time had cost the farmer to bring the crop down to that period of annual production, but frankly the cost of production data has not developed in the last 10 years as it was hoped 10 years ago. This condition may make it necessary for us to hesitate from the earlier point of view and more definitely take the point of view of Senator Pope's bill that the insurance shall be on the yield.

Senator POPE. That may be true with reference to strawberries or any other crops which require continuous labor up to maturity. Your idea might more equitably apply to strawberries than to wheat. If the flood comes along when the wheat is half grown and destroys the entire crop it might be entirely equitable for him to have his average production yield.

It doesn't require any more actual labor and you do not have to employ labor to carry on the work and mature the crop. The wheat after being planted will mature itself.

Mr. GRAY. I think those remarks are very helpful to the discussion. Reading on again:

The plan must include damage to crops from weather conditions such as hail, drought, flood, heat, insect, rodent, and predatory damages, also blight and diseases.

So often people think of crop insurance as being only insurance against drought and weather conditions such as hail, drought, and floods, but we in the Farm Bureau have not limited our point of view, and stood on such narrow ground as that. The items that have been indicated in the last extract I read, the damages that might occur, and the sources from which the damage may come are covered in the bill except as to rodents and predatory animals.

Senator FRAZIER. It says "and such other causes as may be determinted by the board."

Senator MCGILL. What page are you reading from, Senator?
Senator FRAZIER. The top of page 7.

Senator MCGILL. May I ask a question with reference to that?
Senator POPE. Yes, sir.

Senator MCGILL. Ought we specify with reference to such other causes as may be determined by the board the construction of that last phrase would be that such other causes would be of like character to those specifically set out in the language of the bill?

Senator POPE. Yes; I think that would be the interpretation.
Senator MCGILL. Could not be just anything.

Senator POPE. I think that would be the interpretation, but we use the broader clause "such other causes as may be determined by the board" to include damage by rodents and even damage by animals getting into the crop under certain conditions where there would be no element of negligence on the part of the farmer. I suppose you could say damage by rodents, by forest fires, and damage by lightning would be similar to these other cases, but we were not quite sure they would be similar and thought under such circumstances the board might determine there would be protection.

Senator MCGILL. That might be possible, but I believe the courts will put a construction on that language to apply the rule it means cases of like character.

Mr. GRAY. I may say this, if I may interrupt, if I have a neighbor next to my Missouri farm and am insured under this plan, and that neighbor's cattle breaks through a fence of mine which is in bad con

dition and that I have not properly cared for, or his fence that he has not properly cared for, in that case this insurance should not apply because we have State laws to take care of cases of that kind.

That is not an insurable damage in the sense this bill is contemplating, but if the animal you speak of should be a wild animal, a deer or bear, or if there should be rodents, such as are in different sections of the country, it would be assumed from the language of your bill that such losses should be paid.

Senator MCGILL. I doubt this.

Mr. GRAY. If you doubt it I would suggest the language be made clear.

Senator POPE. In our discussions I may say these very illustrations you used of animals, of forest fires, of lightning and so forth, were all discussed and it was thought that the board should have some discretion to determine which of those causes might be properly included in the policy, and that regulations could be made and the policy could be so drawn as to cover those points where there ought to be insurance. As you have mentioned, they may be some question whether there ought to be insurance in the case where the neighbor's animals do damage. There may be an action for damages against him. There may be hazards that might or might not be properly insured against so we left the matter to the board.

Senator MCGILL. Do you think, seriously, with that general language following the character or classes you designate, that a fire could be included in the policy?

Senator POPE. I think so.
Senator FRAZIER. What?

Senator MCGILL. Fire.

Senator FRAZIER. Lightning does not damage corn crops.

Senator POPE. Well, it does damage wheat in some sections.

Senator MCGILL. Well, a forest fire, and I suppose there are regions where wheat is grown in the State of Washington that might be damaged by forest fires. I don't see how you can include that in this language.

