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Now, we in the insurance business consider that very important, because the insurance companies, and the success of insurance companies, and the success of any insurance scheme, depends upon the adequacy of the rate, and its dependability, and of course that depends on the data which is available.

Now, if you base your program largely upon guess, you endanger the plan by reason of the fact that you start out on an inadequate rate basis, and in certain territories, and then when you attempt later to lift the rate to the level which it should be, you meet with a resistance of those who were favored with the inadequate rate in the beginning, and if you start out on too high a basis, of course, your plan falls because no one is interested in paying what they regard as too much.

Now, the superintendent of insurance of the State of New York, who has had considerable experience in connection with the failures of insurance companies, has made the statement that in practically every case of an insurance-company failure, the rates played a large part, and in my opinion this plan-of course, there are other considerations, but will largely succeed or its failure will be due to the adequacy and the equity of the rates which are promulgated.

It was our suggestion at the time that with wheat, with the volume of data that was available, you could develop a workable plan which would in a very short time bring additional experience which would enable the adding of other crops.

As Dr. Valgren has said, if private insurance has failed in the matter of crop insurance, that was largely due to the limited extent that it was tried out because of lack of experience, and lack of data, and perhaps engaging in the activity at a time when this disaster happened before.

Now, you may hit a year or two when things will go along swimmingly and start the thing off on a very even and successful basis, and you might again find the first year or two very difficult, but I wouldn't do much tinkering with the rates for several years, until you have gotten a pretty good volume of experience.

In my opinion, the principal difficulty is going to be with the socalled experience rating, and that you will find a little interest in the plan, in the low-hazard territory, and you will find in the high-hazard territory the necessity of charging rates again, to use insurance terms, which would make the plan rather unattractive to many from that standpoint.

It is a real problem, and it is one which we don't envy the Department of Agriculture experts having, but we think that they need all of the help that they can possibly get, and they are entitled to it, and we are prepared to do just that within the limits of durability.

Senator POPE. They had have some very difficult problems, of course, in the administration of the Agricultural Adjustment Act, and in the present Soil Conservation Act, so I presume they are not unaccustomed to problems. · Mr. GRUHN. I am sure not, but our experts who met with the com-: mittee were very much impressed with the reliability of the data, and with the approach to the problem by those in the Department charged with the responsibility of meeting it, and felt rather secure in the belief that it could be solved, and it could be worked out.

Senator POPE. That is very interesting, and we are very thankful to you.

Mr. GRUHN. If you want any of these men here who have the practical experience in the hail field of insurance of crops, and some cover

all crops, and some a limited number of crops, and I would be very glad to ask a few of them to come down, secretaries of these farm companies, closely identified with the farm problem in their particular territories, and they may have something to offer which you might find of value, or at least interesting.

Senator POPE. Would it be convenient for us to have one or two men of that sort, say a week from today?

Mr. GRUHN. I could ascertain and let you know by tomorrow, if you would like to have that.

Senator POPE. Do you think that would be valuable?

Senator POPE. Very well. If you do that, we expect to continue these hearings, and on next Monday and Tuesday we hope to close them, and during the coming week there are other hearings. I understand Senator Frazier has a hearing that will take place this week, and I will be out of town for 2 or 3 days, so that we expect to continue . these hearings next Monday and Tuesday, and if you could have one or two of them here, perhaps that would be enough.

Thank you very much, Mr. Gruhn.
Now, Mr. Marsh, do you have some comment to make on this?


· Mr. MARSH. My name is Benjamin C. Marsh, and I am appearing here this morning personally, because I have been very keenly interested in this problem of farming, having come down here exactly 19 years ago today, with the Farmers' National Council, which was a group of progressive farm organizations; so I am speaking purely personally. The organization with which I am connected as secretary, the People's Lobby, which does not appear in this, favored specifically a Government farming corporation, feeling rather emphatically that there are a great many farmers who cannot face the impossible situation themselves, and the Government must operate many farms, but I am not going to discuss that.

I merely state in passing, in order that I may make it clear that in raising some questions on this measure I am doing so because of my own personal interest, particularly as I worked with several others back in 1922, to get the investigation of the feasibility of crop insurance, and I would like to read a brief statement, if I may, and then elaborate on it, and raise a number of questions (reading]:

The Federal Government has an obligation to afford a chance to earn, or to maintain people, but it has no obligation to underwrite fictitious farm values at the expense of consumers, as it would under this administration bill.

