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Senator MCGILL. So that applies to all those who occupy a position in regional headquarters, or wherever they may be located in the country. Mr. SHIELDS. That is right.

Senator McGill. Unless they are connected with the county agent's staff or something of that sort, dealing directly with the farmer, they would have to be civil-service employees, would they not?

Mr. SHIELDS. My understanding is that most of the people in the counties or connected with the association are employed by them, and it is not the purpose of this bill that they should be subject to civil. service laws or the Classification Act. They never have been under any program.

Mr. SHIELDS. They are employees of the Corporation. That was the only thing; whereas, the others are not.

Senator POPE. All those that are now employed by the Department of Agriculture would not be under civil service?

Mr. SHIELDS. That is true. There is an exemption there. I think most of them are but some of them are not.

Subsection (b) of section 6 provides specifically that the Federal Employers' Liability Act shall be applicable to the employees of these local committees and associations insofar as it may be applicable. There has been long discussion between the board administering that act and the Department of Agriculture as to whether or not our committees are covered by that act, and to clear up the ambiguity we have stated here that it is the intention of Congress that the act shall apply to them.

Subsection (c) of section 6 authorizes the board to establish and utilize county committees or associations of producers and to make payments to such committees or associations to cover the estimated administrative exepnses to be incurred by them in carrying out this act and may provide that all or part of such administrative expenses may be included in the insurance premium provided for in the act. That is a provision similar to the one in the Soil Conservation and Domestic Allottment Act, and is the provision referred to by Mr. Green when he was speaking of the loading of local expenses in the premium.

Senator POPE. However, that is discretionary with the Board?
Mr. SHIELDS. That is correct.

Subsection (d) of section 6 provides that the Board may allot to other bureaus and offices in the Department of Agriculture, and other agencies of the Government funds to assist in carrying out the purposes of the act.

In other words, in order to avoid duplication it is provided that the corporation may use any facility of the Department of Agriculture or any other department and pay that bureau for it rather than duplicate the expense.

Section 7 provides that to carry out the purposes of this act the corporation is authorized and empowered,

(a) Commencing with the wheat crop planted for harvest in 1938, to insure, upon such terms and conditions not inconsistent with the provisions of this act as it may determine, producers of wheat against loss in yields of wheat due to drought, flood, hail, wind, torndao, insect infestation, plant disease and such other causes as may be determined by the Board. Such insurance shall not cover losses due

to the neglect or malfeasance of the producer. Such insurance shall cover a percentage, to be determined by the Board, of the recorded or appraised average yield of wheat on the insured farm for a representative base period, subject to such adjustments as the Board may prescribe, to the end that the average yields fixed for farms in the same area which are subject to the same conditions may be fair and just. The Board may condition the issuance of such insurance in any county or area upon a minimum amount of participation in a program of crop insurance formulated pursuant to this act. - Senator POPE. You followed quite closely the report of the President's committee in drafting that provision.

Mr. SHIELDS. Subsection (b) of section 7 provides that the Board is authorized and empowered to fix the premiums for such insurance.

Senator MCGILL. Pardon me just a moment. They can insure against loss in yield of wheat due to drought, flood, hail, and so on, and such other causes as may be determined by the board. Do you construe that to mean similar causes to the ones that have been specifically set out in the language of the act? Mr. SHIELDS. That is true.

Senator POPE. On the drafting of the bill that was discussed at great length. There are numerous causes; for instance, forest fires or destruction by animals, ground squirrels, and the like, that may or may not be included.

There are certain causes which may, to a greater or less extent, depend upon the diligence or negligence of the producer, and it was felt that there are a certain number of causes that may or may not be insured against, but cannot always be specified in the law; that a certain amount of discretion would have to be left with the board to determine that, in some sections there may be losses, whereas in other sections there would not be losses from certain causes.

Senator McGILL. I merely had in mind getting from Mr. Shields, the drafter of the act, his ideas as to how much discretionary power we are conferring on the board. I take it the general rule of construction would, of course, confine that statement to such similar causes as those set out specifically.

Mr. BLACK. I think the wording would not permit the board to exclude any of these, would it?

Senator McGILL. No.

