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facility built by the Federal Government to drive the hydroelectric generators. That was my interpretation of that particular part of it. I certainly want to get this straight.

Mr. Jones. You had better not try to interpret what the Bureau of the Budget people said.

Mr. EVERHART. That is exactly what we do not want to do.

Mr. Jones. So, therefore, I do not think it would be proper to make a charge against those people there for any nominal or stated consideration for the use by the utility, and therefore it should not be a part of it. You are interpreting what you think they might have meant and it would not, in my opinion, be a justification for making that allegation.

Mr. EVERHART. No, sir. I certainly do not want to do that, and that is the reason why there was no prolonged discussion on the capital part of this transaction.

Mr. LIPSCOMB. Was there any prolonged discussion on anything you have told us about this conference you have had?

Mr. EVERHART. I certainly think so.

Mr. LIPSCOMB. I mean on this particular part. I do not mean on the valid part of the conference you had with them and the brief you were submitting on the part of the Cumberland Valley Association.

Mr. EVERHART. I stated the substance of the conversation. I will be glad to restate it.

Mr. JONES. Before you get into it, Mr. Lipscomb, let me say this: I want to get that provision out where the change is suggested, and I want the telegram referred back to the witness in order that we can have the corrected portion read so that it actually alleges what transpired at that meeting.

Mr. LIPSCOMB. I do not know what the policy of the subcommittee chairman is, but if we are making allegations against the Bureau of the Budget and we are going to have testimony from them, would it not be well to swear the witness?

Mr. JONES. I think it would certainly be unfair to make any allegations about the Bureau of the Budget except upon the basis of the testimony given by this witness. It is not the allegation of the chairman of the committee, nor the committee, that what is alleged by the witness is true. It is based upon a statement he has made here which I asked to be the subject of inquiry by the assistant to the President, because the Bureau of the Budget is an arm of the President. Therefore this is requesting him to make inquiries as to whether or not these facts actually took place, with a further petition that if they did take place they be remedied, because it is certainly a solicitation by the Bureau of the Budget to have an illegal act committed for the purpose of securing what could not be obtained through any lawful procedure.

Certainly we do not intend to defer water resources development to suit the convenience, the profit, the pleasure and the joy of a private utility company. Therefore I think it should be a subject of inquiry, and I feel that if this is found to be true, Mr. Adams, I am sure, will correct the situation and see that it does not become a policy of the Government or the Bureau of the Budget.

Mr. EVERHART. Mr. Chairman, I would like to reiterate that
Mr. JONES. Just a moment. Off the record,
(Discussion off the record.)

Mr. JONES. Mr. Clerk, you will change the telegram to be directed to the Director of the Bureau of the Budget rather than to the Assistant to the President.

Mr. STURDEVANT. Mr. Rowland Hughes.

Mr. Jones. Now read the telegram into the record at this point as corrected by the witness, Mr. Everhart.

Mr. EVERHART. It reads: Testimony presented at subcommittee hearing today discloses shocking effort by Bureau of Budget to impose a private utility veto on congressionally author. ized multipurpose project on lower Cumberland River in Kentucky. Testimony came from Charles M. Everhart, Nashville, president of Cumberland Valley Association. In company with other citizens Mr. Everhart was told in Washington, October 19, by Budget Bureau official identified as either Mr. Schwartz, Rappaport, or Schad, that they would have a much better case for the Cumberland project if they could get the Kentucky Utilities Co. or other private utilities to take over the power features of the proposed dam. The witness added that the Bureau official said that it was expected that a nominal payment would be made to the utilities.

The proper wording would be "charged to the utility," would it not, or, “made by the utility”?

Mr. Jones. "Charged to the utility.”
Mr. EVERHART. All right.

Mr. LIPSCOMB. Why doesn't the court reporter read back what the gentleman testified to this morning, instead of enlarging on the testimony at this particular time?

Mr. JoNEs. What I want to be sure of is not to make any charge to the Bureau of the Budget other than what is factually correct. That is the only reason I am having him go over it. I want him to be sure that what he says and the factual information disclosed in the telegram is what actually took place.

Here is a copy of the formal testimony.

Mr. EVERHART. It is a little difficult to take somebody else's words and relate them to what I said this morning.

Mr. LIPSCOMB. Is the content any different than what you testified to?

