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to lend price support. It will be other carry-over stocks of wheat with no predetermined outlet that will constitute the greatest disposal problem, and not the insurance reserves.

Now, there is one other point brought up this afternoon that is not touched upon in the bill or the committee's report. It is left to regulations, but since we have been giving it some thought, I judge you would be interested in what is being attempted for recommendation, anyway. That is, with regard to grades in which these premiums or indemnities are to be paid. We have discussed with several grainmen, discussed with Mr. Thatcher because of his experience in grains, the problems of the past and the most practical way to go at the problem, and we are inclined to the view, at the present, that in each area certain basic grades should be designated in our winter-wheat area.

I will mention that as an example because I know more what I am talking about when I talk about it. It would be number two hard winter. We would say to the farmer, "Your premium is one bushel per acre, and that means one bushel of no. 2 hard winter wheat. Now, if you bring in a load of no. 1, you can sell that and pay your debt with no. 2 hard winter wheat. When indemnities are paid, they will be paid on the basis, the same basis”, and so in each area. If a man had an unusual good production of wheat, that is, the increase is based on basic grade, both as to payment of premiums and payments of indemnities.

I thought that might help to clear that up.

Senator MCGILL. Mr. Green, this is on an entirely different line from what you have just been testifying. I think by reason of some questions that have been asked outside of the committee room by different ones, it might be well to have something in the record about it. That is, how does the Department or the Bureau go about it to determine from year to year how much wheat is raised in a given territory, a given county, or we will say in a State. How do you know how much was produced?

Mr. GREEN. I will tell you; if you are interested in having that in the record, I think we can get some from the division of crop estimates. I am sure they can give you a better background.

Senator MCGILL. The reason I brought that up was this. How does the Department know how much is raised in any State?

Mr. GREEN. Of course, those figures are based on estimates made from crop reports.

Senator MCGILL. You are figuring on this insurance to be based on a year's performance? Mr. GREEN. That is right.

Senator McGILL. And, in order to start off it would seem, taking the base period as to how much the farmer produces, you would have to have the statistics?

Mr. GREEN. Yes, that is why we took that period 1930 to 1935. We, through your triple A program did get for that short span of years, records from 100 of those individual farms as to what they produced in 1930, 1931, 1932, 1933, 1934, and 1935. Now, it is true—or very likely true at least—that 1933, 1934, and 1935 figures are a little more accurate than the earlier ones because there was some check-up measurements in the later years.

Senator POPE. You heard the testimony of Mr. Talbott today; in North Dakota they have some very accurate data on individual farm production?

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Mr. GREEN. Yes, we have that.

Senator McGILL. I think you will find that is true in some States and in other States they haven't any.

Mr. GREEN. Two States, North Dakota and Kansas, have the best data over a period of years. We have the data from North Dakota and Kansas.

Senator McGILL. That is largely due to State law.
Mr. GREEN. That is right.

Senator MCGILL. And taking States that have no statutory requirements generally, this is done in estimating return, whether there is a tax based on it or not. We require a farmer to tell how many horses he has and how many colts, to keep a fairly accurate record.

Your figures based on production under the A. A. A. program, that would only be applicable to those farmers who entered into that program? Mr. GREEN. Yes; that is about 78 percent of the acreage at that time.

Senator MCGILL. I think we ought to have statistics in this record that will enable us to answer how the Department knows how much wheat is produced in a State.

Mr. GREEN. Well, that is the Division of Crop Estimates.

Mr. TALBOTT. Senator McGill-pardon me, Mr. Chairmanisn't it a fact that there are States without laws that have a cropreport system gathered more or less accurately for a good many years?

Senator McGILL. I presume that is true, but the State in question made no record, so whatever information there is or any statistics as may be available, would have to be only such as are gathered by the Department of Agriculture.

Mr. GREEN. That has been one of the problems in this matter.

Senator POPE. Now, there are two questions, but before suggesting those I will say that we will get in touch with the Bureau of Crop Estimates, and I think we can have someone here tomorrow who can answer any questions with reference to that.

Mr. GREEN. They can give the details.

Senator POPE. There is one other question now, Mr. Green. With the data, quite complete data that you have from North Dakota and from Kansas with reference to individual farm production, does it occur to you that there would be very much difficulty in using a longer base period than we have perhaps contemplated in our discussions?

Mr. GREEN. We are doing that. That is why we got the North Dakota and Kansas data and the Division of Crop Estimates are now working it up for a number of other States, data that has never been worked up. We are at least going to get a 10-year period for all the States. They are doing some work now on data that has never been worked up, so we will have a 10-year basis. In fact, we have done some work on North Dakota and Kansas and taking the average figures for the 1930–35 period. We have triple A data on it, too, and comparing that for the 10-year period; and find in a number of cases, you have to step up your yields. There are some cases where the 1930 to 1935 data was the average yield, or three or four, and when you correct it, it is seven or eight. The same is true in Kansas. There is a section in Kansas, and some cases in Oklahoma from Enid, Okla., where they had a good crop in 1934 as well as a bumper crop in 1931, as the 1930–35 figures had about the same as 10 or even 25-year period in Kansas.

