Mr. MERTZ. Not as serious as this. When it lays there so long, it just kills all the crops.

As I say, this crop we lost now doesn't affect us very much right at the present time, but it will in years to come. I raise all my own grain for chickens. We make our own mash and feed for the cows. We have 60 head of stock. We have got enough from last year held over to last us a few months. But when that is gone, it is going to start hurting. To go next spring and put in crops again, you have to buy feed for your cows besides and pay your taxes.

Senator LEHMAN. You are not covered by any crop insurance, are you?

Mr. VAN ALST. No. Along the river there, you could not buy insurance. We had one neighbor there, he had 1,200 laying hens. The water came up in his chicken house. I took a tractor down and buried them for him.

Senator LEHMAN. I was thinking about crop insurance. The Department of Agriculture does operate a crop-insurance program. Mr. MERTZ. We never had need of it before.

Senator LEHMAN. I do not think your county is covered.

Mr. VAN ALST. This farm I used to farm with my father, and when he passed away, I bought this farm here. I have been farming this farm 5 years now, and I have lost 2 crops of corn in 5 years, and a tremendous lot of oats the last time, which came in the first of July. I replanted the corn and the water went down and the oats were too late, and I lost a lot of hay. But the effect of the flood hits you 2 or 3 years afterwards.

Senator LEHMAN. Did you save your cows?

Mr. MERTZ. Yes.

Senator LEHMAN. Which river is that?

Mr. VAN ALST. The Wallkill. There is a dam and below there is a fall. If the water could go on through there—there are three bridges within half a mile.

Senator IVES. In other words, you have a bottleneck.

Senator LEHMAN. I would again like to suggest that you take it up. with the Corps of Engineers. I think they are the only people that can do anything on this in the Federal Government. I think that feeds into a navigable stream, so I think it would come under the Corps of Engineers.

Mr. VAN ALST. You know how it is. Nobody ever gets started doing anything, and we are always getting the consequences.

Senator LEHMAN. Thank you very much, gentlemen.

I think that concludes the hearing. I want to thank you all for coming, and I particularly want to express my gratification that even though we have been sitting here for a long time, every person who appeared at this hearing and wanted to testify was given an opportunity to testify at such length as seemed desirable to him or her. That is a great satisfaction to me, and I am sure it is to Senator Ives also. Nobody has been excluded; everybody has had a chance to testify. I thank you very much for coming.

We will recess now until our hearing in Boston on the morning of November 9.

(Whereupon, at 4: 30 p. m. the hearing was recessed until Wednesday, November 9, 1955.)

FEDERAL DISASTER INSURANCE

WEDNESDAY, NOVEMBER 9, 1955

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,

Boston, Mass.

The committee met, pursuant to recess, in courtroom No. 4, Federal Building, Boston, Mass., at 10 a. m., Senator Herbert H. Lehman presiding.

Present: Senators Lehman and Bush.

Also present: Senator Kennedy, and Representatives Philbin, Rogers, Macdonald, Curtis, and O'Neill.

Senator LEHMAN. The hearing will please come to order.

Before calling Senator Kennedy, who will be the first witness, I want to make a brief statement.

These hearings are not confined to any one bill or any specific legislation. And this is not a subcommittee of the Banking and Currency Committee. Senator Bush and I have been asked to represent the committee. Of course, the record will be made available to the full membership of the committee.

There have been a number of pieces of legislation introduced, all directed at the same purpose but differing very considerably in detail. One piece of legislation was introduced by your two Senators, Senator Kennedy and Senator Saltonstall. Another bill was introduced by Senator Carlson of Kansas. I have introduced a rather more comprehensive bill than any of those before the committee. Senator Bush, while he has not made public any bill, has had one drafted under his direction which is available to the committee.

We have been carrying on these hearings in the hope that out of them will come some effective and practicable legislation. We realize that this is a very, very difficult problem, and it has no easy solution. We want to get all the facts. We have had fine cooperation from the executives of various States and from public bodies and private individuals.

We have had two hearings in Washington. We had 2 hearings in New York, 1 in New York, and 1 upstate, at Goshen.

We are very glad indeed to be here today. Tomorrow we hold a hearing in Providence, on next Monday in Hartford, and then later on we probably will hold hearings in one or more Southern States, which were also seriously affected by floods.

We have a fine list of witnesses here today. It is a pretty long one, but we hope to be able to get through by this afternoon.

I have a piece of good news for you. I have been advised that smoking is permitted. The audience is requested to make use of the ashtrays. Will you please follow those suggestions?

Senator Kennedy, will you come up?

