(d) The Board shall select, subject to the approval of the Secretary of Agriculture, a manager, who shall be the executive officer of the Corporation with such power and authority as may be conferred upon him by the Board.

SEC. 5. The Corporation

(a) shall have succession in its corporate name;

(b) may adopt, alter, and use a corporate seal, which shall be judicially noticed; (c) may make contracts and purchase or lease and hold such real and personal property as it deems necessary or convenient in the transaction of its business, and may dispose of such property held by it upon such terms as it deems appropriate; (d) subject to the provisions of section 7 (c), may sue and be sued in its corporate name in any court of competent jurisdiction, State or Federal: Provided, That no attachment, injunction, execution, or other process, mesne or final, shall be issued against the corporation or its property;

(e) may adopt, amend, and repeal bylaws, rules, and regulations governing the manner in which its business may be conducted and the powers granted to it by law may be exercised and enjoyed;

(f) shall be entitled to the free use of the United States mails in the same manner as the executive departments of the Government;

(g) with the consent of any board, commission, independent establishment, or executive department of the Government, including any field service thereof, may avail itself of the use of information, services, facilities, officials, and employees thereof in carrying out the provisions of this Act;

(h) may conduct researches, surveys, and investigations relating to crop insurance for wheat and other agricultural commodities;

(i) shall determine its necessary expenditures under this Act and the manner in which they shall be incurred, allowed and paid, without regard to the provisions of any other laws governing the expenditure of public funds and such determinations shall be final and conclusive upon all other officers of the Government; and

(j) shall have such powers as may be necessary or appropriate for the exercise of the powers herein specifically conferred upon the Corporation and all such incidental powers as are customary in corporations generally.

SEC. 6. (a) The Board shall appoint in accordance with the provisions of the Classification Act of 1923, as amended, and subject to the provisions of the civilservice laws, such officers and employees as may be necessary for the transaction of the business of the Corporation, fix their compensation, define their authority and duties, require bond of such of them as it may designate and fix the penalties thereof, provided (1) appointments of attorneys and experts may be made without regard to the civil-service laws or the Classification Act of 1923, as amended; and (2) nothing in this section shall be construed to prevent the Board from employing in the administration of this Act persons in the employ of the Department of Agriculture on the date of this enactment.

(b) Insofar as applicable, the benefits of the Act entitled "An Act to provide compensation for employees of the United States suffering injuries while in the performance of their duties, and for other purposes", approved September 7, 1916, as amended, shall extend to persons given employment under the provisions of this Act, including the employees of the committees and associations referred to in subsection (c) of this section and the members of such committees.

(c) The Board may establish or utilize committees or associations of producers in the administration of this Act and make payments to such committees or associations to cover the estimated administrative expenses to be incurred by them in cooperating in carrying out this Act and may provide that all or part of such estimated expenses may be included in the insurance premiums provided for in this Act.

(d) The Board may allot to the bureaus and offices of the Department of Agriculture or transfer to such other agencies of the Federal and State Governments as it may request to assist in carrying out this Act any funds available for the purposes of this Act.

SEC. 7. 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, tornado, 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.

(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.

(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 one year after the date when notice of denial of the claim is mailed to the claimant. (d) From time to time, in such manner and through such agencies as the Board may determine, to purchase, handle, store, insure, provide storage facilities for, and sell wheat, and pay any expenses incidental 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.

SEC. 8. 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. SEC. 9. All money of the Corporation not otherwise employed may be deposited with the Treasurer 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.

SEC. 10. The Corporation, including its franchise, its capital, reserves, and surplus, and its income and property, shall be exempt from all taxation now or hereafter imposed by the United States or by any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority.

SEC. 11. When designated for that purpose by the Secretary of the Treasury, the Corporation shall be a depository of public money, except receipts from customs, under such regulations as may be prescribed by said Secretary; and it 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.

SEC. 12. The Corporation shall at all times maintain complete and accurate books of account and shall file annually with the Secretary of Agriculture a complete report as to the business of the Corporation. The financial transactions of the Corporation shall be audited by the General Accounting Office at such times and in such manner as the Comptroller General of the United States may prescribe for the sole purpose of making a report to Congress, together with such recommendations as he may deem advisable.

SEC. 13. (a) Whoever makes any statement knowing it to be false, or whoever willfully overvalues any security, for the purpose of influencing in any way the action of the Corporation, or for the purpose of obtaining for himself or another money, property, or anything of value, under this Act, shall be punished by a fine of not more than $5,000 or by imprisonment for not more than two years, or both.

