local agencies of government. It is our aim to work with them to the end that the contributions we make at the Federal level may be most effectively utilized.

In this connection, it may be stated that we adhere with faith to the traditional TVA philosophy: to treat each area as a whole, and to shun the piecemeal attack of building aimlessly, project upon project, for the sake only of creating monuments.

I have previously introduced Mr. Wagner, the most recent appointee to our Board; this is his first appearance before you in this capacity.

Senator HILL. He used to come to see us when he was General Manager.

And we are happy to welcome you here today, Mr. Wagner, as a member of the Board.

Mr. VOGEL. You have known him for many years as a staff member, and a very competent General Manager.

Senator HILL. I have indeed. He is a very efficient man. The only thing, when he takes you fishing he does not always see to it that you catch a fish.

Mr. VOGEL. Senator, if he has not told you about the big bass he caught-I think perhaps it was a year ago now-I think perhaps you have been missing something.

Senator HILL. I have seen that picture.

Mr. VOGEL. He carries that picture along with that of his twin grandchildren,

Now, in order that you may become better acquainted with him in the position which he presently holds, and because he has had many years' experience in the development of the TVA approach to resource development, I am going to suggest that you call upon him a little later to describe this program in somewhat greater detail.

Senator HILL. All right, we will do that, General.

FORESTRY RESEARCH AND DEMONSTRATION

Mr. VOGEL. A major valleywide activity included in water shed protection and improvement is forestry research and demonstration. The Tennessee Valley is a great timber area. It is becoming a better one, under the conditions of sound woodland management on the part of owners, and better utilization of timber by the forest industry.

Senator HILL. Is this not true, General, that prior to the time TVA began, there was very little sound conservation and management of our timberland?

Mr. VOGEL. That is true. And, at that time, very little attention was being given to the development of the valley forests. Now, of course, the situation has changed.

Over the past 10 years sawtimber growing stock has increased by 112 billion board-feet. This is the result of the increase in forest areas which the TVA program has promoted through reforestration efforts, and of better woods management, which we have stimulated by the wide use of demonstrations, conferences, and other educational

means.

The output of these improved forests has likewise increased. Currently the timber output is valued at $500 million a year. Properly

developed, managed, and used, the forest resources can contribute a billion dollars a year to the national production.

There are two new multimillion-dollar pulp and paper mills in the valley that employ nearly 6,000 people.

The TVA recently completed a study showing that the region can support additional mills using hardwoods. This would add significantly to the improvement of forest resources and the forest economy.

Now, again let me emphasize that TVA's forestry projects are cooperative. We work with the owners, the users, public agencies, and industrial groups. We cooperate with the U.S. Forest Service, with SCS, and the Agricultural Extension Service.

Our aim is to promote the wise use of natural resources in such a way as to improve the economy and protect the watershed, objectives which are fully compatible under conditions of sound management. Our 1962 plans are based on a continuation of forestry research and demonstration. This program discovers the facts, presents the facts, and appeals to self-interest and public interest to do what is best in the long term for the individual and for the region.

TOTAL APPROPRIATION REQUEST

Our appropriation requests for 1962 total $38,203,000. This is exclusive of the power program which will be financed with income from power sales and bond proceeds.

Senator HILL. There are not any funds in this bill to finance your power facilities?

Mr. VOGEL. That is right. We are entirely on our own there.

Senator HILL. As far as power is concerned, you are entirely on your own, and that "own" means that you can finance some, of course, from the revenues which you receive from the sale of power, and the other source of funds is, of course, the sale of bonds which we authorized here some 2 years ago?

Mr. VOGEL. That is right.

Our fertilizer operations will be financed principally from nonpower proceeds.

That concludes my opening statement, Mr. Chairman, and we are ready to proceed from this point as you may desire.

Senator HILL. General, we may arrive at this later on, but I think I will ask it now anyway.

TOTAL INVESTMENT AND ANNUAL RETURN

Senator Hayden, who is the chairman of the full committee, was not able to be here, he had another meeting, and he asked me to be sure to have in the record, he left this memorandum here:

The total gross investment in electric power facilities (total value of capital assets before deduction for depreciation and other reserves all the money which will be placed into the facilities).

Second, the total reimbursements applicable against the total investment. Three, the total reserves, if any, remaining after reimbursement.

Four, estimated annual rate of return on the investment.

And I am going to hand this over to you, sir.

Mr. VOGEL. With your permission, we will prepare that material for the record.

Senator HILL. Good. And we will have it appear at this point in the record.

(The information referred to follows:)

1. Gross investment in electric power facilities Completed plant (before depreciation)_ Construction in progress‒‒‒

Total gross investment---

June 30, 1961 (in millions)

$2,042. 5 161.7

2. Reimbursements applicable to appropriation financed portion of

above investment-..

3. Reserves of funds held for future use--

4. Estimated annual rate of return on the investment (percent)

2,204. 2

$195.1

$5.5

3.71

A complete presentation of the application and derivation of funds used in the power program is as follows:

Senator HILL. Do you suggest that we go on now with Mr. Wagner at this time, General?

