Mr. THATCHER. Mr. Chairman, our next witness is Mr. J. Edward Anderson from Buffalo, Minn., a member of the Farmers Union of that State and active in the cooperative organization and had been our good secretary of the wheat and conservation conference. STATEMENT OF J. EDWARD ANDERSON, SECRETARY-TREASURER, COOPERATIVE UNION ACTIVITIES, MINNESOTA, OF BUFFALO, MINN. Senator POPE. All right, Mr. Anderson. Mr. ANDERSON. I am glad to be here to testify from my State as others have been here to testify from their States. Many of the wheat farmers of my State want this insurance. We realize it is a good business proposition; that American agriculture has gotten to the point where it must put itself on the same sort of business basis as other businesses. As I understand, this is primarily for wheat farmers. Mr. ANDERSON. My State is diversified, so that in the west and northwest we grow wheat and in other parts of the State there is corn, hogs, and dairies. These farmers are interested to see this crop insurance go through, to see it tried out because if it is successful, as it will be, if it is worked soundly, they, too, will want insurance. I, personally, can testify to this fact, because in my territory we grow both wheat, corn, hogs, and dairy cattle and it can be quite a calamity when your hay crop fails, and when your feed crops fail. There hasn't been total failure exactly on those crops, but there has been a 50-percent failure, at least, which means you have to take 50 percent of your cattle or hogs and drive them off unfinished to market. It is a terrible position to be in. I have been in that position myself. So we are for crop insurance, and we can pledge that our people from Minnesota will help. I think that is about all I have to say. The other boys have covered it so well, that there is very little of anything I could add, as far as that goes. Senator POPE. Your statement is very interesting that farming should be on a business basis. I think, as you have said, that has been one of the difficulties with farming. Mr. ANDERSON. That is right. Senator POPE. It has been haphazard. Mr. ANDERSON. That is right. Senator POPE. Catch-as-catch-can enterprise; and people go into that when they could not go into anything else. By putting it on a business basis and having insurance as other business has, that ought to be a step in the direction of putting the farmer on a business basis. Mr. ANDERSON. Absolutely. Senator POPE. Are there any questions? Mr. ANDERSON. Thank you. Mr. THATCHER. Mr. Chairman, the next witness is Mr. D. L. O'Connor, from the spring wheat area, president of the Farmers Union Terminal Association and Grain Cooperative Service and Cooperative Elevators in this spring wheat area. STATEMENT OF D. L. O'CONNOR, PRESIDENT OF FARMERS UNION Senator POPE. What is your address, please, sir. Mr. O'CONNOR. Mr. Chairman and gentlemen of the committee, I have two particular aspects I would like to touch on. One, security to farming brought about by insurance, and I would like to illustrate that through a personal experience. For years, I have been interested in a local county elevator. In the year 1932, our wheat went as low as 16 cents a bushel to the farmers or 31 cents at the terminal, In 1936, between Christmas and New Years, we sold two carloads of wheat at $1.98 a bushel, which would return to the farmer about $1.80 a bushel. Senator FRAZIER. Just last December? Mr. O'CONNOR. Yes, sir; and what I am referring to would be the difference in these two prices over a term of 5 years, from 1932 to 1937. If in 1932, when we had to dispose of our wheat at 16 cents a bushel we had insurance, we could have paid premiums for 5 years or turned in 5 bushels per acre into insurance which would guarantee us a crop for the next 5 years. Taking that amount off the market generally would not have let the market go down to 16 cents. This premium would have been returned to us during these years. We would have been insured a crop during all that time. I have been in North Dakota in Eddy County since 1887. During all that period the first complete washout we had was in 1934. Up to that time we always had something. We might have lost potatoes or wheat, but in 1934 we had a complete washout. In 1936 a large part of the State was washed up. That is two complete failures in 50 years and both just recently. If this insurance had been in effect during this time we would have held up the prices in 1932, because it would not have been necessary to put it on the market. We could have paid our crop insurance and placed it into an ever-normal granary, with the understanding it would be held to pay indemnities when we lost our crop, thereby making social security available to the farmer. Another point Senator POPE (interposing). On that point it has been suggested that if the individual farmer were in position to store a part of his crop during the fat years and use it during