Mr. JONES. Do you believe that people of the political philosophy that believes that there is a preference as to the common property or State property-that people are Socialists if they believe that the people are entitled to it before the vested interests could acquire the rights of the property? Mr. NICHOLSON. I think we resent that about as much as any good American would, the implication that we are Socialists in our thinking. We subscribe to the theory that the members of our cooperatives, good owners-farmers in most cases-have subscribed to the free enterprise system as abundantly as anybody in this country. We feel that they belong to and help operate and own our systems, largely because of their unselfish interest in proving their own personal net worth. They have become members of an organization that provided a service that they do not under any circumstances get anywhere else. Mr. JONES. Do you think that the Bonneville Administration is a Socialistic enterprise? Mr. NICHOLSON. No; I do not. Mr. JONES. Do you think that the Niagara, if it were developed by the Federal Government, would be a Socialistic venture on the part of the Federal Government? Mr. NICHOLSON. No; I do not, sir. Mr. JONES. Why? Mr. NICHOLSON. I think it is in the interest of the people; I think it is bringing back a great natural resource to the people that it belongs to in the first place. I think it is a fair and proper method of taking an advantage that belongs to the people back to the people in the quickest and shortest possible way. I see nothing Socialistic about it. Mr. JONES. Do you think there is any obligation on the part of the Federal Government to give remedial help to the flood areas of Pennsylvania? Mr. NICHOLSON. We feel that there is a definite responsibility and we feel that we can only turn in times of great stress for something that cannot, will not be provided from any other source than the Federal Government. Mr. JONES. Do you think the Federal Government should make investments in projects of a permanent type that would prohibit a recurrence of the flood that you have experienced in Pennsylvania? Mr. NICHOLSON. I think definitely it would be incumbent upon the Federal Government to consider such. Mr. JONES. If the Federal Government were to build a dam and generate hydroelectric power, do you think that the people would be entitled to it in preference to some of the utility companies? Mr. NICHOLSON. I think that the advantage of any such construction should certainly be channeled to the people and in a method Mr. JONES. Do you think the construction of those projects should wait the time and convenience of the private utilities as to when they think it would be wise and advantageous to their business to construct the project? Mr. NICHOLSON. The answer to that, sir, is an emphatic no. I do not think the time can be spared for such reluctant consideration on their part. Mr. JONES. In the task-force report on page 607, item 3 of one of the recommendations, the task force writes: Where interstate streams are involved, States should be encouraged and, as a prerequisite to Federal participation, be required to create interstate compacts for the purpose of dealing with water-resources development. Now, do you think that INCODEL has been a demonstration of the ineffectiveness of dealing with the problem? Mr. NICHOLSON. We think that ÎNCODEL, of course, has been a complete failure. We even raise this question: We think that maybe there is something a little fishy about the situation there an organization or a plan set up that would cause district against district and State against State to arrive at some sort of agreement that would be virtually impossible—it is pretty hard for 2 people to agree, let alone 4 States. Mr. JONES. To say the least of it, you had about 20 years of effort. Mr. NICHOLSON. With no results. Mr. JONES. So you can satisfy the members of the Hoover Commission on account of the fact that you have tried an interstate compact, and you can satisfy them on that point before you ask for Federal assistance? Mr. NICHOLSON. I think that is fairly obvious. Certainly, we have given it a fair trial. Mr. JONES. Another thing, it makes the recommendation also on page 607, item 7 (d), it says: Amend the power preference law to insure the administration of Federal power projects to provide fair, equitable, nondiscriminatory treatment of all consumers and distributors of power, public and private. Do you agree with that proposal? Mr. NICHOLSON. No, sir; I do not. Mr. JONES. Why? Mr. NICHOLSON. I think it is a poor line of thinking; certainly, it has been a part of the advertising and the propaganda that we have been reading about and hearing about. Mr. JONES. Would not that recommendation amend the Flood Control Act, section 5 of the act of 1944? Mr. NICHOLSON. In my opinion, it would, and thereby relieve us of any protection that we might have under that act. Mr. JONES. Would it not amend the REA Act and Bonneville? Mr. JONES. TVA? Mr. NICHOLSON. It would. Mr. JONES. Federal Power Act? Mr. NICHOLSON. Certainly. Mr. JONES. Can you think of any Federal legislation, even the Atomic Energy Act, that we passed last year? It has a preference .section in it. Mr. NICHOLSON. All of them. Mr. JONES. If that recommendation were to be placed into effect, do you think that the people of this country would have priority over a private utility? Mr. NICHOLSON. I most certainly do not. I think it would insure that the private utilities would obtain all the power and then sell it to us at a profit to themselves. Mr. JONES. What is wrong with the people getting the profit instead of the utility? Is there anything wrong with that? Mr. NICHOLSON. Frankly, I cannot see anything wrong with the people obtaining the benefits of something they have already paid for. So far as profits are concerned, we feel Mr. JONES. Do you know of any utility that operates without a franchise? Mr. NICHOLSON. No; I do not. Mr. JONES. Where do they get that franchise? Mr. NICHOLSON. Of course, it comes from the people. Mr. JONES. The people. You mean the people create an instrument to become its master and cannot take away the same powers that they give to a body corporate? Mr. NICHOLSON. It does not make too much sense, does it, sir, that what the people give they cannot take away? In my opinion, certainly what the people have to give, they can take away. Mr. JONES. So there is no such thing as a private utility, then, in the sense that it is doing a public function, performing a public function? Mr. NICHOLSON. I would say not. Mr. JONES. And it is a monopoly? Mr. NICHOLSON. Guaranteed. Mr. JONES. All utilities are a monopoly? Mr. JONES. Otherwise, it could not operate. Mr. NICHOLSON. That is right. Mr. JONES. Now, do you know of any business in the United States that you can engage in-with bad management—that the law guarantees a profit, like a private utility? Mr. NICHOLSON. Nothing to my knowledge, sir. Mr. LIPSCOMB. Mr. Chairman, what do you mean by "bad management"? Mr. JONES. Well, it does not make any difference how it is managed; it is guaranteed a profit. Mr. LIPSCOMB. You said private utilities with bad management. Mr. JONES. Yes, sir; bad management, good management; it is guaranteed a profit. That is all. Mr. LIPSCOMB. Mr. Nicholson, do you feel that there should be no so-called private utility? Mr. NICHOLSON. No; I think that a balance certainly should be found between the two. Mr. LIPSCOMB. Are you against all private utility? Mr. NICHOLSON. No; I am not. I think they have a very definite part in our economy. Mr. LIPSCOMB. Have you had the opportunity to read the Hoover Commission Report on Water Resources and Power? Mr. NICHOLSON. Yes; I have. Mr. LIPSCOMB. Would you care to comment on the recommendations of the Hoover Commission report? Mr. NICHOLSON. In general? Mr. LIPSCOMB. And how they affect you, and I am not asking you to testify on the task force report, which has no effect in this particular case. This is the Hoover Commission report that we are studying. Mr. NICHOLSON. Of course. Mr. LIPSCOMB. How does it affect you? Mr. NICHOLSON. We have read, of course, the task force and the final Hoover Commission report, and we can draw no particular separation. It seems that the ideas of the task force are reflected in the final document that we call the Hoover Commission report. Mr. JONES. Would the gentleman yield for just a question? Mr. LIPSCOMB. Yes, sir. Mr. JONES. You might in your reply include some of the public utterances of Herbert Hoover on the subject, and see if you can divide those between what Mr. Hoover thinks and the task force report the report and what is said publicly. Mr. NICHOLSON. Of course, I have no record of those statements and I am sure that they would be most interesting and enlightening, and I would like very much to include them in because I think it would probably be helpful to answer. Mr. LIPSCOMB. Have you read them at this time? Mr. NICHOLSON. I have not. Mr. LIPSCOMB. Why not let the Chairman introduce them instead of yourself? Mr. JONES. It would be a voluminous record. Mr. NICHOLSON. In attempting Mr. JONES. Have you ever read the speech that Herbert Hoover made in 1953 at Cleveland when he said that TVA was socialistic, and it naturally followed that everybody who believes that TVA is a good instrument of Government was a Socialist? Did you ever hear that? (The speech referred to follows:) ADDRESS BY HON. HERBERT HOOVER AT THE DIAMOND JUBILEE OF THE CASE INSTITUTE OF TECHNOLOGY, CLEVELAND, OHIO, SATURDAY EVENING, APRIL 11, 1953 SOCIALIZATION OF ELECTRIC POWER This is a celebration of the founding of a great institution dedicated to scientific research and the training of engineers and scientists. You seek to sharpen their abilities and initiative for a climate of freemen. It is an appropriate time for discussion of some of the forces in our Federal Government which have been destructive of such a climate. In the field of Federal electric power we have an example of 20 years of creeping socialism with a demonstration of its results. Three years ago the Commission on Organization of the Executive Branch of the Government, under my chairmanship, made an investigation into the Federal activities in electric power. As the Commission was not dealing with public policies, its recommendations were confined to administrative reforms. Even these have not been carried