and allocations of cost among functions of multipurpose projects may be made in terms of the purposes to be served.

"Public expenditures on resources programs should be stated separately as a public-investment budget. Such public investment should be a relatively stable factor in the total national investment, geared to meeting the needs for soil conservation, reforestation, pollution control, flood control, reclamation of land, recreational opportunity, and public power supply rather than to theoretical budget balancing. As such it would become a dynamic and stabilizing factor in the national economy.

"In making recommendations to the Congress we hope the Commission will think in terms of existing policies and functions to be preserved and that it will include among them the following:

"Policies and functions which should be preserved

"Federal policies and functions in the field of resources development, with special reference to power, which should be preserved might be briefly summarized as follows:

"(1) We urge continued Federal multiple-purpose development of the water and related land resources of river basins for soil conservation, improved forestation, flood control, water supply, pollution control, irrigation, navigation, hydroelectric power, enhancement of wildlife, and recreation. (See exhibits 15, 16, and 22.)

"(2) We urge continued marketing of hydroelectric energy from such programs in a manner best designed to assure the most widespread use at the lowest possible rates consistent with payment of all costs properly allocated to power. The planning, construction, and operation of projects, and the marketing of power from projects should be designed to achieve maximum efficiency, i. e., to most power at the lowest cost. (See exhibit 17.)

"(3) To give effect to the above policy, we urge the construction of transmission lines and steam stations where necessary. (See exhibit 17.)

"(4) Federal loans and technical assistance for the expansion of rural electric cooperative systems and rural power districts, including, where necessary, to correct monopoly power-supply situations, the construction and operation by such systems of their own generation and transmission facilities. (See exhibit 18.) "(5) We urge the continuation of the Tennessee Valley Authority as presently organized and operated with adequate funds for expansion of power supply to meet the nedes of existing customers, including Federal military installations. (See exhibit 19.)

"(6) We urge the maintenance and strengthening of the preference rights of nonprofit electric systems to first call on all federally generated power as essential to the promotion of rural electrification and the maintenance of a yardstick of competition in the electric industry. All Federal power should be available to preference customers at all times, giving consideration to the necessity for due and legal notice to nonpreference users. (See exhibits 16, 17, 20, and 23.) "Recommendations for improvement in performance

"Thsee policies and functions could be more efficiently and economically carried out by adoption of the following recommendations:

"(1) Substitution of single basin or regional Federal agencies having unified responsibility for the resource programs of given natural areas, in place of the divided responsibility represented by agency setup. Such agencies should be public corporations authorized to plan and carry out comprehensive water- and land-resources programs, as well as provide leadership in research and planning directed at more efficient utilization of other regional resources, all in cooperation with State and local agencies, including private enterprise. The objective of each such regional agency should be conservation of resources and wider economic opportunity.

"(2) Provision for performance of the developmental work of such agencies to the greatest possible extent by force account, rather than on a contractual basis. This should include provision for financing which will facilitate progress of projects in accordance with construction schedules designed to make the best possible use of equipment, personnel, and all overhead items.

"(3) Vesting in such agencies of complete control of all future construction works involving major uses of the water resources, whether by State, local, or private agencies. The principle should be 1 river, 1 agency, 1 program.

"Recommendations for new policies and functions

"New policies and functions for Federal participation in the Nation's electric power supply should include:

"(1) Federal investigation and planning to provide for future power supply in abundance at low cost through providing very large-scale regional transmission grids integrating power production from hydroelectric developments, steamgenerating stations located close to large coal and lignite fields, atomic powerplants, and possibly wind power.

"(2) Federal provision for carrying out the program formulated through such investigation, including construction of large Federal atomic-power stations to supply public and rural electric cooperative systems, particularly in those regions where opportunity for public hydro are lacking.

"(3) Federal prohibition of the use of ratepayers funds to spread propaganda against competition in the utility industry or to influence elections. (See exhibit 21.)

“(4) Consideration of a policy of limiting Federal corporation taxes on private power companies to that portion of net income in excess of a fair return on a net investment rate base."

Mr. Chairman, I would like to read to you our concluding recommendations to the task force:

"It is our sincere hope that this task force in its report and that the Commission in its report will bring to bear upon this vital area the best intelligence in the land. The composition of both the task force and the Commission raise some doubts as to the objectivity of both groups, but we are hoping that the men on both levels can and will lift themselves above the preconceptions which their positions and associations would lead us to believe they bring to this task.