the lean years; and if every farmer did that, you could accomplish the purposes set up by the bill, but the individual farmers can't do that, so the Government is undertaking to do the thing which if individual farmers could do, would be a help to them. Mr. O'CONNOR. That is right, and I might add under our system of marketing the putting of grain into warehouses, it is no guarantee it will stay there. It often moves into the market and destroys the market as though we sold it ourselves. The other point I wish to make is the setting up of a corporation to carry out the purposes of this bill. A corporation is far more flexible than if the administration is conducted under a bureau of the Department of Agriculture. I think adjustments in rates and policy could be far more easily realized through a corporation than through a bureau in the Department of Agriculture. Senator MCGILL. Do you think this Corporation should in a sense be kept under the control of the Department of Agriculture? Mr. O'CONNOR. Absolutely. Senator POPE. There ought to be less red tape in corporation control than departmental control. Mr. O'CONNOR. That is right. I might touch on another point, that is with respect to collection of premiums. In reading the testimony I notice in a few places there they speak about borrowing money for that purpose. For the consideration of the administrators, I might state if, at the time of planting in April or May, we decide to take crop insurance including the whole program, soil conservation, and so forth, we make application for this crop insurance. At that time it can be determined what our premiums will be; we may be permitted to give a note to the corporation guaranteeing the payment in bushels for the amount of our premium, due in the fall. The corporation can very easily work on that basis because indemnities for losses would not necessarily have to be paid until fall. That would eliminate the matter of interest and storage on the grain premiums. I think that is about all I have to say unless you have some questions. Senator POPE. Are there any questions? Senator MCGILL. I think not. Senator FRAZIER. Are you familiar with the hail insurance law in North Dakota? Mr. O'CONNOR. Somewhat, Senator. Senator FRAZIER. That question was brought up here at the previous hearing, and I think the committee would appreciate for the record just a brief statement as to how the hail insurance has worked in North Dakota from your experience. Mr. O'CONNOR. In 1917, or about that time, North Dakota enacted a hail-insurance law. When the assessor made his rounds in the spring assessing property, he took into consideration the farmer's prospective planting. That was automatically insured. If the farmer did not desire this insurance, he went to his county auditor and withdrew it. You will remember, Senator, during those years crop insurance was very successful. There was quite a large coverage of insurance and we had a very favorable rate. This insurance was very beneficial to the farmers. Senator POPE. You mean hail insurance. Mr. O'CONNOR. Yes, sir. Senator MCGILL. It was mandatory unless the farmer notified the State officials to the contrary. Mr. O'CONNOR. Yes, sir. Senator FRAZIER. There was a time limit on that, wasn't there, June 15? Mr. O'CONNOR. Yes, you had to withdraw before June 15. Mr. O'CONNOR. Through our political upheavals in North Dakota, and you know we have them, and having a lot of people in the insurance business before the enactment of this law who would like to be in it again, the automatic insurance feature was repealed. The insurance law is still in force, and it is my understanding the automatic feature has been reinstated. Senator FRAZIER. During the present session of the legislature? Mr. O'CONNOR. During the present session of the legislature. Senator FRAZIER. There was an interesting fact in connection with that change that the farmer had to make the statement that he wanted the insurance or apply for it in order to have it; and that in a great many cases, there was almost as many insured under that provision as under the former provision. Mr. O'CONNOR. That is right. Senator FRAZIER. Showing that they appreciated the hail insurance law and wanted to continue with it. Mr. O'CONNOR. That is right. Senator POPE. With reference to your statement awhile ago in regard to payment of premiums, the law, or the bill rather, I think is broad enough to cover that, that "such premium shall be collected at such time or times, in such manner or upon such security as the board may determine." Therefore, they have complete authority, I think, to make any reasonable arrangements for payment of premiums. Mr. O'CONNOR. I think that is right, Senator. It was not my idea to have any change in the bill, but to have the record show a discussion was held here and this proposition was presented and discussed for the benefit of the administration. Senator