You see, he pays for his coverage, Congressman, and gets his coverage at the same price that we pay the loss. So the only problem is some moral risk, if we use a price too high or one too low, then he is entitled to a few more or a few less dollars.

But we agree on the price at that stage for that crop year.

Coming up now, in 1959, that price was set a long time ago, and that was filed and coverage was based on the price filed. He knew what it was; we knew what it was. That is the way we'll settle our losses this year, and he will pay the premium on that price.

Mr. MARSHALL. Maybe I don't understand. Maybe if I kind of put it in my own words, and you follow me your premium is based on the predetermined price, which does not change through the year? Mr. COLBY. That is correct.

Mr. MARSHALL. Now, we come to a time, and, of course, a number of times these contracts are entered into a considerable time in advance of planting time?

Mr. COLBY. Oh, yes; many months.

Mr. MARSHALL. It would have to be.

Now, when that man has a loss, that means that settlement will have to be made with him?

Mr. COLBY. That is right.

Mr. MARSHALL. We will say, to make things simple, that this predetermined price was the support price

Mr. COLBY. Yes.

Mr. MARSHALL. And when the settlement is made, then, the settlement is made to him on this predetermined price rate, regardless of whether the price support price was lowered, or regardless of the market?

Mr. COLBY. Irrespective of the market; that is correct, Congress

man.

Mr. MARSHALL. So his payment of the premium may be out of step with the market price or the price support price at the time the settlement was made?

Mr. COLBY. That is correct, Mr. Congressman.

The only exception is that in the case of tobacco, supports fix the price, because Commodity Credit stands ready to take all the tobacco in these cooperative arrangements, that is not sold above that price. Therefore, we are able, in tobacco, to fix a coverage and take the actual returns. If we don't do that, we are not able to offer quality protection in tobacco. The other crops are handled just as you discussed.

Mr. MARSHALL. Your other crops, such as corn, soybeans, barley, flax, are all on that basis?

Mr. COLBY. On that basis, Congressman; that is correct.

PERSONNEL

Mr. MARSHALL. Now, what grade are your State supervisors, State directors?

Mr. MCCARTNEY. They are grade 12.

Mr. MARSHALL. A grade 12?

Mr. MCCARTNEY. Yes. With one exception. Our State director for North Dakota is a grade 13.

Mr. MARSHALL. Otherwise they are all grade 12?

Mr. McCARTNEY. Yes.

Mr. MARSHALL. What is the grade of your State director in South Dakota?

Mr. MCCARTNEY. He is a grade 12. We don't have a State director in South Dakota. We have an acting State director.

Mr. MARSHALL. And you are still keeping him in a grade 12?
Mr. MCCARTNEY. He is a grade 12.

Mr. MARSHALL. How long has it been in South Dakota since you have had a permanent State director?

Mr. MCCARTNEY. About 2 years.

Mr. MARSHALL. In a position like South Dakota, and I notice that is included as one of your States where you have a heavy insurance program, why would this man be continued for 2 years in an acting capacity?

Mr. MCLAIN. We have problems occasionally, Mr. Marshall, in getting the kind of people that we want in these positions. I think your question is a quite logical one, and we are trying pretty hard to see that we have one that isn't acting. I think the job is being done effectively, without any question. At least, we have no indications to the contrary. I don't relish people in acting capacities any more than you do, I assure you of that.

Mr. MARSHALL. If I understand this situation correctly, you have had a man who is in an acting capacity for 2 years in the position, and he is holding a grade 12?

Mr. McLAIN. He is doing the job. He is a good director, so I don't think there is any question about his being able to do the job.

Mr. MARSHALL. Then why isn't he the director?

Mr. MCLAIN. As I say, we have the right to select the directors, and we are trying to see that we get one that will be a director permanently, and not acting. We haven't been able to get that done.

Mr. MARSHALL. What is your condition for filling that position? Mr. McLAIN. We try to get competent people that are acquainted with the program, and get them in these spots like we do with our State committees and other positions, where we have discretion. I am sure that you would expect us to do that, and that is exactly what we have done.

