agency, is responsible for these funds, and for coordinating Federal agency emergency relief activities. Thus far, nearly $11,000,000 has been allocated to Federal agencies and to State governments for reallocation to local governmental units. Temporary housing needs, remaining clean-up costs, and estimates now being completed by States and communities to cover emergency repairs to waterworks, sewer systems, streets, roads, bridges, and other community facilities will probably exhaust the remaining $14,000,000, even with the fullest contributions the local governments can themselves make. Second, a number of lending agencies, including the Department of Agriculture, the Housing and Home Finance Agency, the Veterans' Administration, and the Reconstruction Finance Corporation, can to a limited extent make or insure loans for the rehabilitation of farms, homes, and businesses. But in a disaster of this magnitude, the combined resources now available to the Federal Government, the States, and the local communities, and private organizations such as the American Red Cross, are far from enough to accomplish the tremendous task of restoring for the Nation the productivity and economic vitality of one of its major regions. There are two reasons why the Nation must act, and at once, to restore the stricken regions to economic health. The first is humanitarian. The victims of the flood must be given opportunity to renew their farming, to reopen their businesses, to build new homes, to find employment, and without a crushing burden of new debt for every individual. In this land we do not take the view that a man's misfortune, suffered through no fault of his own, is his own affair, or that a stricken community shall be left to shift for itself. Normally, the aid comes from local resources or from those of private relief agencies. But when the disaster spreads beyond the capacity of those resources, then the Nation itself must act to share the loss. The second reason is that we are now engaged as a Nation in a struggle for survival, and we cannot afford to dispense for long with the industrial and agricultural production that came but is not now coming from the flooded areas. The industries in those valleys turned out hundreds of products that are critical in the building of military and economic strength. Our meat supply will be seriously affected by the loss of corn and livestock, and the food supplies of not only this Nation but the whole free world may suffer from the loss of wheat. Because of the effect of the disaster on the defense effort, I assigned to the Director of Defense Mobilization, Mr. Charles E. Wilson, the task of coordinating long-range Federal rehabilitation activities as distinguished from the emergency relief aid previously described. Mr. Alfred E. Howse, of Mr. Wilson's staff, has been directing this work in the flood area. They have seen to it that priorities have been granted for repair work in the area, and that all types of aid have been extended within the limits of existing laws and funds. The recommendations contained in this message are based upon their estimates, after a month of close observation. We urgently need to take steps to relieve human suffering and restore economic life in this flood area, and to protect against future losses from disasters of this type. In the long run, of course, the greatest need is for the prevention of floods, through carefully planned and coordinated programs of conservation and water control. Until flood prevention can be assured, however, other measures are urgently required to meet the needs of the present and of the immediate future. I recommend, therefore, that the Congress at once approve an appropriation of $400,000,000 for the following purposes: 1. To indemnify the flood victims for a portion of their loss of real and personal property. 2. To make and guarantee loans on liberal terms for the building of homes and businesses to replace those destroyed. 3. To help farmers drain and rehabilitate their land, replace buildings, and restore the productive capacity of their farms, through on-farm assistance and disaster loans. 4. To permit loans where necessary to enable State and local government participation in the rehabilitation activities. 5. To provide funds to establish a national system of flood-disaster insurance, similar to the war-damage insurance system of World War II. To administer the program, I expect to establish a Flood Disaster Administration as a small policy and control body, with operating functions placed in existing Federal and State departments and agencies. Under the circumstances, a broad degree of discretion in administering the rehabilitation funds is necessary. In this emergency, speed of action is all-important. Winter is approaching, and congressional authorization for Federal aid cannot be delayed to await the development of fully detailed plans for the administration of aid in the variety of individual circumstances that will arise. A broad legislative directive will let the stricken region know in general what can be counted on, so that individuals and communities can make plans for going ahead with rehabilitation activities. The loan programs represent no new departure in Government policy. My recommendations will simply increase the available funds and remove certain normal limitations which are inappropriate in a disaster of this magnitude. But loans, even on liberal terms, are not enough to meet this situation. People who lost their homes, farms, and businesses now have little or no security to offer a lender. Very few, if any, individuals or businesses had any