Subsection (b): To fix premiums for such insurance, payable either in wheat or cash equivalent as of the due date thereof, on the basis of the recorded or appraised average crop loss of wheat on the insured farm for a representative base period, subject to such adjustments as the board may prescribe, to the end that the premiums fixed for farms in the same area, which are subject to the same conditions, may be fair and just. Such premiums shall be collected at such time or times, in such manner, and upon such security as the board may determine.

You will note that the basis of the coverage and the basis of the premium are the same.

Subsection (c): To adjust and pay claims for losses either in wheat or in cash equivalent under rules prescribed by the board. In the event that any claim for indemnity under the provisions of this act is denied by the corporation, an action on such claim, may be brought against the corporation in the district court of the United States in and for the district in which the insured farm is located, and exclusive jurisdiction is hereby conferred upon such courts to determine such controversies without regard to the amount in controversy; provided, that no suit on such claim shall be allowed under this section unless the same shall have been brought within 1 year after the date when notice of denial of the claim is mailed to the claimant.

Senator MCGILL. Is that the usual length of time provided in a measure of this kind in which to bring an action?

Mr. SHIELDS. I don't know as I can say that it is the usual time. It seemed a reasonable time.

Subsection (d): From time to time the board is authorized, in such manner and through such agencies as the board mày determine, to purchase, handle, store, insure, provide storage facilities for, and sell wheat, and pay any expenses incident thereto, it being the intent of this provision, however, that insofar as practicable, the Corporation shall purchase wheat only at the rate and to a total amount equal to the payment of premiums in cash by farmers or to replace wheat sold to prevent deterioration, and shall sell wheat only to the extent necessary to cover payments of indemnities and to prevent deterioration. Wheat acquired under the provisions of this act shall be kept in federally bonded or State licensed warehouses or in such other manner as the Board determines will adequately protect the interests of the corporation and the producers insured. That is the section you refer to, Senator Schwellenbach.

; Senator SCHWELLENBACH. I wonder if some time in the next few days, if you gentlemen think about that and think that there is any merit in it, if you will get up an amendment which will cover the point I made?

Mr. SHIELDS. If I got your thought, it was to incorporate in the contract an express provision that the Corporation would be bound to the producer not to sell wheat which he paid in premiums for any purpose other than to cover the indemnities?

Senator SCHWELLENBACH. Yes; provide in this law that the contracts which the Corporation enters into will have a stipulation that the wheat can only be sold for either payment of indemnities or to prevent deterioration.

Mr. BLACK. The wording would have to be such, it seems to me, that would permit the Corporation to turn over wheat that might: become subject to going out of condition or something of that sort.

Senator SCHWELLENBACH. Yes; prevent deterioration. Mr. SHIELDS. I don't know that I quite got the purpose of the amendment.

Senator SCHWELLENBACH. Congress could repeal the law, while if you put it into the contract the Corporation makes with the farmer, then, Congress would not have the right to repeal the law.

Mr. SHIELDS. You mean if the repeal took place after the law had gone into operation?


Senator MCGILL. And particularly under that language. Someone might introduce a bill and just strike that portion out of the act and throw this wheat on the market all at one time.

Senator SCHWELLENBACH. The mere fact that there is a large amount of wheat stored in one place under the control of the Government has the effect of dragging down the price. It is a constant threat. Now, it is all right to say in the law that it shall only be sold .

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for that purpose, but people will always know that Congress can repeal that law and that some Congress might do it, and we might find ourselves in the same position that they found themselves in under the farm board, and to a lesser extent as they found themselves in the cotton pool.

Senator POPE. Would you suggest, Senator, that that be put in here as an amendment, or that they have regulations and actually enter into these contracts with that provision in it? Which thought did you have in mind?

Senator SCHWELLENBACH. It seems to me that if it is a good idea it ought to be in the law.

Senator McGILL. And required to go into the contract as well.
Senator POPE. All right, Mr. Shields.

Mr. SHIELDS. Section 8 provides that claims for indemnities under this act shall not be liable to attachment, levy, garnishment, or any other legal process before payment to the insured, or to deduction on account of the indebtedness of the insured or his estate to the United States, except claims of the United States or the corporation arising under this act.

In other words, we want to get our payments to the producer.