(b) No person shall, while acting in any official capacity in the administration of this Act, speculate, directly or indirectly, in any agricultural commodity or product thereof, to which this Act applies, or in contracts relating thereto, or in

the stock or membership interests of any association or corporation engaged in handling, processing, or disposing of any such commodity or product. Any person violating this subsection shall upon conviction thereof be fined not more than $10,000 or imprisoned not more than two years, or both.

(c) Whoever, being connected in any capacity with the Corporation, (1) embezzles, abstracts, purloins, or willfully misapplies any moneys, funds, securities, or other things of value, whether belonging to the Corporation or pledged or otherwise entrusted to it; or (2) with intent to defraud the Corporation, or any other body politic or corporate, or any individual, or to deceive any officer, auditor, or examiner of the Corporation, makes any false entry in any book, report, or statement of, or to, the Corporation or draws any order, or issues, puts forth, or assigns any note or other obligation or draft, mortgage, judgment, or decree thereof; or (3) with intent to defraud the Corporation, participates or shares in or receives directly or indirectly any money, profit, property, or benefits through any transaction, loan, commission, contract, or any other act of the Corporation, shall be punished by a fine of not more than $10,000 or by imprisonment for not more than five years, or both.

(d) Whoever willfully shall conceal, remove, dispose of, or convert to his own use or to that of another, any property mortgaged or pledged to, or held by the Corporation, as security for any obligation, shall be punished by a fine of not more than $5,000 or by imprisonment for not more than two years, or both.

(e) Whoever conspires with another to accomplish any of the acts made unlawful by the preceding provisions of this section shall, on conviction thereof, be subject to the same fine or imprisonment, or both, as is applicable in the case of conviction for doing such unlawful act.

(f) The provisions of sections 112, 113, 114, 115, 116, and 117 of the Criminal Code of the United States (U.S. C., title 18, secs. 202 to 207, inclusive), insofar as applicable, are extended to apply to contracts or agreements with the Corporation under this Act: Provided however, That the provisions of section 3741 of the Revised Statutes (U. S. C., title 41, sec. 22) and sections 114 and 115 of the Criminal Code of the United States shall not apply to any crop-insurance agreements made under this Act.

SEC. 14. 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 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.

SEC. 15. There are hereby authorized to be appropriated and made available to the Corporation such sums, not in excess of $10,000,000 for any fiscal year, as may be necessary to cover the operating and administrative costs of the Corporation other than payments of claims for indemnities.

SEC. 16. The sections of this Act and subdivisions of sections are hereby declared to be separable, and in the event any one or more sections or parts of the same of this Act be held to be unconstitutional, the same shall not affect the validity of other sections or parts of sections of this Act.

SEC. 17. The right to alter, amend, or repeal this Act is hereby reserved.

Senator POPE. We will come to order, please. The purpose of the hearing this morning is to consider the matter of crop insurance, and particularly to consider the provisions of Senate bill 1397, which provides for a plan of crop insurance. The bill follows the recommendations of the committee appointed by the President last summer, and the suggestions contained in the President's letter appointing the committee, and in his recent message to Congress. The bill has been prepared with the assistance of the Solicitor's office in the Department of Agriculture, and those who worked with the President's committee. I think it has been prepared with a good deal of care. Every provision and I may say every sentence and clause of the bill has received very careful study.

For some years in this country there has been interest in the subject, and during the last year or two there has been considerable interest in it. I introduced the bill last year authorizing the Department of Agriculture to establish a program to insure against extraordinary and

unusual natural hazards. Since that time I have presented the matter to a number of States and have met with very general and encouraging response. I understand that other bills have also been introduced in Congress during the past few years. Some of the farm organizations have studied proposals for such insurance.

This all indicates to my mind that there is a rather continuing and widespread interest in the matter, and particularly the matter of protecting the farmer against natural hazards. Almost every other industry is able to protect itself by insurance. It is generally recognized that the farmer does not have the protection that can be obtained by other lines of business through private companies.

I have before me the hearings before the Senate Committee beginning on April 24, 1923, with Senator McNary of Oregon, chairman. Senator McNary is still a member of this committee. These hearings cover some 116 pages of testimony. I think the members of this committee might be interested in reading the record of that committee's work.

Senator McGILL. That was in 1923?

