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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. Senator McGIll. Is that in force at the present time? 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.

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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 à 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. ! Mr. THATCHER. Yes; Mr. Chairman.

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TIVE, 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

tion, and if it were very serious, there would be ample time in the next session of Congress to replenish that fund by appropriation. I am sure everyone would be agreeable to doing that if we are willing to appropriate so much at the outset.

Senator McGill. At the time the corporation might sell to prevent deterioration, they could sell at the market price.

Mr. THATCHER. Right.

Senator McGill. Therefore, they could use the funds to buy at market price.

Mr. THATCHER. Except at such discount as they might be required to suffer.

Senator FRAZIER. You have had some experience, Mr. Thatcher, in storing grain. Mr. THATCHER. Yes, sir.

Senator FRAZIER. Is it not possible to store wheat under conditions where it will not deteriorate?

Mr. THATCHER. There are just two things to consider: The condition of the place where the wheat is to be stored, and the condition of the wheat when stored. · Senator FRAZIER. Of course. But I say, if you have the proper warehouse and the grain is in proper condition, it will keep indefinitely.

Mr. THATCHER. That is right. I look for no difficulty on that score because the authority and management of this corporation certainly will use ordinary judgment to put away such wheat as would keep for à long time, because the bill is predicated upon a long-time holding.

Senator POPE. I had a letter from a friend of mine a short time ago that raised the question of different grades of wheat. I think that has not been mentioned in this hearing. He pointed out some wheat was poor to begin with, and some was good sound wheat. He even suggested in connection with this bill that some provision be made for classifying the wheat. I felt that perhaps this was not exactly the place to do that, so I have not taken the matter up with the committee, but he did raise that question of classification of wheat.

Mr. THATCHER. Well, since you have raised the question, I quite agree with you that this is a matter, I believe, can be more appropriately settled by the rules and regulations of the authority.

Senator FRAZIER. Is there not authority to do that under the bill as it stands?

Mr. THATCHER. Yes; under the broad authority they have, they may do that. Of course, the question you have presented here brings in not only the differential in grades, but also a matter of premiums. To illustrate, down in the Senator's State, in the western part, it is not an uncommon experience to see some of your better hard wheat sell for 20, 30, or 40 cents a bushel premium as compared to another bushel in some other part of the country selling at what we know as futures or option prices. I am sure that can be well handled under regulations. I have had hours of discussion about it with the people in the Bureau of Agricultural Economics; and I might state while we are discussing it, that all these transactions of necessity will need to be translated through a common factor and that factor will need be the prevailing wheat future in the area around which that grain moves. It would be a long, technical discussion to go into that here. I would not offer the discussion unless I were interrogated to bring it out. I don't think it is an unsurmountable problem at all. I think it is readily solvable and will give all farmers equal treatment.

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Again discussing the question you raised as to the value of the bill, I think it is splendid, and we all do, but it doesn't solve the wheat producer's problems. It is merely one of the rungs in the ladder, but one of the essential and fundamental ones. For those who had the opportunity to participate in the conference and discussion on the President's committee on farm tenancy and thereafter to sit in and study the reports and briefs on that question and te prepare a report to the President on that subject, one who has had that information is impressed with the fact that this Nation has gone many, many years too long without getting right down to the roots and causes of agricultural commodity depressions. It is almost an impossibility to overcome the ravages of soil and family erosion, they have been so terrific. It has been estimated it would take about $11,000,000,000 to repurchase the farms that have been lost, practically since the World War, and to give those people who have so lost their property another opportunity to engage as tenants upon the farm or as prospective owners of the farm, and to put them back on soil that is not as good as it was 30 or 40 or 50 years ago; and under the same speculative system, which is the largest and almost sole contributing factor causing this tenancy problem and spoilage of the land and so forth. I am making that statement to show the importance of establishing protective rungs in the ladder of distribution. Crop insurance is a very essential rung of that ladder and a strong rung.

We will be coming back to you in relation to other rungs in the grain ladder and will ask the committee to provide other helpful measures to improve the status of grain producers.

Our whole system of price fixing and the making of warehouse laws in the States and the administration of those laws must be corrected or there just cannot be parity income for the farmer who produces wheat or any other product resting upon world prices.

This act of itself, where the Federal authority will be storing wheat deposited as indemnities will soon find, as it begins to determine what wheat should be stored and where and how, the character of warehouse acts we have in the various States. In some we have none; the lack of supervision in some States where we do have reasonable warehouse legislation, will also be learned.

Fortunately, we have a Federal Warehouse Act, and under that act, any warehouseman meeting certain conditions and carrying on under required practices may enjoy the privileges of that act.

In the use of that act, we shall run into difficulty because Congress has never seen fit—and perhaps it has been as much the responsibility of the Department of Agriculture as of Congress—to provide an adequate fund to police warehouses over the country. It has therefore been most difficult for warehousemen to enjoy the benefit of the Federal Warehouse Act. Also, bond requirements and cost for such bonds imposed by regulation of the department call for an early reconsideration.

It is a black page in the history of this country because of lack of attention to the farm problem that we find large segments of our States are in reality Federal poorhouses. Something over 40,000 families in each North Dakota and South Dakota, and the same percentage in Montana; Oklahoma leads the Nation with somethir over 50,000 on relief. These are people who in other times have produced enormous amounts of wealth from their farms and given it to foreign countries and to society here. They are not going to be

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