One committee, on which I want you to serve as chairman, and in your absence Dr. A. G. Black, Chief of the Bureau of Agricultural Economics, is to work out a plan of crop insurance. The other, which is to succeed the temporary Great Plains drought-area committee, is to work out plans for a land-use program for better permanent protection against drought. The Crop Insurance Committee will consist of yourself and Dr. Black; H. R. Tolley, Administrator of the Agricultural Adjustment Administration; Wayne C. Taylor, Assistant Secretary of the Treasury; and Ernest G. Draper, Assistant Secretary of Commerce. The Crop Insurance Committee is directed to prepare a report and recommendations for legislation providing a plan of "all risk" crop insurance. In preparing its report, the committee should utilize the extensive crop-insurance studies now being made in the Department of Agriculture. 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. I suggest that it may be found wise for the first year to limit the application of the plan to one or two major crops as a start. My general suggestions to your committee follow: In the past 321⁄2 years, the Government has helped farmers to meet emergencies of two kinds. The first was a collapse of prices resulting from huge surpluses for which the foreign markets disappeared. The second was a failure of crops in wide areas resulting from drought. Each of these emergencies, except for Government action to assist farmers, would have had devastating consequences to consumers and business as well as to farmers. The time has come to work out permanent measures guarding farmers and consumers against disasters of both kinds. Crop insurance and a system of storage reserves should operate so that the surpluses of fat years could be carried over for use in the lean years. Measures of this kind should make three important contributions to the general welfare of the country as a whole; first, protection of the individual farmer's income against the hazards of crop failure or price collapse; second, protection of consumers against shortages of food supplies and against extremes of prices; and third, assistance to both business and employment through providing an even flow of farm supplies and the establishing of stability in farm buying power. Since 1933, the Agriculture Adjustment Administration payments have proved their usefulness to agriculture as well as business in assuring farmers some income both in time of price collapse and in time of crop failure. This I have been impressed by the work of the Department of Agriculture in developing actuarially sound methods for affording farmers the use of the insurance principle in protecting them against hazards which for centuries have handicapped their occupation. I am especially interested in its studies of a plan providing for the payment of premiums and insurance in commodities. This should make it possible to base the premium rates on the productivity of the individual farms as shown by records of past production a large number of which the Agriculture Adjustment Administration county committees already have on file. method should avoid making farmers of one region pay for the risks of another region. By making this insurance available only to farmers cooperating in farm and soil conservation programs, the plan would be safeguarded from the price dangers which the Federal Farm Board operations invited in the years from 1929 to 1932. By using existing records of cooperating farmers and farm committeemen it would appear that premiums based on risk experience could be as fairly assessed as with existing forms of private insurance. The expense in the past to Federal, State, and local governments of burdens caused by drought shows it is time to begin using the economical principle of insurance to lessen the financial and human costs of drought in the future.. There should be no question that the welfare of the entire Nation would be served by including, as keystones of our agricultural policy, crop insurance and storage of reserves along with conservation of soil and water, better land use, and increased farm income. Crop insurance properly worked out should give adequate abundance to consumers even though there are several years of severe drought while at the same time farmers would be protected from the low prices like those of 1932 which might result from several years of good weather. I am sending similar letters to Administrator Tolley, Assistant Secretary Taylor, Assistant Secretary Draper, and Dr. Black. Very sincerely yours, (Signed). FRANKLIN D. ROOSEVELT. TABLE 3.-Net Federal expenditures for agricultural relief during the 10-year period ending June 30, 1936 1 [1,000 dollars] I. Data supplied by Farm Credit Administration: Farmers' seed-grain loans, 1921-22_ Farmers' seed-grain loans, 1922–23. Farmers' seed and feed loans, New Mexico, 1924–25. Loans to farmers in storm- and flood-stricken areas, southeastern Loans to farmers in storm-, flood-, and drought-stricken areas, Loans to farmers in storm-, flood,- and drought-stricken areas, Agricultural credits and rehabilitation, Emergency Relief, Loans to farmers in drought- and storm-stricken areas, Emer- Crop-production loans (R. F. C. funds), acts of Jan. 22, 1932, Farmers' crop-production and harvesting loans, 1934–35. Subtotal_--- II. Data supplied by Federal Emergency Relief Administration: Federal Emergency Relief Administration, grants to States for 181, 095 78, 615 Subtotal_ III. Data supplied by Department of Agriculture: 259, 710 Loans and relief in stricken agricultural areas (transfers to 74, 825 IV. Data taken from published reports of Treasury Department: Emergency Relief, Resettlement Administration, rural rehabitation.. Emergency Relief, Farm Credit Administration, emergency Subtotal__ Grand total_. 1 See accompanying memoranda. Emergency Relief Resettlement Administration, rural rehabili- 67, 880 19, 448 4, 065 14, 471 12, 204 118, 068 615, 937 EXTRACTS FROM MEMORANDA ACCOMPANYING TREASU MENTS OF EXPENDITURES FOR AGRICULTU The accounts were selected with the specific view of i might be eliminated were an adequate system of crop activities as drought relief, flood relief, storm relief, se loans, crop-production loans, rural rehabilitation, and rehabilitation seem to fall rather cleraly into this categ ever, that some of the selected accounts may include with agricultural relief. It is conceivable, on the other which, by their titles, would appear to include no ag represent to some extent either loans or grants for questions can be cleared up only by an exhaustive anal the respective agencies. Administrative expenses for agricultural relief preser some extent they are included in the selected accounts but available information is not sufficient to segrega handled through specific appropriations. In addition de for administrative expenses termine the amounts handled ncies, and the table is incom t be considered only a rough expenditures for agricultural ined only through exhaustive by the various agencies. It nd grants, though it is likely et amount of expenditures to pute the amounts of interest baid in the future. determine what expenditures in force must depend on the ation, and the figures in the ind. the Farm Credit Administrandertaken prior to the period Farm Credit Administration a State basis from the later ever, as the total amount p to November 30, instead of ce expenditures between the from funds provided by the 1936. The figures were obDepartment. The account mergency crop loans" is the s in the District of Columbia; those orce tes for her lief Proble They enses a TABLE 4.-Net Federal expenditures for agricultural relief during the 10-year period ending June 30, 1936, by States1 EXTRACTS FROM MEMORANDA ACCOMPANYING TREASURY DEPARTMENT STATE The accounts were selected with the specific view of including only those which might be eliminated were an adequate system of crop insurance in force. Such activities as drought relief, flood relief, storm relief, seed and feed loans, forage loans, crop-production loans, rural rehabilitation, and grants to States for rural rehabilitation seem to fall rather cleraly into this category. It is possible, however, that some of the selected accounts may include activities not concerned with agricultural relief. It is conceivable, on the other hand, that other accounts. which, by their titles, would appear to include no agricultural relief, actually represent to some extent either loans or grants for relief to farmers. These questions can be cleared up only by an exhaustive analysis with the assistance of the respective agencies. Administrative expenses for agricultural relief present a special problem. To some extent they are included in the selected accounts covering loans and grants, but available information is not sufficient to segregate them. They are also handled through specific appropriations. In addition, such expenses are in |