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The following appears on page 900 of the Task Force Report on Water Resources and Power, volume 2, Commission on Organization of the Executive Branch of the Government:

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EXTRACT FROM PAGES 32 AND 33 OF PROGRESS REPORT OF THE SENATE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE BY ITS DOMESTIC LAND AND WATER TRANSPORTATION SUBCOMMITTEE, PURSUANT TO SENATE RESOLUTION 50 ($1ST CONG.)

The extent to which inland water transportation is subsidized could be appre ciated better if the total subsidy could be translated into an annual cost per ton-mile on particular segments of the inland waterway system. Unfortunately, there is little data available which breaks down the total subsidy figures. In 1940, however, the Board of Investigation and Research did compute the amount of the inland waterways subsidy for 1940. After amortizing capital facilities, eliminating expenditures for obsolete facilities no longer useful to navigation, and allocating the cost of joint facilities as between navigation and other fune tions and as between foreign and domestic commerce, the BIR concluded that "domestic waterway transportation was subsidized in 1940 to the extent of about $125 million."

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36 Op. cit. Board of Investigation and Research; subcommittee hearings, p. 201.

Using the basic data developed in the BIR report, the following table was submitted indicating the subsidy per ton-mile of traffic moving on the Mississippi River system in 1940:

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1 Federal channel costs per ton-mile in 1940 as determined by the Board of Investigation and Research. * Includes cost of navigation facilities borne by State of Illinois and Chicago Sanitary District. Length of navigable portion.

Source: Subcommittee hearings, p. 201.

The above table indicates the extent to which subsidies placed other forms of transportation at a competitive disadvantage in 1940. Since 1940 total exepnditures on inland waterways have doubled. A larger share of total expenditures is being devoted to the improvement of inland rivers and canals. The amount of intercity freight traffic carried on rivers and canals in 1940 was slightly more than half that carried in 1949. It seems clear, therefore, that the subsidies per ton-mile of traffic on major segments of the Mississippi River system are greater today than they were in 1940.

Mr. JONES. Mr. Sullivan, Mr. Baur, Mr. Beasley, and Mr. Wagner. I believe you are all people who have to get a 2 o'clock plane. Mr. SULLIVAN. Yes, sir.

Mr. JONES. You are Mr. Sullivan?

STATEMENT OF JAMES F. SULLIVAN, MADISON, WIS., REPRESENTING THE WISCONSIN ELECTRIC COOPERATIVE

Mr. SULLIVAN. Mr. Chaiman and members of the committee, my name is James F. Sullivan of Madison, Wis. I appear before you today as a representative of Wisconsin Electric Cooperative, statewide organization of the 30 rural electric cooperatives who serve 86,000 rural families in our State.

You can readily understand how the interest of Wisconsin's rural people in advancement of rural electrification prompted us to request an opportunity to discuss our views on the broad and vital field of national water resources and power policy.

For you members of this subcommittee are well aware of how the adoption of a concerted and aggressive national policy in promoting the full development of rural electrification was responsible for our people today enjoying the blessings of electric power.

Since passage of the Rural Electrification Act, the rural people of Wisconsin have received a very dramatic demonstration of how soundly conceived and well-administered policies can directly affect each and every one of us in the field of power. Every farmer in our State still has vivid memories of the days when rural electrification was con

sidered the exclusive privilege of those wealthy enough to pay what I considered exorbitant rates, or who were fortunately located in the proximity of an urban area.

Certainly this national power policy can be directly credited with building a better life, creating greater opportunity, and making better free enterprisers out of millions of rural Americans.

And none of us can accurately estimate the billions of dollars in increased purchasing power and tremendous new markets resulting from this policy.

The recent report of the Hoover Commission on Water Resources and Power has caused real concern-even alarm-to our directors and managers who have had the opportunity to read or discuss it. Our alarm is not only based on the findings and recommendations of the task force and Commission. Even worse, it is a concern over what we consider to be the narrow and obviously biased approach engaged in by what was supposed to have been a highly responsible Commission appointed to serve in the interests of all Americans.

Now, in behalf of our electric cooperative officials, I want to convey this message to you gentlemen. Chairman Jones, and you members of the subcommittee, we are very grateful to you that you would tax your valuable time to go out and conduct public hearings to assure the American people that you don't intend to rely in Congress exclusively on the Commission findings, but want to be sure you have the whole story before exercising your legislative responsibilities.

Now let us look, for a moment, at the field of electric power. There can be no question of the importance of electric power in a dynamic, free, American economy. There is no field where it is so important to permit free competition. And yet, we see here in America today that commercial power spokesmen are spending millions of dollars to convince our people that a commercial corporation in any area should be handed over monopolistic control of power supply. And, on the other hand, we see how spokesmen for the commercial power industry seek to sway the Congress, the Federal executive department and our courts to invoke and enforce policies clearly which could result in elimination of the right of the people to choose an alternate power supplier if service is considered unsatisfactory.

Frankly, gentlemen, it is pretty hard to separate a skunk from its smell, and it is pretty hard to separate complete monopoly in the power business and all of its inherent weaknesses from monopoly in any other business in our economy. How can those spokesmen argue that they are defending free enterprise by destruction of any and all forms of competition?

