recommendations for water legislation that may be necessary in Ten

nessee.

That applies, of course, to our local conditions in Tennessee, but it is not unrelated to conditions that exist throughout the Nation perhaps. We find that our surface water is much lower than it has been for a number of years, and the active use of many wells, especially in west Tennessee, is depleting to a certain extent our subterranean

streams.

Those are the things that we are studying as a commission.

Mr. JONES. You have no report yet formulated at the present time? Mr. McCORD. No, sir. A representative of the Public Administrative Service is here in the room this morning. Their study has not been of long enough duration for him to make a concise statement of any kind, but I am sure he will be glad to make some statement. Mr. JONES. Governor, have you studied the Hoover Commission's recommendations?

Mr. McCORD. I am not fully conversant with it. No, sir. Just as an old Negro friend of mine used to say-in a haphazard sort of way— and I think you might designate that report almost in those terms. Mr. JONES. In your casual observation of it did you reach any conclusion?

Mr. McCORD. I am not altogether in harmony with some recommendations that they made, stemming back to our problem here in the South and their treatment of the Tennessee Valley Authority, and other things.

I want to make this statement, if I may, because TVA gets into all of our considerations in the development of this very sort of thing. Perhaps the greatest emancipation of slavery up to that time was the emancipation that Abraham Lincoln issued when he became President. However, in 1932 there was another emancipation from slavery in the Southland, which was equal to that, and that was the establishment of laws that led up to rural electrification. That was emancipating the housewives of this land from the slavery of the old kitchen, where you burned the old wood stove, and all of the other things that REA has done.

Under the original plan of developing our electric energy by private power companies there was no expansion, and would not have been to this day, I am quite sure, into areas beyond the corporate limits of the municipalities they served.

More electricity has required more water, and as it continues we will continue to get more water. Notwithstanding that 20 percent of the potential waterpower of the United States is in the Tennessee River and its tributaries, we do have shortages of water.

Mr. JONES. It is a universal problem, is it not, Governor?

Mr. McCORD. Very much, indeed.

Mr. JONES. And it is becoming more aggravated with the passage of time?

Mr. McCORD. And it is one also that the State as a unit cannot finance alone, I am quite sure. These problems as they confront us have to be met factually, I anticipate, by some such legislation as may be recommended at some time to take the States into cooperation with the Federal Government.

Mr. JONES. I notice you had representatives of the State and city and other agency groups in Washington to try to convince the Bureau

of the Budget to make funds available for the start of the lower Cumberland River project. Evidently they have not done too well. I wonder who is going to win in that race to build that $400 million project on the Nile? The United States or Russia?

Mr. McCORD. Well, I imagine the United States will get in there. We usually do. I am very interested in this development. I know you have some very able engineers here this morning to go into that in detail, but I hate to see these projects on the Cumberland River curtailed because of the shortage of appropriations at this time.

Mr. JONES. Of course, we as a committee have nothing to do with appropriations.

Mr. McCORD. I understand that, of course, but my friend and your colleague here will have much to do with that when it comes up. Mr. JONES. Are there any questions?

(No response.)

Mr. JONES. Thank you very much, Governor.

Mr. McCORD. Thank you very much, gentlemen.

Mr. JONES. Thank you, sir.

Mr. J. C. Hundley, secretary of the Citizens for TVA, who is speaking for Mayor Dempster, who I understand is not able to be here today. Is that correct?

STATEMENT OF J. C. HUNDLEY, SECRETARY, CITIZENS FOR TVA, INC., AND REPRESENTING HON. GEORGE R. DEMPSTER, MAYOR, KNOXVILLE, TENN., AND PRESIDENT, CITIZENS FOR TVA, INC.

Mr. HUNDLEY. That is correct, sir.

Mr. JONES. Won't you have a seat, Mr. Hundley?

Mr. HUNDLEY. Fine.