Section 9 provides that all money of the Corporation not otherwise employed may be deposited with the Treasury of the United States, in any Federal Reserve Bank, or in any other bank approved by the Secretary of the Treasury, subject to withdrawal by the Corporation at any time, or may be invested in obligations of the United States. The Federal Reserve banks are hereby authorized and directed to act as depositories, custodians, and fiscal agents for the Corporation in the performance of its powers conferred by this act.

Section 10 exempts the property of the Corporation from taxation of any kind.

Section 11 provides that when designated for that purpose by the Secretary of the Treasury, the Corporation shall be a depository of public money, accept receipts from customs, under such regulations as may be prescribed by the Secretary, and may also be employed as a financial agent of the Government, and it shall perform all such reasonable duties as a depository of public money and financial agent of the Government, as may be required of it.

On the basis of that provision in the Federal Farm Loan Act, it was held to be constitutional by the Supreme Court. of the United States, even though the credit agency involved there did not exercise : that power. That is the purpose of this provision here. That is contained in all corporate set-ups of this kind.

Section 12 provides that the Corporation shall maintain complete.. and accurate books of account. We referred earlier to provision with respect to the auditing by the General Accounting Office.

Section 13, on pages 10, 11, and 12, provides the usual penalty provisions for a bill like this.

I call attention to page 12, to subsection (f) of section 13 which : permits Members of Congress to enter into contracts with the Cor- . poration, which except for this provision would be prohibited. .

Section 14 provides that the Secretary of Agriculture is authorized to appoint, from time to time, an advisory committee consisting of: not more than five members experienced in agricultural pursuits and appointed with due consideration to their geographical distribution, to advise the Corporation with respect to carrying out the purposes of

are they noPope. Yes, Jothid explain the nas to the m

this act. The compensation of the members of such committee shall be determined by the board but shall not exceed $10 per day each while actually employed, and actual necessary traveling and subsistence expenses.

Section 15 we have already referred to as the authorization for appropriation of operating expenses.

Section 16 is the separability clause.
Section 17 reserves the right to alter, amend, or repeal this act.

Senator POPE. Are there any questions of Mr. Shields or Mr. Black or Mr. Green?

Senator McGIll. I think they are going into additional testimony, are they not, Mr. Black or Mr. Green?

Senator PoPE. Yes, I think it might be interesting and helpful to the committee if you would explain the method and use such charts and tables as you think might be helpful, as to the method of arriving at the average yield in the regions and sections of the various States.

It is now 12 o'clock. We will continue at 10 o'clock tomorrow morning. I think the committee would be interested in your method of arriving at the average yield and tables which you worked out as a result of the data you obtained.

(Senator Pope submitted the report and recommendations of the President's Committee on Crop Insurance, as follows:) REPORT AND RECOMMENDATIONS OF THE PRESIDENT’S COMMITTEE ON CROP INSURANCE


The White House. DEAR MR. PRESIDENT: We have the honor to submit herewith our report and recommendations for legislation providing a plan of "all-risk” crop insurance.

The committee has carried out the instructions contained in your letter of September 19, 1936, assigning it the responsibility of preparing the report and recommendations. It has utilized the extensive crop-insurance studies of the Department of Agriculture.

Likewise it has carried out, your instructions in which you stated: “Final recommendations for legislation should be formulated with the advice and assistance of national farm organization leaders so that the plans can be submitted to Congress, with the approval and support of the representatives of the farmers."'. The committee has consulted with representatives of local, State, and regional as well as national farm organization leaders. It has also had the benefit of the advice and assistance of representatives of farmers' mutual and stock insurance companies and of representatives of the industry warehousing farm products. A spirit of excellent cooperation has been shown by representatives of these groups.

The report consists of a discussion of the economic and social background for crop insurance, an examination of questions of public policy involved, a plan of crop insurance recommended by this committee, and a condensed statement of the committee's recommendations. In addition, an appendix is attached containing statistical data developed by the Bureau of Agricultural Economics and the Agricultural Adjustment Administration, and certain other reference material, Respectfully,


Secrctary of Agriculture..

WAYNE C. TAYLOR, . .. Assistant Secretary of the Treasury.

ERNEST G. DRAPER, Hris: ; . . . : Assistant Secretary of Commerce.'

1 " A. G. BLACK, :; ;. Chief, Bureau of Agricultural Economics.":6.5

1. H. R.TOLLEY, Administrator, Agricultural Adjustment Administration.

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