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Mr. BRENCKMAN. Mr. Chairman, and gentlemen of the committee, my name is Frederic Brenckman, and I am Washington representative of the National Grange.

The occurrence of severe droughts covering large sections of the country, burning up either partly or totally grass fields during recent years, has given rise to a demand for crop insurance.

The National Grange at its recent annual convention adopted a resolution in favor of trying out crop insurance under Government auspices with the idea that we should start out in a modest way and gain some experience.

As Mr. Gray indicated in his testimony we have had hail insurance and tornado insurance to a limited extent in certain sections of the country for about 50 years.

The Grange in one or two States, notably Kansas, has had mutual insurance companies that have furnished hail and tornado insurance for a good many years, and on the whole they have performed a very useful service and have given the farmer needed protection.

As I understand it, the first State to furnish insurance of that kind was North Dakota. They passed a law something like 20 years ago providing hail insurance. It was made mandatory and the farmers were taxed to provide this insurance. It developed after a little while that the farmers in certain sections of North Dakota where hailstorms were prevalent were very well satisfied. In other sections of the State where they didn't have much hail but where rust or smut was their principal trouble, they wanted to know why they should be taxed with hail insurance when hail was not one of their difficulties, and at the same time they were not getting any benefit and they had to shoulder their own losses on rust and smut.

So there were some adjustments made and the thing became a little bit more satisfactory, but by and by they had to give up the compulsory idea and make it voluntary. If a farmer wants insurance he gets it automatically. If he doesn't want it, he has to notify the State board he is going to carry his own insurance this year, and then the tax does not apply.

So, they have operated this State plan successfully for a period of something like 20 years and they have gained a lot of valuable experience.

The National Government has been taking an interest in this subject for a good many years, going back to the time the late James Wilson was Secretary of Agriculture. He established a small division in the Department to study the question. The man that was in charge of that work was Mr. V. N. Valgren. I have been told that his graduation thesis when he was being graduated at one of the universities in the Middle West was on crop insurance. His essay was brought to the attention of Secretary Wilson and he thought so much of it that he invited Mr. Valgren to come to Washington and take charge of that work, and he has been here ever since.

Senator POPE. Is he in Washington now?

Mr. BRENCKMAN. Yes; as I understand it, he is on the staff of the Farm Credit Administration, but he spent approximately 20 years in this work and I think he has a fund of information of which this

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committee should avail itself. Probably he knows more about crop insurance than any other man in the United States.

While every President from Theodore Roosevelt down to the present has indicated or manifested some interest in this question and the Department has gathered a lot of valuable information. Congress itself has at various times held hearings on this subject.

I have in my hand here one of the hearings that was held by a special committee of the United States Senate in 1923. The committee was composed of Senator McNary, Senator Keys, and Senator Ellison D. Smith of South Carolina. I was greatly interested in reading the testimony given before the committee by the late Henry C. Wallace, father of the present Secretary of Agriculture, who was then at the head of the Agricultural Department, and there was a lot of valuable information in this hearing.

Senator PoPE. I might say when these hearings were begun I made reference to that and made the suggestion to the committee they would gain some valuable information by reading those hearings. I think we will have before the committee, at least we have invited, representatives of some of the various insurance companies that have had some experience with crop insurance.

Mr. BRENCKMAN. Yes; one of those companies, I understand is the Hartford.

Senator McGill. I think Aetna also is engaged in crop insurance.

Senator Pope. I think so. We are inviting representatives of both of those insurance companies to appear and give their experience.

Mr. BRENCKMAN. I think that would be a good idea to have them here.

We are in general accord with the ideas that have been expressed here so well by Mr. Gray.

In the first place, this insurance should be on a voluntary basis. There should be nothing compulsory about it. I believe that the insurance is needed more in one crop section of the country than it is anywhere else. It is needed by the wheat farmer out in the semiarid regions particularly. I am not speaking particularly for the cotton growers but any section where cotton is grown exclusively to everything else almost, it might be wise to take in cotton.

