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sted in it and Wight, but they the out with the w
be more interested in it and wanted it. Not that other groups—if they wanted it, it would be all right, but they thought that with such a new type of program it would be best to start out with the wheat fellows, and they wanted it, and probably it is more feasible for the wheat grower.
Senator POPE. And it is your observation that those representatives from the wheat States were more favorable to such a program at this time than those of other States? -- ----
Mr. O'NEAL. Yes, sir. I might say, Senator, that Dr. Wolf, who is president of the Farm Bureau in Kansas, was very much interested in it, and he felt that it would be very practical for the wheat area. I have never seen the spirit of farm leaders more cooperative.
In other words, there was no section and no sectionalism or anything of that sort; we all wanted to go along together to see if we could help.
Senator Pops. What is your idea as to how this sort of program would fit in with other programs that are being carried out by the Government?
Mr. O'NEAL. I see no reason why it would not fit in in a very good way. Particularly the farm leaders were all sold to the ever normal granary idea that we have been discussing, that is, the carrying of supplies of food and feed and fibre, and the wheat men thought that this would, to a large degree, just fit right in with that in good shape.
Senator Pope. Do you think that the principle of insurance, which has been carried out in various forms by private companies, might apply to this sort of a situation which covers the whole country?
Mr. O'NEAL. Of course, you would have to work it out on a sound actuarial basis, and if you could simplify the administration or the farmers themselves, I don't see any reason why they could not work it.
Senator Pope. Have you made any observations as to the efforts of private companies to insure crops?
Mr. O'NEAL. No; I have not. We have not tried it in my area of the country with our cotton crop. I am a cotton grower and we have not tried it. And of course, there are not so many big areas of the crop in the part of the cotton belt that I live in. Yield and production are pretty certain there. They rarely have the tragedies that the other areas have, yet as the economists explained it, it might be that farmers in the Cotton Belt could apply it.
The most successful insurance companies in the world are run by farmers. There are some out there in the Middle West that will challenge any insurance group anywhere in the world. You talk about Danish cooperatives and all that sort of thing, those fellows will make them look like 30 cents, the way they do business.
Senator Pope. I have wondered about the pests, such as the boll weevil in the South. To what extent does the boll weevil in occasional years damage the cotton crop?
Mr. O'NEAL. Since the first infestation of the boll weevil the colleges and scientists have developed a method of treating that trouble so that it is not such a great hazard any more, by poisoning and by planting at different times and by the use of intensive fertilizers.
In the Delta of Mississippi, for instance, and the Delta of Arkansas, where the land is as rich as it is anywhere in the world, you see those growers using large quantities of fertilizer. Well, you wonder why in the world they want to fertilize. It supports the plant so that it will develop quickly and mature quickly.
Senator Pope. During the past 5 years has there been any time when the production of cotton has been reduced because of the boll weevil, say to 75 percent of an average crop?
Mr. O'NEAL. I am really not in a position to answer that. There might have been some places where that is true, but on the whole that would not be true.
Senator POPE. And to what extent would floods damage cotton?
Mr. O'NEAL. The floods are not so much feared, but the drought. in the western belt, for instance, Oklahoma and Texas and parts of Missouri and Arkansas-droughts and those dry, hot winds have cut the crops very severely in all that area this last year.
Senator POPE. Would you say 50 percent or more? Mr. O'NEAL. Yes; I would say so. I haven't the figures, but I know Texas and Oklahoma produce a very large proportion of the cotton crop of the country now. Under abnormal conditions it is very short there, several million bales a year. That was due to these hot winds and the drought.
Senator POPE. Of course, where the yield is apparently stable from year to year, and since premiums would be calculated according to certain regions, the premiums in such staple production communities would be very small.
Mr. O'NEAL. Surely.
Senator POPE. Therefore, if a farmer or a group of farmers did have an infestation of boll weevil or did have a drought, those particular farmers would receive a very much needed benefit; whereas, the producers generally would pay a very small fee.
Mr. O'NEAL. Yes; that is right.
Senator POPE. In other words, it would be just like any other insurance?
Mr. O'NEAL. Yes; I hope that a large number of farmers will undertake it, because in order to succeed you have got to spread it out, and while you might have the insurance premium based on the individual farm, as I understand you have planned it out, you would have to have, necessarily, a great number of farmers to go into it.