insurance protection against their flood losses. Generally speaking, private insurance companies have not offered such protection, because of the uncertain nature of the risk. Consequently, many people were left after the flood with nothing, or with nothing but their debts. If they could borrow more, new loans added to the old ones would create a debt burden that for an indefinite time to come would be a drag on the economic vitality of the region and would impair its ability to contribute to building our national security. For these reasons, I consider it essential to provide some rehabilitation grants, directed particularly to assist wage earners and small farmers and businessmen, whose losses in this flood represented personal financial tragedy. To accomplish the most in rehabilitation with the money available, the indemnity program should provide a sliding scale. For example, on the first $10,000 of loss (after deducting a standard amount of perhaps $200), the payment might be 80 percent on the next $10,000, 60 percent, and so on, with a maximum payment of perhaps $20,000 for any one claimant. The ceiling would exclude the bulk of the industrial losses, but it would enable individuals and small businesses to make a prompt new start. Fortunately, most of the large industrial concerns affected have other resources; and many are, in fact, already proceeding with reconstruction of their plants. As part of the rehabilitation program, local redevelopment plans should be required in some cases to assure that rebuilding does not take place in areas subject to recurrent flooding. For example, some of the devastated urban areas could best be converted to parks, recreation areas, or other public uses to minimize the amount of investment in construction on flood plains. The whole aid program must be carried out on a basis of joint participation by Federal, State, and local governments. The States and cities that are affected have already spent much in restoring their own public services. Nevertheless, the States, and where possible the cities, should share the cost of the whole program on some equitable basis. The lack of a national system of flood-disaster insurance is now a major gap in the means by which a man can make his home, his farm, or his business secure against events beyond his control. It is a basic requisite to the rapid reopening of plants in the flood region, where dikes cannot be rebuilt for some months, and companies are unwilling, in some cases, to undertake the risk of being inundated in the meantime. The system of flood insurance should be based, if possible, upon private insurance with reinsurance by the Government. This was the principle of the war-risk insurance in effect in World War II. It depends, of course, upon the demonstration by private insurers that they can meet the needs of those seeking insurance at reasonable rates. Once the system of flood insurance is in effect, there should be no need in the future for a program of partial indemnities such as is now proposed for the Midwest flood victims. As a permanent national policy, insurance is far superior to direct Federal payments. Suggested appropriation language to carry out these recommendations is attached to this message. The major features of the indemnification proposals I am making are similar to those already introduced in the Congress by Senator Hennings and Representative Bolling of Missouri. The principles incorporated in all my recommendations have the support of the Governors of Kansas and Missouri and of the Governors' advisory committees which represent major groups within the two States. They will revive a region of the Nation now badly hurt-a region of such importance to the security and welfare of the whole country that its revival must be the immediate concern of all our citizens. Whatever is I urge the adoption of this program as an emergency measure. done must be started with the greatest speed. Homeless families must be rehoused quickly. Industrial production and transportation must be restored. To avert the loss of next year's farm production from much of the flooded land, drainage ditches must be opened, debris cleared away, and silted soil seeded to cover crops in the remaining 60 to 90 days before winter sets in. Tax resources of States and communities must be reestablished. In all of these things, we must move quickly. Every day counts. THE WHITE HOUSE, August 20, 1951. HARRY S. TRUMAN. FUNDS APPROPRIATED TO THE PRESIDENT REHABILITATION OF MIDWESTERN FLOOD-STRICKEN AREAS For expenses necessary to enable the President, through such agencies of the Government (including new agencies which the President is hereby authorized to create) as he may direct, and under such regulations as he may approve, to provide for and to take such measures as he may deem necessary for relief and rehabilitation in the areas declared by the President during July and August, 1951, to be disaster areas because of floods, including (a) partial indemnification for physical loss of, or damage to, such tangible real or personal property as may be deemed administratively feasible, but such indemnification (1) shall not exceed $20,000 for all claims of any one person and shall in no case exceed 80 percent of an amount equal to the cost of replacing, rehabilitating, repairing, or reconstructing such property (less depreciation), (2) may be required to be contingent upon financial participation of State and/or local governments and compromise of creditors' claims (including claims of Federal agencies which are hereby authorized to be compromised without consideration), and (3) shall be adjusted on