Mr. JONES. It will appear at the appropriate point in the record, then, Mr. Reporter.

Mr. LIPSCOMB. Mr. Chairman, will it be possible for each member of the committee to have a copy of the transcript to study between now and our next meeting?

Mr. JONES. Yes; indeed.

The evidence at this hearing has convinced me that the Hoover Commission does not have the answer for the people of Pennsylvania, New Jersey, and New York, and particularly the people who live on the Delaware River.

It is clear (1) that this region needs more Federal help on water problems, not less, as the Hoover Commission recommends; (2) that Federal leadership is needed to help pull this region out of the muck of devastating floods and down from the heights of exorbitant electric rates. Otherwise, this great industrial empire will become static and its progress will come to a halt.

(3) Although interstate compacts are strongly favored by the Hoover group, INCODEL is exhibit A of the failure of interstate compacts.

(4) Floods, water-supply problems, all questions of proper resource developments, are historically and properly national problems, affected with a Federal interest.

The hearings have been most informative and I am grateful to the witnesses who have been here and presented their views to the committee.

Thank you for your courtesy and cooperation.

It will always be a pleasant memory in my mind of the visit that we have had in Mount Pocono these past 2 days.

Mr. LIPSCOMB. Mr. Chairman, I would like to make an observation. I cannot agree with your statement completely.

In the first place this is the beginning of a series of hearings to be held throughout the country on the Hoover Commission report, and I do not believe that any committee or the members of the committee should draw conclusions from the first hearing that they have held.

At this particular meeting, many of the witnesses have not read or were not prepared to testify on the Hoover Commission report, and I believe that their testimony, although informative, does not allow us to draw conclusions in such a short time.

As for your third point, on the INCODEL program, the Hoover Commission recommends interstate compacts in other sections of the country, too. INCODEL is one of many that may be possible, or are possible throughout the whole country, and to indict the whole recommendation because of your personal opinion on the INCODEL is not, in my opinion, the thing to do at this particular time.

I would like to reserve my particular feelings on this hearing until I have had a chance to read and digest the facts that have been presented to us, and I feel that the proper time to make the committee's intent and recommendations known is after we have gone throughout the country and actually gone in to the Hoover recommendations and how they would affect the Nation.

I have a deep sympathy for the people in the area and for what they have gone through. I believe that other committees, the Congress, and

the administration should look into it immediately to see what can be done to give them a hand, but that is not the jurisdiction of this committee. But as an individual Congressman I am deeply interested in it as part of my Federal responsibility.

I appreciate, too, the time the witnesses took and your courtesy, Mr. Chairman, and I am looking forward to the next meeting with a great deal of interest.

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

The committee will now be adjourned until next Wednesday at Raleigh, N. C.

(Whereupon, at 4: 25 p. m., Thursday, September 22, 1955, the hearing was adjourned, to reconvene on Wednesday, September 28, 1955, at Raleigh, N. C.)

70818-56-pt. 1- -17

APPENDIX

UTTERANCES BY TASK FORCE MEMBERS ON SUBJECT OF POWER

At the hearing in Mount Pocono, Pa., September 22, 1955, the Chairman directed the staff to insert in the record previous utterances of members of the Hoover Commission Task Force on the subject of power. They follow:

STATEMENT OF ADM. BEN MOREELL, CHAIRMAN OF THE TASK FORCE ON WATER RESOURCES AND POWER, BEFORE THE AMERICAN SOCIETY OF CIVIL ENGINEERS, ST. LOUIS, JUNE 15, 1955

PART II-CONCLUSIONS DRAWN FROM TASK FORCE STUDIES-PROPOSED IMPLEMENTATION OF THE HOOVER COMMISSION RECOMMENDATIONS

In part I of my statement, I said that I would present some conclusions which might be drawn from the studies of the task groups and the task force and suggest a method of implementation of the Hoover Commission recommendations after they are submitted to Congress.

I believe the most important conclusion is that Federal activities in the fields of water resource and power development have taken place without central supervision in the executive branch of the Government, except for cursory action by the Bureau of the Budget, which has never been adequately staffed for this purpose. Furthermore, there is no clear-cut, unified body of Federal water policy. Instead there are diverse policies for different types of development and different agencies, variously authorized and financed, each programed under different ground rules and often in conflict and competing with one another.

There is an imperative need for a clear-cut definition of the role and policies of the Federal Government within the framework of a consistent national water policy. The current Federal policies taken together result in a hodgepodge, many elements of which are contradictory. This, in turn, generates conflict among agencies, overlapping of functions, competition for position, and wasteful expenditures.