I wanted to say Mayor Dempster wanted me to express his appreciation to the committee for its fine work. He certainly regrets he cannot be here today, but he has an election coming up in 2 or 3 days. Mr. JONES. Well, we certainly have to stay home when we have an election.

Mr. HUNDLEY. So he has a very good reason for not being here. My name is J. C. Hundley, secretary of Citizens for TVA. I will present Mayor Dempster's testimony without any explanation further than that, and possibly without comment.

Mr. Chairman, I am George R. Dempster, mayor of Knoxville, Tenn., and president of Citizens for TVA, Inc. It is a great privilege for me to appear before you today expressing the views of our 55,000-strong citizens organization which has as its objective the preservation of the Tennessee Valley Authority as the power generation and transmission system and resource development agency, of the Tennessee Valley region.

The report on water resources and power which is the subject of your investigation can be simply and accurately described as the second TVA veto message of Mr. Herbert Hoover, Chairman of the Commission.

I have recently examined a document entitled "Veto Message Relating to Disposition of Muscle Shoals," dated March 3, 1931, and signed by Herbert Hoover, President, United States of America. In it the former President ridiculed a congressional act proposing to establish a 3-member Commission to operate the Government's dam and chemical facilities at Muscle Shoals and to construct Cove Creek and other dams on the Tennessee and its tributaries. In his message, the former President said: "It won't work." He stated the power operations of the project would "show a loss." With reference to the chemical operations of the proposed Commission, the former President forecast: "It can be stated with assurance that no chemical industry with its constantly changing

technology and equipment, its intricate problems of sales and distribution, can be successfully conducted by the Government."

The "it won't work" veto delayed the birth of TVA by 2 years. Now, after 22 years of magnificently successful operation in all phases of its activities, the new veto message is a brutal death warrant to cut down this proud, proven, and internationally famous model of river and regional resource development.

Mr. JONES. The bill which the mayor referred to is the veto message on the Muscle Shoals Act of 1931.

Mr. HUNDLEY. Yes, sir.

Mr. JONES. The author of that bill was George W. Norris, a member of the President's own party.

Mr. HUNDLEY. Yes, sir. [Reading:]

Mr. Chairman, it was a doubtful pleasure for me to appear before the Task Force on Water Resources and Power of the Hoover Commission at its Chattanooga hearings in June of last year. They had TVA in the dock and on trial. The presiding judge, Mr. Hoover, had done his work well. I have never seen a better packed jury more obviously bent on a directed and loaded verdict. Never was there any group of men more determined or unanimous in where they wanted to go before they had even seen the roadmap.

So, today, I am going to take this so-called report insofar as it applies to TVA and use it for the purposes the task force and the Commission intended. Right now, before your eyes, I am going to use this kit labeled "How To Tear Up TVA." It will do the job.

Here is the Commission's formula step by step:

Step 1. Negotiate at least one Dixon-Yates type deal annually. Yes; revival of the Dixon-Yates contract is the inevitable meaning of recommendation No. 10 that TVA (and other governmental agencies) "cease the building of steam plants" and get needed power increased by interconnecting with neighboring private-power systems. The present TVA service area is experiencing a normal increase in electrical consumption requiring the expenditure of 150 to 200 million dollars yearly for new steam-generating facilities. Obviously, within a few years, every power company surrounding the Tennessee Valley would have its Dixon-Yates contract.

Step 2. Adopt the Budget Bureau's version of a TVA self-financing plan to heap extra and excessive costs on the system. Recommendation No. 9 of the Commission would require the establishment of TVA wholesale rates by the Federal Power Commission under a formula involving multiple charges for amortization, depreciation, high interest, and Federal tax payments exceeding even those of similar private utilities. TVA has heretofore clearly financed its operating costs from revenues without any subsidy whatever from the United States Treasury or taxpayer, as established by the dissenting opinion of Representative Holifield, submitted in the Commission report. But under the TVA self-financing plan the Hoover Commission-Budget Bureau's proposals for interest charges at 3 percent (exceeding the actual Federal cost of money by one-half) and the requirement of amortization as well as depreciation, would increase TVA's annual fixed charges by some $40 million, constituting an excessive burden on a purely revenue-financed enterprise.

