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this agency to be competitive with other lenders but to have a supplemental service.
We felt that it was in the interests of avoiding this competitive situation and avoiding some confusion and getting these rates in line with 2 actions which the Congress had previously taken in establishing 5 percent.
As was stated during those hearings, we very frankly say and regretfully so, that it was a serious oversight in not publicizing this action. It was published in the Federal Register, and of course, it was made known throughout the system, but it was not publicized in the way of press release that it should have been. In the course of those hearings, we did not resist the action to put this rate back down to 3 percent but presented the factual evidence of what was happening and, of course, put the rate back 3 percent everywhere in line with the action of the Congress.
We felt it was a matter that Congress should act on, but we did certainly err in not publicizing it.
Senator LEHMAN. Thank you very much for a very clear and frank statement.
Mr. FRETTS. Could I add one further thought which I think has some significance, particularly with respect to these 14 counties that I referred to.
I think I should complete the story by telling you that our Board of Directors considered that problem very, very carefully just about a year ago, and as a result of this our continued unfavorable experience in those 14 counties, the decision was reached that the program be withdrawn from those 14 counties and beginning with the 1956 crop year we will not have a program in those counties.
Senator Bush. What is the principal crop there?
But I just wanted to point that out to make it clear that insurance is not always the answer.
Senator LEHMAN. But instead of the insurance, you will have the assistance program, is that not a fact?
Mr. FRETTS. Other programs will be available, but not crop insurance in those counties.
Now, the rates in those counties got up as high as 40 percent of the coverage, and when you get up in an area where you have a rate that high, it is just too high to operate an insurance program.
Mr. WALLACE. Mr. Chairman, could I clear up one thing: On page 2 you were talking about the furnishing of food in the case of disasters and stated that this was generally done through the Red Cross or the Salvation Army. What sort of food did you furnish! Did it come strictly from surplus commodities or was it all sorts of food ?
Mr. SCOTT. That was strictly our surplus food commodities. It was dry beans and rice and dried milk and butter and lard, as I remember, and cheese. It was surplus, the food commodities owned by the Commodity Credit Corporation in surplus.
Mr. WALLACE. You do have authority, do you not, to do a certain amount of processing of some of the foods to make them available?
For example, flour instead of wheat?
Mr. WALLACE. I was wondering in this case whether you furnished flour or whether you went a step further in the processing and furnished bread or if you furnished anything of a wheat product.
Mr. SCOTT. I have with me Mr. Hutchins who is with that program. May I ask him?
Mr. WALLACE. I would be interested, for the record, if you have a statement or something which gives us information. I would be perfectly happy to have it filed with further hearings.
Mr. Scotr. We will be very glad to do that, and you want particularly to know about things other than these surplus commodities?
Mr. WALLACE. I think it would be well for the record-how much you furnished and what and to what degree it was processed, and so forth.
Mr. Scott. All right. We would be very glad to do that.
(The information referred to follows:) SUPPLEMENTAL STATEMENT OF KENNETH L. Scott, DIRECTOR, AGRICULTURAL CREDIT
SERVICES, CONCERNING THE AVAILABILITY OF SURPLUS FOODS FOR EMERGENCY DISTRIBUTION IN MAJOR DISASTER AREAS
This supplemental statement is to provide the requested additional information concerning food-distribution programs for victims in major disaster areas as provided by the Agricultural Marketing Service of the Department of Agriculture.
Food is normally distributed by the Department to the Bureau of Indian Affairs and to State, Federal, or private agencies for use in the United States in nonprofit school-lunch programs, in the assistance of needy persons, and in charitable institutions, including hospitals, to the extent that needy persons are served. Food is also distributed in times of emergency in areas designated as "major disaster" areas by the President under Public Law 875, 81st Congress. These food-distribution programs are a part of the standard operating proces dure of the Department; they are self-starting at the point of emergency, and have been in effect for some time. The Department of Agriculture has a contractual arrangement, with one or more State-designated distributing agencies in each State in the country, which makes provision for the State to assume the responsibility for the within-the-State distribution of Department-donated commodities. During the course of the year, the Department donates such commodities as are available, resulting from its price-support or surplus-removal programs, for subsequent utilization by the State-designated agencies necessary to alleviate hardship or suffering caused by the major disaster.
