their capital is drawing or costing them less than 6 percent, as lots of the preference stock does, they are, I believe, able to even that up and take it. It sometimes runs up toward 20 percent on their investment on the common stock and on the controls.

As you may know, some $2 million is being raised, according to the press, for the purpose of propagandizing the Hoover reports into law. The Commmittee for the Adoption of the Hoover Commission Reports is being set up and staffed and has gone to work on the most gigantic propaganda campaign since the passage of the Holding Company Act, in our opinion. Many of the staff people who worked on these reports have now gone over into the propaganda agency. That includes the Chairman, Mr. Hoover himself, who has become Honorary Chairman, although we expect him to be in action trying to put these reports over on the American people.

I want to read you, as an indication of what is coming to you as Members of Congress, an editorial from the last issue, the October 17th issue, or at least the last issue I have seen of the Electrical World, which is the principal recognized spokesman for the private industry among the magazines of the country. It is short and it reads:

Both as citizens and as electrical utility officials you have a large stake in the proposals of the second Hoover Commission Report on Government Reorganization. The proposals incorporate economies for a host of Federal agencies and operations. The report also contains some nine recommendations aimed specifically at putting Federal power activities on a fairer and sounder basis. Support for the proposals is being organized by the Citizens Committee for the Hoover Report, with offices in Washington and New York. Considerable work has already been done in preparing legislative and executive recommendations to be put forward in the next few months. Much is still to be done in preparing the testimony to be submitted in connection with the committee recommendations To gain the grassroots backing needed, the Citizens Committee is organizing State and Federal committees for the purpose of familiarizing more people with the purpose of the Hoover Commission's work. Enthusiastic help in such organization is forthcoming from business, civic, labor and other groups. The committee is wary of domination by any single busines or other group. I guess it would be.

It needs financial and organizational support, but desires it on a broad basis in order to make its pleas more effective in executive and legislative circles. But utility men can participate. There is a time element involved. Men working at close range on these Hoover proposals feel some of the impact will be lost unless recommendations are put before the next session of Congress. Publicity and recognition that has been drawn to the Hoover proposals over the last few months will help in gaining congressional attention early next year. Unless continued pressure is applied, many of the important proposals are likely to end up in some Congressional or White House pigeonhole.

Mr. LIPSCOMB. Mr. Chairman, I carry no torch for the Hoover Commission Report, but do you think it is sinister for a group to organize to support their beliefs?

Mr. ELLIS. No, sir.

Mr. LIPSCOMB. For instance, since I have been in this section of the country I have picked up literature by the Citizens for TVA, soliciting money and contributions to support the viewpoint of the Citizens for TVA, which I think is perfectly all right to do. What is your objection? Is it just because they are big, or what is it?

Mr. ELLIS. My objection is this: Here we have public service organizations who in my opinion should never be permitted to charge the rate payers with millions of dollars of propaganda. That I think

70818-56-pt. 5-11

is bad in itself. I do not think that the organization as such is bad. I think it is bad when it is used to excess. I think it is bad when millions of dollars are poured into it by special interests, as I think will be done in this case, to buy public opinion.

The statement which I have submitted to you and which I am making around the country at our regional meetings is almost entirely this year on the question of the climate of opinion. I think I have pretty well documented the fact that not only are the power companies trying to buy public opinion, but that they are doing it. They themselves say that, and they say it can be done. They say in effect it can be done, and that it is being done.

I think that is what they have set out to do here through this Committee for the Adoption of the Hoover Reports.

Mr. LIPSCOMB. For instance, in your organization, the NRECA, do your members contribute for you to put out your side of the story and what you believe in and for you to be able to contact your Representatives and Senators and all the rest, and do a good job?

Mr. ELLIS. Yes, sir. They contribute. But it is a pittance by comparison. We do not or we could not pour millions of dollars into campaigns such as You Were There television show, and the slickmagazine ads. I have here a brochure which is put out by the Saturday Evening Post which contains 128 of these ads which they have run in the Saturday Evening Post alone. This is the electric companies of the United States. Down at the bottom it says "Electric Light and Power Companies." It usually says you can get the list by writing to them.

