treated in the same manner and to the same extent as all other claimants. For example, when the whole subject of French spoliations was referred in 1885 to the Court of Claims, Congress included the insurance cases on exactly the same basis as the others, and as late as 1891 (that is, after findings of the Court of Claims had been reported back to Congress), appropriations in accordance therewith were actually made of the very class now petitioned for, making a direct precedent for the present claims.

RECENT DISCRIMINATIONS AGAINST INSURANCE COMPANIES.

The erroneous impression alluded to above, no doubt, is due to the fact that in the three omnibus claims bills, namely, act of March 3, 1899, act of May 27, 1902, and act of February 24, 1905, the petitioning insurance companies were wrongfully discriminated against and ommitted from the bills. The individual owners, who carried no insurance, and the unincorporated underwriters who paid for losses, were reinbursed in full, while the corporate underwriters of the same ships and cargoes, and under exactly the same conditions, were omitted.

This was really a matter of expediency to prevent the loading up of these bills. There is nothing on record against the insurance companies' cases, and they were simply put off for the time being. There is a proviso in the last two omnibus claims acts, however, which on first glance would appear to be adverse to these insurance claims, and which, no doubt, has aided in creating, this erroneous impression. This proviso reads as follows: "Provided, however, That any French spoliation claims appropriated for in this act shall not be paid if held by assignment or owned by any insurance company. But this shall not apply to any claim of a class heretofore paid under the act approved March 3, 1891, entitled 'An act making appropriations to supply deficiencies in appropriations for the fiscal year ending June 30, 1891, and for prior years and for other purposes.' It can not be said that by this proviso Congress intended to exclude these insurance companies permanently, for the reason that by the said act of March 3, 1891, as set forth above, appropriations were in fact made in two cases to insurance companies, which cases were of exactly the same class as those for which the companies are now seeking payment.

EXAMPLE OF DISCRIMINATION IN THE RECENT OMNIBUS CLAIMS BILL OF THE SIXTIETH CONGRESS.

An example of the discrimination against an insurance company as such is found in the case of the brig Aurora (p. 166 in H. R. 15372, and in S. Rept. No. 382, pp. 662-665, 60th Cong., 1st sess.). On page 665 the amounts due by the United States as found by the Court of Claims were as follows:

To 4 individual underwriters of vessel_

To 12 individual underwriters of cargo_
To 1 corporate underwriter of cargo_.

Total due___.

$2,450.00 8, 358. 16 7, 383. 52

18, 191. 68

In the bill as reported it was proposed to pay the sixteen individual underwriters of vessel and cargo and not to pay the corporate underwriter, notwithstanding the fact that the conditions of all three cases are identical, except in the matter of incorporation. What justice or reason is there for this discrimination against the corporation? It is absolutely unfair to omit the company simply because it happened to be incorporated.

The present situation can be illustrated by the following: Three vessels engaged in the foreign commerce of the United States and loaded with merchandise, sailed from the port of New York, destined to the same foreign port. One of these vessels carries its own risk and takes out no insurance; the second carries

policies upon the vessel and cargo, issued by individual underwriters, and the third vessel carries its risk on vessel and cargo by policies issued by an American insurance company. They are owned, vessel and cargo alike, by American citizens and the two that carry insurance are insured by American citizens or American companies. All three of these vessels and cargoes are captured by French privateers, sold, and the proceeds turned into the treasury of the French Government.

The United States presents these claims to France and insists on payment. Subsequently, in a treaty with France, the United States bargains off these claims of its citizens for the national welfare, and Congress refers to the Court of Claims each of these three cases, to ascertain and pass upon the validity of the claims for damages as to each of these three vessels, "according to the rule of law, municipal and international and the treaties of the United States applicable to the same." The Court of Claims finds the United States liable as to each of the three vessels and reports the amounts justly due.

The United States appropriates the money and pays the individual owners and the individual underwriters, but has not yet paid the companies.

The question is: Can any just reason be given for such discrimination by the United States between its citizens?

THE COMPANIES NOW PETITIONING CONGRESS FOR PAYMENT.

The companies now petitioning Congress for the payment of their French spoliation claims are the two oldest fire and marine insurance companies in the United States, namely, The Insurance Company of North America, and The Insurance Company of the State of Pennsylvania. They were both incorporated in 1794 and have done a continuous and honorable business ever since, and are among the time-honored institutions of our country, having agents all over the United States. These two companies are the only early companies which have survived to the present. There were ten other companies before 1800, which have had French spoliation claims of this class proved by the Court of Claims, but they all failed or ceased to do business, and their claims are now being pressed by receivers or trustees on behalf of the heirs of the stockholders. One of these was in Massachusetts, two in Rhode Island, one in Connecticut, three in New York, two in Maryland, and one in Virginia.

TOTAL AMOUNT OF ALL INSURANCE COMPANY FINDINGS.