Mr. EVERHART. There is certainly different wording to this extent. I believe I testified this morning, Mr. Reporter, that they told us that our project, the lower Cumberland project, would—after reading this I am getting confused myself. Just a minute, please.

Well, of course, the wording can't be testified to anyhow. There is no record. So substantially I suppose it is all right.

Mr. LIPSCOMB. I know, sir, but you are making an allegation which you want to stand behind.

Mr. EVERHART. I will stand behind it, and there are five other gentlemen who were present who can all be called, if necessary. If the committee would like to hear it, I can elaborate on how this discussion came about that lead up to this particular statement on the part of the Bureau of the Budget officials.

Mr. JONES. Let us have that information.

Mr. EVERHART. Mr. R. V. Green, who is executive secretary of the Paducah Association of Commerce, was designated before we went into the Bureau of the Budget, to discuss the power aspects. Each of us, of course, had taken a little part in the presentation. He got into his discussion of the power shortage in the lower Cumberland

Valley, and how much they needed additional power at the present time. One of the Bureau of the Budget officials raised some question that I do not recall now, and Mr. Green informed the Bureau of the Budget officials that he knew all about private power companies because he was with Kentucky Utilities for 18 years.

They in turn asked him if he thought that some private utilities could be interested in taking over the power generating facilities of this lower Cumberland project. Mr. Green stated that he didn't think any private power company would be interested in taking it over because of the 135,000 kilowatt, I believe it is, output, or proposed output, of this particular project. He didn't think any private power company would take it over on that basis.

So then the remark was made that they thought we would certainly have a much better presentation for the start of our lower Cumberland project if we could interest—that is exactly how it came about, and I think, if my testimony needs to be corroborated, as I say,

there are five additional people who were there.

Mr. JONES. Did that telegram state in substance what transpired !
Mr. EVERHART. In substance, yes, sir.
Mr. JONES. As corrected ?
Mr. EVERHART. As corrected.
Mr. JONES. Are there any further questions?
Mr. EVERHART. And I will stand behind it.

Mr. LIPSCOMB. Mr. Chairman, may we have the full telegram reread as it now stands!

Mr. Jones. The clerk will read the telegram as corrected.

Mr. STURDEVANT. Telegram to the Honorable Rowland Hughes, Director, Bureau of Budget, Washington, D. C.

Testimony presented at subcommittee hearing today discloses shocking effort by Bureau of Budget to impose a private utility veto on congressionally authorized multipurpose project on lower Cumberland River in Kentucky. Testimony came from Charles M. Everhart, Nashville, president of Cumberland Valley Association. In company with other citizens Mr. Everhart was told in Washington October 19 by Budget Bureau official identified as either Mr. Schwartz, Rappaport or Schad, that they would have a much better case for the Cumberland project if they could get the Kentucky Utilities Co. or other private utilities to take over the power features of the proposed dam. The witness added that the Bureau official said it was expected that a nominal payment would be charged to the utility for the future use of water for hydroelectric generation. This outrageous flouting of the will of Congress is most reprehensible. It is a bargaincounter sale of public property that departs radically from established Federal policy. It should be the subject of immediate inquiry by the Office of the President. I urge you to bring a quick halt to such solicitations by the Bureau of the Budget.

Signed Robert E. Jones, Member of Congress, chairman, Special Subcommittee on Water Resources and Power.

A copy of this telegram is being sent to Congressman Earl Chudoff, of Pennsylvania, chairman of the subcommittee investigating power policies of the Federal Government.

Mr. JONES. There is one more change to be made. "It should be the subject of immediate inquiry by your office," instead of that by the Office of the President.

Is there any further questioning of Mr. Everhart?
Mr. Reuss. Yes. You have just heard that telegram read, have :

you not?

Mr. Reuss. Your answer is yes?

Mr. EVERHART. Yes; I have.

Mr. Reuss. Are the facts set forth in that telegram the truth, to the best of your knowledge and belief! ?

Mr. ÉVERHART. As to substance, yes, sir.

Mrs. GRIFFITHS. Was it Mr. Green who made the statement that a public utility company would not be interested ?

Mr. EVERÉART. In his opinion, and based on his 18 years of experience in the public utilities business.

Mrs. GRIFFITHS. Did he state why!

Mr. EVERHART. Because of the low kilowatt output of this particular project.