But if you go down into southwestern Kansas, those 14 counties down there, then, you have a situation similar to the one in North Dakota where you have to make correction. Now, we are making that correction. We are making that correction on the 1930–35 period. In addition to that, you have a few other adjustments in some cases that you have to make. For instance, there are two counties, namely, in central Iowa, where the rate in the report of the President's committee is as high as western Kansas, and we had the Bureau of Entomology to spot all insect outbreaks for the 2 years 1930 and 1935, and it was upon those two counties that the worst outbreaks centered. In this case, after you have done everything else, they will have to be brought into line similar to the counties around them. So that there are a few of this kind of adjustments that have to be made after you have done all the figuring, but that is the purpose, to get that at least on a 10-year basis for all States. If we had as good data as we do from some State like North Dakota, you could spread it out over a longer period.

Senator POPE. Are there any other questions, Mr. Green? Did you say all you wanted to say about the matter of grading?

Mr. GREEN. Yes, sir; I think that is about where we are in this matter of grades and that has appeared to be the most practical solution of that problem.

Senator POPE. All right, Mr. Green, if agreeable to the committee, we will meet tomorrow morning at 10 o'clock. We have one or more insurance, men, and perhaps one or two other witnesses for a brief time. We hope to close the hearings tomorrow.

(Whereupon, at 4:15 p., m., an adjournment was taken until 10 a. m., Tuesday, Mar. 9, 1937.)

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Washington, D. C. The subcommittee met, pursuant to adjournment, in the hearing room 324, Senate Office Building, at 10 a. m., Senator James P. Pope presiding.

Present also: Senators McGill and Frazier.

Senator POPE. The committee will come to order. We have this morning Mr. Rutledge, who can give us, I think, a good deal of information as to the experience of his company in the matter of hail insurance, and I think he has some information with reference to crop insurance generally.

You may proceed, Mr. Rutledge. State your name and the position you occupy, for the benefit of the record.



Mr. RUTLEDGE. My name is F. O. Rutledge. Technically I am assistant general manager of the Farmers Mutual Hail Insurance Association of Iowa. I might further say that we have the record of being the largest mutual hail-insurance company in the United States. I am representing at this time as a witness that particular institution, and also all of the other mutual hail-insurance companies of the Middle West. I came here with the avowed intention of only attempting to furnish statistics on hail insurance and information and to answer questions, because the mutual hail-insurance industry has no desire to lobby in opposition or to oppose the Government's program on crop insurance.

Frankly, we feel that the Government would handle it in such a manner that if it is a competitor it would be healthy competition, and we of the mutual hail-insurance industry believe that healthy competition is good for all concerned.

I am not sure just where I should begin with giving information. I might offer first to the committee a chart which was prepared by the the Weather Bureau, the Highway Division of the Government's Weather Bureau at Des Moines. The particular chart I am presenting shows an average for 8 years, although the information is available for · 14 years, showing the actual average hail loss in each county in the State of Iowa in dollars. That is taken from a record taken by the

assessor, by inquiring of each farmer each spring whether or not he has had any hail loss.

I would say that this report is conservative in the extreme, because in our experience in the hail-insurance business we find that men who might have a 10 percent loss by hail, if they are not insured by the following spring they will have forgotten and considered that they did not have a loss. Sometimes when they are insured they do feel that a 10 percent loss is at least 10 percent, possibly more. But that is human nature.

Anyway, this is conservative because of the fact that it is taken in the spring following the season in which the losses would have occurred, and naturally the smaller ones will have been forgotten. That is human nature also.

This report shows that in Iowa the loss on an average annually in each county ranges all the way from two or three thousand dollars as the very smallest one, up to an average of $235,000 in a single county annually. That is the mail loss alone.

Senator FRAZIER. What crops do you cover with your mutual insurance?

Mr. RUTLEDGE. All ordinary farm crops. There has been some effort to write special crops. Sugar beets and soy beans are written rather generally now, but sugar beets and some of the special crops and the vegetable crops where they are produced on a commercial basis, and also the horticultural crops. However, that experience has been somewhat bad, and the rate is rather high, even in Iowa, where you insure that kind of crop, because you are adding to your proposition a question of marketability of a crop as well as the actual loss from a normal feeding value standpoint. It is a little different proposition, but the ordinary crops I refer to are corn, small grain and hay for feeding purposes.

Senator POPE. Your insurance is limited to hail? Mr. RUTLEDGE. Our insurance is limited strictly to hail only, nothing else, to growing crops.

SENATOR FRAZIER. Are your rates the same for the whole State?

Mr. RUTLEDGE. No, we zone the State. Iowa is divided into three districts, three zones.

Senator FRAZIER. And the cost is based on the amount of loss you have had?

Mr. RUTLEDGE. It is determined by the amount of loss over a period of years, of course.

This little green sheet is our own piece of advertising, but it is taken from this general report made by the Weather Bureau. This report is not an insurance-company report; it is a Government report taken from every farmer. It includes the entire hail loss in that particular State.

I have not been able to find anywhere any other State that I know of that makes such a similar report. I have not been able to find one. Probably the men from the Agricultural Department know better about that than I do, but I don't know any other State that actually makes such a complete record and compiles and makes a summary of it. This small sheet shows that the lowest loss, the average over the State of Iowa from hail, is one-half of 1 percent, or $5 on every $1,000, or of course, putting that into bushels, would be 5 percent of a bushel, five one-hundredths of a bushel. And the highest has been 2 percent, the highest loss ratio. The average is 1.15, according to this report.

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