And later on, in the defeat of the Kehoe Rating Schedule bill, "Big Business," assisted by public opinion against the bill which the clerks of "Big Business" had worked up, was to triumph over the progressive Legislature of the State of California.181

181 Independent insurance agents, of course, continued their support of the measure. Under date of March 9, J. E. Phelps of Los Angeles, third vice-president of the California State Association of Local Fire Insurance Agents, wrote Insurance Commissioner Cooper warning him of the campaign that was being carried on against the bill.

"The only means,' said Phelps, "by which the Pacific Board (Board of Fire Underwriters of the Pacific) can defeat your bills is in warping and distorting the facts to limited experienced local agents and then inducing these agents to wire or write their legislators to defeat your bills. The Pacific Board has sent its untruthful literature all over the State and this coming week or weeks will find the companies' Special Agents exceedingly active in personal canvas work with local agents. To offset such influence it will be necessary to have your bills presented in both houses by able and well known administration men. No doubt bills coming out of committee are blessed with a great deal of vitality, but the 'babes' cannot live if the wolves press in on them too hard and fast, and the company managers in San Francisco can see their pocket books grow materially thinner if these bills reach enactment.

"We agents have not sufficient funds or time to devote to a campaign of education and on the other side the companies are well supplied with both, it is therefore a serious situation we are compelled to face, with hundreds of men in the field against us securing the co-operation of the local agents we cannot reach. We hope to offset some of the company work in Sacramento and believe that our letter to agents will prove of some benefit. The cities in the State have been well taken care of and I believe we are safe in counting on favorable votes from their legislators." Under date of March 13, Phelps again wrote Cooper: "The Special Agents of the companies," he said, "are meeting with some success in the field and have prevailed upon a few officers of Local Boards to write their legislators to work and vote against your Senate Bill No. 896 in its present form; contending that sections 3 and 4 would practically permit the Insurance Commissioner to create conditions similar to those effective under the Sullivan bill, for he could refuse to accept rates as filed, thereby inducing wide open competition. All San Francisco company managers have used this argument freely and, apparently with the belief that it is the only vulnerable spot in your bill, in fact they see in this element the step that will lead to State Rating. The managers endeavor to blind the local agents as to the real purpose of their opposition by stating that they favor the Washington law and would offer no opposition to your bill had you not included sections 3 and 4."

CHAPTER XV.

DEFEAT OF THE KEHOE RATING SCHEDULE BILL.

After the legislative recess a most powerful lobby representing the fire insurance underwriters, appeared at Sacramento. T. C. Coogan, who had represented the insurance people at many legislative sessions, and Daniel A. Ryan,182 Chairman of the Progressive Republican State Central Committee, were the most conspicuous of the group. The efforts of the lobby were directed particularly to convincing the members of the Legislature that the Kehoe Rating Schedule bill should not be passed. In addition to the work of the lobbyists on the ground, there came hundreds of letters from insurance agents and from citizens urging that the Kehoe bill be not passed. Some of these letters were most conflicting. Members received from the same writers letters protesting against the passage of the bill, and letters urging that the measure be passed.

Week after week passed with the bill still held in the Senate Committee on Insurance. The committee's regular meeting night was Thursday.

On Thursday, March 20, when the committee met, the Rating Schedule bill was crowded aside by other matters. On Thursday, March 27, the committee did

182 Mr. Ryan's appearance in the interest of the insurance people caused much comment. In addition to heading the State organization of the dominant faction of the Legislature, Mr. Ryan was at the same time an employee of the State, being attorney for the State Board of Harbor Commissioners at a salary of $2400 a year.

not meet for want of quorum. It was not until the night of Thursday, April 3, that the committee was able to take the measure up.

Mr. Coogan and Mr. Ryan, on behalf of the underwriters, asked further delay, on the ground that they wished to bring their people from San Francisco to appear against the measure. They also made objection to the measure's wording. On every point raised, however, the supporters of the bill expressed themselves as willing to concede any correction of real or fancied weakness; they were willing, they said, to accept any amendment Mr. Coogan might suggest to make clearer the provisions of the bill, or to strengthen it. They insisted, however, that they would not accept amendments to weaken the measure, or to "kill" it. They even agreed to work with Mr. Coogan in preparing amendments.

Coogan had claimed that the bill not only required the filing of rate formula, but gave the commission power to fix rates.

The supporters of the bill replied that it was not their intention to make any such provision, and that if the language of the bill indicated such powers, they would accept amendments to make the Commissioner's limitations absolutely clear. They warned the opponents of the bill, however, that if reasonable State supervision of rate-making were not accepted, the State would eventually be forced to provide machinery for State-making of rates.

Coogan had complained that in the event of an insured protesting against a rate, the bill required the Commission to give notice to all parties at interest, but did not specifically mention underwriters.

The bill's supporters expressed themselves as willing to accept amendments to meet this alleged weakness. Coogan took the position, however, that the measure could not be improved to make it satisfactory. He insisted that he wanted his San Francisco people to be heard. But he could not himself appear before the committee again until the following Monday. It was finally decided that the hearing should be had the following Tuesday, April 8.

At that time, the popular belief was that the Legislature would adjourn toward the end of April. The proponents of the bill became alarmed lest continued delays might result in Senate or Assembly, or both, not being given opportunity to vote upon it. Kehoe, author of the bill, insisted that the measure, without further delay, be returned to the Senate with the recommendation that it "do pass," to be amended, if necessary, on the Senate floor. A compromise was finally reached by which the bill was returned to the Senate without recommendation, with the understanding that after it had been read the second time in the Senate, it was to be returned to the committee for amendment, with the proviso that it was to retain its place on the Senate file.

The suggested procedure, to put it mildly, was not provided in the Senate rules. The proponents of the bill didn't want it. They wanted the bill returned with the recommendation that it do pass, to be amended, if necessary, on the Senate floor, a procedure which was entirely regular. But to get it out of committee at all they were compelled to accept the compromise.

In the Senate the following day, however, the irreg

ularity of the committee's action gave the opponents of the bill basis of a demand that the measure be returned to the committee forthwith. Senator Wright moved that the bill be re-referred to the committee. Senator Boynton supported Wright's motion. Boynton and Wright unquestionably had foundation for their contention that the proposed procedure was not in accordance with the governing Senate rules. But the Senate was clearly in a mood to make exception in this particular instance.

Kehoe, however, on the understanding that the Insurance Committee consider the bill, and act upon it the following Tuesday night, and that nothing be done to delay its consideration by the Senate, consented that the measure should be returned to the committee.

And when the following Tuesday night came, the committee did not take action on the Kehoe Rating Schedule bill.

The committee did, however, meet to hear arguments for and against the bill.

The proponents of the bill offered the amendments which had been suggested at previous meetings, to meet the objections which had been raised by the representatives of the underwriters.188 But Mr. Coogan, to whom

183 The representatives of the underwriters particularly objected to sections 3 and 4 of the bill. These sections read:

Sec. 3. To secure uniformity in such rating schedules, it shall be the duty of the insurance commissioner to furnish each company and each rating bureau a classification of risks and table of hazards, which shall be used as a basis of such rating schedules. All risks shall be classified in the manner as provided by the insurance commissioner and the insurance commissioner may refuse to accept for filing any rating schedule upon a different classification or which is indefinite or which may permit discrimination in rates on similar properties. No company shall use more than one rating schedule in the determination of its rates.

Sec. 4. Any rate or charge for such insurance shall be subject to review before the insurance commissioner upon the application of any property owner or other insured affected thereby.