such a problem in disposing of the surplus grain. We also know that when our warehouses and elevators are overflowing with that burden from surplus, having no place to go with it, that our price structure, the price of the additional wheat goes down, down, way below the cost of production.

This would equalize that situation.

The bill as it is drawn and as we have all carefully gone over it, seems to need but very little correction from our viewpoint. There is one section on page 6, section 7, line 25, that I do hope you will see that there is just one word put in, where it says:

producers of wheat against loss in yields of wheat due to drought, flood, hail, wind, tornado, insect infestation, plant disease, and such other causes as may be determined by the board.

Our hazards out there are due first to drought. There is very little flood, just isolated sections where hail insurance is ever taken out, some loss by wind, never by tornado or seldom, if ever. Insect infestations are very rare. Plant disease we seldom have, other than smut, but the great hazard in that area is fire, very largely. Our wheat is a very dry wheat. Under the Federal grades they allow 13-percent moisture. It is seldom that our wheat gets up above 9 percent. It is tinder dry. The railroads going through the section frequently will fire that wheat and the fire will be carried to other areas. Sometimes carelessness-well, I would not say carelessness, but sometimes travelers along the highway will throw out a cigarette and light a field. It is true it says "other causes", but since you have specifically mentioned a number of the hazards, I hope you can see your way clear to just insert the one word "fire" in there with the other hazards that are insured against in this measure.

Senator POPE. I will say that the committee has agreed upon an amendment to add the words "winter-kill and lightning." The committee has also discussed fire. Also those who drafted the bill discussed fire, and we are very glad to have your suggestion and the committee will consider that.

Of course, fire brings in another element. That is the element of negligence on the part of the railroad company or on the part of others that the bill protects against. As to negligence and malfeasance of the producer, it does not cover losses due to that, but as to negligence of others, we are somewhat doubtful about that, because if the negligence can be established as against the railroad copany the farmer would have a right to damage to cover his losses. Therefore, up until the present time we have not included fire ast one of the specific hazards, but have thought that such other causes as may be determined by the board would include fire. It would include the matter of forest fires, which sometimes affect our wheat situation up there. Therefore, so far we have considered that we would leave that to the board to put in the policies in certain sections and perhaps not in other sections, but we are glad to have your suggestion and I assure you the committee will carefully consider that.

Mr. SHUMWAY. Then, in conclusion, I would just state that our organization is solidly behind this measure. It is true that they hope it is one of a series of measures, but they realize that crop insurance itself will materially aid our market in leveling off the high spots. Mr. TALBOTT. Could I ask a question there, Mr. Chairman, in reference to fire, because I feel it is a vital thing to them? In the case

of negligence of the traveler through the country, the farmer is helpless and certainly would not have any redress. He could not find the guilty party. That is what happens in prairie fires continuously, and it would seem to me, of course, that where there is a responsible corporation like a railroad company you can always collect, but you could not collect from an irresponsible person, vet that would be no fault of the farmer.

Senator POPE. Exactly, and that is one reason why we felt that if the board could consider fire as one of the hazards to be included in policies, with perhaps some limitations. If the fire was caused by the negligence of a responsible person or corporation, then it would not protect as to that. It might protect as against some other causes such as you suggest. That is why we did not name fire outright, but we would leave it to the board to determine in what cases they should be protected against fire.

Mr. TALBOTT. In other areas I think it would not apply as it does there, because the average wheat crop is cut before there is much danger of loss by fire. In our country there is too much moisture in the wheat, in the straw, to burn very readily.

Senator POPE. To your knowledge do private companies insure against fires in wheat?

Mr. SHUMWAY. Yes; there are very few farmers but what take out insurance on standing grain against fire in the wheat area.

Senator SCHWELLENBACH. This is true, Mr. Chairman, that the corporation will be subrogated to the rights of the farmer against the railroad company, for example, and could collect automatically. If the corporation paid the indemnity it would then have the right of

action.

Mr. SHUMWAY. And could collect it much more easily than a private individual.

Mr. TALBOTT. That was the thought, Mr. Chairman, that I had in mind, that the Government would relentlessly pursue the collection of damages, where the individual might not be able to do it.

Senator POPE. Are there any other questions?