Mr. VOGEL. Yes; I think it would be appropriate at this point to hear from Mr. Wagner.

Senator HILL. Mr. Wagner, suppose you give us a statement of the TVA viewpoint now, the history behind it, and the whole story of your tributary area development program.

Mr. WAGNER. Senator Hill, I will be very glad to do that.

This program has perhaps not been as well understood as we would like to have it, and I am grateful for this opportunity to describe it to you in some detail.

The tributary area development program includes TVA activities in several subareas in the Tennessee Valley where special and detailed attention is being given to economic development. These are defined areas where special problems inhibit economic growth, where specific

opportunities exist for substantial further development of the resource base, and of course where local groups have organized to turn their own energies, and those of their State and local governments, together with ours, to the problems of economic growth and area improvement. The roots of this program and the basic concepts which it involves go back to the very early days of TVA. It was recognized then-by TVA's first board of directors-that as TVA's various programs were carried forward areawide in a broad sweep of general coverage over the region, there would be smaller and identifiable areas in the valley where special conditions would require more precise and specific analysis and treatment to bring fullest economic development.

PARTICIPATION OF STATE AND LOCAL GOVERNMENTS

It was recognized by TVA's first board, too, that as development proceeded in all its phases, State and local governments would also participate. This has been the keystone of TVA's programs from the very beginning.

Senator HILL. They have done that from the very beginning? Mr. WAGNER. Yes, sir; it has been done.

Senator HILL. You do not distribute the power to the small local home consumer or some small business houses and places in town; that distribution is made by that particular city or that particular town, or that particular area, is it not?

Mr. WAGNER. That is right; power is distributed into the homes and farms by local institutions.

Senator HILL. You therefore have this joint enterprise of TVA with these local agencies or institutions; is that not right?

Mr. WAGNER. That is correct. And it has been so from the very beginning.

THE 1936 REPORT OF BOARD

The board's 1936 report to the Congress, for example, on the unified development of the Tennessee River, said that is this report (referring to volume)

A program of unified development for the Tennessee River Basin, in order to be most effective and economical, must have in view not only the functions of the Federal Government, but also the proper relating of these functions to the functions of State and local governments, and the activities carried forward under private initiative, to the end that the best total development may be achieved. This report makes no attempt to define specifically the sphere of the National Government or that of State and local governments or of private initiative. The distribution of responsibility must be gradually arrived at through determinations of policy by Congress and by the State legislatures in accordance with constitutional provisions.

Again, in speaking of the place of the smaller rivers of the valley in a unified development, the report stated:

Thus, the control of the smaller rivers should not be dominated by any single end, but by consideration of the greatest total benefit. To secure such results the Tennessee Valley Authority can serve as a coordinating agency, with planning and advice, and in appropriate cases by cooperation where contribution to navigation or flood control is clearly evident.

In a preliminary way, TVA very early earmarked some of the tributary problem areas for attention later, after the big job of providing the massive basic tools for resource development was further along.

TOTAL TRIBUTARY PROBLEM AREAS

As early as 1938, some 100 such areas were given a preliminary review. By the end of World War II, one small watershed was the subject of intensive study and concentrated activity. Here we undertook to demonstrate what might be accomplished in one small area, a single watershed, by the combined and intensified developmental efforts of Federal, State, and local agencies working with the people. It served as a proving ground for the development of administrative methods suitable for adaptation to meet the differing situations in the various small watersheds which make up the drainage basin of the Tennessee.

You, Senator Hill, summarized some aspects of that program on the Senate floor in the spring of 1953 when the TVA appropriation for fiscal 1954 was under consideration.

You spoke, for example, of the tremendous importance of the unified approach to resource development, viewing the job as a total job, utilizing all resources. And you spoke also of the great importance of local participation if the development efforts were to bear lasting fruit.

Senator HILL. If I may interrupt you there, to go back and look over the record for that time, you will find that many other Senators expressed that same view and recognized that the TVA program involved the Federal Government doing all that it should do and was justified in doing, but that for total development you had to have more. You had to have the help, the cooperation, the contributions from the local people, so to speak-the cities and the municipalities and the State itself-associated together in a great joint enterprise. Mr. WAGNER. That is correct.

AREA PROGRAMS UNDERWAY

The program has grown since that modest beginning. Today 10 area programs are underway, and since March of this year the coordinating committee originally in charge of these activities in TVA has been succeeded by a small full-time staff. This is under the direction of Richard Kilbourne, who was formerly TVA's Director of Forestry Relations and at the same time coordinator within TVA of this program.

Now I should like to tell you in somewhat greater detail just what we do in this program, to describe the methods and processes we employ

Senator HILL. All right, give us that picture.

Mr. WAGNER. Thank you, I will.

And I would like also to give you some examples of the problems and the accomplishments of some of the special projects that we have underway.

The local organizations involved in this program are not alike, the problems of the areas are not the same, nor is progress equal. Only the purpose is identical.

It is an effort undertaken jointly by TVA, State, and local agencies and by private individuals working together, first, to appraise the total resource base of the area and its potential for economic growth, then to undertake activities to reduce the obstacles which can be iden