"If the Commission brings to the Congress findings of fact and legislative recommendations designed to promote an abundance of electric energy at the lowest possible cost; if the Commission makes recommendations designed to make Federal resource development more efficient, better organized and less costly; if, in short, the Commission's report reflects the interest of all of the people, the farmers of the country will be among its strongest supporters.

"But if the Commission brings to the Congress recommendations designed to promote monopoly and scarcity and high cost energy; if the recommendations contemplate the weakening or destruction of competition in the electric industry, including the destruction of the rural electric systems; if the recommendations point to turning over our great resources to private monopoly to exploit; if the recommendations, in short, are designed to enrich that 1 percent of the people who draw down 66 percent of all corporate dividends (or did between 1919 and 1947) at the expense of the standard of living, national security, and freedom of the rest of us, your reports and recommendations will become a matter for bitter discussion around the breakfast tables of millions of rural families and your work will have been in vain except for whatever comfort the vested interests may gain by thumbing wishfully through the volumes of your reports.

"We hope and pray you will give the Congress, the administration, and the people reports and recommendations that we can all long be proud of, for your's is an opportunity rare in our history."

SECTION III

Mr. Chairman, I would like to group the balance of my remarks under three headings: (1) The philosophy and preconceptions of the task force and the Commission members who did not dissent from the recommendations; (2) the effect the adoption of these recommendations would have upon the rural electrification program and the national economy, and (3) the extent to which some of the recommendations made in these reports are already being foisted upon the people by administrative action.

Despite the pleas of the rural electric systems, Mr. Chairman, the recommendations of the task force and of the Hoover Commission report proper disregarded the needs and wishes of the farmers of this country, indeed the recommendations could just as well have been lifted bodily from the propaganda of the commercial power companies. Study of the five volumes leaves one simply astounded at the brazen disregard of the truth, the careful compilation of financial figures which are almost wholly misleading, and the careful manner in which the staff of the task force and Commission wrote into their figures and arguments the basic philosophy of the big power companies and the Commission Chairman, Mr. Hoover.

Since I do not plan to take the time of the committee to comment in great detail on these documents, I would like to direct your attention to the basic philos ophy which sticks out all too obviously throughout almost every page of these reports, as contrasted to the history and development of the Federal power and rural electrification programs.

THE PHILOSOPHY OF THE HOOVER COMMISSION STAFF AND THOSE MEMBERS OF THE TASK FORCE AND COMMISSION PROPER WHO DID NOT DISSENT

1. The most basic preconception which runs throughout these reports is that Federal action in the field of water and power is socially and economically undesirable. It is clear that the writers and those who subscribed to their writing would like to convince the Congress and the people that they believe in local and State governmental action in these fields and that such action is a part of the American way but that Federal action can rarely if ever be justified and will lead to socialism and dictatorship.

The strategy behind this preconception is that State and local governments are so restricted in their legal rights and powers, so limited in their financial ability, and so much more easily influenced by the great corporations that if the Commission and task force could persuade the people to block the Federal Government the result, in effect, would be to remove all Government from the field of water resources and power except in those areas of domestic water supply and related local matters where the big corporations are not interested in operating.

To disguise this strategy, the Commission and the task force piously affirm a belief in the development and conservation of water resources, but in the policy recommendations they deny this belief by making impossible the effective control of river basins.

reports of Mr. Hoover, it is interesting In vetoing the Muscle Shoals Act passed

The aversion of these gentlemen to Federal action is wholly explainable on the basis of the aversion they have for effective public action in development. They cover their real intentions by a hypocritical adherence to freedom and local control. Some propagandists in the current struggle for the minds of men attempt to rewrite history, but the Hoover Commission set an all-time high by attempting to recreate the earth in the image of their own desires. Since these reports are certainly the to note some of the history of his views. by the Congress in 1933, Mr. Hoover said: "The real development of the resources and industries of the Tennessee Valley can only be accomplished by the people in that valley themselves *** I would, therefore, suggest that the States of Alabama and Tennessee, who are the ones primarily concerned should set up a commission of their own representatives, together with a representative from the national farm organizations and the Corps of Engineers; that there be vested in that commission full authority to lease the plants at Muscle Shoals in the interest of the local community and agriculture generally (Congressional Record, vol. 74, pt. 7, pp. 7046-7048).