I happened to turn to this one with a map of the United States with dots all over it. Let me read you the kind of propaganda they put out, and it is the kind of thing they will do with the Hoover Committee, I am sure. This is in big letters, and you can see it in this reduced form:

SOCIALISTIC UNITED STATES OF AMERICA

Would you like to live in a

A lot of it is false-absolutely false that runs through these ads they put out, and that they make the rate payers pay for. We have in 1 year reports of $20 million in advertising which the power companies themselves admit to for 1 year to the Federal Power Commission, and most of it is propaganda ads.

Would you like to live in a Socialist America? Most Americans wouldn't. But there is real danger that we will, whether we want it or not. One of the main roads to socialism is Government ownership and control of important businesses. The electric light and power companies is one, and this map shows how far the Government is in it already

Now, note how subtly they lead up to some false statements.

Every white dot, 209 of them on the map, marks an electric powerplant now operated or financed

or financed-the REA's, you see

by our Federal Government.

The rural electrics are privately owned. The cooperative is a private organization, and yet they list it here and try to make it look like it is a part of the public and the socialistic United States of America.

They go on to say:

Every black dot shows another Government powerplant which is being built, expanded, or proposed.

It is amusing here that there are a lot of black dots up in New England. Show me a Federal powerplant in New England. That is the "or proposed," but it is a part of the false picture which they present. They say that there are over 700 places in 44 States and it is a long step toward a socialistic United States of America.

That kind of propaganda advertising and that kind of propaganda would destroy America, in my opinion. It is the kind of thing that did destroy Germany and Italy and may destroy us some day if we cannot call a halt on it somewhere.

I am sure you have all heard of this pamphlet-and I do not have it with me which Bozell & Jacobs, the big advertising outfit working for the power companies, put out a few years ago. They are the ones who got up the "You Are There" program and prepared slick page ads for the power companies. They made a survey to determine how the American people feel about TVA and the Federal power projects and concluded that the most of the people are for TVA and the other projects, but are against socialism. So Bozell & Jacobs said to the power companies-and we have the pamphlet which they sent themthe line now henceforth must be that TVA is socialistic, so that the people will relate the two-these Federal power projects are socialistic. That is the line, and it was adopted then. The President himself picked it up and used it.

I think we are all more or less subject to the influence of propaganda. The President used it when he called TVA creeping socialism. Secretary McKay many times has used the line. He used it and followed it when he withdrew the Interior Department's opposition to the Hells Canyon Dam site being given away to the Idaho Power Company of Maine.

On August 23 the Interior Department adopted the line pretty fully when it issued its new power policy. That was in August of 1953. In September 1953 it issued its Missouri marketing criteria, which adopted it still further and which turned over and is turning over more of the power of the Missouri Basin to the power companies and less to the rural electric cooperatives.

In September 1953, at Fargo, N. Dak., Assistant Secretary of the Interior Aandahl adopted the line, and among other things said in his opinion that the power rates of Missouri Basin power should be raised. Chairman Langer went into the matter at some length and had Mr. Aandahl and others there, and as a result of the very great pressure the Missouri marketing criteria, section 7, was softened, but it still stands as a great step toward the power company line of turning the power over to the power companies.

The Dixon-Yates deal was just another step in that direction. Had that been able to stand, many others in addition to that would have come. One of the worst examples and most glaring examples of all, of how the administration has swallowed the power company lineand let me digress to say in my opinion this is not the power-company line. It is much more than that. The power companies were pretty much pulling away from the old holding company speculators after the Hobsons and Insulls back in the twenties and early thirties, but

again they have come under the control of speculators. It is the speculators of the First Boston Corp. and other eastern financial groups that are now again in control of the power companies.

Time after time we hear, as in the case of the Stietenroth testimony, that the orders come down from New York to raise the rates, and to do this and that, which is against the people. It is because the speculators want absolute monopoly and they want to raise the prices always.

In Georgia and North Carolina a very serious situation exists, where the rural electric co-ops have been trying to buy during every day of this administration in both States power from Federal dams. I preface that by saying it ought to have been sold to them before this administration came into power. It should have been sold to them by the other administration, but it was not.

Mr. JONES. You mean Clark Hill?

