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is the one that cannot get it. If I live probably pretty well up on a plateau, where there is no chance of floods, I could probably get insurance, and even though the insurance companies did not write it, I would make a deal with them to get coverage. The practical problem

a involved here has been given a lot of study in the past. That does not mean, however, that we cannot come up with something now. The very fact that there are losses makes it incumbent upon all of us to find a practical answer. What that practical answer is, I don't know, and I think it is going to take a lot of study.

Senator LEHMAN. Have you any idea how long these studies by the executive agencies, if undertaken, will take?

Mr. WILLIAMS. No; excepting to report that my understanding is that the administration hopes and expects to have some proposals, tangible proposals, by the time Congress convenes. I know nothing more than that. I suppose perhaps another way of saying that is that continuing studies are being made at the present time in the hope that they can resolve those studies into tangible legislative proposals.

Senator LEHMAN. I wonder what the President meant when he said he would have his recommendations and suggestions in the hands of the committee when the hearings were undertaken.

Mr. WILLIAMS. I cannot answer that, because I have no other information on the subject than appears in the letter.

Senator LEHMAN. I read that.
Mr. WILLIAMS. Yes. Well, I have seen a copy of it.

Senator LEHMAN. Mr. Secretary, may I ask if that would be a fair statement of the administration's position? In other words, as I analyze it, it means that the administration is for something, but it does not know what.

Mr. WILLIAMS. Well, I would say it was a fair expression of the view of the Department of Commerce, as one branch of the administration. We do not pretend to have all the answers. The parts of the program that relate to this whole flood matter are pretty numerous. And the Department of Commerce only played a certain part in the solving of those problems. So in the matter of insurance, we have our views, but we do not pretend to have all the information that bears on the answers, and certainly we do not have all the answers.

Senator LEHMAN. Mr. Secretary, the members of the committee staff have just drawn my attention to the fact that they have had very, very valuable assistance from Dr. Landsberg of your Department. We are very grateful. We hope it will continue.

Mr. WILLIAMS. He is in the room, if there should be any questions you have to ask.

Senator LEHMAN. Will Dr. Landsberg stand up, please? I would like to thank him.

Thank you very much. .

I think that we will recess now. I wish to anonunce that tomorrow the first witness will be Senator Payne, of Maine, who will testify very briefly, and then we will hear from the Small Business Administration, the Department of Agriculture, and the Department of the Interior.

(The following was subsequently received from the Department of Commerce :)

THE SECRETARY OF COMMERCE,

Washington, December 14, 1955. Hon. HERBERT H. LEHMAN,

United States Senate, Washington, D.C. DEAR SENATOR LEHMAN: In connection with the hearings relating to general disasters by the Committee on Banking and Currency for the Senate, we would like to take this opportunity to acquaint the members of the committee with the actions taken by the Department of Commerce to assist areas of the Northeast which were recently victims of the flood disasters caused by hurricanes Connie, Diane, and Ione, and the flood of October 13, 1955.

The Bureau of Public Roads, in coordination with the Federal Civil Defense Administration, worked with the State highway departments in restoring roads on the Federal-aid systems with emergency funds provided under the Federal-Aid Highway Act of 1952. The Bureau also furnished staff engineers to the Federal Civil Defense Administration in their construction work with the United States Army engineers on highways off the Federal-aid systems, and in the repair of other public works damage. Federal funds to the extent of approximately $10 million were granted for assistance in the reconstruction of Federal-aid highways. The total damage to these highways was estimated at approximately $35 million, and legislation authorizing funds to meet the Federal share of 50 percent of these amounts will be requested.

The Maritime Administration came to the help of the citizens of this area by loaning gasoline fire pumps and by making available to the Red Cross thousands of blankets, sheets, and pillowcases.

The Business and Defense Services Administration established a relief mission to help in the assessment of damage, to expedite procurement, advise the businessmen of the criteria necessary to qualify for tax amortization certificates, and how such certificates are obtained.

The Weather Bureau is constantly working to improve its forecast accuracy and also to improve the dissemination of weather data and forecasts. Plans are being laid for an extensive new center in Hartford to give additional service to New York and New England. New river and rainfall reporting stations are being established and new specifically designed electronic equipment is being added for this purpose.

We thought also that the members of the committee might be interested in a private system of flood control put into effect many years ago by the Wisconsin River Valley Corp., which has recently been brought to our attention. This project covers 465 miles on the Wisconsin River and tributaries and includes dams, reservoirs, and reforestation. In addition to providing a more nearly uniform flow in the waters of the Wisconsin River Basin and improving navigation, the project diminishes damage by floods and freshets to property, both public and private, along said waters. Companies generating electricity and other industries benefiting from the uniform flow of water, such as paper mills, support the corporation.