The United States Department of Agriculture reports that in 1935 land rent for wheat lands was $189,060,640. It has increased somewhat and is probably nearly $200,000,000 this year. This rental, capitalized at 5 percent, means a wheat-land value of about $4,000,000,000.

The average land rent for wheat was $3.68 per acre and it amounted to 25.2 percent of the costs of production. The alleged purpose of the bill among other things, is "maintaining the purchasing power of farms.” Of the seven stated causes of loss in yields, only three hail, wind, and tornado-are due to inscrutable Providence, while drought and flood are largely due to anarchistic practices of other farmers even if not of the insured. Wheat insurance and any other crop insurance should be limited to farms reasonably adapted to the crop insured, regardless of the market.

Secretary Wallace states that of the 610,000,000 tilled or tillable land in the United States "some 50,000,000 acres have been ruined as productive land and another 50,000,000 acres have been seriously damaged.” Obviously to attempt to insure any crop on such land is futile, and the proposed wheat-insurance principles are apt to be cited as a precedent for insurance of other crops.

Insuring crops on ruined land is highly uneconomic and will be disastrous for the farmers whose crop is insured.

Measures to make fertile land available to farmers at fair rentals are necessary.

One result of the proposed plan might well be to drive small farmers off their land, and they could not meet carrying charges, and there are about one and a half million too many farmers in commercial production now, for our present economic set-up.

I want to state some of the reasons for reaching those conclusions, and raise questions, not in criticism of the bill, but as to how it is going to work out.

First, I would like to quote from this report of the President's Committee on Crop Insurance as to the objective.

Crop insurance would undoubtedly be of real value to banks, insurance companies, and other institutions extending farm credit.

It would be of vital importance to the farmer in maintaining his credit, following a crop failure, so that he might borrow for production need, in subsequent years.

Wheat crop insurance would probably find its greatest usefulness in the Great Plains States where it is perhaps needed the most, because of the wide fluctuations in yields, and where most of the Nation's wheat is produced.

Now, that raised a question in my mind when I read it as naturally I read this full report rather carefully, “What is back of this cropinsurance plan? . Is it the idea of protecting the creditors of the farmers, or of insuring the farmers a given income?

We are all practical enough to know that it isn't the number of acres of wheat or the number of bushels that you raise on a farm, but what you get for it that counts and what your money income is with a given standard of living, and the same way with labor. It isn't whether you get $2 a day of $3 a day or $5, but it is what you can buy with that income, and the real instead of the nominal or money wages count. It wasn't clear in reading this bill just how this thing was going to work out.

I would like to raise some, if I may-two or three specific questions which would probably be answered by the committee, or upon which you can get information, and I do it because naturally having been with the farmers' organization, and travelled from coast to coast, I am as perturbed as I know the members of this committee, without exception, are and the public generally, are perturbed over the situa. tion.

For instance, the last speaker intimated one of the extremely difficult problems which was raised in the earlier and rather hasty inquiry. into the question of crop insurance.

Take a farm--a wbeat farm-in which wheat is the only crop covered by this bill—with a small yield per acre, and the farmer needs to sell in the best of years, in many of these farms, we all know, every

bit of wheat that he raises to break even, and I am not sure that he can do it then.

I remember I was up in Minneapolis when the discussion was started of controlling crop production, and a man who had a great deal of experience in farming said to me, “Now, if you reduce the acreage 20 percent for the big fellow, it isn't going to hurt him so much, but if you reduce it only 10 percent for the little fellow when he has got to sell every bushel of wheat that he can raise on his farm, you may put him right into the receiver's hands or reduce his standard of living”, but I think that question comes up here.

Here are the seven losses in yields that are supposed to be insured: Drought, flood, hail, wind, tornado, insect infestation, and plant disease.

