Senator MCGILL. Well, the drought condition in the last few years has been a very unusual condition, it has been abnormal.

Mr. VESECKY. It has been abnormal.

Senator MCGILL. It is not a thing in my judgment that is going to continue.

Mr. VESECKY. That is the hard winter wheat territory of this country and if we eliminate or limit its production we shall have to import strong wheat.

Senator MCGILL. We could not produce enough wheat in the country without that territory to supply the demand for it in this country.

Mr. VESECKY. That is true.

Mr. THATCHER. The next witness is Mr. Lyle Hague, of Cherokee, Okla., president of a large grain cooperative regional in that State, and also represents a farm organization.

STATEMENT OF LYLE HAGUE, CHEROKEE, OKLA.

Senator POPE. All right, Mr. Hague.

Mr. HAGUE. Mr. Chairman and members of the committee, I think I should like to particularly point out the farmer's psychology and his expectations. I live on a farm, and sometimes, I actually work at it.

Back on the 11th of January, this year, I had an opportunity in Oklahoma City to discuss the advisability of crop insurance on wheat with representatives from about 40 counties. These were equally divided between wheat and cotton and I appealed to the cotton men and asked them what might be their attitude toward a crop insurance bill on wheat. If I can reflect correctly the sentiment in that meeting, I am sure the cotton men are for it, for the same reason that has been pointed out by a number of these other men.

You know we raise a lot of cotton in Oklahoma, and we always hope to raise a lot of wheat. Now, since we have machinery, the northern part of the State may go to raising cotton. I don't think there has been very much danger of that until the mechanical cotton pickers came in.

The cotton men, I believe, will go along with us in support of this bill, that is, the cotton producers of Oklahoma.

There is no question about the feeling among the wheat men. The second point I should like to discuss was mentioned a moment ago. While it is the intent of the bill and will be carried out, that this wheat will not be dumped; I think it is of tremendous importance and good psychology that we will say to the farmer in his contract that your wheat or your bushelage will actually be held and not be dumped. That is good psychology and the average farmer is not strong for boards of trade and speculation. He would like to see this wheat put where it could not be moved or ground; and that has been a crime, in my opinion, for years to put wheat where it would be ground and milled a long time before he sells it.

Another point is in regard to page 7, line 20, "such premium shall be collected at such time or times."

Now, in reading some of the discussions in the hearings I noted that in some of the testimony there was a trend that might lead to the collection of premiums in advance. In Oklahoma, our harvest time is about June and our seeding time is about September, when, if I

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understand it, I should be making provisions for crop insurance, we will say, in August or the first of September before the wheat is planted. I think it would be a whole lot harder to sell if we contemplate in the administration of this that the premium would be collected in advance. The arrangement can be made if I am to pay a certain premium in bushels, either in kind or in money-of course, I could not pay it in money on a basis of what the grain would be worth at harvest time the following harvest.

I think it would complicate it considerably in getting the farmer to accept it. We are talking about a system in aiding agriculture; and sometimes, we have a little discussion that might lead us to think we had asked the farmer to pay his premium 10 months in advance. Senator MCGILL. That would be impossible.

Senator POPE. That was discussed here and two suggestions were made, one contained in the bill itself. One provides that a lien on the crops might be given. Another is it might tend to induce the banker or whoever is financing the farmer to advance money for the premium. We realize that difficulty, but we do not know anything else to do.

The farmer ought to know about what his premium is going to be when he signs his contract, and that arrangement will have to be made at the time the contract is made, otherwise it would be indefinite. He would not know if he had to pay 3 bushels, 5 bushels, or half a bushel, or what.

I think in the administration of that, about nine-tenths of the success of the act will depend on the administration. Of course, I feel they will be sympathetic to the needs of the farmer, and they do have the power and authority here to adjust and arrange that in a way that would be best suited to the farmer's need, and that is about all we could do.

Mr. HAGUE. Well, I agree that certainly the arrangement and provision should be made in advance, but I question the advisability of asking them to pay it 10 months in advance, either in cash or bushels

Senator POPE. I would expect in a great many instances, particularly when the bill first goes into effect, some arrangement will have to be made to take the farmer's note or lien on the crop, or make other arrangements so that payment can be deferred. That would be a matter of administration.