We trust the above information will be of interest to the committee in its consideration of the general disaster problem. Sincerely yours,

SINCLAIR WEEKS,

Secretary of Commerce. (Whereupon, at 4:45 p. m., the committee was recessed until 10 a. m., Tuesday, November 1, 1955.)

FEDERAL DISASTER INSURANCE

TUESDAY, NOVEMBER 1, 1955

UNITED STATES SENATE,
COMMITTEE ON BANKING AND CURRENCY,

Washington, D.O. The committee met, pursuant to recess, in room 301, Senate Office Building, at 10:05 a. m., Senator Herbert H. Lehman, presiding.

Present: Senators Lehman, Bush, and Payne.

Senator LEHMAN. This hearing, which is the second that we have held in Washington, will now come to order.

The witnesses this morning--and I will ask them to testify in the order which I name—are the Honorable Frederick G. Payne, Senator from Maine, who is also a member of the Banking and Currency Committee; Mr. Wendell B. Barnes, representing the Small Business Administration; Mr. Kenneth L. Scott, Director of Agricultural Credit Services, representing the Department of Agriculture; and Mr. Lawrence N. Stevens, representing the Department of Interior. Senator, will you take the witness stand? Senator PAYNE. Thank you.

STATEMENT OF FREDERICK G. PAYNE, A UNITED STATES

SENATOR FROM THE STATE OF MAINE

a

Senator PAYNE. Mr. Chairman, Senator Bush, my statement will be reasonably brief, sir.

Of course, as you know, I am tremendously interested in this problem because of my work on this committee and because of the fact that I do come from New England where we have just had a terrific situation as a result of the hurricanes.

During the past several months, the Northeastern States have experienced some of the worst disasters in their history. The recent floods have taken a heavy toll and have called attention to the need for a program of insurance to minimize such loss and to enable flood victims to rebuild their homes, factories, and businesses as rapidly as possible.

While it is true that certain areas of the Nation are much more vulnerable to flood damage than others, such disasters should be a matter for deep concern by all Americans. Not only do Americans have it humanitarian concern for the suffering of their fellow citizens, but the heavy economic damage caused by floods has serious effects on all sectors of the national economy. It is, therefore, proper and, indeed, essential that the Federal Government should in some way lend a hand to alleviate flood distress.

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This is particularly true in view of the fact that private insurance companies are simply unable to provide adequate protection. It has been estimated that only 5 to 10 percent of the loss caused by the most recent floods was covered by insurance. Flood insurance is almost unobtainable in the United States today and, where it is available, the expense is practically prohibitive.

This is not hard to understand, since flood damage often runs into many millions of dollars, and insurance companies have rightfully felt that they are unable to provide coverage at rates which are both reasonable and adequate. In addition, only those who live in areas susceptible to floods would buy such insurance, thus making it impossible to spread the cost over the entire population.

A program of Federal insurance is not a new subject for congressional action. There is already in operation, for example, a program to insure certain agricultural crops under the Federal Crop Insurance Corporation of the Department of Agriculture. The experience of these and other Federal insurance programs should be helpful in trying to develop a nationwide flood-insurance program.

It would be impossible for me to attempt to set down for the committee a precise plan for Federal flood insurance at this time. This is a highly complex subject and will require a great deal of study by the Banking and Currency Committee before any final draft can be submitted to the Senate itself for consideration.

However, I would like to point out what I consider to be a generally sound approach to this problem.

I am a cosponsor of a flood-insurance bill which Senator Leverett Saltonstall and Senator John Kennedy intend to introduce in January. This bill is now before the committee for study. Under the proposed bill, the program would be federally sponsored, but the Federal Government would cooperate with private insurance companies by drawing upon their facilities and services. It is contemplated under the bill that the program initially would be on an experimental basis in order to make possible a sound expansion of flood-insurance coverage at a later time.

Other proposals will undoubtedly come before the committee, and all should receive careful consideration in order to develop the soundest program possible. The important thing is that the job be done so as to effectively spread the risk of future losses, soften the destructive blows such disasters bring, and provide for earlier rehabilitation of flood areas.

I should like to bring two editorials on the subject of flood insurance to the attention of the committee and request they be printed in the record at the conclusion of my remarks.

Senator LEHMAN. There being no objection, so ordered.

Senator PAYNE. The first editorial is from the Portland (Maine) Press Herald of October 26, 1955, and is entitled "Congress Should Create Federal Flood Insurance."!

The second editorial is from the New York Times of October 26, 1955, and is entitled “Controlling the Floods."

Both editorials set forth arguments in favor of a Federal floodinsurance program which I believe the committee will find of interest.

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