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been following in arriving at suggested premium rates for each farmer in each different area is substantially sound. I believe that just as far as possible each farm should be made to rate itself. In order words, you should base your guess of probable insurable values on that farm in the season ahead on what has happened on that farm in the past years. That is the only sound basis that we do have, as was pointed out a few minutes ago by Senator Frazier, but because of the shortness of the period for which we have data it would not be fair in all cases to fix a premium based entirely on the showing of that farm during this short period. Adjustments up and down will have to be made, based on a broader record than that pertaining to a single farm, in order to arrive at the probable insurable values ahead.

Senator POPE. As I understand it, there are fairly good records as to individual farm yields of wheat back to, say, 1930, therefore, in the charts and tables they have used they have taken their records over the past 6 years. Since you were in the department for a number of years, what would you say as to available data back of 1930 as to the yield?

Mr. VALGREN. The available data as to yield on individual farms is not very great or accurate back of 1930. The available data as to average yield or total yield for each county and State for each year is fairly accurate for a large number of years back, so that those earlier records can be used as a check against the records for the period 1930 to 1935 as to total yields per county and State, and can be 'used to determine whether or not for a given county, which also means to some extent for a given farm, the 6-year period for which we now have more accurate records, mainly, 1930 to 1935, is fair as a basis for estimating the probable future yield. On the basis of those earlier records I think the rates can be adjusted up and down for given counties so as to make them more representative than the figures that you arrive at by using the yields for those 6 years alone.

Senator POPE. Now, since this is a most important matter, this matter of having data with which to arrive at statistically sound or actuarially sound bases, do you think that the data which is now available—that we would be fairly safe in using that to arrive at fairly sound bases for the payment of premiums?

Mr. VALGREN. I believe so. I believe by starting with this detailed data that was accumulated under the A. A. A. program and adjusting-

Senator POPE (interposing). Of course, when you testified in 1923 you did not have any such data.

Mr. VALGREN. No; we did not.

Senator POPE. And at that time you commented on the fact that such data was necessary, and you also referred to the experiences of private insurance companies in that field and their lack of actuarial data, and I think you indicated there the difficulties that those private companies were having, due to that lack of data.

Mr. VALGREN. Yes; it was. And I am personally very happy over the fact that there now is a possibility of starting out on a crop insurance program on a much sounder basis than would have been possible at the time of those earlier hearings or at any prior date.

Senator POPE. I have been thinking about the situation in the Northwest just now. Senator Schwellenbach and others have been very much interested in a so-called transient problem we have in the Northwest. For the last year, families have been moving from

the drought regions into those Northwestern States. It is estimated that there are from 10 to 20 thousand families that have moved out there. About half of them are without funds; the other half have some funds. Now, under such a program as this, if in that great plains area, in that drought region, they were able to collect indemnities. Isn't it reasonable to assume that our own burdens now in taking care of the destitute families that are moving out there would be very much relieved?

Mr. VALGREN. Yes; I think there is no doubt but what a program such as this bill contemplates has a very important bearing on the future necessity for special relief in the form of seed loans or any other form. I believe, however, that it is important that the crop insurance board stick quite closely to the plan of rating the different areas that the Department now has been working on and that we not attempt to insure crops on untried areas for an amount that may be above the probable future production of that area, If that were done it might, of course, mean that we would at public expense be led to support farmers on submarginal land where their efforts would be entirely wasted and they would be living, if living at all, at public expense.

Senator POPE. You stated a few minutes ago that you had not given particular study to this ever normal granary idea, the idea of paying a premium and storing the grain and then paying indemnities in wheat. I will be interested to know what you think of that idea in connection with an insurance program. I note in your testimony that you gave in 1923, that idea was not suggested, and you werte still very much interested in insurance for farmers. I will be interested to know what you now think of that idea in connection with insurance.

Mr. VALGREN. As already stated, I do not feel that my views on that are of any great value because of lack of experience with problems involved in the storage and handling of grain in connection with premiums and indemnities.

I am glad to say that, insofar as I have any views on the subject, it seems to me that the plan outlined in the bill is practicable.

Senator POPE. Have you seen the report of the Brookings Institution which was referred to in the morning paper, the report on crop insurance?