May I say how pleased I am on behalf of the committee to welcome you here. I hope that when you have completed your testimony you will take a seat here at the table. We would be very glad indeed to have you join us.

Senator KENNEDY. Thank you, Mr. Chairman.

Senator LEHMAN. Senator Bush.

Senator BUSH. I just want to say in behalf of the people of my State, your neighboring State of Connecticut, that I know we all feel the very deepest sympathy for the State of Massachusetts, particularly western Massachusetts, which has been so ravaged in this past year with floods, just as we have.

I am afraid that Connecticut has the unfortunate distinction of having been the worst hit of any of the States. I feel that our people, and yours in Massachusetts, will approach this question of flood insurance with a very high degree of sympathy and very great hopefulness that finally we may be able to get on the books of the Federal Government some sort of a program which will guarantee indemnity to the people who are threatened with disaster in the future and who have been so decimated by it in the past.

I certainly join the distinguished chairman in expressing my pleasure at being able to be here today and in welcoming our good colleague, Senator Kennedy.

Senator KENNEDY. Thank you.

Senator LEHMAN. Governor Herter, won't you take a seat here at the committee table?

Governor HERTER. Thank you very much.

Senator LEHMAN. Senator, I do not know whether or not you have a prepared statement.

Senator KENNEDY. I have, Mr. Chairman.

Senator LEHMAN. Will you proceed in whatever manner seems desirable?

STATEMENT OF JOHN F. KENNEDY, A UNITED STATES SENATOR FROM THE STATE OF MASSACHUSETTS

Senator KENNEDY. Mr. Chairman, Governor Herter, I have a rather lengthy statement which I have boiled down to three and one-half pages which I will proceed to read.

I am very grateful to you and members of your committee for coming to Massachusetts and New England for this problem of such major importance.

Although prevention of damage to property is obviously preferable to reimbursement for its loss, once such destruction is an accomplished fact reimbursement softens the blow and makes possible earlier rehabilitation. Some suggest that flood insurance, however, whether public or private, is undesirable because it would encourage retention of property in potential danger areas, a problem which is not presented by fire and most other disaster-insurance programs. Certainly, some care needs to be exercised to prevent this tendency.

But an estimated 10 million people live on 50 million acres in potential flood areas in this country, particularly here in New England, where our major cities are located in river valleys, and some $100 billion is invested in those areas.

All possible floods in these areas cannot be prevented. The cities and industries cannot be abandoned or relocated, and thus insurance is needed.

It is apparent from the unavailability of private flood insurance that the only alternative to some form of Federal insurance is no insurance at all. However much we may criticize the Federal Government's entry into this field, however doubtful we may be about the success of such an experiment, it is important to remember that the only other choice facing us is no insurance whatsoever.

Floods have long been recognized as an appropriate subject for congressional action because of their devastating effects upon our Nation's interstate commerce, preparedness, health, welfare, and economic well-being. Without Federal flood insurance the Federal Government receives less tax income from nonproductive flooded industries and from homeowners able to deduct flood losses. Without Federal flood insurance heavy Federal subsidies through direct relief grants, to which flood victims have made no special contribution, will continue.

Finally, the Federal Government has an important stake in preventing the abandonment of cities and industries in potential flood

areas.

It has been suggested that the accelerated flood-control program which I have previously mentioned should be preferred to the exclusion of any insurance program. But consider these facts:

(a) Every flood-control expert in the country agrees that no amount of projects, however high the dams and however adequate the warning systems, could ever eliminate all floods and all damage.

(b) It will be years before a comprehensive flood-control program can be completed, if it will ever be completed.

(c) In some areas flood control is simply not economically feasible because of the cost of the project, the value of the land to be acquired, or other factors.

(d) Responsibility of the Federal Government for payment of flood-insurance claims would decrease, not retard, the speed with which it built projects to reduce these claims.

The argument has been made that direct grants of money from both Federal and private sources would be more in keeping with the American tradition of voluntary relief for humanitarian purposes. But such relief, by its very nature, and as demonstrated by our experience here, is irregular, unreliable, and inadequate in terms of complete recovery.

Early in September I proposed a draft Federal flood-insurance bill which is before your committee now and was joined in this endeavor by the senior Senator from Massachusetts, Senator Saltonstall. I have since received assurances of cosponsorship from Senators in other parts of the country.

The difference between this draft proposal and the other proposals contained in the committee prints before your committee points up a number of questions concerning the exact nature and details of any Federal disaster-insurance bill.

First, of course, is the question of the use of the word "insurance,' some preferring the use of the word "indemnity." I think it's just a question of semantics, and "indemnity" would be satisfactory even though, of course, the principles are based on insurance.