With a few exceptions, we have had no difficulty.

Mr. MARSHALL. Are you required to fill these positions by holding a civil service examination?

Mr. McLAIN. That is correct.

Mr. MARSHALL. Has an examination been held in South Dakota? Mr. McLAIN. I think that is correct.

Mr. FRETTS. There has been one held there; yes.

Mr. MARSHALL. I take it from what you said, then, that you are not satisfied with the list of eligibles furnished you by Civil Service? Mr. McLAIN. If we had been satisfied we would have had this spot filled permanently, I am sure.

Mr. MARSHALL. Now, what about Nebraska?

Mr. McCARTNEY. That spot has been filled just recently. The State director has been appointed.

Mr. MARSHALL. Is he holding that position at GS-12?

Mr. MCCARTNEY. He was a GS-9, as a district supervisor. There are three grades between district supervisor and State director. We advanced him to State director, but because of the Whitten amendment, we have to keep him at an 11 for 1 year.

Mr. MARSHALL. Did you hold a civil service examination in the State of Nebraska?

Mr. MCCARTNEY. We did; yes.

Mr. MARSHALL. And there, the list of eligibles was unsatisfactory to you?

Mr. MCCARTNEY. Well, we decided not to use the list furnished us. and just advance one of our own people.

Mr. MARSHALL. I wonder if you could tell me why, in two instances of this kind, in two States, adjoining one another, the Government would need to go to the expense of holding a civil service examination, if you didn't follow it?

Mr. MCLAIN. What was your question, again?

Mr. MARSHALL. Why should the Government go to the expense of holding a civil service examination, go through the process of grading papers and submitting a list of eligibles to you, if you didn't intend to follow it?

Mr. McLAIN. Well, again, this is part of the operation, and again, I think responsible administrators have the right to follow the procedure, as we have done in both of these cases. We think we have the right to promote from within when it will be to the advantage of the program.

Mr. MARSHALL. You selected a man in Nebraska who you thought was a man who would do a good job?

Mr. MCLAIN. Surely.

Mr. MARSHALL. Undoubtedly he has had some experience, or you would not have been able to consider him.

Mr. MCLAIN. Right.

Mr. MARSHALL. You could have done that without holding the examination, could you not?

Mr. MCLAIN. Yes.

Mr. MARSHALL. The examination part had not changed that.

Mr. MCLAIN. We held the examination, and after review felt this individual was the most competent. That is why we made the decision.

Mr. MARSHALL. In other words, when you originally had a vacancy there, you were not satisfied that this man in the position of a nine could do the work, and you did not consider him before you held the examination?

Mr. McLAIN. I think we ought to consider all the possibilities, and get the most competent person we can to do the job. We don't decide that on the spur of the moment, because quite naturally there are people in many of these positions, that would like to be advanced. Mr. MARSHALL. Is civil service in accord with the way you handle this?

Mr. MCLAIN. To my knowledge, we haven't had any complaint. Mr. MCCARTNEY. I discussed it with some of the people in civil service, and they told us we had the right to choose our own man rather than a man from the list of eligibles.

Mr. MARSHALL. I would be the last person in the world to criticize you for advancing people from within your own organization. I firmly believe that the advancement of people working in your organization is something highly desirable.

But, thinking in terms of the taxpayer, in paying out money for this examination, I just cannot make the connection of why you go through the process of holding the examination in two adjoining States, and then decide that you are not going to pay attention to the examination or the list of eligibles, and select one from your own organization. These people were in that organization of yours before you requested an examination.

Mr. MCLAIN. Many examinations are held, for many positions, by civil service. I see nothing wrong with following that procedure. You look at the applicants that are qualified, and you look at those you can move up from the ranks, and select the most competent person available. I think that is efficient administration.

Mr. MARSHALL. It would seem to me that we are getting the cart before the horse a little bit, Mr. Secretary.

Mr. McLAIN. Well, we don't want the cart before the horse.

