virtually dragooned into the writing of war-risk marine insurance. At the peak of insurance I should say there were a hundred companies that were writing to a greater or less extent marine insurance. frequently as reinsurance. A great many of the smaller companies were not able to undertake marine insurance on their own account, directly issuing policies; a great many of them were dragooned into assisting the direct writing companies by serving as reinsurers.

About 1919 the number of companies had been reduced; those writing marine insurance in the city of New York had fallen from something over 100 down to something like 63. To-day I believe the number is nearer 40.

The questions of rates of premiums as we look back we find they divide themselves into four categories, one of which we might call a preferred rate of premium, on which the rate of premium was from one-twentieth of 1 per cent up to 1 per cent. That we might term the preferred class of business.

Mr. CHINDBLOM. Was that business going into the danger zone? Mr. McGEE. No; excepting at a time when things seemed to be exceedingly quiet. In other words, the rate to England and to France at one period got as low as five-eighths of 1 per cent during the war.

Mr. CHINDBLOM. That was when the submarine menace was not so bad?

Mr. MCGEE. Yes; that was during the lull in things, when we got into a sense of feeling that the war was practically over, although it was really not. Then there is what we might call a normal warrisk rate, which was from 1 to 22 per cent. These divisions are my own, purely.

Then I would make the third division what I would call hazardous rates, where we felt there was a substantial hazard to the risk and we wanted something more than we would call a normal rate. That was usually governed by voyages or complications.

On the hazardous business the rate would run from 22 to 10 per cent.

Then we come to a class which I have termed extra hazardous, on which the rate would run from 10 to 15 per cent. Then I come to the last class, what I call fancy. In this last class the rates were from 15 per cent upwards.

Mr. COLLIER. What do you call the last?

Mr. MCGEE. Fancy.

Mr. CHINDBLOм. Did you say fancy or fancied?

Mr. MCGEE. Fancy. Now, all rates of premium above 15 per cent. as a rule, were designed to discourage business, either to discourage a transaction which a merchant was endeavoring to go into, which he was after, and figuring whether he could or could not do a thing these rates were made to discourage the entering of such business, and they were equivalent to a refusal to insure through the medium of quoting a rate that would make the transaction commercially prohibitive. Quotations of this sort very rarely were accepted. Mr. COLLIER. When the war first broke out a good many wanted to take as little insurance as they could?

Mr. MCGEE. We did not know what we were up against, and we did not want to take any more than we had to.

Mr. COLLIER. You wanted insurance on the Pacific coast, did you not?

Mr. MCGEE. Yes; there we were not frightened.

Mr. COLLIER. Did you charge different rates on the Pacific side? Mr. McGEE. Very different. We charged very different rates for a voyage along our coast; we had one rate of premium-we would charge one rate of premium on a coastwise voyage, and another rate from an Atlantic port to a domestic port on the Gulf of Mexico, and still something else from the Atlantic to the Pacific, and still again something else to South America, depending on where it was going and the particular period of time it went.

At rates above 20 per cent the amount of business done was negligible. It was so small that it would cut very little figure in arriving at an average rate. To put it in another way, the insurance at those higher rates compared with what was written at normal rates, the amount of business done at the lower rates was so large as to reduce the average premium rates on the whole business for the whole period of the war to less than 2 per cent. Some of the companies, their average rate was under 12 per cent. The CHAIRMAN. Let me understand you. Was that average you have just given the average of all the business done?

Mr. MCGEE. That is taking all the war-risk premiums written during the whole period of time we wrote war risks; as to the volume of business, again coming back to your question, sir, into A and B would fall by far the greater volume, preponderating, the far greater volume of the whole business done.

Mr. GARNER. Class B is your normal?

Mr. MCGEE. Yes. I used the word preferred because we usually apply that in our business to something where the rate of premium is a small fraction of 1 per cent.

Mr. GARNER. If I understand the preferred rates, in that classification you put the rates in that from one-twentieth of 1 per cent to 1 per cent, and the normal from 12 to 2 per cent?

Mr. MCGEE. Yes.

Mr. GARNER. And the great volume of business was done on those rates?

