate of local 
 authority to lawfully transact insurance business, together with an ofiicially 
 certified copy of the last complete statement of its condition and affairs as filed 
 in the office of the superintendent, commissioner of insurance, or other author- 
 ized official of the State, Territory, District, or nation of its incorporation or 
 origin, and a certificate under the seal of the proper officer of its government, 
 certifying that the said corporation is duly authorized, by local authority, to 
 engage in or transact the business of insurance. Every insurance corporation 
 transacting business on the stock or share plan shall cause to be kept at all 
 times a full and correct list of the names and residences of all the stockholders 
 or shareholders in the company and the number of shares or certificates of 
 stock held by each in the office where its business is transacted ; and every 
 insurance corporation doing business on the mutual plan shall cause to be kept 
 at all times a full and complete list of the names, occupations, and residences 
 of all the trustees duly elected and responsible for the management of said 
 corporation. A copy of such list, as of the thirty-first day of December of 
 each year, after December thirty-first, nineteen hundred and five, verified by 
 oath of the president, vice-president, or secretary of the corporation, shall be 
 transmitted to the Comptroller of Insurance : Provided ^ That such list of 
 stockholders or shareholders or trustees shall only be for the lawful use and 
 information of the Bureau of Insurance, and not for the public inspection, or 
 for the information of other stockholders or shareholders or trustees of the 
 company, corporation, or association, as the case may be. Every corporation, 
 at the time of filing the copy of its statement as aforesaid, must deposit with 
 the Treasurer of the United States, as a guaranty for the faithful performance 
 of its contracts of insurance. United States bonds or other securities satisfactory 
 to said Comptroller, or as subsequently to be defined by law, to the amount of 
 one hundred thousand dollars : Provided, however. That the Comptroller of 
 Insurance may accept, in his discretion, in lieu of such deposit, a certificate 
 issued under the seal of the insurance department of the State, Territory, or 
 District of incorporation or origin, certifying that said insurance corporation 
 has deposited, under the laws of the State, Territory, or District of its incorpor- 
 ation or origin, with the authorities of said State, Territory, or District, cash or 
 securities to the amount of one hundred thousand dollars for the protection of 
 its policyholders. If, upon a careful and thorough examination of the facts, 
 as required by law, and of any other facts which may come to the notice of the 
 Comptroller of Insurance, it appears to his satisfaction that such corporation 
 or association is thereafter lawfully entitled to transact the business of inter- 
 state and foreign insurance, the Comptroller shall issue to such corporation a 
 certificate, under his hand and official seal, that such corporation has complied 
 with all the provisions required to be complied with, and that such corporation 
 is authorized to transact such business in any State, Territory, or District of 
 the United States. And every corporation, before transacting interstate or 
 foreign insurance, shall appoint in each State, Territory, or District in which 
 it proposes to carry on business, other than the State, Territory, or District of 
 incorporation or origin, a person on whom process of law may be served, and a 
 certified list of such appointees shall be filed with the Comptroller of Insurance. 
 