The total amount of all the insurance companies' proved claims still unpaid is about $1,450,000. The payment of these, together with the remaining individual claims, amounting to about $850,000, will nearly clean up the whole subject of French spoliation claims, which has been worrying Congress for more than a century. The great bulk of all the cases, both individual and corporation, have already been passed upon by the Court of Claims, and there are only comparatively few more that are likely to be reported favorably, so that the finding of these claims is almost at an end.

ANSWER TO THE OBJECTION THAT THE COMPANIES WERE IN THE BUSINESS AND TOOK THE RISK."

It has been objected that the premium received covered the risk of the insurance companies and is all that they are entitled to. Is this true? Under a policy of insurance the underwriter is entitled to two things: First, the premium; second, to be subrogated to all the rights of the insured in the event of loss-that is, to all salvages.

He is entitled to both of these, and to one as much as the other. When he pays the loss, by the law of the land, he instantly steps into the shoes of the insured. This is and always has been the

law, both in England and the United States. Hence, the underwriters who paid the losses in the case of the French spoliations are entitled, legally and justly, to all salvages that the owners would have been entitled to prior to the subrogation of their interest to the insurers.

As for the companies being in the insurance business, of course they were, and so also were the individual (that is, unincorporated) underwriters, to an even greater extent than the companies. If Congress has consistently voted to pay the individual underwriters, why then should objection be made to paying the companies for doing identically the same business?

The fact that both the companies and the individuals continued this business at all was due solely to the solemn promise of the Government to see to it that the merchants of the United States should be protected from foreign aggression. It was only by this promise that vessels could be induced, during the period of the war between England and France, to venture on the high seas at all, or underwriters be found to insure them on their voyages. The interruptions of our foreign commerce would have so seriously cut off the revenues of the Government that the administration faced a crisis. It was at this time, in 1793, that Thomas Jefferson, Secretary of State, at the instance of President Washington, wrote to the merchants of the United States as follows:

"I have it in charge from the President to assure the merchants of the United States concerned in foreign commerce or navigation that due attention will be paid to any injuries they may suffer on the high seas or in foreign countries contrary to the law of nations or to existing treaties, and that on the forwarding hither of well-authenticated evidences of the same, proper proceedings will be adopted for their relief." (Mr. Jefferson, Secretary of State, to -, Aug. 31, 1793, 4 Jeff. Works, p. 31.)

President Washington's message of December 5, 1793, contained the same assurances that "due measures would be taken to obtain redress of the past and more effectual provisions against the future." (Vol. 4, Annals of Congress, p. 15.)

It was thus because of this double assurance from the Government itself that the companies continued to do this business, which resulted in such terrible losses from capture by the French. That the Government should now repudiate this assurance seems hardly credible.

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THESE CLAIMS NOT ASSIGNED OR BOUGHT-UP CLAIMS.

In these French spoliation cases of the insurance companies the losses had been paid and the rights of the insurance companies had accrued prior to the treaty of 1800, so that it was their rights and their property and not that of the original owners that the Government was then so earnestly and persistently endeavoring to secure and collect from the French Government, and which the United States by that treaty surrendered to France. At that time the original owners had no claim or right whatever in these cases, for the losses had been paid by the insurance companies and they were the owners and holders of the claims. These claims have never been assigned, nor have they been bought up or speculated in. They are the identical claims owned by the identical companies which sustained the original losses prior to 1800.

ANSWER TO THE OBJECTION THAT THE RATES OF PREMIUM WERE HIGH.

Objection has been made that high rates of premium were charged. In some instances this was true, but the companies did not charge any higher rates than the individual underwriters. The cost of all insurance in those days was high, and varied with the circumstances under which the risk was taken. Many of the ships that were captured were on voyages to China and the Far East. of twelve to eighteen months' duration, and a high

premium was charged for so long a voyage. Again, the rate to some of the West India islands was always high, as in fact still prevails to-day in the case of Haiti, because its coast has never been as fully charted or the reefs platted as carefully as other places, so that the risk is correspondingly increased. The rates also varied greatly from day to day, due to the changes of supply and demand, condition of the ships insured, reports of pirates, privateers, etc. There were also no light-houses and only poor charts. The ships were small wooden sailing vessels-usually about 100 tons. The risk of navigation was therefore much greater than it is to-day. In fact, many of the risks could not now be insured at all. The average rate for both companies and private underwriters was about 15 per cent, which was not high under the conditions of navigation in those days.

DENIAL OF THE STATEMENT THAT THE INSURANCE COMPANIES MADE LARGE PROFITS FROM SO-CALLED "WAR PREMIUMS."

It is an historical fact, that can be verified by anyone who investigates the matter, that the insurance companies which did business to any extent during the period of the French spoliations have, with only two exceptions of any importance, failed or ceased business in consequence of the losses they had to pay on account of these spoliations, and that their claims must now be prosecuted by receivers and trustees appointed by the courts of equity for the benefit of the descendants of those who were at the time stockholders in them.