Frankly, though I worked on a farm a great deal, in my younger days, out in Iowa, I don't know whether to classify insect infestation and plant disease as inscrutable Providence or lack of organization, but this is not an inclusive measure, and all farmers need to be protected in their income. If there is land which ought not to be farmed, the only proper action is to take farmers off it, and this doesn't contemplate that, and I think it is only fair to say that this report on crop insurance is very frank and says:

"A program of crop insurance should be closely integrated with other programs”, but here on page 7 of the bill, the page to which Mr. Valgren directed some of his remarks, on page 7, line 10, a statement is made that “the Board may condition the issuance of such insurance in any county or area, upon a minimum amount of participation in a program of crop insurance, formulated pursuant to this act."

If I construe that correctly, and I may be incorrect, apparently this Board set up by this bill would have the right to deny any possible advantages of insurance, of wheat, which is supposed to be inclusive insurance, to not only a county but to an area, and that might include a series of States, or series of counties, or a single State. The problems of the wheat growers in that area, may not be covered, simply because there may be a recalcitrant minority, or even a recalcitrant majority, which refused to go in. In any case, unless you make insurance inclusive, those people who obviously are going to need income insurance, and that is what social security and every kind of security comes down to, except for successful property holders, are going to be deprived of what they need as much as anybody else in the United States, and I don't know this subject thoroughly enough, Senator Pope and members of the committee, to cover that, or to make suggestions as to how it could be covered, but what struck me in studying this bill—and it may be due to reasons of which I know nothing, and it may be explainable—was that it does not put back of the wheat growers, whose product we have got to have, the resources of the Nation, to insure them an income, when they produce under conditions which the Government prescribes. · I would apply the same principle that we applied in criticizing the administration's so-called security bill, that the National Government, which can exercise the power of taxation, can make conditions which would entitle it to tax the land value, and the Federal Government itself can tax income, instead of consumption, and it is the only agency that can force an equitable distribution of income.

As I see it, this bill is practically only a permissive bilı, and not an inclusive bill, even with the amendments which Mr. Valgren suggested to you, and it is only a permissive bill, which by no means assures that those who most need it will get it.

Now, with reference to this security bill

Senator POPE. You heard the opinion of most of those who testified here, that those who would want insurance are those who have the greater hazards, and who have the losses from year to year, due to these hazards, whereas those who have a fairly stable yield now would be least likely to take insurance. It would seem likely that in those areas where they have the droughts, and insect infestations, and other hazards they would be most likely to take the insurance, and further, don't you think that it would be necessary from the practical angle that at least a substantial number of people participate in insurance? If there are only a comparative few, if there are half a dozen or a dozen in the community, it might be that there was not sufficient demand, and there wouldn't be enough involved, to warrant the expense of operating the corporation in that locality.

That is from a practical standpoint. Mr. Marsh. From the practical standpoint of avoiding difficulty of administration, but not from the practical standpoint of the requirements of the farmers, and that is a point that I tried to make. Those who need it most are least able to pay any insurance, and they have got to sell every bushel of wheat which they raise, to live, instead of deducting a certain percentage for insurance.

For instance, this report gives a very interestirg table of what percentage the reduction would be, and it is in 75 sample farms of Frederick County, Md.—that is right near here.

Twenty-nine percent of the farms would need a premium percentage of coverage of 1.1 to 2 percent of their net, and 20 percent from 2– in round figures-2 to 3, and 19 from 3 to 4 percent, and of course an exception, a little over 1 percent would take from 15.1 to 16 percent of the crop.

Well, if you get over 7 or 8 or 10 bushels per acre, and you have to take the highest percentage of that, in order to give them any alleged protection, you are discounting the future; you are giving up requirements today in order to protect yourself against the future exactly as in the Social Security Act. Very few earners are getting enough to give them within 10 percent or 15 percent of the standard of living they require, but their wages are taxed now 1 percent, to go up shortly to 3 percent. If it is to be an insurance that has got to be inclusive, it can't be optional, and the cost can't be excessive, any more than the Social Security Act. I am not discussing the method of raising the money, but the application, and it can't be optional with the individual worker.

He can't say, “To heck with the Government; I will take my own chances.” The Government says, “No; you have all got to be insured," and that is what Government is up against. Government has got to act for 100 percent of each class for whom the legislation is intended, or to which it is directed.

Now, by far the most significant suggestion, in my mind, that has come from the administration recently, was the one which was reported in yesterday's New York Times, that the President urges 48 States to pass a model soil law, and said, “Complaints of regimentation would fail”—but reading the article through carefully, it stipu

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