Senator POPE. Yes; so that the risk would be spread widely?
Senator POPE. Have you given any thought as to the practical way of paying premiums in cotton, in the event such a program was established for cotton?
Mr. O'NEAL. Well, the farmers could pay just as readily, just as easily, more so than they could with wheat. Cotton is a very easily handled crop.
Senator POPE. But of course it is baled, and the farmer who produces only two or three bales of cotton, it might be difficult for him to pay in kind, in cotton.
Mr. O'NEAL. Yes; but I don't know what the average production is-5 or 8 or 10 bales—something like that. In some areas-very few I am sorry to say—they used to have what we call the “round bale.” Why they have stopped doing that I do not know, because that was the nicest way to put up cotton I have ever known. They would have a 250-pound roll, just like a big roll of paper, and it was very easily handled. In other areas a lot of them sell their cotton in seed. That would not be so difficult.
Senator POPE. It was suggested yesterday that a form of pooling arrangement might be made.
Mr. O'NEAL. The cooperatives. All the cotton states have cotton cooperatives. That would make it easier, if they wanted to do it that way.
Senator POPE. It is suggested in this bill, or it is provided in this bill, that the actual overhead operating expenses, including storage, would be paid by the Government, and that the premiums paid by the farmers would cover the actual insurance of their crops. Do you think that is wise?
Mr. O'NEAL. I would say this, that it is good public policy that the farmer be required to carry most of the cost of crop insurance. The farmer really is caring for the public as well as his own welfare, and this above-normal supply, that part of the normal granary, I think it would be all right for the Government to pay the expenses of carrying that cotton.
Senator POPE. In other words, you feel that the public at large, the consumers, would be benefited ?
Mr. O'NEAL. Yes; that is right. It could be tried out in that way, and I am sure if they try it that way and see how it works out, the farmer would not object, maybe, later to doing it, if he found that was feasible. But the public certainly gets the benefit out of a program of that sort.
Senator McGILL. Mr. O'Neal, do you think that a program such as is contemplated in crop insurance could be successfully carried on unless it was in conjunction with a control program of production?
Mr. O'NEAL. I can see the danger, of course, Senator, that you would accumulate there—if we had a great big crop it would pile up so much that you would have to have a controlled production.
Senator MCGILL. Really, then, a measure of this kind could only be carried forward with those farmers who are cooperating in a control program?
Mr. O'NEAL. I think so.
Senator McGILL. Now, this bill provides that the Board of Directors of the Corporation to be established under the bill, to carry forward the program—that they shall purchase and handle and store and insure wheat, and that they shall only purchase an amount equal to the payment of premiums by the farmers, and that they shall sell wheat only to the extent necessary to cover the payment of indemnities and to prevent deterioration. Might not that cause large accumulation of wheat in storage in this country?
Mr. O'NEAL. I remember the discussions—maybe I just couldn't understand it, but I fundamentally believe that back of all these programs you have got to have a production control to tie in there; if you don't, you get into trouble at times.
Senator MCGILL. We must also avoid the danger of accumulating a large amount of wheat in storage, such as would affect not only the market in this country but the world market.
Mr. O'NEAL. Yes. Farmers don't want more Farm Board experiences. I want to say that.
Senator MCGILL. Do you see danger of that?
Mr. O'NEAL. There is the danger of that. Now, we want to come before your committee at your earliest convenience and have a free discussion of what we have been working on since the farm conference. We would like to do it this next week if possible, and have just a free discussion with you leaders, and the thought is with all of us that with a normal granary idea or insurance or anything else, unless you have
got definite control, at times you are in danger. That underlies the whole thing.
Senator McGILL. It would seem that probably under certain conditions which might arise, this board ought to be permitted to dispose of its wheat in storage for purposes other than those described now in the bill; that is, it would not want a large storage of wheat in this country and not be permitted to sell it under certain conditions when it. might cause importation of wheat.
Senator Pope. Wouldn't this be a better suggestion, one that we talked over in our conference, that the premiums be reduced so as to limit the storage in that respect, because if the wheat were sold the money would be on hand belonging, in the first instance, to the Corporation, but really belonging to the farmers, and since the board has. the power to fix the premiums, adjustments will have to be made from time to time in the light of experience.