Step. 3. Strangle TVA and destroy its efficiency through Washington control. Recommendation 1 (h) of the Commission would require that all of TVA's expenditures, even in the case of its own revenues which do not obligate the United States taxpayers or the United States Treasury in any manner, be controlled by the Budget Bureau and the Congress through the appropriation process. This would destroy the ability of TVA to act promptly and efficiently as an independent, corporate agency. Not only would the policies of the Authority be within the control of the President and the Congress, as is proper, but also the details of administration. Its efficiency would go out the window.

Step 4. Deny the 148 municipal and cooperative distributors of TVA power the right to secure their electric supply from TVA. That is the effect of recommendation No. 11 calling for elimination of the preference clause. Private utilities would bid for TVA power on the same basis as our municipalities and co-ops and would be guaranteed “a share” of TVA power. This is, of course, an effort to destroy the utility responsibility that TVA has had for almost half a generation for generation and transmission of electricity in its service territory, a responsibility no different from that of private electric utilities in their service areas.

70818-56-pt. 4- -5

I have not mentioned the numerous recommendations of the task force which were favorably mentioned in the full Commission's report without being formalized into recommendations. For example, the Commission views with much favor the task force's recommendation that TVA flood control and other nonpower activities be surrendered to other agencies.

I defy anyone to predict the survival of TVA if the recommendations cited are put into effect. I defy anyone to claim with proof that the Authoriy could adequately supply the power needs of this territory at reasonable rates if these recommendations were put into effect. I defy anyone to prove that we in the valley would not be confronted, if these recommendations are applied, with tremendous increases in our power rates, drastic shortages of electricity and general economic stultification and chaos.

Mr. Chairman and members of the committee, we can best describe these recommendations of the task force as applied to TVA and others which apply to public power and resource development in general throughout the country, as "The empty do-it-yourself kit." Open this kit and what do you find there? No tools; just a set of instructions about why it should not be done, how not to do it, how to tear down what you have already done.

This empty kit has been in use in New England for the last 22 years and by contrast the Tennessee Valley in that time has largely solved its water resource problem. With the deepest feeling of distress and sympathy, I point out how tragic and expensive the consequences are to flood-ravaged New England.

The key to the Commission's entire program is "destroy public power in America." It has viewed the broad and frightful problem of water-resource development in this country through the narrow keyhole of the private electric utility lobby's fight against public power. The result has been a shameful be

trayal of the needs of our people and the future of our country.

Yes, you have learned already in your New England hearings, about which we have read in our paper here, that the private utilities managed to keep Federal resource enterprise in New England from gaining a foothold. The territory was left as the province of private power. It was proven there that private utilities exploit those water resources guaranteed to produce a lucrative profit and neglect all the rest-flood control, navigation, water supply for industrial and domestic purposes, water for irrigation, recreation, fish, and wildlife, etc. Mr. Chairman, Citizens for TVA, Inc., and the leadership of the Tennessee Valley, stand ready to carry the good word about how to develop the resources of a river to our friends in New England. It has been with a sad heart during recent years that we have borne the private-power-generated slurs and criticisms of our friends in New England about low-cost TVA power. They have complained incorrectly of our stealing New England industry. Floods and the highest cost power in the country may be converting New England into the "Nation's No. 1 economic problem"-the label once applied to our region. We can recommend to our neighbors in the East the antithesis of Mr. Hoover's catastrophic plan; instead, they should try a TVA which has contributed so successfully to better use of natural and human resources of this region.

Mr. Chairman, I shall not reiterate for you the well-known facts about the enormous success of the TVA operations. This success was not denied by either the task force or the Commission. The only charges leveled against TVA was that its successful operations are not fair to other regions, are not selfsustaining, are not in accordance with certain prejudiced conceptions of the private enterprise system. The private utility monopoly system's great fear of the TVA cost-of-production yardstick and its competitive effect on their rates and sluggish monopoly practices was evident throughout both reports.