POPE. Yes; that will be helpful. Mr. FOSHEIM. Mr. Chairman, may I make one more short statement? Senator POPE. Yes. Mr. FOSHEIM. As farmers, we buy at retail and sell at wholesale. I would like to have you get this. Is that true? Senator POPE. Yes. Mr. FOSHEIM. Operating on that basis, the only opportunity we have is the opportunity to fail. We appreciate the good work you are trying to do now. It will help a great deal. Operating, as I say, on a basis of buying at retail and selling at wholesale, it makes me believe that helping the farmers is like making love to an old maid, you just can't overdo it. [Laughter.] Mr. THATCHER. Mr. Chairman, I think that concludes the testimony for the producers in connection with this bill. Senator POPE. I might inquire if there are any other representatives of farm groups who are here today that would like to testify. Senator FRAZIER. Or anyone else? Senator POPE. Are there any insurance men here who represent some companies that have tried crop insurance? I have a wire that one or more representatives will be here tomorrow morning. We gave over today to the farmers, and I think they expect to be here tomorrow morning. Do you have some statement, Mr. Thatcher, in conclusion. STATEMENT OF M. W. THATCHER, WASHINGTON REPRESENTATIVE, FARMERS NATIONAL GRAIN CORPORATION, WASHINGTON, D. C.-(Resumed) Mr. THATCHER. I should like to have a few minutes of your time. Senator POPE. Go ahead. Mr. THATCHER. Many of us have been seeking legislation of this character for some time, and we are very grateful to the members of the committee for their attendance and interest in it, particularly Senator Pope. This group appreciates the fact that he has spent months in this matter and has been giving it earnest consideration and working with the Department for several months. We believe he has brought out a splendid bill. While the different farmers have been testifying to the benefits and the probable advantages to come from this bill, two particular things have been running through my mind. One is the note of caution offered by Senator McGill in relation to the effect this new program may have on the price level. I am sure it is going to make quite a little difference to speculators as to how this wheat is to be put away, as it will be under this bill, particularly so if you write it into the farmer's contract that this wheat is to be put away in storage against future indemnities to be paid and the wheat may not be moved out upon the discretion of the authority of the corporation except where there is deterioration noted and then, of course, we might assume that the authority would replace such wheat so moved out. Senator POPE. Yes. Now, at that point, Mr. Thatcher, aside from such affect as the mere existence of a substantial amount of wheat in storage would have upon the market, do you think we have in this bill effectually prevented the dumping of this wheat upon the market? Mr. THATCHER. I am confident that is the purpose of the bill and the testimony in support of it and the authority will be bound even by the terms of the bill to do that which you have stated. Senator MCGILL. They might conclude there was a deterioration going on and by rather liberal construction of that part of the bill, put wheat on the market when it should not be done. Is it your thought that there should be some requirement that when wheat is sold in storage, is sold to prevent deterioration that you should be required to dispose of it and acquire a like quantity of wheat and store it in its place? Mr. THATCHER. That should be the law and the requirement and practice, in my judgment. Senator MCGILL. That is not in the bill at this time. Mr. THATCHER. It isn't in there except by implication. Senator POPE. Yet, the whole policy of the bill is, as expressed, to carry out just that purpose. In fact, I think this committee has given more time to that one point than anything else, to be sure that this wheat cannot be placed on the market so as to seriously affect the price. Senator MCGILL. Well, if it is sold to prevent deterioration, it is sold at the market price at the time. It would seem to me it might be well to write into the bill that they should use the money derived from that sale with which to buy a like quantity and the market price would be the same. Senator POPE. I think that is a very good suggestion. Senator MCGILL. To replace the amount sold. Senator POPE. That is a very good point for the committee to consider before it makes its report to the whole committee. Mr. THATCHER. I should hope to see and I do hope to see that the language written in the bill would even be more specific than that. The requirements should be that an equal amount of bushels be purchased, and the corporation can do that because it begins initially, with a hundred million dollars of capital. There would not be too great an impairment of that capital because of some loss in deteriora |