of the same within five years after title has been obtained thereto, unless the superintendent is willing to extend the time on the plea that the company's interest will suffer materially by a forced sale.

3. Classes of insurance the companies may write.Nearly all the states limit fire and marine insurance companies to those two types of insurance or to such additional forms of protection as may be closely allied. In this country the states have adhered to the so-called "monoline system," as contrasted with the "multiple line" plan prevailing in England and most European countries. The customary classification with us is three-fold, namely, life insurance, casualty insurance, and fire and marine insurance. As far as possible, American companies are restricted by statute to the writing of some one of these three classes of insurance, British fire and marine companies, on the contrary, have the option of writing practically all forms of insurance, including life, casualty and surety forms.

Any study of the subject will show that the American grouping of insurance coverages is purely artificial and by no means strictly observed. There is already an immense overlapping by numerous companies. Moreover, numerous companies, or those who control them, have been creating subsidiaries to do indirectly what they may not do directly. The multiple line principle, it may be added, has already been adopted by Oregon and Wisconsin to the extent of including all kinds of insurance, whereas on March 4, 1922, the Federal Government recognized the principle with respect to the District of Columbia.*

See title II of the Act to Regulate Marine Insurance in the District of Columbia, approved March 4, 1922. For a detailed discussion of the multiple line principle, see S. S. Huebner: Report on "Legislative Obstructions to the Development of Marine Insurance in the United States," pp. 33-40.

By writing various kinds of insurance, it is argued, a company's overhead charges are reduced materially and a reduction in expenditures along many lines is effected. It is also placed in the advantageous position of being able to secure the support of large business concerns by meeting their full insurance needs. Various forms of insurance also complement one another in that bad results in one branch for a series of years are apt to be counterbalanced by good results in some other branch. British companies have found the privilege of multiple line insurance a great source of strength, especially in that such freedom has greatly helped them to capture the foreign market by enabling them to meet the full insurance needs of large foreign corporations. Largely because of this fact, American marine underwriters have requested that they be also permitted to adopt the department store idea in insurance directly.

Marine insurance as practiced to-day, it should be pointed out, is essentially multiple in character. It protects against fire, perils of the sea, and a multitude of other hazards. It embraces builders' risk insurance, which covers every variety of hazard connected with the process of constructing and repairing vessels. It also includes protection and indemnity insurance, involving some thirteen distinct kinds of risk, including injury to crew, passengers and other persons, theft and pilferage, property damage to vessels, cargo, piers, etc., illness of passengers and seamen, and negligence or default of the carrier, captain or crew. American marine companies, judging from their answers to an inquiry as to why they did not emphasize certain types of insurance, are prevented by state law in many instances from writing ever such closely allied forms of protection as builders' risk and protection and indemnity insurance. Fifteen insurance commissioners have advised that the statutes of their

states will not allow marine, and fire-marine insurance companies to write protection and indemnity insurance; thirteen expressed themselves to the same effect with reference to builders' risk insurance; and five more were uncertain, but expressed grave doubt with respect to both of these forms of insurance.

4. Taxation of insurance companies.-The great majority of states subject fire, marine and fire-marine companies to a tax on gross premiums derived from business within the state (after deducting return premiums and premiums paid for reinsurance in authorized companies), ranging all the way from 1 to 3 per cent. An examination of the laws, however, indicates the utmost lack of uniformity in the rates and the methods of taxation used. The situation is rendered still more complicated by the fact that many states apply different methods of taxation, or different rates if the method is the same, to domestic companies from those applied to foreign and alien companies.

With respect to domestic companies 36 states tax premiums (derived within the state and after deducting either return premiums or premiums paid for reinsurance in authorized companies or both such return and reinsurance premiums) in one form or another. Ten states impose a tax of 2 per cent on gross premiums after deducting return premiums and premiums for reinsurance placed with authorized companies; in four states the tax on this basis is 1 per cent, in three 11/2 per cent, and in three other states 2/14, 23/8, and 26/10 per cent, respectively. Three states tax domestic companies 21/2 per cent on gross premiums after deducting only return. premiums, while in three other states the tax on this basis is 2 per cent and in one state 11/2 per cent.

Mention should also be made of the facts that a number of states impose upon fire and marine insurance

companies, in addition to their other taxes, a flat or percentage franchise tax, and that in a number of other instances the state taxation is reduced by degrees in accordance with the extent to which the company invests its funds within the state under consideration. With respect to the taxation of foreign and alien companies, 27 states apply the same method and rate of taxation as are applied to domestic companies. Nearly all the remaining states charge admitted companies of other states or foreign countries a higher rate than is imposed upon their own companies.

In addition to all the aforementioned taxes, insurance companies are subjected to a large variety of state license fees and special charges, relating to the organization of companies, the annual licensing of companies and their agents, the filing of reports and other papers, the certification and publication of annual statements, etc. Here, again, the utmost lack of uniformity presents itself with respect to the requirements of different states. A careful tabulation of such licenses and fees reveals a list of 47 varieties to which a company would be subject if entered in all the states.

To make sure that insurance companies will be treated with equal severity, it is interesting to note that 38 states have "retaliatory laws" on their statute books, although it is customary to refer to such laws with the more charitably sounding title of "reciprocal legislation." The nature of the reciprocity is indicated by the following customary wording of such statutes:

When, by the laws of any other State, any taxes, fines, penalties, licenses, fees, deposits of money or securities, or other obligations or prohibitions are imposed upon insurance companies of this or other States, or their agents, greater than are required by the laws of this State, then the same taxes, fines, penalties, licenses, fees,

and other obligations and prohibitions, of whatever kind, shall, in like manner, for like purpose, be imposed upon all insurance companies of such States and their agents.

All of the 38 aforementioned retaliatory laws apply to deposits of money or securities; all except two refer to taxes, fines, and fees; while in 24 instances the statute extends the retaliatory feature to cover "any obligations, prohibitions and restrictions."

The collective burden involved in all of the aforementioned taxes and fees gives unmistakable evidence of excessive and unjust taxation, especially when the Federal taxes are added. A compilation shows that 71 American marine and fire-marine companies paid a total of $19,500,429 of taxes and fees during 1918. Of this total the Federal Government collected $8,964,030 and the state and local governments, $10,536,399. With respect to the marine insurance of these companies, taxes and fees amounted to 6.18 per cent of the total net marine premium income of the companies, while for fire insurance the percentage was 4.76 per cent. Yet leading underwriters have testified that they are satisfied to make, over a period of years, an underwriting profit equal to 5 per cent of the net premium income. Total taxes and fees paid during a single year by these 71 companies amounted to nearly 221/2 per cent of their capital stock, and to nearly 8 per cent of the capital stock and surplus combined. For every dollar of dividends paid by these companies to their stockholders during the year, the tax-gatherer took nearly $1.06.

The American system of premium taxation, it is contended, is unscientific, to say the least, and can be supported only on the plea of revenue and ease of collection. British taxation, on the contrary, is levied on net profits and recognizes the fact that a premium written may never