Mr. MCGEE. The great volume of business was done on the preferred rates.

Mr. HADLEY. I understand the business above those rates was so negligible that it would not materially affect the profits of the company?

Mr. McGEE. The fact that the average rate of premium, calculated as accurately as we can at this late day, shows the average of premium we received applied to the sums we insured was well under per cent.

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Mr. HADLEY. As a general proposition it seems to me it would follow, so far as the profits of the business were concerned, that when you get above those rates, into the hazardous and extra hazardous, it would be so negligible that the cost, taking the cost, it would not materially affect the profits of the business.

Mr. MCGEE. It was a very, very small part of the whole, sir.

I wanted to make one more point, and that was this: That as to these fancy rates I referred to, those were quoted principally, or very

largely, during the period of time when there was the very greatest hazards in the trade. The greatest hazards at sea existed then, at a time when the cargo space of the steamers going across to England, France, was commandeered by our own and by the governments of our allies, and that consequently during that period of high rate very little business was done by private merchants, because the space on steamers was commandeered by the governments and there was no place for a merchant excepting as a government did not use all of the space of some individual steamers. Frequently there was a little bit of space free for private tonnage, but it was a very small part of the whole.

Mr. CHINDBLOM. The Government insured its own shipping, did it? Mr. MCGEE. Yes, sir. And just at that point I would like to say that the private companies-or, rather, let me put it in another waythe Government War Risk Bureau picked its risks, I believe, during the entire war, or practically the entire war, most of it, and the Government would not insure contraband or conditional contraband cargo, it would not insure other vessels than vessels under our own flag. For a considerable period of time the Government War Risk Bureau dictated the routes and sailing directions which vessels had to follow. The marine insurance companies insured contraband and conditional contraband on a great many shipments.

Mr. GARNER. Prior to our entrance into the war, was there any material loss of cargoes by virtue of the English or French or any of the allied nations, any loss on their account?

Mr. MCGEE. There were very substantial losses, sir.

Mr. GARNER. There were substantial losses by England and France

Mr. MCGEE. Losses arising out of the detention by EnglandMr. GARNER. You say very substantial. Could you estimate the amount of that?

Mr. McGEE. I could not estimate it. Possibly the figures could be collected.

Mr. GARNER. Would it amount to as much as ten million or twentyfive million dollars?

Mr. MCGEE. It would be a wild guess for me to name any figure. I believe the information is obtainable, at considerable labor.

Mr. GARNER. I merely wanted to ascertain the fact whether there were losses by virtue of the action of England or France or any of the allied nations. You say that there was a very substantial loss! Mr. MCGEE. There was, but I would not want to hazard a guess as to the figures.

Mr. GARNER. In following that up, may I ask this. Have your companies recovered anything from those governments for those losses?

Mr. McGEE. Not a cent.

Mr. GARNER. Has there been any effort by your companies to present claims for those losses to England or France?

Mr. MCGEE. I do not think so.

Mr. GARNER. I was asking that in view of the eloquent presentation by Judge Beck as to the duty of this Government to follow up its citizens and at this date we are called upon to pay damages, in effect, by Germany inflicted during that period, but nothing is said about any damage that was inflicted by England and France.

Mr. MCGEE. My attention has been called to something I had forgotten. There were claims made against foreign governments. There were two cases I know of where claims were made against the British Government and the British Government did pay. There have been two such claims that I know of. They had slipped my mind.

Mr. HAWLEY. Such information has been in the papers from time to time.

Mr. MCGEE. Yes; public property.

The CHAIRMAN. Is that all, Mr. McGee?

Mr. MCGEE. I just wanted to add one thing more, and that was that high rates of premiums frequently were quoted by the companies because of their inability to hazard the stupendous amounts which were wanted.

The CHAIRMAN. I think you have stated that before.
Mr. MCGEE. They could not manage it.

Now just one thing more I wanted to give you in the way of averages in rates. The average premium on the losses for which awards. were made which were the most hazardous of the voyages reinsured, which is proven by the fact that they were losses, the average premium on the cases in which the awards were made was 44 per cent. Those represent the highest rates of premium.