Mrs. GRIFFITHS. That it would not be profitable for them?
Mr. EVERHART. That is right. For the investment purely on a

power basis.

Mr. JONES. Thank you very much, Mr. Everhart.

Our next witness is Mr. Paul Tidwell, Centerville, Tenn., manager of the Meriwether Lewis Electric Co-Op, and representing the Tennessee Valley Public Power Association.

All right, Mr. Tidwell.



Mr. TIDWELL. Mr. Chairman and members of the committee, my name is Paul H. Tidwell. I am manager of the Meriwether Lewis Electric Cooperative, Centerville, Tenn. I am the Tennessee director of the National Rural Electric Cooperative Association and a member of the executive committee of the Tennessee Valley Public Power Association. I am representing this association, whose membership is composed of a majority of the 150 cooperative and municipal power distributors.

I consider it an honor and a privilege to appear before your committee on a subject that is so vital to all of the people of this region. The water resources and power report is so broad in scope that my remarks shall be brief and directed only to the questions of TVA and REA.

Before I begin the discussion I should like to pay tribute to the members of the subcommittee who are sacrificing their

time away from their constituents to carry on these hearings. I particularly want to say that the committee is very fortunate, and we are indeed happy, to have Congressman Bob Jones as chairman. He is our neighbor and our friend who is endeavoring to promote the welfare of the people of our country.

I should like to discuss some of the reasons why the Hoover Commission is unfair to the welfare and the progress of our people.

The Commission may have been empowered with authority to formulate policies, but it has been my impression that its duties were to make recommendations on reorganization of the Government and to leave policymaking to the Congress.

1. (a) We do not agree that public power generating systems should charge the same rates to their consumers as would private concerns.

(6) We do not subscribe to the recommendation that the Federal Government should cease to build steam plants.

(c) Upstream flood control should remain a part of the Federal flood-control plan and be supported by appropriations.

2. The whole concept of the report gives emphasis to profits rather than the low-cost power privileges and regional economies so well exemplified by the TVA program.

3. The report completely ignores the right of people to generate their own power. It ignores the general welfare clause of the United States Constitution which gives the Congress the power to promote the general welfare of the people through large-scale reclamation, irrigation, and other internal improvements.

4. Reference is made to the fact that the cost of TVA dams cost much more than their original estimates which were made as early as 1936. These were preliminary and the actual construction was carried out under rising material and labor costs that began to spiral upward shortly afterward. Underestimating is not limited to TVA, as exemplified by the Electric Bond & Share Co. construction at Paducah, Ry. Not only was the cost much higher than estimated, although it was a firm bid and not an estimation, as in the case of TVA, but the delay in construction could have been disastrous had we been in a state of real emergency..

5. The Hoover Commission's report says, and I quote that TVA should be required to secure capital for future improvements, when authorized by Congress, by issuing their own securities to the public without subordinating the present Federal investment, thus relieving the taxpayers of this burden.

However, enough of the task force proposals are included in the report to hamstring TVA's progress and to begin breaking it apart.

The people of the Tennessee Valley want the TVA to remain whole. They believe that this can be accomplished through the self-financing plan that was submitted to the Bureau of the Budget by the Board of Directors of TVA. This plan was not one that was thought up after the President asked for a self-financing plan, but was one that has been in the discussion stages for nearly 4 years among the members of the TVA staff. We will not be satisfied with a mutilated compromise of the original plan.

We do not feel that TVA is a burden on the taxpayers of the Nation, but rather it is a national asset. It proved to be such during World War II and is continuing to supply power to AEC at tremendous savings.

The yardstick rate which is being attacked by private power groups has brought to light the fact that when the costs of electricity are down where people can afford to use it, volume sales add to the profits.

I would like to bring this in as a personal experience.

This was demonstrated by the Tennessee Electric Power Co. when the TVA system came into being in 1933. The power company promoted the manufacture of a "TVA” model refrigerator, range, and water heater that sold for $79.50 each, installed. This was a price people could afford to pay even in the clutches of a depression. We hauled them out by the truckloads and peddled them from door to door. Every employee was a salesman. If the user couldn't buy a water heater, we rented him one for $1.50 a month. The result of this activity was that the company began to sell more kilowatthours and each year, and in spite of rate reductions, made more profit than ever before.

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