Mr. MARSHALL. It seems to me that if I were an administrator, the very first thing I would do would be to review the personnel I had working with me.

Mr. McLAIN. This is exactly what was done.

Mr. MARSHALL. To find the ones that were satisfactory.

Mr. McLAIN. This is exactly what was done.

Mr. MARSHALL. No, the first thing was not, because the first thing you did was ask for an examination.

Mr. MCLAIN. No, the examination that we made was prior to the time that the civil service examination was held. We reviewed the people that were within the organization before this decision was made.

Mr. MARSHALL. You reviewed the people which you had.

Mr. McLAIN. That is the first thing we always do. I think a person would be stupid if he didn't do that.

Mr. MARSHALL. You had these people reviewed, and you determined that those people were not satisfactory to you..

Mr. McLAIN. We determined that there might be others who would be more satisfactory.

Mr. MARSHALL. So then you requested an examination from civil service.

Mr. McLAIN. That is right.

Mr. MARSHALL. So there was some doubt in your mind, in the first instance, that these people were not entirely satisfactory, or you would not have requested the examination.

Mr. MCLAIN. We felt there was a possibility that better candidates for the position might be available.

Mr. MARSHALL. Now, the examination was held, the papers have been graded, and the people placed on that list of eligibles by civil service. What took place then?

Mr. MCLAIN. Well, they were ranked, and they were considered, along with those that were in the Corporation, and the decision was made to promote the district supervisor.

Mr. MARSHALL. The man that you placed in the position in Nebraska, did he take the examination?

Mr. MCCARTNEY. Yes, he took the examination. He was third on the list.

Mr. MARSHALL. On the list of eligibles?

Mr. MCLAIN. Yes.

Mr. MARSHALL. Then you followed the list of eligibles.

Mr. MCLAIN. We followed it. We didn't take the No. 1 on the list. You have a right to make a selection of the top few.

Mr. MARSHALL. You have a right to make a selection of the top three, in accordance with veterans' preference.

Mr. MCCARTNEY. In this case, the top one had veterans' preference, and the other two did not, so we only had the choice of one man.

Mr. MARSHALL. Let's see if I get that straight. I understand that because the top applicant in the State of Nebraska had veterans' preference, you were unable, because of veterans' preference, to accept him from civil service.

Mr. MCCARTNEY. No; he had the veterans' preference. We were unable to accept the No. 2 or No. 3 man.

Mr. MARSHALL. So it gives you a register of one name.

Mr. MCCARTNEY. Yes.

Mr. MARSHALL. On the basis of civil service and their grading of the papers, if you might also have been able to have convinced them that the top applicant was unsatisfactory to you, and could have picked a man off the civil service register then, could you not have done so?

Mr. McLAIN. Well, that is difficult to do, if your top man is a veteran, as it was in this instance.

Mr. MCCARTNEY. We would have had to go through the whole procedure again.

Mr. MARSHALL. You promoted him to a grade 11, where, if you had picked him off the register, you could have promoted him to a 12? Mr. McLAIN. Yes; but the point was, there was a veteran at the head of the list.

Mr. MARSHALL. It was not the Civil Service Commission that passed these laws, it was the Congress. The Congress set up a Veterans' Preference Act. Whether that law was set up properly or not, it is the law, and civil service is expected as an agency of the Government, to see that the rules and regulations are looked up to. Now, in this particular instance that we are talking about, this man in Nebraska who was named as No. 3 on the register, there is some question in my mind as to whether civil service would have concurred in the action which you people have taken. I am a little surprised that they have not objected to that.

Mr. MCLAIN. To my knowledge, they have not objected.

Mr. MCCARTNEY. No, they haven't. I have discussed this particular thing with civil service. They said it is perfectly all right.

Mr. MARSHALL. If this matter had been handled without going through the process of examinations, it seems to me that you people would be in a much better position to have defended your actions than you are, after having gone through the process and expense of holding an examination, and then actually ignoring the law in making an appointment.