Diversified farming is very good protection. It might happen that wheat or corn or some other crop would be a total failure one year and something else might succeed very well, and it might be possible to put in a catch crop, a crop that is grown to take the place of some crop that is failing.

My home is in Pennsylvania and quite frequently when farmers there see a crop is going to be a total failure they will plow it down and put something else in its place. Buckwheat is grown extensively.

Senator POPE. We used to plant peas between the rows of corn so if we had a short corn crop we would be likely to have a pea crop.

Mr. BRENCKMAN. Yes; so diversification is a form of insurance and those who simply grow one crop and no others, put all their eggs in one basket, need crop insurance more than anybody else does.

Senator MCGILL. There are certain parts of the country where it is more difficult to engage in diversified farming, as naturally you know.

Mr. BRENCKMAN. Yes. Now so far as the area is concerned would be very important.

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There are certain sections in the United States where total crop failure is practically unknown. It would not be altogether fair to ask farmers to share the losses in States where there is three good crops out of five because there would be dissatisfaction with that, but yet if the area would not be too large then the losses would fall heavily on those least able to bear them, so a fairly large area would be needed to pull these losses down.

Senator Pope. The area would have to be fairly large.

Mr. BRENCKMAN. Yes; the rate should be raised more or less in localities where the losses are heavy and fall when losses are low.

We are in general accord with the plan proposed in this bill. I think that as the bill is now drawn the premiums could be paid in cash or in kind. Probably it would be a good idea to start out by taking them in kind. That would necessarily mean that part of the crop would be taken in payment of premiums and that it should be stored with the understanding that part of the crop stored should not be thrown on the market and glut it when market conditions would be unfavorable.

Senator POPE. Do you think in this bill that we have sufficiently protected that idea that you have just expressed? We provide expressly that indemnity shall be paid in kind and that wheat shall be stored except it may be sold to prevent deterioration or may be sold to pay a premium in money to the farmer who requests it.

Now, with those provisions in the bill do you think that idea you have just expressed is fairly well carried out?

Mr. BRENCKMAN. Oh, I think the bill is properly drawn so far as that is concerned. · I agree with Mr. Gray that this insurance should be put on a selfsustaining basis as soon as possible. I know very well there are some farmers who have the idea that the Government should furnish this insurance and bear the losses when there are losses, but there should not be any premium at all on the part of the farmer, which would be an unworkable idea, of course. It would not be fair and the country as a whole would not tolerate the idea, so we ought to start out on a sound basis.

Senator Pope. Do you think it would be advisable at first .for the Government to pay the expenses of operation, including storage?

Mr. BRENCKMAN. I think that would be a good thing for the Government to do to get it started, but it should not continue long after the plan is placed in operation.

Senator McGILL. What is the difference here between an appropriation of $10,000,000 to pay the operation than to add that much to the capital stock? · Senator POPE. The thought with reference to the capital stock is that this is the cnly authorization for the capital stock. We will not have to go back year after year for additional capital stock but they may desire year after year to ask for appropriations for operating expenses. That is one reason why they are separate.

So, assuming next year it is necessary to take care of operating expenses, it will be necessary to get that in the appropriation bill.

Senator MCGILL. That would have a tendency to, because that sort of program being carried on you appropriate each year to pay expenses rather than an effort being made to make it self-sustaining.

Senator POPE. Yes. It will depend of course upon the experience that is obtained. If it is found these premiums are not too burdensome to the farmer then the suggestion made by Mr. Brenckman and Mr. Gray would be excellent, and I would very much like to have this organization become self-sustaining. It has been mantioned that such an organization does serve the public and heretofore the Government has provided large sums for relief of flood and drought victims, and victims of all sorts of natural hazards resulting in damage.

Senator McGill. That gives the reason for it but the thought I had in mind is that when you start into appropriating money to pay expenses, it is a rather difficult thing to stop.

Senator POPE. I agree that is true of any appropriation you make, bureaus or boards or anything. It is not so hard to start but it is tremendously difficult to ever stop one.