Senator POPE. Well, I think you can. In the language describing these causes you will notice, after naming specifically drought, flood, hail, wind, tornado, insect infestation, plant disease, it covers such other causes as may be determined by the board. That would include lightning. It would include even forest fires if in the discretion of the board it should be included.

Senator MCGILL. I think it might include lightning due to the fact you have wind and tornado, indicating storms, but in other cases I think the court is bound to apply the rule that those causes must be of like character to the ones designated in the act. They cannot cover any other field.

Senator FRAZIER. This says and such other causes as may be determined by the board.

Mr. GRAY. I think you are right.

Senator MCGILL. I know that, but they will apply a rule to the construction of the language in the law that those determinations of the board must be of similar character to the ones specified in the act where you set out certain things for which insurance is provided and you have a general clause following that which must relate back to the ones specifically set out.

Senator POPE. Mr. Shields, in your examination of the legal aspects of this matter, would you say it might be well to change the language. Come over here where the reporter can hear you better.

What would be your conclusion on that point?

Mr. SHIELDS. I think the legal principle involved in the consideration of that language is as stated by the Senator, but I would call attention to the fact that the sentence to which you have been referring is followed by another sentence which says that

Such insurance shall not cover losses due to the neglect or malfeasance of the producer.

Reading those two sentences together, I think it gives you a better construction than merely reading the first sentence. Reading both sentences together indicates that the insurance is to be against hazards and risks of the kinds specifically designated and others like those. On the other hand, you couldn't go so far as to insure against things which are the result of the neglect and malfeasance of the producer.

Senator MCGILL (interposing). Well, now, that second sentence merely provides that if those losses due to the things specified is caused by neglect or malfeasance of the producer, he cannot recover. That is all that does.

Mr. SHIELDS. Yes.

Senator MCGILL. And therefore I cannot see how it changes the general rule of construction.

Mr. SHIELDS. Well, I think this might be an example. Take insect infestation.

Senator MCGILL. Yes; he could not go out and put grasshopper eggs in a wheat field and recover.

Mr. SHIELDS. In one sense insect infestation might occur despite what anyone would do, and on the other hand as you pointed out a farmer might deliberately cause it.

Senator MCGILL. I do not want to be too precise, but I am fearful you can not change that construction.

Senator POPE. The interpretation of Senator McGill is "such other causes as may be determined by the board" is the same as if the word "similar" was actually written into that clause.

Would that be your interpretation that the other causes must be similar to insect infestation, drought, hail, wind, flood or drought, and so forth?

Mr. SHIELDS. I think that is substantially correct.

Senator POPE. Then you could not include damage by rodents and ground squirrels, in your opinion?

Mr. SHIELDS. I do not think it is a legal question, but to my mind. rodent infestation would be of the same nature as insect infestation. Senator McGILL. There would be some similarity, but 1 would think in order to be sure, Senator, if you would wish to cover that, you ought to just say it in the bill.

Mr. SHIELDS. I think it would be desirable to state as many specific things as you want to cover.

Senator MCGILL. It might be very questionable.

Senator POPE. At one time we had in the bill animal infestation and then we got into the difficulty of determining what we meant by animals. Animals might mean ground squirrels, might be cattle or horses or any other kind of animals, so in the final draft we left that out.

Mr. SHIELDS. We took that out, Senator, as I recall it, because our experts said there was no such

Senator MCGILL (interposing). A rodent, would that word include squirrels, ground squirrels, and moles?

Senator FRAZIER. And mice?

Senator MCGILL. And mice, and all that?

Senator POPE. I think that is true. I found no objection myself to including that.

Senator MCGILL. The insect is hardly a rodent.

Mr. GRAY. May I observe right here, Mr. Chairman, when these suggestions of the American Farm Bureau Federation were made they were not in the form that I am presenting. The thought then was that crop insurance would not start on a single crop, but on a number of crops, so our explanation of what damages might result from was not confined to wheat alone. We had in mind orchards and other crops which become susceptible to damage by reason of the fact that rodents cut off the roots.