Mr. VALGREN. I have not seen the report. I read the article in the paper this morning and I was not clear from what I read whether the questions raised with reference to an ever normal granary plan had particular reference to this modified or qualified part of such an ever normal granary plan that is involved in this bill, or to a more comprehensive plan.

Senator Pope. That was exactly my doubt about it. I have not seen the report I didn't know whether they were referring generally to the ever normal granary idea or whether they did have some specific reference to that used in connection with insurance.

Mr. VALGREN. It has seemed to me in reading the report of the President's committee on crop insurance and reading the present bill that this qualified and limited application of that ever-normal granary plan ought to be practicable, and insofar as it would have any effect on surplus in given years and deficits in other years, with resulting low prices in one year and high prices in another, it would be in the right direction, although that feature of the crop insurance bill is not going to be a very important factor in the regulation of supplies and of price, as I see it.

Senator POPE. Do you see any danger under the terms of this bill in such an accumulation of wheat being any threat to the market, with the bill limited and restricted as it is?

Mr. VALGREN. No; I have not been able to discover what seemed to me any serious difficulty or threat to the price structure by reason of the relatively limited accumulation of wheat that might accrue as the result of a good year, when premiums were being paid and fewer indemnities than normal were being called for. In the first place, the supplies so held would be a very small part of the total annual output, and in the second place it would be held for a specific purpose, to be disposed of as and when needed to make good the indemnities called for in years of more frequent and severe losses.

Senator POPE. It has been interesting to receive opinions that accumulation would be very small, too small, and then other opinions that it would be too large and we would need some method of draining it off. Do you have any thought on that matter?

Mr. VALGREN. Of course, if the first year this plan were in effect it should develop that crop losses were few, and that as a result a large part of the premiums collected in the form of wheat should be kept in storage, and if that should happen again the second year, it would be possible for the board to reduce its premiums.

Senator POPE. Would you think it advisable to reduce them within a year or two, under those circumstances, for the reason that we might have 3 or 4 continuous years of drought and you would need then a considerable amount of wheat on hand to pay the indemnities? Would it be advisable within a year or two, even though we had bumper crops, to reduce the rate?

Mr. VALGREN. Well, I am not sure but what at the end of the second year, if the demand on the accumulated wheat for indemnity purposes has been so light that a very substantial percentage of the total amount of wheat collected as premiums was on hand, that some slight adjustment could be made. I think any adjustment made should be made with caution, and we should not forget, even though we had had a couple of fortunate years, that the other kind of years are likely to lie close ahead.

Senator Pops. Do you see any difficulty in the ability of the board to fairly well regulate this accumulated reserve of wheat by adjusting premiums from time to time?

Mr. VALGREN. No; it had not occurred to me that there will be any serious difficulty there. I don't know that it is contemplated in the bill but it seems to me it might be well to have a provision under which the board, if it found that it was accumulating an unexpectedly large volume of wheat as a reserve against future indemnities to be paid, that it could translate a part of that wheat at its own option into cash reserves.

So far as I know that is not contemplated in the bill. I am simply raising the question whether that might be a solution of the question that you now raise, Senator.

Senator POPE. Of course, we are anxious that the Secretary shall not have the power to engage in market operations, for the very reason that we discussed a few minutes ago. There should be no power for him to dump a considerable amount of wheat on the market and reduce the price of wheat. In our anxiety to prevent that we have limited the sale of wheat for deterioration, except in sales that may be made to obtain money to pay the indemnities in cash at the option of the producer.

What do you think of the idea contained in the bill of having the Federal Government pay the cost of operation, including the cost of storage, and having the premiums go toward accumulating reserves to pay indemnities?

Mr. VALGREN. I have a feeling that there is considerable justification for that, by reason of the benefits which should result from a program of this kind in lessening the need for special assistance and relief as a result of crop failures. If I have the bill correctly in mind, it would permit the loading of the premiums collected from the farmer to a slight extent for expenses of a local committee.

Senator POPE. That is right.

Mr. ValgREN. That would assist in its administration. So that a small part of the administration expense would be paid by the insured, although the bulk of the overhead, would be paid directly by the Federal Government. I have a feeling that that plan is justified.