Gentlemen, we insist that the Hoover Commission Report on Water Resources and Power is just another chapter in the unending propaganda battle being waged by the commercial utilities of this Nation to discredit any and every form of competition.

Let me point, for example, to an editorial in the November 7 issue of Electrical World, a spokesman for the commercial utility viewpoint. Electrical World expresses displeasure because Hoover Commission recommendations regarding power aren't being taken as seriously by the public as the publication would like. The magazine asks that the commercial utilities of the Nation get behind the Citizens Committee

for the Hoover Report to win greater public acceptance of the commercial utility viewpoint.

This job,

and now I quote—

falls directly in the lap of the electric companies because they have the understanding and the direct interest required to do it.

And I believe that anyone examining the Commission recommendations would readily agree that the electric companies certainly have the direct interest, as they said it, required to justify spending a few bucks to sell the American people on those findings after all, they are part and parcel of what the utilities have been trying to sell the American public for years. I even suspect most of the recommendations were worn threadbare.

It is pretty hard, gentlemen, for a Wisconsin farmer to figure out just how he is helping this Nation creep or gallop toward socialism by supporting public policy which fosters competition in the electric industry, or which calls for public development of our natural resources when such development lays the groundwork for a stronger and more active economy in the area developed.

In Wisconsin we don't happen to fit into a potential pattern of broad resource development such as one finds in the far Northwest, or the Tennessee Valley, or the Missouri Valley. However, we have seen demonstrated time and again how all America benefits from the wise utilization of those resources. I do not say that all previous efforts in this field are above criticism. But those who would seek total reversal of present policies on resource development are little different from the despoilers of our great lumber resources in our own State of Wisconsin almost a century ago, which we know plenty about.

One of the major reasons rural electrification has been successful is that it emerged from a nationwide policy. The same opportunity for Wisconsin's rural people to have rural electric power was provided for rural people across the length and breadth of this great Nation. Our electric systems have been subject to attack from Wisconsin to Florida, and from New York to Oregon. The nature of the attack varies with circumstances under which rural electric cooperatives developed. In Wisconsin, we heard a commercial utility lobbyist tell our State legislature several months ago that because we built our own generating and transmission facilities in Wisconsin in order that the farmers might serve themselves, we are promoting socialism.

Competition in the power business can help bring rates down to normal levels. We have seen it in our electric co-ops. Cooperatives in our State never would have been successful had it not been for national policies permitting our rural people to turn to building their own facilities or purchasing from municipally owned systems when wholesale power rates quoted them proved too high to be feasible. It was because many of our electric cooperatives were quoted rates as high as 2 cents per kilowatt-hour that they organized the Dairyland Power Cooperative.

Today Dairyland provides the wholesale power supply of 19 of our electric cooperatives. Another cooperative is served by a municipal system. Nine co-ops buy their supply from commercial companies. Competition in the power-supply business in our State has kept rural

wholesale rates down. A study conducted by the Wisconsin Public Service Commission several years ago showed that the two utilities studied kept their wholesale power rate for cooperatives down below the average rate of return enjoyed from other types of business. At the same time, the study showed that general rural retail rates also were kept down below the average rate of return enjoyed from all business. Yet there is probably little doubt that the total return to these utilities from rural business is much higher than could possibly have been earned at higher rates which would have discouraged consumption.

The right of electric cooperatives, granted under our national power policies, to choose alternate sources of power supply where costs are high or service is inadequate certainly has been a major factor in the rapid rate at which rural people are adopting electric power for productive purposes. Electric cooperative load growth is considerably higher than for the power industry as a whole. And we are happy to say that in Wisconsin, the electric cooperative load growth exceeds even the national growth of electric co-op loads. The fact that our people have been able to take advantage of this competitive situation certainly has been important to our co-ops in building powerlines to remotely located rural dwellings. Without such a policy, Wisconsin wouldn't today be able to point to the fact that more than 96 percent of our farms have electric service. Certainly the same is true of other areas of the Nation where cheap wholesale power has been the major factor in our progress toward complete rural electrification.

Although Wisconsin today is located some distance from sources of Federal power, we feel we have a strong stake in the retention of the preference clauses in Federal legislation. Tremendous advances in technical know-how place nuclear energy and even solar energy within reach of us all during our lifetime. Development of our hydro resources can be expected to progress.

Recently an Atomic Energy Commission study headed by Palmer Putnam, predicts that in the next century man will use 18 times as much energy in all its forms as he used in the past century. Putnam believes that man will never have quite enough energy. There can be no doubt that the manner in which we as a Nation control our energy during the next century will certainly dictate the standard of living and the national strength. Putnam feels the demand for power will be so great we will have to harness every available hydroelectric site within the limits of economic feasibility.

Can there be any question that any power and water-resource policy which blindly favors private monopoly development can only narrow our national opportunities? The only nongovernmental organizations which can finance and develop power sites today are the great private corporations. And it is everywhere apparent, and logical, that they do not seek full development, but only want to "skim the cream" from the rivers, leaving the balance to run to waste.

By the same token, only the large corporations can possibly invest the necessary capital to build the large transmission lines from federally developed power sites to their load centers. Without the preference provisions of Federal power laws, the small public suppliers would be deprived of any share of the low-cost power from these sites. Actually, to eliminate these provisions, the Federal Government would

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