Mr. HAGUE. That is right.

Senator POPE. Are there any further questions? If not, we thank your, Mr. Hague.

Mr. THATCHER. Mr. Chairman, the next speaker is Mr. L. T. Mayhugh, from Kress, Tex., representing the Texas wheat growers. He is an officer in one of their large cooperative grain regionals and a member of the board of directors of the National Grain Association.

STATEMENT OF L. T. MAYHUGH, KRESS, TEX., REPRESENTING THE TEXAS WHEAT GROWERS, INC.

Mr. MAYHUGH. Mr. Chairman

Senator POPE. All right, Mr. Mayhugh.

Mr. MAYHUGH. And gentlemen of the committee, I happen to be one who has been able so far to survive on the farm all my life. I have no other income except from the farm. So, if there is any money to be borrowed around this table, I want to do the borrowing.

I represent the Texas Wheat Growers, Inc., of 5,000 members. We handle substantially one-third of the wheat that comes into commercial channels of that territory. They are paying my expenses up here, and this isn't the first time.

I have not been a member of organizations among farmers very long. Without organizations, of course, there would be nobody here. Therefore, crop insurance as you know, would help because we live in the unfortunate dust bowl. I lived in Texas 30 years before we had a dust bowl. I have never seen anything like this drought we are going through with now. We are somewhat concerned since there are differences of opinion in the interpretation of the Constitution, and we are concerned about the interpretation of this law somewhat.

As Mr. Hague has brought out relative to collecting premiums, this isn't the first time that this has been discussed in our committee meetings. I think there has been testimony offered here recommending that the premiums be collected in advance. Of course, we realize there is no danger of collecting premiums when there is a loss to the farmer because it can be taken out of his indemnities, but when he has a crop, it is felt there might be some danger about getting delivery of his premiums.

Senator FRAZIER. If he does not pay up, he cannot insure again, that would be a cinch.

Mr. MAYHUGH. That would be true. We have a good many farmers that will speculate on insurance, anyway. [Laughter.) It seems to me there might be an assignment of bushels to the county committee when your insurance contract would be written that would be reasonable guarantee of delivery of those bushels. Now, if the farmer has to go to the Resettlement or Production Credit, or some other agency to borrow the money, then, he is going to have to pay interest on that money for nearly a year. The indemnity or premium isn't due, but he would have to be paying interest on that, and they say it will cost too much for the county committee to collect it. It will cost the county committee as much as the Resettlement. The committee is composed of fellows that live in that community and they know best. You know farmers are not going to break into this as fast as some might think. Most farmers don't insure in our country, they don't insure houses, barns, and livestock.

Senator FRAZIER. May I ask you a personal question? Do you not insure your house and livestock?

Mr. MAYHUGH. No.

Senator FRAZIER. Not even buildings?

Mr. MAYHUGH. No; I do not.

Senator POPE. I wonder what percentage of them insure their buildings, what percentage of farmers?

Mr. MAYHUGH. I don't know about the percentage. That was a new country when I went there and a man that didn't have 4 sections didn't have anything much. But now, that land is like other places, gotten into the hands of loan companies and landlords. We have plenty of tenants there. Landlords may keep their houses insured. I don't know, but a good many that have tax title do and a good many do not.

Senator FRAZIER. Of course, up in my State we have to have better classes of buildings, but we have county mutual insurance companies that insure practically every sort of farm building in the county.

Mr. MAYHUGH. What I am getting at is this, that the applicant for insurance ought to be able to go to one agency and get the job done there. I think we ought to make it as attractive as we can. If he has to go to several agencies to complete his application, I am afraid a good many of them will stay out. I don't know anything about the law on that, but it seems to me like it could be accomplished with the county committee, and I understand it is to be administered through the county committee.

Senator POPE. Yes; that is the idea.

