Mr. BARNES. I have available information on the experience of the Government in the war-damage insurance program. It was mentioned yesterday in the hearing, and if the committee wishes to go into it, I can do so.

Senator LEHMAN. Is that covered by this statement?

Mr. BARNES. No, sir. It is not in my statement.

Senator LEHMAN. The chart has been put in the record.

Mr. BARNES. Yes, sir.

Senator LEHMAN. Well, other testimony has been given and will be given on war-risk insurance.

Mr. BARNES. All right, sir.

Senator LEHMAN. We have a number of other witnesses. I just want to ask two questions: You referred to 1,300 applications granted? Mr. BARNES. Yes, sir.

Senator LEHMAN. Can you tell us how many were for business and in what amount and how many were for homes and in what amount? Mr. BARNES. I can't tell you in terms of the ones that have been granted. I can tell you in terms of the applications that were filed. I just don't have the information.

Senator LEHMAN. Well, what we want to get at is the number granted of that 1,300.

Mr. BARNES. This sheet shows the total of the applications broken down in homes and businesses and showing the 342 homes and 1,282 businesses; the figures do not jibe, because this is dealt with by mail and is our official figure. The other was assembled by wire.

Senator LEHMAN. Well, I can understand you have not got those figures at the moment.

Mr. BARNES. Yes.

Senator LEHMAN. Will you have them prepared?

Mr. BARNES. Yes. You wish it as to the loans actually granted? Senator LEHMAN. Yes. I will repeat my question: Of the 1,300 applications granted, how many were for business, and in what amount; and how many were for homes, and in what amount? Mr. BARNES. We will furnish that information.

Senator LEHMAN. Thank you very much. Just one other question: I noticed on one of your tables that 152 loans were declined or rejected. Mr. BARNES. Yes, sir.

Senator LEHMAN. Can you give us some reason why they were declined and tell us how these applicants will recover economically from the disaster?

Mr. BARNES. Well, there are a variety of reasons, as you might judge. I can think of 1 or 2 examples. In one the applicant had a bowling alley, and it had been flooded, and he estimated the damage to the bowling alley was some $7,500-$7,000 or $8,000 it would cost to refinish it and put it back in operation, and he applied for a loan of that amount.

In our investigations it was learned that he had another piece of property in that part of the city which had just been condemned by the city for highway purposes. He had been awarded some $75,000 for this piece of property that was condemned, and he would receive the funds in the matter of 2 or 3 weeks.

We felt that, under those circumstances, Government funds shouldn't be advanced since banks in the community indicated their willingness to give him a temporary loan until he had his own funds.

That is one type of case. Another type might be where there is no possibility whatsoever shown by the applicant to repay the loan; there were no earnings whatsoever from which a loan could be repaid.

Those are the pitiable cases, of course, and in many cases that happens to the agent and in those cases we refer the victim to the Red Cross and they consider that a proper case for them to take action. It is that type of cases that involve declines. Senator LEHMAN. Are there any questions?

Senator BUSH. Mr. Chairman, I just want to make one comment because I think Mr. Barnes and his agency has rendered a great service to our State and the other areas. I am familiar directly with Connecticut, but I know that the people of our State and the officials, including our Governor and all of us who have been close to the situation, are deeply grateful to Mr. Barnes and the Small Business Administration. They acted very promptly. Mr. Barnes came up there in the very first week of the disaster, personally. They opened regional offices so as to go right to the place where the disasters were and facilitate the receiving of applications. They rallied the support, the advice, and counsel of local commmittees which were generous in supplying that support and cooperated fully with the local governments and in every way, I believe, got the most out of the legislation providing for disaster relief in the SBA.

So that I think on the whole that the record has been very creditable. I want to say that our people in our State very, very much appreciate what you personally and what your whole organization have done.

Senator LEHMAN. I am sure that Mr. Barnes has conducted himself and the work of his organization with efficiency and with great sympathy. Mr. Barnes obviously can't write the laws of the United States.

Senator BUSH. No.

Senataor LEHMAN. He can't go beyond the powers that are given to him by the legislature.

Senator BUSH. I say he has gotten the most out of the legislation. Senator LEHMAN. I think that he has.

Mr. BARNES. I did have one comment to make, Mr. Chairman, relative to the type of losses that might well be considered in any legislation that is developed by the committee.

This is not an Administration position but is my personal observation on the nature of the losses, that is, that there is something more involved than buildings and inventories as was discussed in the criteria. It has been our experience that most of the small merchants that have suffered loss-and, of course, that was certainly true in all these cities in Connecticut-many of them are in rental property and the loss to them, of course, is their inventory, but moreover they own their fixtures or if they are small manufacturing plants they own their equipment; and a large part, I would say a substantial part, of the loans that we have made have been to authorize either the cleaning and repair of equipment in the case of manufacturers or the complete repurchase of fixtures, and in an insurance plan I think that if those items are not included that there will be a serious gap in the actual losses based on our experience.

