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This same thing has now been happening to the power systems that border the TVA area. The record shows that they have made more money, both gross and net, as a result of the yardstick rate. Their common stocks have made phenomenal increases as compared with those of companies farther away from the TVA and Bonneville
Municipal systems have generally had lower rates than those charged by the power companies that surround them. It is interesting to note that the power company usually has a standing offer to buy the municipal power system.
America has always had public power agencies in these municipally owned systems. There were four of them as early as 1882 and today they number in the thousands. These public systems have always been financed with public credit and have never been called upon to pay income taxes. Municipalities owning their own power systems, or communities choosing public power, have had the option of buying power from a private system or asking the Federal Government to come in as a power partner. This was an extension of the community right to choose public power with public fixed charges, free of Federal income taxes because of their nonprofit nature.
Today we feel that we have the same right to own (because we are paying for TVA with power revenues) and operate our power systems, and it is no more contrary to our fundamental economic system than it is for the Government to construct highways, operate the mail system, the public schools, public water systems, fire departments, or other public services.
6. The Commission has no recommendations to offer in such important areas of water-resource development as fish and wildlife conservation and recreation. Thousands of people from all over the Nation have enjoyed our fishing and recreation facilities made possible through the TVA resource development program. We do not believe private industry would develop and maintain these benefits.
7. The Commission completely ignores the need for any further development of Federal power. There is every evidence that the Government should not only stay in the power field but should expand it to assure our Nation an adequate supply of power to meet defense needs. If we maintain an adequate reserve of generating capacity to meet these needs, it will not be necessary to grant tax amortization certificates to power companies in order to get them to build needed capacity.
8. The Commission proposes to discontinue financing of rural electric needs through the Rural Electrification Administration and to abolish the agency. This will certainly impose disaster upon the electric cooperatives who have built large distribution systems based upon the fact that adequate financing would be available at reasonable rates. The 2-percent rate that has been available will go to 412 percent if the recommendation is followed. This will bring to an end rural line construction and continued development of our rural electrification program.
9. Federal power growth: According to the report it was only seven-tenths of 1 percent in 1933. In 1953 it was 12.4 percent. When all authorized construction is completed, the total will be 17 percent. I remember that before 1933, and while Mr. Hoover was President, less than 2 percent of America's farmers had electricity. The power companies said rural lines cost too much to build; that the farmers didn't need electricity, and if they had it they couldn't pay for it. The power companies were certainly correct in this assumption during Mr. Hoover's term as President.
This is another personal reference here. I was employed by the Tennessee Electric Power Co. for 11 years as a local manager prior to the acquisition of the power system by TVA in 1939. I was subjected to all of the reasons why the TVÅ was illegal, improper, immoral, and shouldn't be allowed to exist. The company told the local governing bodies of the towns and counties that the taxes paid by the company would be cut off if TVA took them over; that there was already more generating capacity than was needed; although I don't remember any criticism about the power that was being purchased at Wilson Dam by the company at 2 mills and was being sold for 8 cents. They were told that the TVA power system would become so involved in politics that service would be terrible.
Since the acquisition in 1939, I have served as manager of our cooperative. We acquired the distribution from the power company which consisted of 132 miles of distribution line to serve approximately 2,000 consumers in 5 counties. We have since added 1,460 miles of line and 8,950 additional user members. I am happy to report that our power system is nonpolitical, nonpartisan, and is taking its place along with the other 149 municipal and cooperative systems in providing good electric service to the 4 million consumers in the TVA area. I am happy to report that the towns and counties are collecting several times as much tax as was paid by the former company.
I often wonder if the 95 percent of our farmers that have electricity today would have ever had it if we had depended on the power companies to do the rural electrification job. Yes, the seven-tenths of 1 percent of public capacity in 1933 has now grown to 12.4 percent in 1953, but it has performed miracles in our power economy, not only in its direct consumption, but by its effects on the rates on the power purchased by rural cooperatives over the Nation.
In conclusion I would like to express my appreciation to the members of the subcommittee for the opportunity to make this appearance. On behalf of the distributors of TÙA power, I would like to ask the subcommittee to recommend to the Congress that the Rural Electrification Administration be continued as it now exists, and that the selffinancing plan for the Tennessee Valley Authority be approved as originally submitted by their Board of Directors.