In keeping with the growth trend of all levels of government-Federal, State, county, and municipal-together with the policy over the past few decades of concentrating more and more power in Washington, the Federal Government has steadily assumed a larger and larger share of responsibility for water resource and power development. So much so that it has now become a dominant factor in enterprises which, under our traditional concept of sovereign States, should. be outside its domain.

In the field of hydroelectric development, the Federal Government has invaded a field which should be reserved for private enterprise. In 1933, the installed capacity of Federal power projects was less than 1 percent of all electric utilities of the country. By 1953, the Federal Government had become the largest single producer of electric power, producing 13.1 percent of all kilowatt-hours generated. Technically and financially, there is no present or prospective need for Federal power activities. It is logical to conclude that no additional Federal power projects should be constructed and that a start should be made on disposing of Federal projects to private industry or, if this is not feasible, to the States and local governments.

Federal power projects under construction and authorized (if these be also constructed) will, by 1960, more than double the 1953 capacity and, when all are completed, will triple it, reaching a total of 35 million kilowatts of installed capacity and representing a total outlay of $10 billion.

There is no lack of ability on the part of privately owned utilities to finance and install needed electric generating, transmission, and distribution facilities. During the past 13 years, they invested $13.2 billion in electric properties. And much more is now available for financing sound projects. The Federal Government does not owe a responsibility to supply any community, section, or region with its power requirements.

Another indication of the powerful movement toward centralized governernment is that the Federal Government has not, in the recent past, given sufficient consideration to non-Federal interest, opinion, and participation in water resource and power projects and there is every indication that local desires will receive less consideration in the future, unless this trend is stopped. In the last two decades, the Federal Government has shown a strong tendency to designate whole valleys and river basins as exclusive Federal domains for development of water-resource projects instead of encouraging local and private interests to undertake these works.

At the public hearings held by the task force, State highways officials again and again called attention to the fact that decisions on bridge clearances across navigable streams and whether or not drawbridges should be installed are made without proper attention to the extra cost to State highway departments or delays to highway traffic and that, frequently, the water traffic so accommodated is minor to nonexistent.

While some current legislation favors a closer relationship between State and Federal interests, it is noteworthy that Federal agencies do not generally consult effectively either among themselves or with State and local groups. Unfortunately, local authorities, in general, will not question projects which are paid for with Federal funds, preferring to yield to the powerful seduction of subsidies. In this case, as in many others, "he who pays the piper calls the tune;" the Federal Government bosses the show.

It is apparent from our studies that the Federal Government has used waterresource and power-development projects, which should be undertaken exclu sively for economic purposes, to accomplish indirect social and political ends. There are instances where projects are described as flood control, reclamation, or navigation measures when their real and obvious purpose is to produce hydroelectric power. Navigation-improvement projects have been constructed solely in order to bring pressure to bear on the railroads and truckers to reduce freight rates. Although Federal power production is described by existing legislation to be subservient and supplemental to other objectives of water-resource development, Federal agencies have recommended construction of multiple-purpose projects which were but thinly disguised hydroelectric developments. Also, Federal projects have been recommended whose sole purpose is the development of power with no attempt at disguise.

"

The construction of Federal power projects as a so-called yardstick to control the rates charged by investor-owned utilities is a snare and a delusion. I was taught in my schooldays here in St. Louis that there are 36 inches to the yard, But by virtue of failure to include taxes and because of low-interest financing, as well as other hidden subsidies, the yardstick proposed by public-power proponents has somewhere in the neighborhood of 23 inches.

The improvement, in recent years, of regulatory techniques and the successful administration of the various controls instituted by the States and the Federal Government over both operations and investments have been shown to provide ample safeguards for both consumer and investor. No short-change yardsticks are required.

Another conclusion which might be drawn from our studies is that the Federal Government has paid too much of the costs of water resource and power development and has required too litttle of the beneficiaries. Of the total of $85 billion invested by all public and private sources in water-resource development in the United States, the Federal Government has made a capital outlay of about $12 billion. The other $73 billion has been spent without benefit of Federal subsidy and, thus, the persons who financed those expenditures have been discriminated against, as have the other taxpayers of the country.

In some cases, beneficiaries have contributed a share to the costs of Federal projects but, with the exception of some unusual cases, the contribution has been minor.

In recent irrigation projects, the general range of repayments required from the beneficiaries has been between one-fourth and one-third of the capital costs and a few are as low as 10 percent. In no case have they been required to pay interest.