Senator POPE. Do you have anything to say about your observation of efforts of private companies in the crop-insurance field?

Mr. VALGREN. I do not know that there is anything that I can add that may not already have been put into the record or will appear from other witnesses. Has there been any recital in the record so far, Senator, of the experiments that have been made by private companies?

Senator Pops. No; except in a very limited way, but some reference has been made to that and some effort was made in the report of the President's Committee, but nothing in the way of detail as to experiments. We hope to have some witnesses representing the insurance companies who can give that.

Mr. VALGREN. They would probably give that in greater detail than I would be able to give it offhand.

I might make this general statement, that according to my observation the efforts by private companies to provide farmers with needed crop insurance have very largely failed, and that such efforts have been fewer and fewer in recent years. Even last year, however, there was a very small amount of general crop insurance written by at least one company.

Senator POPE. What company is that? Mr. VALGREN. By the Hartford Fire Insurance Co., on truck crops. The particular coverage that I heard of was on green peas, covering a part of the cost of planting and producing those peas. But so far as I know there has been no effort made in the last 2 or 3 years to give the farmer crop insurance on the staple field crops. Such insurance as has been written recently covering essentially all production risks has been under special contracts covering some specialty in the way of fruits and vegetables, and limited largely to amounts sufficient to cover loans or advances on those particular crops.

Senator POPE. Are you familiar with the efforts of different States in the hail insurance field?

Mr. VALGREN. Somewhat. We have had attempts made to provide the farmers with hail insurance on their growing crops in five different States, North Dakota, South Dakota, Nebraska, Montana, and Colorado.

The State of Oklahoma also enacted a State hail insurance law back in 1919 or 1920, but so far as I know, no insurance was written under that law. · Senator POPE. Why was no insurance written under the law? Do you know?

Mr. VALGREN. I am not entirely certain as to why not. I have been inclined to believe that while the State hail-insurance bill in Oklahoma obtained a majority of the State legislature and was actually made a law, the State officials that were charged with the administration of that law were not friendly toward it and more or less ignored it, and no serious protest was made.

Of the States that have engaged in hail insurance, North Dakota has done by all odds the largest volume of hail insurance business; in fact, the State of North Dakota has provided the farmers of that State with more hail insurance than all the other five States put together that have had hail-insurance programs.

I do not know whether you want a little description of that North Dakota plan in the record or not, Senator.

Senator POPE. We had hoped to have some representative of the State of North Dakota who is familiar with that to make a statement, but I am not sure whether there will be any one here.

Senator FRAZIER. I think there will be.
Senator. POPE. You might in a few words give us some idea.

Mr. VALGREN. I will try to do that. North Dakota began the writing of hail insurance through a State hail fund in 1913, if I recall correctly, but very little was done under that hail insurance plan until 1919, when the State rewrote its hail insurance law and made the State hail insurance, in effect, automatic. It was automatic in the sense that every farmer in the State was covered under this State hail fund unless he took specific steps to exempt himself.

The premiums called for by the hail insurance were made a lien on the land and are collected with the taxes on the land. Under that plan a very substantial percentage of the farmers were insured against hail in North Dakota for a number of years following 1919. I think it ran up to approximately two-thirds of the farmers in some of the earlier years of that new hail insurance plan.

In 1932 the State hail insurance law of North Dakota was again amended, removing the automatic feature and requiring the farmer to apply for his hail insurance if he desired it.

In other words, it removed that situation under which the inertia of the farmer worked in favor of his being insured, as had been the case under the law as set up in 1919, and I might say that, as I believe was the case with a great many other observers, I was under the impression that with that modification of the law in 1932 the North Dakota Hail Department, like most of the other State hail departments, would not amount to very much.

In other words, I expected that the farmers would not of their own option and volition apply for hail insurance. My views on that point were rather rudely upset when I received a copy of the North Dakota State hail insurance report for the year 1935, the latest one available. According to that 1935 report of the North Dakota State Hail Department, approximately 42,000 farmers voluntarily applied for hail insurance and had it during the growing season of 1935. If I recall correctly there are only between 80,000 and 90,000 farms in

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