Senator POPE. Yes, 1923. The scope of those hearings was limited to the particular kind and cost of crop insurance obtainable at that time, which was private crop insurance; the adequacy of the protection offered by these private companies, and the desirability for extending their scope and availability of organizations necessary to properly and safely issue additional crop insurance. The hearings were confined, as I have intimated, to private insurance and what had been done by private companies at that time, and the possibility of extending that field. I am safe in saying that the investigation was almost entirely about private crop insurance. Very little was said about the Government entering that field. The Secretary of Agriculture at that time, Mr. Henry C. Wallace, did, however, refer to Government action and said something ought to be done for cheap and effective insurance. I think you might be interested in a paragraph of his testimony at that time. He says on the subject of crop insurance:

Of course, you will be going into intensive hearings.

The measure at that time which was before the committee was to investigate crop insurance but related, as I say, almost entirely to private insurance. He says:

But I assume that behind the resolution the thought was that if it were possible to devise some way by which the farmer can be relieved in part of the hazards of weather, over which he has no control, that would be desirable without considering just how it should be done. And unquestionably it would be desirable. Farming is a business of peculiar hazards.

The farmer has no control over most of his raw

material that is, sunshine and rain-either as to when it comes or as to the quantity which comes, and he has no control over torrential storms, unaccompanied by hail, which may lay his crops flat, or accompanied by hail which may beat his crops to pieces, or any of the other hazards resulting from weather.

I might say here that a number of States have adopted a plan for hail insurance. The success is doubtful, although in some States a good deal has been done along that line. Mr. Wallace goes on to say:

If it were practical to find some way to relieve the farmer of these hazards from which he cannot protect himself and distribute the risk, not necessarily over the entire community but over all farmers producing a given crop, if some equitable way could be found to do that, certainly it would be desirable.

Then he refers to governmental crop insurance and says:

You spoke, Mr. Chairman, of the suggestions which have been made concerning the Government going into insurance of some sort along this line. I agree with you. I have not thought, at least not now, that a Government agency should be set up to carry on a crop insurance business. Theoretically, if all the corn farmers, for example, or all wheat farmers, wherever they might be, could be brought into an association, either through Government action or through the activity of private associations organized for that purpose, something might be done so that you would get the widest possible distribution of the risk. would then be able to get the cheapest form of insurance and the most effective. Since that hearing nothing specifically has been done, but there has been a good deal of interest, as I have indicated before.

You

The bill before us is the beginning of a program. It applies only to wheat, for several reasons. In the first place, during the year's study by representatives of the Department of Agricultural Economics, sufficient data has been accumulated to undertake the program.

In the second place, the wheat farmers seem to be pretty well united in support of such a plan, and it seems wise, since the program is experimental, that only one commodity be included to begin with. Others may be included later when sufficient data are obtained. The bill has been prepared for the insurance of wheat, but with some modifications could probably be made to apply to corn, cotton, and some other farm commodities.

Since there has been no hearing upon this matter, except the one referred to above, I think it advisable to have as complete a hearing at this time as possible. We have the Secretary of Agriculture with us and several of his assistants. We also have representatives of the various national farm organizations here, and I have received requests from some of the warehousemen to appear and be heard. It is our purpose to hear all of them who have any information or who have any opinions that would be of value to the committee. We desire

to conclude the hearings at as early a date as possible, but in my opinion it may be 10 days or 2 weeks before we can hear all the people who desire to be heard and who may have something of value to offer to the committee.

I think it would be appropriate to ask the Secretary to make a statement in his own way with reference to the subject matter that is before us, and any reference he desires to make to the bill which is before the committee. Mr. Secretary.

STATEMENT OF HON. HENRY A. WALLACE,

AGRICULTURE

SECRETARY OF

Secretary WALLACE. Mr. Chairman, it seems to me that I had best appear here as chairman of a committee appointed by the President on September 19, 1936, to investigate the subject of crop insurance and to make a report to him. It would seem to me, therefore, that for purposes of the hearing, for purposes of the record of the hearing, one of the first things to do would be to place in the record a report as made to the President. And in order to save the time of you gentlemen I would suggest that I not go over the same kind of material as is contained in the report to the President, but that I assume that you gentlemen have had the opportunity of reading this report and are in a position to ask questions which this report might bring up.

Withfegard to the particular bill which is before you for consideration, I would like to offer one observation, however, that this bill