I don't know what the possibilities are for the rodent damage to the crop we are now thinking about, wheat. It may be negligible for that crop, but if we revert to the original idea the Farm Bureau first started with, of including all crops, then undoubtedly rodents and predatory animals should come into that picture.

I am perfectly willing to leave this up to you gentlemen in the western areas as to how much possible damage there might be from rodents and predators to wheat. We may not be able to confine this to wheat because we are running against a legislative situation, as has already been pointed out by Senator McGill.

Senator MCGILL. We met that situation once before since I have been here. We started with a bill to make it applicable to wheat or cotton, but you cannot tell what one House or the other may do to a bill.

Senator POPE. I am in favor of including damage by rodents, but I had thought under this general provision we have referred to that the board would have the right to include that because it is similar enough to insect infestation.

If there is any doubt, I would like to have it included. You might have damage below 75 percent caused by a drought and other causes that would bring the total below the coverage. I think that ought to be included.

Senator FRAZIER. Sometimes rodents do a great deal of damage to wheat crops, and I have seen fields ruined by wild ducks.

Senator MCGILL. That has not happened in my State. You must have all the ducks.

Senator POPE. When the subcommittee considers the matter of amendments, that can be discussed. I think there is no difference in opinion.

Mr. GRAY (reading on):

The plan must be on a mutual cooperative basis with financial structure, credits, and so forth, under the control of the assured.

We have a quarrel, may I so state it, with the Farm Credit Administration, and prior to that with the old Federal Farm Loan Board, which extends through 15 years, because the supposed cooperative aspect of the Farm Loan Agency, and more recently in the Credit Association, are not allowed to function. That is, the farmer bor

rower theoretically controls the mechanism when as a matter of fact he has very little control. So when the Farm Bureau began studies of crop insurance, realizing the Federal Government would have some hand in it, we included a very significant statement that it must be on a mutual or cooperative basis, must be on a voluntary basis and as much as possible be under the control of those who are insured.

Now, there is a section in your bill, Senator Pope, that touches upon that somewhat indirectly. It recommends associations of producers and committees to be appointed, which, as under triple A and under the Soil Conservation Act, in theory tells the farmers they are recommending and somewhat dictating or directing the administration of these laws. But I would suggest, to carry this thought further that either in the section to which I am referring or in another section more definite recognition and more definite integration be given to the Capper-Volstead type of organization.

There are few producers better organized than the wheat group. It has a national organization, and in many States there are State cooperatives of one name or another. It seems to us, the cooperative principle must be more definitely recognized than contemplated in your bill. And, may I say in that regard, that efforts are being put forth now, and in the past months, to write drafts of legislation which will carry out the purposes of the conference of February 8 and 9, and all farmer organizations have agreed that Capper-Volstead cooperatives should fit into the legislation being drafted not merely as associations of producers, but that the cooperative principle be definitely recognized in administering the laws.

We have committees of associations under the triple A and under the Soil Act. They are partly, but not wholly, successful because they are Government set-ups and Government appointments. We want the cooperative recognized in this picture as they are recognized in the other fields of insurance, namely, automobile, life, fire, and lightning, and I will make the suggestion that you have your draftsmen put some language in the measure so that the great grain cooperatives will be in the plan of crop insurance and can speak for their members, and will have an important role to perform in the administration of this form of crop insurance.

"The plan should include original capital from the Federal Government, something like the land bank secured, such capital to be amortized in due time," says the Farm Bureau letter from which extracts are being presented.

It will be remembered when the original Farm Loan Act was passed, $10,000,000 were provided and many millions of dollars have been provided since. So we say in crop insurance the original capital should be appropriated by the Federal Government, which under the bill as drawn is $100,000,000. We further say that capital should be amortized in due time.

I don't know whether amortization is necessary or not. That seems to be the thought evolved in Farm Bureau studies; but it might be well instead of paying back to the Federal Treasury to consider a revolving fund, permanently to be used year after year. The thought in this would be to avoid the necessity of going back to the Federal Government repeatedly for additional capital stock. Senator POPE. That was our thought, too, in connection with the appropriation for a hundred million dollars for capital stock that it