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go through a number of boards and bureaus and officers to get their approval, because the delay would defeat the program.

Senator MCGILL. We can avoid any difficulty with reference to the Comptroller General's office, I think, in view of Mr. Farrell's testimony yesterday that they are adjusting all matters within a period of 3 weeks' time.

Senator POPE. Well, he said they were able to pay the claims under the Soil Conservation Act within 3 weeks, and he thought these indemnities could be paid more promptly than they are now paying the benefits under the Soil Conservation Act. But he had in mind the Corporation set-up, and I have had a number of lawyers who have considered the matter give it as their opinion that it would be easier and quicker to operate through a corporation than through the Department, where the premium wheat would become the property of the Government and the claims for indemnity would have to be passed upon by the necessary officials of the Government in taking it out.

That is one important reason why we provided for the corporation form of organization. But it is clearly within the Department of Agriculture and complies with the President's proposed reorganization plan.

Are there any other questions? If not, we will call Mr. Gray. i

Mr. Gray, you may go ahead and make any statement you care to about the matter before us.



Mr. GRAY. The interest of the Farm Bureau Federation on the question of crop insurance is not a recent one.

I was glad to note the first morning of these hearings that you, Senator Pope, made comments about the studies that were made in 1923 on the crop-insurance matters. At that time the American Farm Bureau Federation was actively in touch with all of those studies, and about that time officially in an annual meeting we went on record in favor of the general idea of crop insurance, not at that time outlining any plan.

Since that year of 1923 every step that has been taken here at Washington and over the Nation generally, either by the American Farm Bureau Federation in its national capacity, or some of our State federations, the Farm Bureau has been definitely related to and in contact with progress, studies, and researches on crop insurance.

So that when the proposition, rather suddenly from a public point of view, in the last 12 months comes out as a matter of debate, it is not a new issue to us; but frankly it is an issue upon which we do not feel at this date we have that mass of actuarial data which we ought to have before we plunge into crop insurance as enthusiastically and completely as some people would advocate to be done at the present time.

Senator POPE. Now, at that point, you are familiar with the studies that have been made by the Bureau of Agricultural Economics and by those who worked with the President's Committee? Mr. GRAY. Yes.

Senator POPE. Were you present when Mr. Green and others testified with reference to this factual data they had obtained?

Mr. GRAY. That was the first part of the hearings?
Senator POPE. No; yesterday, principally.

Mr. GRAY. No; I was not able to be here yesterday. I was up in New York State.

Senator POPE. Yesterday Mr. Green testified as to what had been done and the data that they have obtained, and gave illustrations with charts and tables, to show how they had arrived at what they thought were reasonable conclusions that would enable them, as to wheat, to put the program into operation but not as to cotton and corn, on which they have made some study.

Mr. GRAY. I think that is the generally agreed conclusion or observation of most of us who have been more or less in contact with this proposition for more than a decade.

It seems that the wheat farmers, as in North Dakota and other States, such as Kansas, where wheat is a prominent crop, have been more interested in crop insurance against hail and other weather adversities than have been the farmers in any other national crop, and as a result of these State experiments, if I may call them som practically all of these efforts having been confined to State lines by State laws—we have assembled considerable actuarial data.

Now, that data enables us, at least tentatively, to now make some conclusions getting into the national scope of action. One of the conclusions that is quite definite in regard to wheat insurance is that the area to be insured should be rather large, much beyond a State boundary, regional at least in character, and if possible national.

We are led to that conclusion by the developments in tornado insurance which the farmers have made a monumental success of. That commenced 40 or 50 years ago under the cooperative or the mutual type of organization.

When tornado insurance was first started, with that local sovereignty and that local pride that possesses most of us, the activity was centered in county lines, and at the beginning, 40 and 50 years ago, and in more recent years, tornado insurance companies were set up to operate in county Blank, and no farther than that one county. Well, the result was the area was too small; that a twister would come through and cut a path half a mile wide and cause such damage that the assessments had to be so large on a limited area and a limited number of people insured that it would ruin the mutual or the cooperative enterprise.