But it might be in order to comment once again, as I did face to face before the task force on Water Resources and Power in Chattanooga, about what is surely one of the most prejudiced and unwholesomely constituted bodies ever assembled in the history of this country for the stated purposes of performing a service in the general public interest. I speak of the task force itself.

Let me go back to that fateful day on June 1, 1954, when Admiral Moreell led his task force into the Tennessee Valley in what we felt to be, and now know to have been, a Trojan horse invasion with the predetermined mission of knocking out TVA. After reminding Admiral Moreell of his own statement and that of Chairman Hoover of the parent Commission, labeling TVA and similar Federal enterprises as examples of "creeping socialism," and after calling to the attention of the task force the publicly recorded statements of most of its members in condemnation of public power and TVA-type resource development, I concluded: "Despite this evidence of bias, and despite the publicly stated aim

of Mr. Hoover to 'get the Federal Government out of the business of generating and distributing power as soon as possible,' I am bold enough to urge you nevertheless to consider the TVA openmindedly.' Even Mr. Hoover could not swallow the raw prejudice and the clumsy meat-ax approach of the Moreell wrecking crew attack on TVA.

Unless this committee, the Congress, and the people of the United States sort out this hodgepodge of prejudiced conceptions of power and water resource development, concocted by the Hoover Commission and its task force, not merely the Tennessee Valley but all America, now and in future generations, will pay a fearful price from adoption of the recommended policy of abdication of Federal responsibilities in this field.

That concludes Mayor Dempster's statement, Mr. Chairman.
Mr. JONES. Thank you very much, Mr. Hundley.

Do you have any questions, Mr. Reuss?

Mr. REUSS. Just this question: On the last page of your statement you say:

Even Mr. Hoover could not swallow the raw prejudice and the clumsy meat-ax approach of the Moreell wrecking crew attack on TVA.

What is your evidence for that statement?

Mr. HUNDLEY. I am not sure whether he is referring here, sir, to the hearing we had in Chattanooga or not. Apparently that is what he is referring to.

Mr. JONES. Let me explain to Mr. Reuss that this is a statement made by Mayor Dempster.

Mr. HUNDLEY. That is correct.

Mr. JONES. Mr. Hundley is reading the statement for the mayor because the mayor could not be here today.

Mr. HUNDLEY. That is correct. I think, though, that he is referring here to the hearing held by Admiral Moreell's group in Chattanooga.

Mr. REUSS. Was Mr. Hoover there?

Mr. HUNDLEY. Mr. Moreell was there-Admiral Moreell was there. Mr. REUSS. Was Mr. Hoover there?

Mr. HUNDLEY. No; he was not.

Mr. REUSS. Mr. Herbert Hoover was not there, I gather?
Mr. HUNDLEY. No. He was not there himself.

No.

With your permission I would like this to be placed in the record. Mr. JONES. You have read the statement, so without objection it will be made a part of the record.

Mr. Lipscomb?

Mr. LIPSCOMB. Mr. Hundley, did I understand you to say you are connected with the Citizens for TVA?

Mr. HUNDLEY. I am secretary of Citizens for TVA.

Mr. LIPSCOMB. Could you explain what the organization is?

Mr. HUNDLEY. The organization is a citizens' organization designed to stand up for TVA, for the citizens' interests. It represents the citizens of the valley.

Mr. LIPSCOMB. Do you mean municipalities and the State

Mr. HUNDLEY. And cooperatives.

Mr. LIPSCOMB. Are all members?

Mr. HUNDLEY. And cooperatives. The citizens of this area.

Mr. LIPSCOMB. You say in your statement they are 55,000 strong. Mr. HUNDLEY. That is correct. That is how many have contributed to Citizens for TVA and become members of Citizens for TVA. Mr. LIPSCOMB. What is the objective of Citizens for TVA right now?