account of any assistance, compensation, insurance, or other reimbursement received or due on account of such loss or damage; (b) loans to State and local governments, on such terms and conditions as may be deemed necessary, to enable financial participation by such governments in the indemnification program authorized herein; (c) direct loans, or the guaranteeing of loans made by any public or private financing institution, upon such terms and conditions as may be deemed necessary, for rehabilitation of houses, farms, and private businesses; (d) conservation and land restoration measures; (e) personal services, without regard to the civil service laws; (f) hire of passenger motor vehicles and aircraft; (g) advance of funds under section 11 of the act of August 2, 1946 (31 U. S. C. 529); (h) expenses of attendance at meetings concerned with purposes of this appropriation; and (i) services as authorized by section 15 of the Act of August 2, 1946 (5 U. S. C. 55a); $400,000,000, to remain available until June 30, 1952: Provided, That prior to the payment of any indemnity, or the granting or guaranteeing of any loan under this act, the recipient thereof, or the cognizant State or local government, may be required to provide reasonable assurance of the relocation, reconstruction, replacement, rehabilitation, or repair of the damaged property so as to provide reasonable protection against the recurrence of flood loss or damage to such property, or the indiscriminate redevelopment thereof, and for these purposes there may be acquired by purchase, donation, other means of transfer, or condemnation, and without regard to section 355 of the Revised Statutes (40 U. S. C. 255), land which is subject to recurrent flooding, and such land may be utilized or disposed of in such a manner as to reduce the likelihood of further serious flood damage: Provided further, That any indemnification made pursuant to the provisions of this appropriation shall be final and conclusive for all purposes: Provided further, That the authority conferred by this appropriation and the funds provided herein shall be supplementary to, and not in substitution for, nor in limitation of, any other authority conferred or funds provided under any other law: Provided further, That the functions and duties exercised under this act shall be excluded from the operation of the Administrative Procedures Act (60 Stat. 237), except as to the requirements of section 3 thereof. FLOOD-INSURANCE REVOLVING FUND There is hereby created the "Flood insurance revolving fund", which shall be available, without fiscal-year limitation, for all expenses necessary for the estab lishment and operation of a Federal flood-insurance program to provide insurance and reinsurance (when not otherwise available at reasonable rates and upon reasonable conditions from private sources) against damage to, or loss of, private property (including that owned by State or local governments) from floods occurring within the United States or its Territories, including expenses of attendance at meetings concerned with the purposes of said fund; services as authorized by section 15 of the Act of August 2, 1946 (5 U. S. C. 55a); advance of funds under section 11 of said Act of August 2, 1946 (31 U. S. C. 529), and purchase and hire of passenger motor vehicles. Said program shall be administered by such agency of the Government (including new agencies which the President is hereby authorized to create) as the President may direct, and shall be operated under such regulations as he may approve. For the foregoing purposes, there may be transferred to said fund, from the appropriation for "Rehabilitation of Midwestern Flood-stricken Areas," such amounts as the President shall determine to be necessary, which shall remain available without regard to the limits of disaster areas. In addition, said fund shall be credited with all net receipts from insurance premiums, salvage, or other recoveries from insurance activities thereunder, and there are authorized to be appropriated such additional amounts as may be required: Provided, That any insurance or reinsurance issued under said fund shall be based, insofar as practicable, upon consideration of the risk involved, and said program shall utilize to the maximum extent possible the facilities of private insurance companies: Provided further, That reinsurance shall not be provided under said fund at rates less than, nor obtained under said fund at rates more than, the rates established by the Government on the same or similar risks or the rates charged by the insurance carrier for the insurance so reinsured, whichever is most advantageous to the Government, except that there may be made to the insurance carrier such allowances for expenses on account of the cost of services rendered or facilities furnished as may be deemed reasonably to accord with good business practice, but such allowance to the carrier shall not provide for any payment by the carrier on account of solicitation for or stimulation of insurance business: Provided further, That such program of insurance shall be so administered as not to serve as an inducement for indiscriminate investments in facilities in areas which are subject to recurring floods. JUSTIFICATION OF THE ESTIMATES Mr. NORRELL. At this point we will also have included in the record the general justifications and the green sheets that were submitted, I believe, to the committee on Monday afternoon of this week. (The material referred to is as follows:) SUMMARY STATEMENT (The following statement is a summary of the historical and economic effects of the great flood of 1951 and a digest of the rehabilitation plan now before the Congress, together with a condensed version of the justification for an appropriations request of $400,000,000.) It is now obvious that the great flood of 1951 was a disaster of a magnitude unequaled in the history of this country. Damage estimates in comparison with the 1927 and 1937 floods are as follows: 1. Agriculture (including land damage, crop losses, farm homes, buildings, machinery and equipment, fencing, livestock and poultry, farm levees and ditches, stored grains and roughage). 