insurance.

Perhaps it is not a bad scheme to restrict taxation of insurance companies to the undistributed surplus of the company; and further than this the utmost publicity of the operations of insurance should be secured.

In the matter of securing publicity the state insurance departments have signally failed. They have rather been agencies for the promulgation of whitewashing reports which have been used by the companies as advertisements for the further spreading of endowment policies. Government regulation should not forbid the spreading of endowment insurance. The general tendency towards centralization of commercial regulation in this country indicates that something should be done towards stimulating the activities of the federal government in the matter of investigation of life-insurance methods and exposure of abuses. The Bureau of Corporations already has the power to investigate life insurance. Let it use that power. If it needs additional money and men for the purpose they will be readily forthcoming when the attention of Congress is called to the matter.

Economically speaking insurance is not commerce. It is finance. The essence of finance is the contract of guaranty; and insurance is plainly a contract of guaranty. But the lawyers are taking care of the constitutional question for us. They are rapidly deciding that insurance is commerce, and for present purposes it makes very little difference on what constitutional theory the requisite powers are given to the central government. It has not been proposed that the central government charter insurance companies but that it be given additional powers in enforcing publicity. Our narrowing contact with foreign countries touches us in insurance as it has touched us already in commerce, in finance, in diplomacy, and even in educational questions. We want to take every means at command to find out whether our insurance magnates are promoting railroad combines and whether they are using insurance funds in participation syndicates, in collateral trust bonds, or in bank accounts A or X.

FRANK E. HORACK: Without entering into the constitu

tional or legal difficulties to be encountered and overcome before the organization and government control of insurance companies by the National Government can become a reality, I want to emphasize what in my opinion would be the chief advantages of such organization and control.

The fact that the insurance companies themselves are working toward this end is not necessarily against the proposition. Government control will undoubtedly benefit the insurance companies by giving them a uniform and simplified organization. This must mean a considerable economy in management over the present system. Moreover, I believe that if means are found to bring this insurance business within the power of the National Government, it will hasten the movement for the organization and control or the control at least of industrial and business corporations engaged in interstate business.

The insurance business is only one of the great enterprises conducted in corporate form in this country which must sooner or later come under the surveillance of the National Government. President Roosevelt urged national legislation for corporations engaged in interstate commerce in his first message to Congress and this year to the second session of the 59th Congress he again calls attention to the need of securing Government control of those great corporations the operation of which are confined to no one State. The impossibility of securing uniform legislation by State action is apparent to any one who has given the subject the slightest thought.

In my opinion all of the arguments urged in favor of organization and government control of insurance companies may well be applied to all the great corporations engaged in interstate commerce. To sum up briefly, the advantages of Government organization and control are:

1. It will give such corporations a uniform and simplified organization.

2. It will make possible a uniform line of court decisions. respecting the powers and duties of such corporations.

3. It will be one of the most efficient means of checking the evil of overcapitalization.

4. It will give better protection to policyholders and to stockholders, particularly in giving them information as to whom their associates are.

5. It will give American companies transacting business abroad a better standing, as well as better protection.

6. It will check excessive profits and reduce the cost of in

surance.

7. It will put a stop to the disgraceful traffic in corporate charters for the sake of the fees which the corporations willingly pay for immunities.

8. It will put the standard of corporate legislation in this country on a par with that of England and Germany.

FREDERICK L. HOFFMAN: The address of Professor Robinson before this Association marks an important step in the advance of insurance science as a branch of economics. The observations, on the whole, are sound and in conformity with the facts, and the address illustrates forcibly the value of independent and impartial research work in practical economics. The scientific study of insurance has been almost completely neglected by economists, with the exception of the valuable monograph of Mr. Allan H. Willett and the occasional discussion of its social aspects and importance by Prof. Ely, of Wisconsin. A very promising field lies open to any one, but no more serious error could be made than to assume that all the knowledge and wisdom respecting the business is to be found in the Report of the New York State Legislative Committee, or in the Report of the Special Committee of the Legislature of Wisconsin. Insurance has a wide literature and most interesting history, but few trained minds in economics have given the matter serious concern, and the subject awaits the coming of the master mind which shall successfully differentiate the sound theory from the unsound, and the valuable material from the worthless. In no direction, perhaps, is the value of special research-work on the part of trained economists better illustrated than in connection with the constitutional aspects of the problem of

Federal supervision of insurance, or the specific question whether, under our Constitution, insurance is commerce or an element of commerce within the meaning of the Commerce Clause. Now, while there has been much discussion upon this point, there has been practically no research-work to establish with accuracy the point of view of the early American statesmen from a study of the works of Hamilton and Wilson, the early American State Papers, the debates of Congress, etc., not to speak of the much-neglected field of the actual practice of ancient and modern commerce and navigation.

Much valuable material will be found in the early dictionaries of commerce, and dissertations upon the Law Merchant, maritime law and custom, and even international law contain much that will prove useful and suggestive. In other words, there is urgent need of a comprehensive inquiry into our political and commercial history, to ascertain whether or not in the early debates and discussions, insurance has been considered an element of commerce in the same sense as bills of lading and bills of exchange. It is to be hoped that some earnest student of economics will take up this question and produce a work useful for practical purposes and which would serve as an aid in the successful solution of the pending problems of the relation of insurance to the State.

Not much good, however, is likely to result until the whole subject of insurance is included within the scope of university education and until the science of insurance is taught in the same manner as other applied sciences are now being taught in our great institutions of learning. An excellent beginning in this direction has been made in Germany by the establishment of an insurance seminary at Göttingen, under Prof. Lexis, and of an insurance course in the Commercial High School at Cologne under Prof. Moldenhauer. In so practical a country as America, it is difficult to understand why insurance has not long since attained to the dignity of an applied science and been taught as such in our universities. By such teaching I mean more than the actuarial branch of the business of life insurance, for I would make the instruction include every department of the business, or, in other words, represent insur

ance science in the true and complete sense of that term. The division is natural into different sections-such as, first, the economics and theory of risk and insurance; second, the history and literature; third, the law of insurance, both private and administrative, including State supervision and control; fourth, the mathematics of insurance, or the practical application of the doctrine of probability; fifth, the finance of insurance, including the doctrine of interest; sixth, the administration of insurance companies, including the science of accounting; seventh, insurance medicine, including hygiene and diseases of occupation; eighth, the business of insurance in practical life, or its social aspects, including statistics, comparative experience, social utility, etc.; ninth, insurance technology, including insurance engineering, prevention of fire waste, etc.

If some such comprehensive plan were introduced into one or more of our leading universities, in place of the present more or less inadequate method of instruction, and if the co-operation of the companies were enlisted to secure material and data, literature and forms, etc., the step would mark the beginning of a new era and the result would be to substitute facts and truth for error and guesswork, and the benefit to society and the State would be incalculable.

F. A. CLEVELAND, PH. D.: The papers read and the discussion following seem to be practically in accord in their advocacy or deferential acceptance of the principle of publicity. That is to say, the need for state control over insurance companies is accepted and publicity is held a necessary incident thereto.

Advocating publicity, Mr. Johnson, in his excellent paper on "The principles which should govern the regulation of life-insurance companies," contrasts the almost complete absence of regulatory acts in Great Britain with the voluminous State insurance legislation in the United States, and concludes that the one provision-" publicity "-in Great Britain has given a complete solution of the problem of regulation, while America with all her statutes-inquisatorial, restraining and