Mr. THATCHER. I would like to ask Mr. Shumway just one more question. In the Pacific Northwest we have, particularly since our world market for wheat was lost to us, we have most every year quite a problem with the surplus of soft wheat grown in our area, finding some outlet for it. The Government has engaged in the enterprise of subsidizing some of that wheat for the market. We have had that

experience.

Senator POPE. That was about 2 years ago?

Mr. SHUMWAY. Yes. They exported 281⁄2 million bushels. Mr. THATCHER. If this program is approved by Congress and the wheat producers receive aid, and these premium stocks are set aside, everybody is on notice that they are set aside; the farmer knows they are there and knows it is in warehouses, and on the one hand it will have a tendency to urge them to participate in control of production, and on the other hand, if no attention is given to surplus production but let it come as and when it may-and that wheat will certainly seek an outlet-isn't it true that as that wheat moves around by waterway to the east and moves west from the east, it should cause concern to all of the wheat producers in the central soft wheat States as to the matter of the price of wheat?

Mr. SHUMWAY. Absolutely true. Wheat must seek a market. If it goes east by rail, it will cost us 35 cents a bushel. The Government subsidized and got rid of 281⁄2 million bushels 2 years ago; and, at another time, they loaned $10,000,000 to the Chinese Government to buy some of the wheat. Relief agencies are in there buying wheat for relief purposes. It is a soft wheat and is not used in our patent flour, but it is used in the Southern States because it is known as biscuit flour. Our wheat can go down the Pacific coast, through the Panama Canal and up to the Gulf ports. We have received through our association many complaints from Ohio and Indiana that we were flooding many markets that formerly belonged to them; and, of course, affecting the price of wheat in the entire United States by taking markets that normally belonged to other sections because our export market is gone.

Senator POPE. It is always true in those Northwestern States we have a surplus of wheat.

Mr. SHUMWAY. Always about a 50 percent surplus.

Senator POPE. I am glad you brought out this point. In those States we do not have droughts to destroy the wheat generally. Mr. SHUMWAY. No.

Senator POPE. But we do have certain sections, arid and other, and a good many individuals who do suffer from losses and with a comparatively low premium spread over the whole area a man that was seriously injured could be compensated.

Mr. SHUMWAY. Yes, sir.

Senator POPE. And, in that way, while we do not have the general losses of wheat as in the drought area, it would be very effective as far as the individuals were concerned in the smaller areas.

Mr. SHUMWAY. Yes, sir.

Senator SCHWELLENBACH. Isn't this true, as Mr. Talbot has pointed out, it is difficult for the individual farmers to pursue his right of action against a railroad company, for example, and almost impossible for him to get a settlement without a lawsuit because of the fact the railroad company goes on the theory that you cannot afford to pursue a case through a very long period of litigation, and if the railroad. company knew that the Government, through a Government corporation, which would last out just as long as the railroad companies could, was the one who was going to bring the suit, there would be much better chance of getting a settlement than the individual farmer would have.

Mr. SHUMWAY. No question about that; because when an individual farmer goes up against a corporation, in the first place, he knows he cannot stand the expense, and many times he takes a settlement that is not equitable, or doesn't follow it up at all.

Senator POPE. I will say our committee in following this bill, regarded it very much as all risk insurance, and we desired to cover everything we could as directly as we could, not due to negligence or malfeasance of the producer. So, I am sure the committee will take that attitude in considering this matter further.

Mr. SHUMWAY. Yes; that is not exactly the same as drought or flood, but, of course, if there is any question about the negligence of the farmer himself, it is covered in the latter part of the bill and, if it isn't due to his negligence, it seems to me it should be covered in the bill and the corporation investigate the causes afterwards and

get what is right out of it. This is a protective measure and that is one of the measures that could be extended.

Mr. TALBOT. It would apply almost entirely to your particular area out there.

Senator POPE. Yes, sir. Are there any further questions? There seems to be none.

We thank you very much for your remarks which have been very helpful.

Mr. SHUMWAY. Thank you.

Mr. THATCHER. The next speaker will be Mr. K. W. Hones, Colfax, Wis., president of the Farmers Union of Wisconsin, who will present the interests of the people of his State with reference to this matter.

STATEMENT OF K. W. HONES, COLFAX, WIS., PRESIDENT OF THE FARMERS UNION OF WISCONSIN

Senator POPE. All right, Mr. Hones.

