FEDERAL CONTROL OF INSURANCE CORPORATIONS

FEDERAL CONTROL OF INSURANCE CORPORATIONS BY WILLIAM R. VANCE IT is probable that that portion of the President's strikingly interesting mes sage recently transmitted to Congress which has attracted most attention from lawyers is the sweeping recommendation of Federal control of all the great corporations engaged in interstate business. Certainly the most striking feature of this recommendation is that concerning insurance corporations, of which the President 'speaks in these words: "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 differ ent States and between American compa nies and foreign governments. I urge that the Congress carefully consider whether the power of the Bureau of Corporations can not constitutionally be extended to cover interstate transactions in insurance." This recommendation, which comes almost as a shock to the lawyer accustomed to consider the doctrine that the insurance business is not interstate commerce as one of the few well settled rules laid down for the con struction of the commerce clause of the Federal Constitution, should be read in connection with the following statement made in the same message: " When we come to deal with great corporations the need for the Government to act directly is far greater than in the case of labor, because great cor porations can become stich only by engaging in interstate commerce, and interstate com merce is peculiarly the field of the General Government." This sentence gives the keynote to the general movement to secure Federal control of insurance corporations. In effect it de clares that a corporation which has become so great as to transcend, in its business ac

tivities, the bounds of the state of its crea tion, and has become engaged in extensive interstate operations, is thereby brought within the purview of the interstate com merce clause, and so made subject to the legislative control of the national Congress. That such a movement has already ac quired considerable volume and force may be seen through evidence derived elsewhere than from the President's message. Thus in the Act of Congress establishing the De partment of Commerce and Labor, approved February 14, 1903, we find, among other provisions defining the powers and duties of the Bureau of Corporations, the following: "It shall also be the province and duty of said Bureau, under the direction of the Secretary of Commerce and Labor, to gather, compile, publish, and supply useful informa tion concerning corporations doing business within the limits of the United States as shall engage in interstate commerce or in commerce between the United States and any foreign country, including corporations engaged in insurance, and to attend to such other duties as may be hereafter provided by law." The natural inference to be drawn from the words so quoted is that Congress con sidered insurance corporations to be in cluded among those engaged in interstate commerce. Acting in accordance with the instructions so given, the Bureau of Corpo rations has carefully compiled the insurance laws of the several states, and collected a mass of other information concerning the conduct of the insurance business in the United States. The Commissioner of corporations, Mr. J. R. Garfield, in a very able and readable report in which he urges Federal control, by means of a compulsory Federal franchise,