In practically every instance when a disaster strikes an area, there are inventories of these surplus foods at various locations in the State. Distributing agencies are authorized to utilize such commodities as may be necessary, either in mass feeding programs or for issuance to individual families affected by such a disaster.
As pointed out in my original prepared statement on the 1st of November 1965 before this committee, food was furnished to individual recipients and for mass-feeding programs in the disaster areas damaged by the August and October floods to an estimated number of persons in the following areas: Connecticut, 7,400 persons; Massachusetts, 3,000 persons; Rhode Island, 2,700 persons; Penn. sylvania, 36,000 persons; and North Carolina, 2,800 families. Many mass-feeding programs are established in public-school buildings by making use of the school cafeteria and Department-donated commodities are drawn from school-lunch inventories. In other instances, inventories of Department-donated commodities at institutions are turned over to the Red Cross, the Salvation Army, Civil Defense, and other welfare agencies for mass-feeding programs, and for distribution to individual and family recipients. Subsequently, these inventories are restocked by the Department of Agriculture in the normal pattern of distribution.
Commodities which have generally been available, during the past year, for such assistance, include butter, cheese, nonfat dry milk solids, cottonseed oil, shortening, rice, and dried beans. Many areas have been assisted through the donation of Department commodities for the feeding of disaster victims. Some of these were the tornado at Udall, Kans.; floods in Oklahoma; hurricanes or the result thereof in the New England States, New York, Pennsylvania, Rhode
Island, North Carolina, and Texas. Also, through special arrangements, an airlift was made of commodities for hurricane victims in Tampico and Yucatan, Mexico, and in Haiti.
Under Public Law 480, 83d Congress, the Department of Agriculture was authorized to perform the necessary reprocessing and packaging of commodities in Commodity Credit Corporation inventories for distribution to needy persons. To the extent that such reprocessing or packaging is necessary, it has been accomplished.
Public Law 311, 84th Congress, authorized the processing of wheat and corn into flour and cornmeal in consumer-type packages. This processing is now a part of the normal operating procedure of the Department, and approximately 17,216,800 pounds of flour and 10,783,000 pounds of corn meal have been distributed to date in 34 States now participating in this program. These two commodities, as in the case of uther commodities distributed by the Department of Agriculture, are used for disaster-relief feeding.
Senator LEHMAN. Senator Bush?
The last witness today is Mr. Lawrence N. Stevens of the Department of the Interior.
I know it is rather late, but I would like to complete this hearing this morning.
STATEMENT OF LAWRENCE N. STEVENS, DEPARTMENT OF THE
Mr. STEVENS. It will be very brief, Mr. Chairman.
Mr. Chairman, Senator Bush, my name is Lawrence N. Stevens. I am a member of the technical review staff in the Office of the Secretary in the Department of the Interior.
The Department of the Interior is primarily concerned with the conservation and sound utilization of the water, land, and mineral resources of the United States.
As you know, we have some eight bureaus which operate within the Department in the water, land, and minerals fields.
While we were not directly concerned with the recent flood disaster in the Northeast, we have at the time of past disasters in areas where Interior has the personnel and equipment, particularly in the West, made this equipment and personnel available to cope with the emergencies.
This was true, for example, in the severe blizzards of several years ago and in past floods on western rivers, and also in fighting major forest fires wherever they may occur.
This same policy would apply in any future disaster in an area where we were able to help in any way.
Although the Department of the Interior is less directly concerned with flood insurance than some of the other Federal agencies which have appeared before you yesterday and today, we are interested in the subject because of our responsibilities in several fields, including the following:
1. Water resources investigations by the Geological Survey. This would include, for example, the stream gaging activities of the Geological Survey and the streamflow records which they keep on all major streams in the country.
Also, the topographic mapping, geologic mapping, and other basic data activities which are necessary to the construction of any water resources control project, such as flood-control dams.
2. We have a direct interest in flood control in the reclamation proj. ects which we build. In other words, most reclamation dams, while built primarily for other purposes, are designed to include floodcontrol capacity.
For example, the Hoover Dam on the Colorado River in the Southwest has a large flood-control capacity and has been very effective in controlling the river in the lower Colorado Valley which was formerly subject to very severe floods such as that in 1905, I believe, which did great damage in southern California.