Mr. HONES. Mr. Chairman and members of the committee, our Wisconsin, as you folks know, is not a primary wheat State and possibly will not be as directly affected under this measure as the primary wheat States, yet, we have a deep interest in this bill from the standpoint of the whole agricultural economic planning program. Our philosophy in our area has run to something like this; that we don't believe that any particular farmers are going to compete with each other, if in our particularly adapted areas the type of farming that is most adapted to that area is made possible to them. I mean by that, if the boys in the western section whose land and climate is adapted to wheat are permitted to make a living out of that wheat and adequately protected against that, that they are not going to be as interested in diversifying as they otherwise have to be when they are not protected. That is also true of cotton. It is also true of corn; and so forth, and so on.

I think that probably on our farm at home, we have as complete an example of what diversification means as in any place. We happen to have enough machinery on that place, I guess, to do everything except enter into the cotton business from which we are only prohibited because of the climate. Wheat, corn machinery, tobacco machinery, potato machinery, and dairy equipment and everything else. The overhead of that type of farm is tremendously expensive, because are carrying a heavy investment in machinery that you will not use but a few days out of the year. And in this bill it will just give us an opportunity to try out something that I believe and we believe has been neglected for a long time in agriculture.

you

I don't believe that there is any particular patent medicine remedy at all for one-all cure of agriculture; and I think it has been remarkable in the last few years to see the tremendous strides that have been made to bring about the different grouping of problems so well correlated as to bring about a planned agricultural economic program for the future, and I have reference to soil conservation and production control, which closely relate to each other, and correlate. Then, we have the ever normal granary plan which we are working on and the cropinsurance program.

Those two, which I believe are very essential and very closely related in not only caring for the seasonal surpluses we have, but work

out for the future an orderly program for all our agricultural commodities.

I believe that crop insurance is just as important to agriculture as life insurance is to all of society, as insurance on farm buildings or city homes or insurance on our livestock and so forth. It is a protective coverage that should absolutely be put into operation.

I think another important thing that has been brought out here on this testimony and that I want to impress again, from my standpoint of view is the elimination of relief, of agricultural relief. Direct relief is bad enough at its best. I think that all of society's obligations and the consumers, and farmers themselves are large consumers throughout the nation. As I say, we are not a primary wheat State, but we use a lot of wheat products in Wisconsin. Trainloads of them. It is up to us to protect the wheat grower and as this program becomes successful, as it will, it will attach and extend to other basic agricultural commodities in the future.

I hope at some time, Mr. Chairman, we may sit down at this same table and work out a program whereby our farmers in Wisconsin can be insured against crop losses for feed for livestock.

I think as this program goes into effect and becomes operative, you are going to lessen a great deal of the heavy relief problem we have. There is only a matter or two, or one thing or the other— either give the agricultural people an insurance to keep them on the farm or we should recognize for once and all time that because of the lack of that insurance we are going to have a national community chest, a Nation-wide community chest and we are going to set up tremendous sums of money for this region and this disaster, and so on. Every year we have some section affected by some kind of disaster or other.

Senator POPE. And would this not be true, too; that the protection of the farmer and the producer would also have its effect on other allied industries, such as dairying?

Mr. HOLMES. Absolutely. That is a very important feature. I was just coming to that point to say that as far as our dairy farmers are concerned in the dairy area, that I feel very emphatic about this program, I presume probably from a selfish reason, that I can see ahead, Mr. Chairman, that this insurance program is going to stabilize our feed prices to a great extent. Thus directly as the program goes into operation with reference to soil conservation and every normal granary we are going to have the great fluctuations in the grain market, and the insurance plan is one of the important features of the whole program; and I say further, I think it is a vital, important factor in our whole agricultural economic program.

Senator FRAZIER. This insurance bill is a step toward putting agriculture on a paying basis.

Mr. HOLMES. Yes; and in our estimation it will eliminate a lot of discussion had around this very table in regard to soil conservation and in regard to the triple A, when everybody says, "We are going to take out this crop and this crop", of course, and go complete with the dairy farmer. Where the dairy industry has been adopted in nondairy areas, it is due to the fact those farmers, in their choice, so desperate had they become, they had to try something else.

On our farm, we have a 360-acre farm and carry about 30 head of Guernsey cattle. In order to set up an insurance program, I have to