Mr. Jones. Thank you very much, Mr. Tidwell.
Mr. LIPSCOMB. On page 5, at the bottom of the page, you refer to the present rate of interest that you are paying as cooperatives. You say that the 2-percent rate that has been available will go up. From whom do cooperatives borrow their money?
Mr. TIDWELL. From REA generally.
Mr. LIPSCOMB. What makes you assume it will go to 412 percent if the recommendations of the Hoover Commission are followed ?
Mr. TIDWELL. That was the rate of interest that was recommended if the Rural Electrification Administration would be abolished and taken over by some other financing agency. Mr. LIPSCOMB. Did the Hoover Commission recommend 412 percent? Mr. TIDWELL. That was my understanding.
Mr. LIPSCOMB. I do not know where they recommended 442 percent, but I was just taking note of your comments.
Mr. TIDWELL. I do not think I could give you the reference on it today, but I remember reading it.
Mr. LIPSCOMB. It seems to me that the General Accounting Office and others have indicated that 3 percent would be the rate, or that 3 percent is the rate which the Hoover Dam pays, and some others. I think you are paying that on the TVA, or that they are paying that on their bonds.
Was there any other comment you wanted to make on specific Hoover Commission recommendations?
Mr. TIDWELL. No, sir. I think not. I might say in reference to that, that I have read the dissent—the book that has been floating around here this morning-by Commissioner Chet Holifield. I certainly concur in that dissent almost in its entirety. I think I can say that on behalf of most of the people in our organization.
Mr. JONES. Thank you very much, Mr. Tidwell. It is good to have you today, sir. Mr. TIDWELL. Thank
you. Mr. JONES. Mr. O. F. Minton, Jr.
Mr. WISE. He is expected back about 4 o'clock. He was called out by reason of his wife's illness.
Mr. JONES. Mr. Tom Catron, of Corbin, Ky., president, Upper Cumberland Valley Development Association.
We are glad to have you, Mr. Catron.
STATEMENT OF TOM CATRON, CORBIN, KY, PRESIDENT, UPPER
CUMBERLAND VALLEY DEVELOPMENT ASSOCIATION
Mr. CATRON. Thank you, Mr. Chairman. Mr. JONES. You may proceed. Mr. CATRON. I am speaking as the president of the newly formed Upper Cumberland River Development Association. I am, I must
brandnew in the business of promoting dams, and so is my association.
The Hoover Commission identified such groups as ours as pressure groups and implied that we are all bad, leading or pressuring the Congress and various Government agencies, or both, into what, in the opinion of the Commission, must have been repeated and serious errors of judgment. I do not share the Commission's opinion. I feel strongly that, if there were no pressure groups operating on the popularly elected legislative and executive branches of the Government and Government's administrative agencies, government for the benefit of the governed might cease to exist. Since that is really the expressed purpose of our form of government, I am not ashamed to say from the outset that I represent such a pressure group.
The pressure is that of a region in the hills of southeastern Kentucky, one of the Nation's depression areas, in the midst of a period of national prosperity. We want a dam on the Laurel River, one of
the tributaries of the Cumberland River. And after that one is well started we want another dam on the Rockcastle and two more on the Big South Fork and, perhaps later, a half a dozen flood control, storage, and power dams even farther
up in the hills near the tips of half a dozen tributaries of the Cumberland.
The first four dams I have mentioned are a part of the comprehensive plan of the Corps of Engineers for the Cumberland River. They have never been authorized by Congress, but we are hopeful of getting Laurel authorized this year. Its cost will be from 25 to 30 million dollars, and the cost of all 4 will be about $100 million. And let me tell you, frankly, what that $100 million means to the people of southeastern Kentucky. It means jobs; 10,000 to 15,000, if you count the number of people given employment indirectly when a big construction project is underway.
Our people, along with those of the New England States, are those the leaders of the Government had in mind last week when they began to talk of a point 4 program for some areas. Corbin, the town where I have my automobile dealership, and the town whose mayor, Bob Daniel, is here with me, is on one edge of a vast area whose meat and bread was at one time soft-coal mining. If we were not living on the edge of this area and instead living right in the middle of it, I doubt if either of us would have had the price of a bus ticket down here. That is how bad things are in some sections of eastern Kentucky today. Several of our small rural counties have as many as 5,000 registered unemployed and little hope for a change in the jobless rolls.