Mr. BRENCKMAN. Exactly. I am pleased with that feature of the bill that deals with the percentage of the crop to be insured. Manifestly it would not do to insure a crop on a 100-percent basis. That would mean there would have to be an adjustment every year with every farmer insured and make the cost prohibitive. It could not be compared with fire insurance. Assume there is a company with 10,000 members and there are 10 fires in a year, and there are 10 adjustments naturally, and it is a very simple matter. But if you were to insure a crop to the extent of 100 percent and had 10,000 members you would have to make 10,000 adjustments which would be very very difficult to do.

Senator POPE. Mr. Brenckman, my thought was the Government should insure against unusual and extraordinary hazards, and so in the bill which I introduced last year, which is a skeleton of a plan, extraordinary and unusual hazards are insured against. For instance, this year your crop might be a little less, due to cold weather or a little too much rain or drought. Those are ordinary hazards and the farmer ought to assume them. That is one of the hazards of his business. Mr. BRENCKMAN. Yes.

Senator Pope. Therefore, I used those terms extraordinary and unusual hazards.

Now, by limiting the coverage to 75 percent, these ordinary hazards due to his own inefficiency as a farmer or due to ordinary cold weather or ordinary dry weather and do not cause a large loss, this percentage coverage idea would take care of that.

Mr. BRENCKMAN. Yes; and that would be about as high as it would be safe to go and would greatly lessen the work of administering the act. · Knowing that there was likely to be legislation on this subject at this session of Congress, Mr. Chairman, I invited Dr. John Lee Coulter, formerly president of the North Dakota Agricultural College, and more recently a member of the United States Tariff Commission, to make a radio address. Dr. Coulter is himself a practical farmer and has given a lot of thought to this question, not only studying crop insurance in this country but has been quite an extensive traveler and has studied the systems of crop insurance set up over the world. His opinion is therefore valuable, and with your permission I would like to place in the record a copy of his address which is very informative.

Senator POPE. Yes; we will make that part of the record.

(The paper referred to appears at the conclusion of this day's proceedings.)

Senator Pope. Are there any other questions?
There seems to be none.

Thank you very much, Mr. Brenckman. Your suggestions have been very helpful.

Mr. BRENCKMAN. I thank you for the opportunity of appearing here.

Senator Pope. Do you know whether Mr. Taber will be here soon? Mr. BRENCKMAN. He will soon be here and if these hearings are in progress he will be glad to come and give you his own views on the subject, but what I have given you is substantially in accord with the action of the National Grange and meets with the approval of Mr. Taber.

Senator POPE. Thank you very much.
Now, is Mr. Hood here?

Senator McGILL. No; he has not arrived. · Senator POPE. It is 3 minutes after 12.

Is there anyone here representing a farm organization that desires briefly to express himself?

We assigned this hearing today for representatives of the farm organizations.

I think he will adjourn if it is agreeable with the other members of the committee for an indefinite time for the reason we are in negotiation with representatives of insurance companies that have had experience with some form of crop insurance.

Senator McGILL. Mr. Chairman, before you do that, this party down here with the Farm Credit Administration who was mentioned by Mr. Brenckman may be available.

Senator POPE. Yes.

Senator MCGILL. It would seem to me it would be well to get him before the committee.

Senator POPE. Yes, sir.

Senator McGILL. And see what he has to say and what information he can give us.

Senator POPE. I will get in touch with him and find out when it would suit his convenience to appear as well as our own, and we aro very anxious to have him.

I notice his testimony in the 1923 hearings, and I also noted that he had considerable information there as to the subject, and I think it would be very helpful to hear from him.

Senator MCGILL. I would like to get these hearings along as rapidly as we could in order to get through before the 10th of March. I know that there are going to be other hearings start with another committee at that time and I will have to attend.

Senator POPE. The 10th of March?

Senator McGILL. Yes. I am inclined to think they are going to be important.

Senator POPE. Yes; Senator Frazier has a committee hearing and I think he will want to use this room for the hearings.

Senator McGILL. I think it might be possible to hear this mian at the Farm Credit Monday. Do you suppose we could hear him Monday?

Senator POPE. I will try to get in touch with him and if we can hear him Monday I will let the members of the committee know and we will hear him at 10 o'clock Monday morning.

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