Mr. COLLIER. Then the statement that has been made that most of those premiums averaged around 40 per cent is very far from the fact?

Mr. MCGEE. It is absurd; it could not possibly be so.

Mr. HAWLEY. In your figures did you show the percentage of business done in the several classes 1, 2, 3, 4, and 5?

Mr. MCGEE. No, sir; I have not done that, because it is exceedingly difficult at this time to get back into the old records to make accurate calculations. We can only estimate it.

Mr. GARNER. You can put in the record, I assume, that you have estimated the various awards made to the companies and have ascertained the average to be about 44% per cent?

Mr. MCGEE. Four and four-fifths per cent.

Mr. GARNER. And you could give the committee, then, I presume, the highest rate that was charged for insurance where an award has been given and also the lowest rate?

Mr. MCGEE. I think that is ascertainable.

Mr. GARNER. That would be interesting to know, to know the highest rate under which an award was made and the lowest rate under which an award was made.

Mr. MCGEE. That, I think, can be ascertained.

Mr. GARNER. If you would furnish that to the clerk in the next two or three or four days I think it would be interesting. Mr. MCGEE. That is with respect to losses paid?

Mr. GARNER. Yes; the highest rate of insurance where an award was made, and the lowest rate of insurance where an award was made. I won't ask you to give them all, but just the highest and the lowest.

Mr. CHINDBLOM. Do you recall approximately what relation the amount of your claims for losses would bear to the awards made by the Claims Commission?

Mr. MCGEE. I could not give that off-hand; no, sir.

Mr. CHINDBLOM. They did not allow your claims in full? Mr. MCGEE. Oh, no. Something between 16 and 17 per cent was deducted.

Mr. DOUGHTON. What is your average peace time rate?

Mr. MCGEE. That is a difficult question to answer, because there is no one standard rate that applies to everything. The rates of marine insurance vary from one-twentieth of 1 per cent to 1 per cent. I am speaking of normal marine rates for normal marine hazards, on normal voyages.

Mr. DOUGHTON. In peace time?

Mr. MCGEE. In peace times. The rates between New York and England, for instance, for ordinary kinds of merchandise, would be something like one-eighth of 1 per cent.

Mr. CHINDBLOM. Have the American marine insurance companies held the business which they acquired during the war?

Mr. MCGEE. Very largely so, yes, sir; but not entirely. The aver age of premium charged by the War Risk Bureau, arriving at their averages in the same way we have ours, the average rate charged by the War Risk Bureau was 214 per cent.

The CHAIRMAN. Very well. If that is all, we will call the next witness, Mr. Betts.

STATEMENT OF GEORGE WHITEFIELD BETTS, JR., OF ENGLEWOOD, N. J.

Mr. BETTS. My name is George Whitefield Betts, jr., and I reside in Englewood, N. J. I am a practicing lawyer, with offices at 120 Broadway, New York.

I have spent most of my practice in admiralty law. I think that is a reason why I was originally brought into this matter.

I represent a number of claims that arose out of the sinking of the Lusitania. I shall speak about two or three of them as samples a moment later.

I am also chairman of a volunteer committee that was appointed by the claimants having claims arising out of the sinking of the Lusitania, and I am representing a number of claims simply as chairman of that volunteer committee, for entrance to which no expense or fee was charged.

I also represent two claims for losses of vessels by submarine attack.

My principal interest has been in the Lusitania, because I started in it from the very beginning, shortly after the Lusitania was sunk. The passengers who embarked on the Lusitania, comprised among their number 197 American citizens. One hundred and twenty-eight of these citizens were lost on the vessel. There were about 100 claims for loss of life allowed arising out of the sinking of the Lusitania. There were about fifty-odd claims for personal injury allowed and 86 claims for loss of personal effects.

These American citizens embarked on the Lusitania relying on the right under international law to a neutral to travel on a passenger ship on the high seas without the ship being destroyed, without search or seizure, and the opportunity of the passengers on the ship to escape. They relied probably also on that warning of strict accountability that has been so ably described by General Beck, who has preceded me, and believing that the Germans would never dare