The two exceptions referred to, viz, The Insurance Company of North America and The Insurance Company of the State of Pennsylvania, also had very heavy losses and only bridged over on the closest of margins. As a matter of fact, so unprofitable was this business that it would have been impossible for the merchants to have placed any insurance at all had it not ben for the assurance of the United States Government, as already stated, that its citizens would be protected in the matter of these claims against France. Even when Congress shall pay the claims that have already been passed upon favorably by the Court of Claims, it will far from compensate the companies for their terrible losses from capture by the French. So many classes of claims have been thrown out by the court, and so small a percentage has been favorably reported, that the companies will recover only about 25 to 30 per cent of all their losses-to say nothing of interest lost-so that in the final result vast loss will appear.

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Furthermore, the policies issued were in no sense war policies," nor were war premiums" charged. On the contrary, the policies were the ordinary marine policy of that time, carrying, broadly, all the risks of the sea, including seizure (which, of course, would be unlawful), pirates, etc., and the premium was a single straight premium. No risk of war or of lawful seizure (as war prize) was assumed, as is evidenced by the fact that a warranty clause was almost invariably added, guaranteeing that the property insured was American, and the ship American. This was because of the United States Government's assurance of protection to American rights of commerce (not contraband of war) against unlawful seizure. If, on the other hand, a war had existed, all our ships would have been lawful prizes for the enemy, the American warranty clause would have been meaningless, and the risk would have been without any hope of salvage through the intervention of our Government; in other words, a real war risk. Such war conditions, however, did not exist and no such risk was assumed by any insurers. With all the vast array of proof before the Court of Claims, there is nothing to indicate that a single dollar of war premiums was ever charged or paid, or that a single policy of insurance based on "war premiums" was ever issued. On the contrary, many of the policies expressly stipulated "Unless the United States shall be at war." In this respect these policies differed from those issued against confed36668-10

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erate cruisers during the civil war, or in time of war generally (when, of course, there exists no chance of salvage). In such cases, to cover this additional risk, a special indorsement is made on the policy, or a special policy is issued, and a second premium is charged.

THE DIFFERENCE BETWEEN FRENCH SPOLIATION INSURANCE CLAIMS AND THE ALABAMA CLAIMS.

No lawyer familiar with the facts who has at all studied the question will contend that there is any similarity between the insurance claims in French spoliation cases and those before the Alabama commission. The Alabama insurance claims were on the usual marine-risk policies, and then special policies were issued against the risk of war for which special premiums were paid; and the insurers were allowed to come under the commission if they had suffered actual loss, but they had not, except in the case of six companies, to all of which their losses were repaid.

There is another material distinction between the Alabama claims and these, in this: The claim made by the United States against Great Britain, growing out of the depredations of the Alabama, was expressly a national claim for violation of neutrality on the part of Great Britain, and the private claims were offered in evidence merely for the purpose of showing the extent of the depredations committed in consequence of this violation of neutrality, and the distribution afterwards to citizens who had lost was entirely a gratuity on the part of the Government.

In the French spoliation cases, on the contrary, the claims of American citizens, as we have already seen, were expressly released to France in payment or settlement and as an offset to claims which France, as a nation, set up against the United States for failure to observe our treaty obligations of February 6, 1778. It is manifest that the claims are dissimilar in fact and absolutely dissimilar in law. (See Senator Warren, in S. Rept. No. 493, 57th Cong., 1st sess., p. 150, quoting from Mr. Bunn in H. Rept. 1051, 52d Cong., 2d sess., p. 13.)

ANSWER TO OBJECTION THAT THE FUNDS PAID TO INSURANCE COMPANIES WOULD NOT GO TO THE HEIRS OF THE ORIGINAL STOCKHOLDERS.

It has been said that the funds paid to insurance companies, as creditors of the Government, would not go to the heirs of the original stockholders as in the case of payments to the individual underwriters.

In those cases where the companies were forced to suspend, by reason of heavy losses, the payments will go to the heirs of the original stockholders. In cases in which the companies survived, the present stockholders have a better claim than heirs would have, because they paid for their stock, while the heirs paid nothing. When has it ever before been held that a man who pays for property is entitled to less consideration than one who inherits it?

These claims have always been reckoned as assets of the companies, and have contributed a part of the value of the stock. Neither the holder nor purchaser of the stock could assume that the United States would refuse to pay for a claim that the courts found justly and legally due. If the United States refuses for a century to pay a just claim, it can surely not expect the stockholders of a company to remain unchanged during all that period. If the United States had not bartered away the claims of these insurance companies to France, and France were still the debtor instead of the United States, how long would we listen to a plea that the debt should not be paid because the personnel of the stockholders had changed?