Senator LEHMAN. Thank you very much.

If there is no objection, I would like to have placed in the record a table here prepared by the Small Business Administration on

October 31, 1955, showing the types and number of disaster declarations made by the Administration in the past 2 years. I wish to draw attention to the fact that of the 45, 18 were floods.

Senator BUSH. Mr. Chairman, there is one more paper here I would like to submit for the record which is a statistical report of the SPA disaster field offices accumulated as of October 27.

The significance of this report, particularly, is to show the very high percentage of approvals made on these disaster loans and what a small percentage of declinations.

For instance, in the city of Waterbury, there were 280 applications filed as of this date and 166 had been approved but only 5 had been declined. The others presumably were in process and action will be taken on them. But the ratio of 166 approved to 5 declinations shows the extent to which the SBA was recognizing the needs of that community.

Incidentally, I would like also to mention that in Torrington there were 67 approved and only 4 declined. In Hartford, there were 86 approved and only 8 declined; in Winsted, 95 approved and only 3 declined; and in Ansonia 75 approved and only 4 declined.

Senator LEHMAN. There being no objection, it will be placed in the record.

(The table referred to follows:)

SMALL BUSINESS ADMINISTRATION

Statistical report of Small Business Administration disaster field offices, cumulative as of Oct. 27, 1955

Senator LEHMAN. Mr. Wallace, do you have any questions?

Mr. WALLACE. Yes.

Mr. Barnes, on page 5 you referred to the fact that at the last session of the Congress authority was given to you to include droughts in your disaster loans.

Mr. BARNES. Yes.

Mr. WALLACE. Would you furnish for the committee a statement showing what has been done under this authorization up to date? (The information referred to follows:)

SMALL BUSINESS ADMINISTRATION,

Hon. J. W. FULBRIGHT,

OFFICE OF THE ADMINISTRATOR, Washington 25, D. C., December 28, 1955.

Chairman, Committee on Banking and Currency,

United States Senate, Washington 25, D. C.

DEAR SENATOR FULBRIGHT: In connection with my appearance before your committee on November 1, 1955, I submit the following information on our drought disaster loan program in addition to the information sent to your committee on November 29, 1955, and December 22, 1955.

As of November 1, 1955, the Department of Agriculture had designated 1,323 counties in 20 States as drought areas. Although the Small Business Administration has publicized its authority to make disaster loans to firms or individuals adversely affected by droughts, nevertheless, to date, this agency has received only 34 of such applications from these drought disaster areas. One loan has been authorized; the other applications are being processed.

The Revised Loan Policy Statement, issued by the Loan Policy Board, to be effective December 31, 1955, includes drought disasters with other types of disasters previously named in the Loan Policy Statement and they are handled in a similar manner.

If any further information is desired, please do not hesitate to call on us. Sincerely yours,

Mr. BARNES. Yes, sir.

Mr. WALLACE. Thank you.

(Signed) WENDELL B. BARNES, Administrator.

Mr. BARNES. I confined my remarks to what we have done in the loan program, and I do think before I close I should mention that we took a very active part through our other programs in working to bring Government contracts in the area. We listed all the manufacturers in all of these States and furnished their names to the various Government procuring agencies. We likewise looked up procurement that would be available and furnished it to the manufacturers who thought that they could alleviate unemployment by providing for contracts to be available. In particular GSA, Defense Department, and many others as your testimony showed yesterday, put contracts in the area.

As to the general aspects of flood insurance, I earlier outlined some of the difficulties in establishing rates due to the fact that there are areas that would be the most subject to flood that would carry the highest rates if it is computed on an actuarial basis. So I think there has been some merit in the private companies being unable to write the insurance.

We have kept in touch with the overall information available on the subject as in many of the RFC programs we have in our agency. It has been a pleasure to appear before you this morning.

Senator LEHMAN. Thank you very much.

The next witness is Mr. Kenneth L. Scott, the Department of Agriculture.

I see you have a statement. Do you wish to read that or proceed orally?

STATEMENT OF KENNETH L. SCOTT, DIRECTOR, AGRICULTURAL CREDIT SERVICES, ACCOMPANIED BY CARL FRETTS, DEPUTY MANAGER, FEDERAL CROP INSURANCE CORPORATION, DEPARTMENT OF AGRICULTURE

Mr. Scort. If it is satisfactory to you, Mr. Chairman, I would like to read it. It is rather short.

Senator LEHMAN. That is entirely satisfactory.

Mr. SCOTT. My name is Kenneth L. Scott, and I am Director of the Agricultural Credit Service, Mr. Chairman. The Secretary has also given me some responsibility of a coordinating nature in connection with our various aid programs in disaster areas.

We hope this brief report, Mr. Chairman and members of the committee, which will be confined to the things that we have done in the