If you gentlemen or the entire Congress should go by the book of the Hoover Commission's recommendations, I am afraid we would have to go to the bank and borrow $25 million as our share of $100 million worth of dams, before you would even listen to us.
If you know anything about how the bottom has dropped out of the economy of many sections of scutheastern Kentucky, you know how much chance we would ever have of raising that amount of money.
You also know what our chances would be of going to Kentucky Utilities and asking them to put up the $25 million for us. That would be nil. And, in addition to that, we don't want to. Corbin owns its own power-distribution system. Nearby Barbourville owns its distribution. And several other towns and REA cooperatives own their distribution systems. If our towns are to have much hope of growing and if those cooperatives are to provide the increased power needed by their members, we have to have the first call on the power. I believe it is 360 million kilowatts a year that will be generated by these 4 dams. The power from Laurel Dam would start us off good, and our little towns would start growing and employ the thousands of jobless in our area. Our needs for power would soak up the power to be generated by all four of the dams by the time they are finished.
I recognize that a majority of you gentlemen of the committee are Democrats, and I think I should tell you now that our area of eastern Kentucky is about the most Republican area, unless it could be east Tennessee, of any section of the South. But we don't think it's being either a Democrat or a Republican to ask for a dam. We think it's good business for us, the future of our area, and highly important to the growth of these United States.
I have traveled over east Tennessee for many years and have seen what a magnificent fresh start was given the people of that country
by the millions of dollars of Federal money spent in that territory on dams. That, back in 1933, was a depressed coal area too.
The money that was spent there made money for everybody as it rolled over and over. It has created opportunities for new industry, higher standards of living, increased taxes for all Government agencies. Page 44, volume II, of the Hoover Commission report, reads:
The nation gained $1 billion in income-tax collections from the Tennessee Valley States in 1953 alone as a result of the economic gains of that area following establishment of TVA.
This was part of a dissenting opinion, but I am sure that, if it was wrong, someone would have hollered until it was corrected.
One billion dollars a year in extra income taxes from a single region can do a lot toward cutting down budget deficits.
We don't want TVA on the upper Cumberland; we want to leave our river in the good hands of the Army Corps of Engineers. But, we want them to be given the money to plan and design our dam, and later on our three other dams, and later on our half a dozen other dams. Then—and it will only take a few years--we will be able to pay some of this multiplying money back to Uncle Sam as additional income taxes and square ourselves for what the people of the rest of the country have spent on us, which up to now has been little.
Then, looking at our situation another way, you might say this. We have already paid for our share of TVA's costs. We are not griping about that. We simply want our economy to have the same shove so we can get up off our economic knees.
We are, as I have said before, Republicans up in this territory, but we are commonsense Republicans and we recognize the long-term building value for a regional economy that comes from the construction of a permanent harness for our now wasted resources.
Now, in fact, they are worse than wasted. Unharnessed, they represent to all of us a constant danger. They are a source of floods. Every spring we look for the really big one that could knock us from our present economic position, on our knees, flat to the ground.
Lots of things have happened to change us from our once disinterested position about dams. . Of course, the first and biggest, was the collapse of so much of the soft-coal industry. But what really has opened our eyes lately is what has happened to New England. While we do not have the ocean in front of us to throw heavy tides in on us, we do have the extra high rainfall of the Appalachian Mountains, which about once every 10 or 20 years can unload rains of regionwide cloudburst proportions. We prefer to see that rain caught up in reservoirs to be used and reused all the way down the 652-mile length of the Cumberland River.
And, if you as Members of the Congress, will speak a good word for us, we will undertake to build for ourselves in our hills a flourishing new economy that will make you proud, and we will bind ourselves to pay Uncle Sam in new income taxes on our new incomes many
times the amount of money the Congress will spend on this investment.
Mr. JONES. That is an excellent statement, Mr. Catron; an excellent statement. It shows you have given some thought to the preparation of this.
Are there any questions?
Mr. Reuss. I would like to ask Mr. Catron this question: Do you have any Socialists up there in Corbin, Ky.?