Mr. ELLIS. Yes, sir. Between Georgia and North Carolina. Power from that dam was being requested by the cooperatives in Georgia even before this administration came into power, but it was just being put into production. There was too much delay. And the same holds true for Buggs Island, which is on the border of North Carolina. Over in Georgia the rural electric cooperatives have not even gotten a decent hearing. Hardly ever are they able to approach the Secretary of the Interior or his assistants without having in some way to come up against the proposition

Mr. JONES. Has not Attorney General Brownell made a ruling to the Department of the Interior with respect to the sale of the Clark Hill energy?

Mr.ELLIS. Yes, sir. He did it, I believe, about July 15.

Mr. JONES. Do you know what the substance of his opinion was? Mr. ELLIS. Yes, sir. The substance was that the Department of the Interior in trying to force on the cooperatives of Georgia the deal it was pushing on them, was flouting the will of Congress. That is the substance of it and that is what we think also.

I think this committee has that opinion before it. Is that in your record, Mr. Chairman? If not, I think you would like it in the record, and if so, we will get it and put it in the record, because Attorney General Brownell in an eloquent opinion and a fine statement of the law, said very clearly they were flouting the will of Congress, and they have been doing it now.

Mr. JONES. I think that is a matter of record as far as the committee is concerned. As I understand it, the Chudoff committee had submitted to it that same information which would be available to this committee.

Mr. LIPSCOMB. Mr. Chairman, can we get back to the Hoover Commission recommendations on this? Our time is getting short. Mr. ELLIS. Yes, Mr. Chairman. I was trying to show you that the Hoover Commission recommendations are being put into effect anyway. Mr. JONES. Did you hear that telegram I read?

Mr. ELLIS. Yes, sir.

Mr. JONES. Are you familiar with Circular A-47, which has been circularized or which allegedly has been circularized in the Bureau of the Budget?

Mr. ELLIS. I know about it. Yes, sir. Let me give you this example-and, Mr. Lipscomb, I will hurry on. I think this is pertinent from our standpoint.

A few days ago, on October 13, the Federal land bank, a bank for cooperatives, and the Production Credit Administration officials of the eastern part of the United States, asked four of our rural electric cooperatives to meet them in Pennsylvania for a dinner. Two of the officials went. The whole evening was spent propagandizing them on the value of accepting the Hoover Commission reports. It was not lending-agency reports that they were talking about.

But my point is, the administration is giving us the Hoover Commission reports now, and in doing so it is my opinion in part it is flouting the will of Congress, to use the Attorney General's own words. That is in my opinion.

Here is another very brief example of it. Out in Montana the Canyon Ferry Dam is being wrecked today. We advocated it because we needed the power and have not been able to get the power because Interior would not advocate and ask for and build the transmission lines necessary for us to get it. Consequently the power that was engineered to sell at 5.6 mills, the Bureau rate in that area, is being dumped, and has been for more than a year, to the Montana Power Co. The Federal Government is losing more than $1 million a year on that dam. Somebody has to make it up for them. And all just because the power company will not pay any more than that because it holds a monopoly position in the area. That is the sale at the bus bar as recommended by the Hoover Commission reports. The REA bills were introduced, as you know, to put the lending agencies into law just before the Congress adjourned.

Now, back to the reports. What is the motive? The motive, in my opinion, is now very clear. It is absolute monopoly. And yet those who oppose the actions which we are taking in supporting this Federal power program, including Under Secretary Davis, are going about this country saying that those of us who do support the Federal power program are socialists. And so is Aandahl in a different sort of way, who says TVA is socialism.

I am getting close to the end, but I want to quote you from the last letter Thomas Jefferson ever wrote, on June 24, 1826, just a few days before he died. He wrote it to Roger C. Weightman, referring to our form of Government, where he said:

The general spread of the light of science has already laid open to view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately, by the grace of God.

I want to refer you to a veto message of Theodore Roosevelt in his veto of the James River bill. He said in that message:

The great corporations are acting with foresight and singleness of purpose and vigor to control the waterpowers of this country. I esteem it my duty to use every endeavor to prevent this growing monopoly—

he means power monopoly

the most threatening which has ever appeared, from being fastened upon the American people.

One of the things they say is that public ownership is wrong. Public ownership is American as anything else is American.

Let me read you some of the history, just a couple of paragraphs, on the Development of American Waterpower, by Fanning:

Public ownership and operation of hydroelectric power sites along the rivers of this country existed long before the establishment of the United States.