Such a commission was created. And the results were nil, just as any informed person would have suspected. Mr. Hoover's long-standing loyalty to no governmental action or only ineffective governmental action was demonstrated. Incidentally, in the debate over the veto, Senator Hugo L. Black, of Alabama, said, in attacking Mr. Hoover's figures justifying the veto: "Either the facts as stated by the President are incorrect or the facts as stated by the Army engineers in their report to this body, which were filed on March 24, 1930, are incorrect."

When Mr. Hoover was President, his Attorney General, William D. Mitchell, handed down an opinion that "minor part" licenses could be issued to power companies seeking to develop Federal power sites. The effect of this ruling would have been to deprive the Federal Government of control over an estimated 80 percent of the Nation's waterpower sites. This opinion was an effort to turn back the clock on 30 years of water policy-by administrative act. The power companies moved in for the kill, submitting applications for sites in various areas, applications based upon the ruling of the Attorney General. Fortunately, the conservationists fought the matter out in the courts with the power companies and on December 16, 1940, years later, the Supreme Court threw Mr. Mitchell's opinion into the discard and upheld the constitutionality of the Federal Water Power Act.

Another basic preconception (and misconception) of the task force and the Commission is that the electric industry is a nicely regulated monopoly which can furnish the Nation with the necessary electric energy without competition from yardsticks. Over and over through the reports it is asserted that private utilities

are effectively regulated-by local, State, and Federal agencies. This is the power company line, unadulterated. It is interesting to note the history of power company propaganda on this point. First they fought regulation, at any level, as a denial of their legal rights and as socialism. Then as regulation of security issues, bookkeeping, and in a crude way, rates of return became law they shifted to the view that such controls should be reasonable and they have exerted every effort to weaken the laws in the legislatures and the courts, to weaken the staffs of agencies by limiting appropriations and influencing elections and appointments. Finally, they have embraced the remnants of the regulatory laws (for the moment) as being effective and a satisfactory protection for the electric investor and consumer. But they embrace regulation only in the hopes of destroying competition, as is clearly shown in their political and propaganda efforts. The power companies are well aware that the regulatory agencies cannot under the law force them to adopt a dynamic rate policy-to lower rates so that increased consump tion will maintain profits but expand electric use at the same time. The function of the yardstick public plants is to force that kind of rate policy, so the yardstick plants must be destroyed, they say.

Since Mr. Hoover in these reports now embraces utility regulation, it is interesting to look into his history on this point. In an address before the National Association of Railroad and Utility Commissions entitled "Why the Public Interest Requires State Rather Than Federal Regulation of Electric Public Utilities” October 14, 1925, he said, "No Federal authority is required," because State regulation "has been effective." And further, in the same speech :

"A considerable amount of speculation is going on, especially in the stocks of holding companies, and it may well be condemned, but what I wish to get clear is that in intelligent State regulation neither watered capital nor speculation can effect the rates paid by the consumers.

"If in the passage of time, the unexpected, either economic or legal, should happen and we find an occupied field requiring regulation, it will be time enough to talk of Federal control. No such condition exists today and is not apparent in the future."

As Mr. Hoover spoke, the most gigantic looting campaign in the history of this Nation was under way in the electric utility industry; consumers and investors both were being robbed right and left by the Hobsons, Insulls, and their ilk. Yet he saw no need for Federal regulation. Ratepayers were being denied the fruits of technological progress; investors were being robbed of their savings; and the power company speculations were helping to bring on the stock market crash and the depression. Later, as President, Mr. Hoover recommended Federal regulation-after the looting campaign had ended in disaster, but no administration bill to achieve this end was ever sent down to the Congress. Federal regulation was to be delayed until 1935. And, contrary to Mr. Hoover's comments on the effects of stock watering, it was necessary for the Federal Power Commission to squeeze $1.6 billion of water out of the power companies' books— $1.6 billion of water compared to the total $2.3 billion investment in the whole Federal power program in 1953.