Mr. MAYHUGH. Now, we have another thing and that is relative to adjustments and payments of claims, and I am thinking again about the board in its interpretation there and its administration there. The farmer might have a total loss. It might occur early in the season and the board might say "Well, that wheat in March wasn't worth as much as it would have been, more fully developed, in May", and they might naturally talk about penalizing the farmer somewhat through insurance adjustment. On the other hand, they might say— and that may be a good practice, I don't know, about hail insurance. Hail insurance has turned out to be very high down there and we do not use it so much. It may be decided, if the farmer doesn't harvest, that the charge of the harvesting will be deducted in his settlement. Senator POPE. Just a moment. We have a session of the Senate today. I do not wish to hold these farmers here any longer than necessary.

Oh, I am just advised that these farmers have another appointment. When will it be convenient to resume the hearing?

'Senator MCGILL. I was wondering, Mr. Chairman, whether these gentlemen would be available during the afternoon. I think in all probability this session of the Senate today is going to be very short and we would probably have this afternoon we could utilize, if it is convenient for the gentlemen to be here.

Senator POPE. What time would it be convenient?

Mr. THATCHER. I think we should all be back here about 2:30 and go right on.

Senator MCGILL. I think we should go right on and be in recess until that time.

Senator POPE. Since the farmers have an appointment, let it be understood we will be in recess until that time.

(Whereupon, at 12 noon, the subcommittee recessed until 2:30 p. m., the same day.)

AFTER RECESS

L. T. MAYHUGH, KRESS, TEX., REPRESENTING THE TEXAS WHEAT GROWERS, INC.-Resumed

Senator POPE. I think we may as well proceed. I believe Mr. Mayhugh was making a statement at the time of the recess.

Mr. MAYHUGH. Yes, sir.

Senator POPE. All right, Mr. Mayhugh, if you know where you left off, you may proceed.

Mr. MAYHUGH. I believe I was discussing adjustments and payments of losses.

I don't know just where I was, but I was undertaking to make a comparison of two farmers on which one had a total loss, whether or

not the farmer who, of course, was excused from the cost of harvesting would be charged against that cost when settlement was made. Our opinion is that should not be done, that he should collect his full coverage inasmuch as he had done all he could do. Now, the other farmer that has a partial loss: It seems to me that the county committee should be empowered by the board to determine whether or not the corporation desired that crop to be harvested. If it did, then the charge of harvesting should be charged to the corporation and the wheat salvaged should be turned over to the corporation as a basis of adjustment and settlement of that claim.

Senator POPE. You may be interested and it might be a good thing to put in the record that the subcommittee has given a great deal of consideration to that.

I think in the first place, it would be a matter of regulation by the board.

Mr. MAYHUGH. Yes; I realize that.

Senator POPE. We could readily see that a man who suffered a total loss and collected the full amount of his loss might be able to put his land in some other crop and we could understand that a man who suffered a partial loss would have to go ahead and harvest his crop and would not get as much as the man who suffered a total loss and would not be able to plant his land to anything else. But that is such a difficult matter that we felt nothing could be put into the law specifically about it.

Mr. MAYHUGH. No.

Senator POPE. But that the board in the administration of the law with the services of the local board might work out regulations that would make that more equitable.

Mr. MAYHUGH. My thought here is that this is for the information of the board.

Senator POPE. Yes.

Mr. MAYHUGH. And my thought is either the liberal or conservative interpretation of the application of the law. If it were interpreted rather conservatively, I don't think it would be applicable to the farmer.

Senator POPE. Of course, this would be true also that a man who suffered a lotal loss this year might suffer a partial loss next year and a man suffering a partial loss this year might suffer a total loss next year; so there would be in a sense an evening up of the process in course of time.

Mr. MAYHUGH. My judgment is if the harvest is applied against the farmer, it will have a lot to do with his coming in. Another thing, it might be said that the corporation was not getting a break in this program, the continued drought and soil conservation program is making rapidly better farmers. We are going to make better crops with less rainfall. We are using the contour method which is rather costly to use, but more than worth it, and I think we are going to find the yield of wheat in that territory is going to be increased because of this better farming practice.

Senator POPE. And that is a very desirable thing.

Mr. MAYHUGH. I believe that is all I have to say.

Senator POPE. Are there any questions from the committee? If not, we thank you, Mr. Mayhugh.

Mr. THATCHER. Mr. Chairman, the next witness is Mr. Oscar Fosheim. He has been in the past an officer of the Farmers Union