 29 
 
"Sec. 21. That whenever, from the statements and reports herein 
 required, or from any other information, it shall appear to the Comptroller of 
 Insurance that the financial condition of such corporation, doing business under 
 this Act, is impaired or unsafe, it shall be the duty of the said Comptroller of 
 Insurance to order such corporation to make good its financial condition, and 
 if this be not done within sixty days after such order is given, the Comptroller 
 of Insurance shall revoke the certificate of authority to such corporation to 
 transact interstate business under this Act, and public notice thereof shall be 
 given in such manner as may be prescribed in the rules and regulations herein 
 provided for, which information shall also be transmitted to the official charged 
 with the execution of the insurance laws of the State, Territory, District, or foreign 
 nation where such corporation was organized. The securities transferred to and 
 deposited by any insurance corporation, subject to the provisions of this Act, with 
 the Treasurer of the United States, as hereinbefore provided, shall remain in the 
 custody of the Treasurer of the United States until all the obligations of such 
 corporation that have arisen out of interstate or foreign insmrance shall have 
 been discharged or otherwise terminated; and the corporation maintaining such 
 deposit unimpaired shall be entitled to receive the interest thereon as it accrues. 
 Whenever a receiver shall be appointed in a court of the United States, of com- 
 petent authority, and shall present to the Comptroller of Insurance a duly 
 certified copy of such appointment, together with an order of said court for the 
 delivery to said receiver of the bonds or securities held by the Treasurer of the 
 United States as a guaranty for the contracts of such corporation, in order that 
 they may be distributed among the beneficiaries in accordance with the princi- 
 ples of equity, said Comptroller shall apply to the Treasurer for said securities 
 and the Treasurer shall deliver them to the receiver appointed by the court. If 
 such depositor shall appear and desire to be heard, the Comptroller shall grant 
 a hearing to the parties, at such time and place as he may limit and appoint, 
 and upon such hearing shall determine the question upon which the parties 
 shall have taken issue, and from this decision either party may, within ten 
 days, appeal to the Secretary of Commerce and Labor, whose determination 
 shall be final and conclusive. It shall also be the duty of the Comptroller of 
 Insurance to keep himself advised of the legislation and executive action of 
 foreign nations affecting the business of corporations transacting insurance 
 under this Act in foreign countries, and whenever he shall consider such legis- 
 lation or executive action to be injurious to the business in such foreign nations 
 of corporations transacting insurance under this Act, he shall lay all the facts 
 before the Secretary of Commerce and Labor for transmission to the Department 
 of State for such action thereon as will extend over corporations under this Act 
 all the rights, protections, and facilities as are within the power of the Govern- 
 ment of the United States. 
 
 "Sec. 22. That the Comptroller of Insurance may, whenever he deems 
 it necessary, call upon the Attorney-General for legal counsel and such assist- 
 ance as may be required to enforce the provisions of this Act. If, upon exam- 
 ination or other evidence exhibited or made known to him, he shall be satisfied 
 that any corporation transacting interstate insurance, as defined by this Act, 
 shall have violated any provision of this Act, he shall report the facts to the 
 Attorney-General, who shall institute proceedings against the same. Any willful 
 
 30 
 
false swearing in regard to any report or statement of fact required by the 
 provisions of this Act shall be perjury, and shall be punished as such, according 
 to the laws of the State, Territory, or District in which the corporation is 
 incorporated or organized ; and every officer, employee, or examiner of the 
 Bureau of Insurance who, upon any' pretence whatever, receives any fee or 
 award for his services, except what is allowed to him by law or by the rules and 
 regulations of the Bureau, shall forfeit his ofl&ce and be otherwise punished by 
 the imposing of a fine of not more than five hundred dollars or by imprisonment 
 for not more than six months, or by both. It shall not be lawful for any 
 corporation or party which has not complied with the provisions of this Act to 
 insure any risk or issue any policy on property of any kind located beyond the 
 limits of the State, Territory, or District under whose laws said corporation or 
 party was incorporated or organized, or upon the life or lives of any person or 
 persons, or upon contingencies happening in futvu'e to person, life, property, or 
 estate, where the insured is not a resident of the State, Territory, or District in 
 which said corporation or party was incorporated or organized; and it shall not 
 be lawful for any person to act as agent or solicitor, or in any other manner, 
 for any corporation transacting business under this Act until all the provisions 
 of this law shall have been complied with and evidenced by the Comptroller's 
 certificate of authority. Any person or persons violating this or any other 
 provision of this Act shall be deemed guilty of a misdemeanor, and shall, upon 
 conviction thereof in any district court in the United States within the jurisdic- 
 tion of which such offense was committed, be subject to a fine not exceeding 
 one thousand dollars for each offense. 
 
 " Sec. 23. That all duties and powers, authority and jurisdiction now 
 imposed aud conferred upon the Commissioner of Corporations by the Act of 
 Congress of February fourteenth, nineteen hundred and three, relating to 
 insurance companies, shall not thereafter be imposed upon or exercised by the 
 Commissioner of Corporations. And all Acts or parts of Acts inconsistent with 
 this Act, and so far as inconsistent, are hereby repealed ; and all books, papers, 
 and documents and correspondence whatsoever, now in the office of the Com- 
 missioner of Corporations, relating to the business of insurance, shall, on 
 demand, be delivered, and transferred to the Comptroller of Insurance, and be 
 and remain in his charge and custody. 
 
 ** Sec. 24. That this Act shall be in force from and after its passage." 
 
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