If they find, for instance, that the particular premiums will bring in too large a reserve, too much wheat in storage, they could adjust the premiums to what might sum the right amount in storage, and it seemed to me in considering the matter that that would be safer than to give the Secretary or anybody else power to deal in wheat, because then you would have the problem presented by the Farm Board to deal with. Therefore disposition was limited to the payment of indemnities and to sale for deterioration, thinking that premiums would be adjusted from time to time to prevent too large an amount in storage.
Senator McGILL. Don't you think, Senator, that this ought to be covered by some provision of this Act? Under your theory we would be leaving it to the discretion of this board, and suppose the board did not exercise that discretion and reduce premiums, and that the importation of wheat became a thing noticeable, due to the fact that we have wheat in storage here and are not disposing of it under the provisions of this act, only for certain purposes—we had too much discretion in the hands of the old Federal Farm Board. That is one thing that was wrong with it. They bought wheat to peg the market, and held it until a certain time, and then started to sell it and destroyed the market.
Senator POPE. Would your idea be to require the board to so fix premiums that too large a reserve would not be created?
Senator MCGILL. Or to provide this. Now, I realize that there are certain kinds of wheat that can be imported, even in good years, that, are necessary for blending purposes, but there is no reason why wheat. such as is grown in Kansas should be imported into the United States, or Nebraska or some of those States, and it would seem to me that when that class of wheat for any reason was being imported, it ought to be mandatory upon this board to dispose of the wheat they have, or some of it they have in storage.
Senator POPE. I think that is a matter that the committee, when it gets to the consideration of amendments to the bill, might very well consider.
Are there any other questions of Mr. O'Neal? If not, we will hear Mr. Gray.
Senator McGill. Probably Mr. O'Neal might have some general statement that he wants to make.
Mr. O'NEAL. Just along that line, Senator, of course, we have been discussing it, and the suggestion we are going to bring to you is to carry it in storage and let the Commodity Credit Corporation handle it-and there are numbers of us that insisted on the point that he is talking about there.
We don't want to go to the stabilization activity to the extreme that the Farm Board went-A good many of our groups of all types of farmers brought up this question.
Now, if the Commodity Credit Corporation makes a loan on this commodity and you accumulate a lot of it, the authority, of course, the title, is supposed to be in the grower—you could buy it at least from the grower, the cotton or whatever it might be. But there must be in any activity of this sort some stabilization power. The farm conference group, which represents all the farm organizations, has been meeting here every week, and we have asked this group to say, “On what basis would you make the loan? On what level would you make the loan?” Then after you make the loan it seems to be the consensus of opinion that you would have to have some stabilization authority. You have got to be able to dispose of that wheat.
Senator McGILL. If there is a scarcity.
Mr. O'NEAL. Yes; in other words, they have got to have some centralized power in there.
Senator POPE. I will say that since this matter has been under consideration I have had letters, and I understand the Department has had letters, from different people with different views as to the amount of reserves to be accumulated. There are some who think the amount of reserves would be too large and there ought to be some way, other than deterioration, to drain it off; others think that it will not be large enough, and that some provision must be made for increasing the reserve in order that the measure will be a success.
It seemed to us that the power of the board to adjust these premiums from time to time, basing it upon actual experience, would take care of the matter.
Senator McGill. I believe that might be true if it was entirely in the hands of the Department of Agriculture, but I don't want to leave it to some board of directors to determine that.
Mr. O'NEAL. I think you are wise there.
Senator POPE. Of course, the bill provides that the Board of Directors must be appointed from the personnel of the Agricultural Department.
Senator McGill. Then we might just as well have it in the Department.
Senator POPE. And the Secretary will have supervision over the Board. I think that there isn't much difference between having it strictly as a bureau within the Department and having a corporation, but most people with whom I have talked, including a number of lawyers, think it would be better to have an independent corporation that could receive these premiums and pay out indemnities promptly. This would be much more expeditious than to have these premiums become the property of the Government of the United States and be paid out only as the Government pays its obligations.
That might incur some red tape and regulations that would make it slower in its operation, and one thing that we are particularly anxious about is that these benefits may be paid promptly and would not have to be passed upon by the Comptroller General and have to