After a number of years of experience along that line the farmers insurance activities for tornado protection gradually evolved into the idea of making their pools applicable to State lines, and now in Missouri, my State, and in Kansas, the State of Senator McGill, and in all of the States that have mutual tornado insurance, you are insured not in a county but in the State organization. À tornado can rip through one county—and they very seldom extend very far and cause great damage in that county, but the loss is paid by the State, by the State farmers who are voluntarily in the organization, and the premiums are not materially affected, even if one tornado does come through one county. And, as in Missouri-speaking of my own State, where I have my two farm properties insured in the Missouri Mutual Tornado Insurance Co.—we have had many devastations in the 10-year period, but the policy and the security and the stability of the organization goes right along.

Senator McGILL. They have scattered their liabilities and do not confine their work to just a small territory? Mr. GRAY. That is true.

Senator MCGILL. Now, most of the mutual companies, hail insurance and tornado insurance and so on, for the reason that they bave confined their activities to so small a territory, most of them have failed, but I know there is one in my State that has been in existence now for since along about 1890 and is still going.

Mr. GRAY. The reason I am reviewing this history and the tornado mutual insurance is that it is not dissimilar to the advent of what we hope will be, in time at least, equally successful enterprises in regard to crop insurance, but we did not obtain the victory and the position we now enjoy in tornado insurance immediately. It has taken half a century of trial and error to get to where we are at the present time.

Going back to another type of insurance which the farmers patronize, and which they run at the present time, reference can be made to fire and lightning, mutual or cooperative, insurance activities. There is no such danger of a great wave of fires spreading over a county or a lightning catastrophe hitting a county so broadly that the county insurance company cannot meet the obligations and pay the losses.

So, unlike tornado insurance, county boundaries seem to be sufficiently wide and inclusive to make a fire or lightning mutual insurance company perfectly safe.

So in this bill that you are sponsoring, Senator Pope, and in our consideration of crop insurance, we can go back to 50 years of trial and error in fire and lightning and in tornado. Viewing the possibility of a devastation striking so heavily, as in a tornado, that a county cannot meet the assessments and must have a wide area, so in crop insurance we must view the fact that a hailstorm or a widely extended drought or a widely extended frost or an unusual epidemic of some plant or animal disease may spread beyond a State and make it necessary for us to go wider in our approach to this question.

Geographically we have gone into tornado insurance and think of it beyond State lines, think of it regionally at least, and possibly nationally.

So we are approaching this proposition of crop insurance in the Farm Bureau Federation cautiously, but based on the history that is behind us in enterprises of an insurance character which are not dissimilar to crop insurance,

Now, coming down to more recent years and confining my next observations to the last 10-year period, farm organizations, speaking of the Farm Bureau because that is the one I represent, but I am permitted to use the plural because other farm organizations have made advances in this regard-have made great progress in regard to automobile insurance, which is strictly cooperative or mutual in character, operated by farmers, the premiums and the losses paid by farmers on a voluntary basis. The solvency of the organizations is beyond dispute, and as President O'Neal indicated a while ago, running into millions and hundreds of millions of dollars of property covered. Still more recently than that, farm organizations have gone into life insurance and are not as far along in that experience as they are in fire, lightning, and tornado or automobile insurance, but they are enough into it, and the actuarial data is so well established in life insurance that nobody needs to experiment in that.

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So that the farm organizations are in the life-insurance field of activity now.

It looks reasonable for us to conclude that the next step in insurance might be crop insurance, and we are happy to know that we have some foundational data tracing back to 1923, and some of more intangible nature still prior to that year, which we can rely upon in order to build up the actuarial foundations upon which any insurance must stand.

So in a sort of an evolutionary, progressive way we get up to crop insurance now, and last November, on or about the 9th of that month, Secretary Wallace, as President O'Neal has already recalled, called 75 or 100 representatives of various farm groups here to Washington to consider crop insurance.

They discussed that in connection with other farm problems and adopted a resolution in favor of crop insurance, along with other farm activities. Then a month later than that, or thereabouts, the Amer, ican Farm Bureau Federation met in its eighteenth annual convention in Pasadena, Calif., and adopted this resolution, the effect of which when I read it will show that we are not overly enthusiastic about crop insurance, but we are friendly to it and are willing to enter into it, may 'I say, somewhat cautiously.