3. Another preconception under which the task force and Commission labored was that when any profit corporation can be given title to a power site and develop it, such title or license should be given, but that if some profit corporation cannot do the job-as would be true in the overwhelming majority of cases-the Federal Government should go into a partnership with the power companies and turn over to them the revenue-producing power facilities by one financial arrangement or another. In other words, the reports insist that any time waterpower is developed the fruits should go to profit corporations. The private power companies have long urged this kind of giveaway partnership; the Hoover Commission and task force have embraced the idea; and the present administration in Washington is pushing it vigorously. Only the people seem to have doubts about the desirability of having their pockets picked.

The history of this kind of "partnership" is long, but I would like to give one example. As early as 1906 the Muscle Shoals Hydro Electric Power Co. was lusting for the Muscle Shoals power site. They loudly insisted that the Tennessee River should be developed and proposed that the Government enter into partnership with them. Under the partnership, the Government would control navigation; the power companies would get the power. The Army engineers endorsed the power company deal, but the liberal Republicans in the Congress were successful in delaying the scheme until the outbreak of World War I buried it.

Mr. Chairman, I think it is well to take cognizance of the fact that so far as I know the first of the phoney partnerships between the private power companies and the Federal Government was proposed here at Muscle Shoals in 1906 and that it was primarily the people in Mr. Hoover's party who killed the proposal, only to have a later administration salvage this hoary scheme and peddle it. Had that scheme succeeded, there would have been no TVA, no yardstick, no full development, nothing but monopoly profit and a little navigation.

In their statements on the blessedness of ineffective governmental action in resource development, in their ideas on the effectiveness of utility regulation rather than yardstick competition, and in their endorsement of "partnership" the preconceptions of the Commission and task force show through, clear as day. But behind these preconceptions is a view far more ominous: It is clear that the endorsers of these reports are not only opposed to effective political democracy in the field of resources, they are opposed to any operations which run counter to the desires of the great corporations and their owners and managers. No figure is too fraudulent, no argument too inconsistent or illogical that they will not summon it up to sanctify monopoly and corporate domination of this vital field. The thinking behind such tactics is the thinking of men to whom private corporate power is sacred and governmental action on behalf of the common man is wicked. This is the thinking of people who support the corporate state wherein the people become the helpless serfs of a kind of corporate feudalism and the Federal Government becomes the tool of the corporations instead of the servant of the people.

THE FEDERAL POWER PROGRAM AS A PEOPLE'S PROGRAM

The Federal power program has rested on simple logic: (1) Rivers run to the sea through precincts, counties, and States. Rivers are integral wholes and their use and development must be basinwide regardless of political boundaries. Thus the Congress and the courts and the Constitution have placed them under the control of the only political entity broad enough to make control possible and effective the Federal Government. (2) The Federal protection and development of waterpower is the result of the belief that since the rivers belong to all the people the fruits of their development belong to all the people and should be utilized for the maximum public benefit. (3) It has followed that the development of electric energy from our rivers could have been turned over to the private monopolies which control 80 percent of the electric industry in the Nation where the fruits would have been profit to a handful of investors. But the policy of the Congress has been that this electric power should be used to supply citizens at cost and in the process should serve as an example and a pressure to compel an otherwise monopolistic industry to act a little like a competitive industry. This is the meaning of preference and the yardstick policy.

Now, we are asked to change our views, to believe that real rivers do not exist; that the people have no right to nonprofit electric service; and that the "earth and the fullness thereof" is properly the property of a few. I do not believe the Congress or the people will fall for this propaganda. know the farmers won't. In reading the task-force report, I kept thinking of Thomas Jefferson, and a phrase from the last letter he ever wrote (to Roger C. Weightman, June 24, 1826). In this letter, Jefferson was declining an invitation to attend a celebration of Independence Day because of his health. He died 2 weeks later. In this letter, he said:

"The form (of government) which we have substituted, restores the free right to the unbounded exercise of reason and freedom of opinion. * ** 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."

It is a far cry from Jefferson's concept of democratic government, by and for the people, to the reports we are discussing today where the name of the Federal Government has been prostituted to corporate greed. There are still those who believe that "freedom" is in jeopardy if the "favored few booted and spurred" are not permitted to loot the people at will.

Mr. Chairman, I would like to comment briefly on the Hoover Commission report proper as it would affect the Federal power program and the farmer's electric systems, over 300 of which get their power directly or indirectly from Federal power agencies. Briefly the effect of the adoption of any considerable