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efforts and helped to distribute roughly $10 million in federal funds. Although the effort was seen as Herculean at the time, it was minuscule by modern-day standards. Federal expenditures in 1927 covered only about 3.3 percent of total damages and were considerably smaller than the $17.5 million in cash contributions (and $6 million of in-kind contributions) collected by the Red Cross that year for the relief of flood victims. Hoover himself recalled some years later that “those were the days when citizens expected to take care of one another in time of disaster and it had not occurred to them that the Federal Government should do it.”5

FIGURE 18.1 Approximate Coverage Ratesa on Five Major Disastersb (Federal Government and the Red Cross) aRatio of disaster spending to total estimated damages (in percent). bThe five disasters are the Mississippi Floods of 1927, Hurricane and Flood Diane (1955), the Pacific Northwest Floods (1964), Tropical Storm Agnes (1972), and the Mississippi Floods of 1993.

Source: David A. Moss, “Courting Disaster? The Transformation of Federal Disaster Policy since 1803,” in Kenneth A. Froot, ed., The Financing of Catastrophe Risk (Chicago: University of Chicago Press, 1999), figure 8.2 (p. 328).

Federal involvement in disaster relief continued to expand over the ensuing decades. Congress passed the first general disaster relief act in 1947 and created the first permanent relief fund as part of the Federal Disaster Act of 1950. Even so, federal spending remained modest by current standards. In the wake of Hurricane and Flood Diane in 1955, for example, federal relief spending covered only about 6.2 percent of total damages—although this was now higher than Red Cross spending, which covered just 2.2 percent of damages in 1955. Federal coverage rates (i.e., federal spending as a percentage of total disaster losses) rose rapidly over the next twenty years, reaching 48.3 percent in response to Tropical Storm Agnes in 1972 (see Figure 18.1).

Howard Kunreuther has characterized the great Alaskan earthquake of 1964, which struck on Good Friday that year, as a “turning point in the federal government’s role in disaster relief.”6 Certainly, federal officials mounted a significant effort in response to the terrible Alaskan quake, and from that point forward the federal role in disaster relief grew by leaps and bounds. Over the remainder of the 1960s, federal disaster policy was “expanded to include funding for the repair of damaged higher education facilities, debris removal from private property, and unemployment compensation and food coupons for hard-pressed disaster victims. The federal government had also increased the availability of SBA [Small Business Administration] and FmHA [Farmers Home Administration] disaster loans.”

The Disaster Relief Act of 1970 codified these developments while also “[s]trongly emphasizing relief for individual victims”; and this followed the National Flood Insurance Act of 1968, which provided federally subsidized insurance for flood risk. Subsequent federal actions established the Federal Emergency Management Agency (FEMA) in 1978, dramatically expanded crop insurance in 1980, and consolidated (and expanded) federal disaster policy as part of the Stafford Act of 1988.7

Recent estimates suggest that from 1989 to 2006, federal disaster spending totaled $212.9 billion on disaster losses of $483.1 billion. This implies an average federal coverage rate of almost 45 percent. Moreover, since nearly 40 percent of total disaster losses were covered by explicit (contractual) insurance, federal aid as a percent of total uninsured losses ran considerably higher (approximately 75 percent) over these years. It is also worth noting that almost four-fifths of federal disaster spending across this period came through emergency supplemental appropriations, suggesting that relief spending was for the most part highly reactive.8

Clearly, the federal role in disaster relief has changed dramatically over the nation’s history. In 1985, Howard Kunreuther and Louis Miller observed:

The