The resolution reads as follows:

Factual data thus far available does not seem to justify any definite statement of policy on crop insurance. Should such information become available and its studies seem to justify, the American Farm Bureau Federation should give its support, at least on a trial basis, for not more than one or two commodities, providing such a program calls only for the voluntary cooperation and participation of farmers producing such commodities.

The two particular points in that resolution are these:

That we are approaching the question consecutively and cautiously, and that the insurance should be on a voluntary basis, like all other insurance activities that farm organizations for the last 40 or more years have sponsored, he who wants to come in comes in on a voluntary basis; if he comes in, he pays the premium necessary to keep the organization going and to meet the losses as they develop.

Those are the two main ideas in this resolution.

Still later than last December, when the American Farm Bureau Federation made that statement which I have just read, the farm organizations again were called into Washington by Secretary Wallace on February 8 and 9, not specifically to consider crop insurance, as was the case last November, but to consider the entire farm program for this session of Congress under the general term or slogan, if I may so call it, of the “ever normal granary”, into which term or slogan many projects fit. At that meeting, after 2 days deliberation, where about the same number of farm representatives from about the same organizations came as in November last year, this resolution was adopted, which is a part of many others of the conference:

The principle of an actuarially sound crop-insurance program is endorsed.

Senator Pope. In making that endorsement you had in mind the combination of the ever normal granary idea and the insurance idea?

Mr. GRAY. I would judge so, yes.

Senator Pope. Do you think that the somewhat novel feature of including the ever-ready granary idea, the payment in kind in premiums and the payment of indemnities in a commodity, would add to the value of the measure?

Mr. GRAY. Yes, especially in the light of the fact that we are trying to integrate or correlate the various and sundry activities of the Federal Government which relate to agriculture into a composite program, and if we care to call that program at the present time the ever-normal granary, which may mean about the same as we used a few years ago, equality for agriculture, it is advisable to fit them all into one machinery as much as may be. If the farmer can pay his premium losses, his premium assessments I mean, in the commodity, then that commodity will be put into storage, and as Senator McGill was suggesting awhile ago, if the premiums paid in the commodity get too terrifically large held in storage, they might have a bearish influence on the market, but our thought is to integrate crop insurance as much as may be with these other activities, one of which is the Commodity Credit Corporation.

Another one is a Surplus Commodity Corporation, and there are other corporations that are doing certain purchasing and selling and disposing business for agricultural commodities, so that if and when these commodities in storage, as wheat and cotton, say, gets to be too large we will have other instrumentalities of the Federal Government presently existing under Federal law or by Executive order to act as selling and disposing agencies.

It is not our thought that the crop-insurance activity itself will be a purchasing or a selling agency, but we have other instrumentalities of Government with which the corporation provided in Senator Pope's bill can easily enter into an agreement to do the thing of getting rid of the crop that is in storage as much as the market demands here and abroad will permit; and if unfortunately we have to continue on the part of the Federal Government rather fortuitously giving these crops away for relief, then the Surplus Commodities Corporation will have a better chance to dispose of the storage commodities, those paid in premiums and otherwise, than normally might be the case.

I will confess that if these premium payments go along in commodities too long and they pile up and accumulate from year to year, and if relief should stop, which we hope it will soon, or eventually, and the Government would not have that avenue of getting rid of the surplus commodities which it has enjoyed for the last few years, then either this insurance corporation would be compelled to dispose of the premiums stored in undue quantity or make a contract with some of these other governmental corporations to do that thing.

Senator McGill. Then the terms of the bill would have to be changed slightly in order to make that possible?

Mr. GRAY. Perhaps so. The bill is not perfect and we do not care to go on record for the bill exactly in its present text. The idea of crop insurance, though, and entering into it in a cautious way, we approve of.

Senator POPE. Now, the enactment of such a law as this, in your opinion, would tend to help with other programs of benefit to the farmer?

Mr. GRAY. That is our thought, and would fit into it. It would integrate with, it would correlate with, unless we are greatly mistaken, some of these other activities which the Government has been exercising in behalf of agriculture.

Senator McGill. Do you also think a control program is necessary in order to go along with this sort of a crop-insurance program?

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