out. The highly critical reports of our staff of accountants and engineers amply illuminated the results of this Socialist invasion. And at once let me state that the present administration is not responsible for this situation; they inherited it on January 20, 1953. WHAT IS THE AMERICAN WAY OF LIFE? Before I go into more detail I wish to say something as to what the American way of freemen really is. The Socialists, with their ideas imported from Europe, totally misconstrue the unique structure of American life. They envisage it in terms of European societies. Ours is a system of freemen and free enterprise in which our concepts have steadily departed from those of the Old World in two directions. We have conceived that, to have freemen, we must be free from the economic tyrannies which were nurtured in Europe's laissez-faire, dog-eat-dog system of economy. Freemen can no more permit private economic power without checks and balances than governmental power without checks and balances. The great enterprises of production and distribution can be used for economic oppression. To prevent this oppression of freemen, we originated Government regulation unique in the world. We regulate rates and services of natural monopolies such as the electric-power utilities. We insist upon freedom from trade monopolies and the enforcement of constructive competition. We adopted this economic philosophy 70 years ago in a revolution from European concepts and practices. And in another departure from European social structures we have developed a far greater expansion of free cooperation between men in community interest. Its extent is without parallel in any other country. It gained force from the necessities of a pioneer people where cooperative action was vital to their existence. Today, I dare say, we have a million nongovernmental organizations for cooperative action in our country. They include thousands of health, educational, sports, musical, social, business, farmers, and labor organizations. They have been created without the aid of bureaucrats. In some aspects we could add to these our insurance and savings banks and our corporations in general. And we hold 10,000 annual conventions of them and survive unending speeches and banquets. This cooperative system is self-government of the people outside of government. It is the most powerful development among freemen that has taken place in all the world. The Old World, however, went on with its lack of effective economic safeguards for freemen and its dearth of cooperation in the American sense. One result was the rise of socialism as a protest. I emphasize this unique structure of our American economic and social life because it is into this system, far divorced from the Old World, that our fuzzyminded Socialists are striving to inject ideas foreign to our concept of life. And they have made progress with these adulterants. They intrude into many avenues of American life. And they threaten a new oppression of freemen greater than the old dog-eat-dog economy. Tonight I shall appraise the aspects of creeping socialism in the electricpower industry by the Federal Government only. Rightly or wrongly the State and municipal governments do engage in electric enterprises. But at least their activities respond to the will and scrutiny of local government. Nor do I include the Rural Electrification Administration in this discussion although it receives great Government subsidies. It has worthy purpose, but that operation is so small a percent of the electric power in the country that it cannot eat up the private industry. PRIVATE ENTERPRISE IN ELECTRICITY In the electric field there are certain transcendent facts. First. Under the initiative of freemen we developed the technology and use of electricity far beyond any other country. Second. Stemming from private enterprise, we have created a per capita supply of electrical power for our people 3 times that of the combined Western European nations and 11 times the average of the whole foreign world. Third. Private enterprise could keep in pace with demand, and could have more advantageously distributed the power from Federal water-conservation projects. Fourth. With our advancing technology and individual initiative, the average price of household electric power is sold today by our private enterprise utilities at one-third of the price of 30 years ago-and that is while most other commodities and wages have increased by 50 percent to 100 percent. There is no such parallel in any other commodity. Despite these results from a free economy these concepts of freemen were abandoned 20 years ago when the Federal Government entered into the socialization of electric power in a big way. THE METHOD OF SOCIALIZATION The device by which our Federal bureaucracy started to socialize this industry was through the electric power from our multiple-purpose water-conservation dams. We needed these dams. And we need more of them. They were built to serve navigation, flood control, irrigation and domestic water supplies, and to provide electric energy. However, the central question here is not the creation of this electric power but using it to promote socialism. The first step toward |