2. Nonfarm homes. 3. Personal possessions (including clothing, household goods, furniture, personal property, but excluding money, securities, or automobiles) _ 4. Industrial, commercial, and transportation (including manufacturing and commercial facilities, inventories, work in process, finished product, railroads, and airlines). 5. Public utilities__ 6. Public property (including bridges, municipal streets, sewers, schools, hospitals, Federal and State buildings, military installations, and flood-control structures) $485, 000, 000 50, 000, 000 10, 000, 000 1, 600, 000, 000 7,500,000 250, 000, 000 7. Private community facilities (including churches, hospitals, Total 1951 flood loss (excluding income and intangible 1937 flood loss__. 1927 flood loss. $1,500, 000 2, 500, 000, 000 432, 000, 000 284, 000, 000 Damage was concentrated chiefly in Kansas, Missouri, Oklahoma, and Illinois where some 5 million acres of land were involved directly and some 30 million acres of land were badly damaged by erosion in the watershed areas (appendix 1). Nearly 140 villages and towns were inundated in a section of fertile country extending 1,000 miles in length. Entire villages and large sections of prosperous cities now resemble the bombed urban areas of Europe in World War II. At the peak of the flood, 385,000 people were displaced by water. Now, nearly 2 months after the height of the disaster, some 15,000 families are still unable to return to their homes. Nearly 6,000 businesses ranging in size from the corner grocery stores to huge packing plants have been laid prostrate in this severe blow to the economy of the entire country. Perhaps the most tragic losses were the 45,000 homes, both farm and nonfarm, which have been destroyed or damaged. The accumulated suffering and misery will affect many thousands of families with unfortunate sociological results for many years to come. Agricultural losses to the 1951 farm crop will mean 7.5 percent less wheat, 5.5 percent less pork, and 1.1 percent less beef for the country as a whole. The wheat loss alone is equivalent to 4,993,000,000 loaves of bread lost to ourselves and to the world at a time when our grain reserves are already below normal. Crop failures in 1952 could immediately raise a specter of food shortages in this country and hunger elsewhere in the world. Intangible losses may well be estimated at an additional billion dollars. Unemployment-insurance claims in Kansas have doubled and they have risen 50 percent in Missouri. Sales tax returns, the principal source of revenue in the State of Kansas, dropped nearly $500,000 in July. The State of Missouri estimates its tax losses at $1,750,000. Federal income-tax losses have been approximated in excess of $250 million. Unless prompt and forceful action is taken by the Congress, the repercussions of this disaster will be felt by all the American people for two reasons: First, there is the serious loss of direct production from a region which supports the defense effort with defense goods themselves and a multitude of contributing services. Second, there will be a severe dislocation of the Nation's economy should recovery be delayed in this region. These economic aspects are apart from the humanitarian demands of the situation with which we are not immediately concerned in this discussion. In order to establish a proper perspective of the flood, it may be desirable to review the actions that have been taken leading to the development of the proposal now before the Congress. All great floods are many weeks in the making and for this one, as in the case of the greatest flood of all time, it rained for 40 days and 40 nights. Late in May the rains began, and throughout June and early July were punctuated with local cloudbursts so strategically placed that they might have been directed by a skillful enemy bent upon inflicting the maximum damage. In one place, 12 inches of rain fell in 11 hours. Over many localities the precipitation was 30 inches in less than 10 weeks-more than the average annual rainfall. Pouring down the tributaries of the Kansas River-the Smoky Hill, Saline, Solomon, Republican, Big Blue, Osage, and others-thence into the Missouri at Kansas City, these rains relentlessly built up a volume of water greater than any ever recorded in the area. Stream flow in central Kansas, for example, was 70 times normal in July. The previous high mark was set in 1844, and it had not been believed that this ever could be surpassed. On Black Friday, July 13, the water topped all flood-control levees and burst into the highly concentrated industrial areas of Kansas City, Kans., and Kansas City, Mo. With one exception, Federal forces of the Army, Navy, Air Force, and Coast Guard, located at all installations within or near the area, were immediately mobilized under the disaster regulations of the Department of Defense. The military establishments at Fort Riley and Camp Funston were not available since they had been severely stricken themselves by floodwater and they were engaged with their own problems of rescue work. The National Guard of both |