3. Interior carries on watershed protection and flood prevention activities on the public lands and Indian lands of the country. These activities are performed by our land bureaus, such as the Bureau of Land Management, Bureau of Indian Affairs, Fish and Wildlife Service, and National Park Service. They are generally land-treatment measures plus small structures designed to retard flood flows and to preserve the soil in place.
4. We have an interest in the protection of the Indian trust lands which would be subject to flood, such as, for example, the Pueblos along the Rio Grande in New Mexico.
5. We perform a liaison function with the governments of the Territories such as Alaska, Hawaii; and
6. And lastly-we have a general interest in comprehensive resources planning which includes flood control. As the committee knows, there have recently been completed comprehensive resources studies in the New England and New York area and in the ArkansasWhite-Red Basins of the Oklahoma-Texas-Arkansas area. There were also earlier, less comprehensive studies in other basins such as the Missouri Basin and Columbia Basin.
Interior has participated in the study of flood insurance being made in the executive branch, but, as you know, that study has not yet been completed.
I appreciate the opportunity of presenting the Department's views at this time and I will be glad to attempt to answer any questions which the committee may have.
Senator LEHMAN. You say you are glad you had the opportunity of expressing the Department's views on this subject. I didn't gather that you did express the Department's views. I don't know whether you feel you are able to do that or not. You gave a very interesting recital of the activities of the Interior Department with which I was more or less familiar, having been on the Interior and Insular Affairs Committee, but I did not get any expression of opinion.
Mr. STEVENS. I should have said the Department's interests in the subject. Senator LEHMAN. Senator Bush, do you have any questions?
Senator Bush. Has the Department given any thought to possible reclamation projects in connection with the flood-stricken areas in New England ?
Mr. STEVENS. Senator Bush, the legal authorization for reclamation activities is limited to the 17 Western States. So the Bureau of Reclamation doesn't operate in the East at all.
Senator Bush. Mr. Chairman, I don't know whether you want to dismiss the witness, but before the record is closed I would like to make a short statement.
Senator LEHMAN. Surely, but I would like to ask the witness something further.
Have you been consulted by the Bureau of the Budget with regard to planning for this flood control! Mr. STEVENS. Planning for flood control?
Senator LEHMAN. Insurance. Not flood control-insurance against flood damage.
Mr. STEVENS. Yes, sir. We were consulted.
Senator LEHMAN. You can't tell us what conslusions were reached or what suggestions were made to the Bureau of the Budget?
I am very anxious to get this thing underway and get suggestions and recommendations from the Department and from the administration, of course.
Mr. STEVENS. I can't say more than Mr. Jones said yesterday, sir.
Senator LEHMAN. Do you know whether the Geological Survey has data which will serve as the basis for preparing an insurance program against flood risk?
Mr. STEVENS. Well, I would say that the Geological Survey has extensive data which would be most useful for that purpose.
Senator LEHMAN. Have the private insurers at any time tried to work out a program using such data as may be available ?
Mr. STEVENS. I believe that several years ago the insurance industry appointed a committee to study the question, and I would assume that they considered the availability or lack of availability of the data, including the basic data which we would have, but I am not familiar with their study in detail.
Senator LEHMAN. Have you any questions?
Senator Bush. I have no questions. I would lik, to make a very brief statement for the record.
Senator LEHMAN. Have you anything?
Senator LEHMAN. I would just like to say one thing: I would like, if you please, to express the committee's thanks to Mr. Langbein of the Geological Survey for the help which he has given to the staff in preparation of this report. His cooperation has been very helpful, and I would like him to know of the appreciation of the committee.
Mr. STEVENS. I will do that. Thank you.
Senator Bush. Mr. Chairman, we have heard the Federal agencies here yesterday and today, and before the record closes I would like simply to make a few observations as one who has been closely associated with this whole problem since the day the flood struck on August 19.
I think on the whole the Federal agencies have cooperated beautifully. The Governor of our State has made that statement and others who have been close to the situation from the start have made it virtually unqualified. The Corps of Engineers was on the spot before the rains stopped falling. The President himself came to Bradley Field and met with all the New England Governors and several Sena