Mr. BENNETT. This report of the Federal Power Commission.
Senator BONE. On the Northwestern Electric?

Mr. BENNETT. On all of them. It goes over the whole business.
Senator BONE. Yes.

Mr. BENNETT. All right. I will read it.

Senator BONE. You have gone into a great many angles of this. I think that the committee is curious.

Mr. BENNETT. If they want lots of it, all right.

Mr. SMITH. If I might offer the suggestion, Mr. Chairman. Why not let the witness just refer to the document and the pages on which this can be found, instead of recopying it in the record, unless you think that it should go in? If there is any considerable amount of it, he can just give us the benefit of a reference to it.

Mr. BENNETT. The point is that it covers, Senator, the amount of money that they have expended in each one of these places, you know, to defeat the P. U. D.'s. They spent around $43,000, $10,750, $1,500, $5,000, and $2,750. All of those sums were expended in that Tacoma election. I will give you the over-all figure.

Mr. SMITH. Do you have any figure for the southwestern part of Washington in that election?

Mr. BENNETT. For Yakima ?

Mr. SMITH. No; in the southwestern part of the State.

Mr. BENNETT. Yes; here it is. It only goes by companies, the amount that the different companies spent. You could locate them on the map and show us.

The Puget Sound Power & Light Co., the total amount that they expended was $152,031.06. That was what they dug up.

The Washington Water Power Co.-that is Spokane-spent $329,205.50.

Senator BURTON. In one election?

Mr. BENNETT. No. This covers a period of approximately 5 years. Mr. SMITH. What document are you quoting from?

Mr. BENNETT. I am quoting from the United States of America Federal Power Commission, Opinion No. 59, Docket No. IT-5647. Senator OVERTON. Were all of those expenditures held illegitimate? Mr. BENNETT. They say here that they are illegitimate. I am not saying so.

Senator OVERTON. Was that expended by these power companies? Mr. BENNETT. Yes.

They say:

The investigation disclosed that the accounting practices followed by these utilities, individually and collectively, were neither consistent nor uniform, that they disregarded the fundamentals of good accounting, and violated the Uniform System of Accounts prescribed by the Federal Power Commission.

Accounting records relating to political activities and expenditures therefor were meager and inadequate. Vouchers covering such expenditures were misleading and, in some cases, deliberately false.

Records were not maintained to show the time consumed or expenses incurred by employees on political and legislative matters or on efforts to mold and influence public opinion.

Expense accounts of employees, officers, and other paid workers were abused to hide political and legislative expenditures. For example, William H. Ude, an official of the Washington Water Power Co., charged $485 for a multisignature telegram in opposition to the Wheeler-Rayburn bill to operating expenses through his personal expense account. The keeping of expense accounts by Charles M. Sanford, secretary and political agent of the Pacific Power & Light Co. and

Northwestern Electric Co., became such a travesty that the companies eventually canceled his obligation to account for $2,850. Although there was thus no proper accounting for the use of these funds, the entire amount was charged to operating expenses. Through these means the operating expenses of the utilities were burdened with the cost of hiring indirectly individuals not otherwise identified with the utilities, with the payment of their expenses, hotel bills, etc., and with the financing of many other activities.

Many political expenditures were made indirectly to conceal the fact that they were being made by the utilities. Chairman of the Board and former President Franklin T. Griffith of the Portland General Electric Co. frankly admitted this. The extent and nature of these activities were concealed until the present investigation brought them to light. To the public they purported to be the activities of disinterested organizations and citizens rendering advice for the public weal. In fact they were actually subsidized partisan activities.

Various "front" organizations were provided with funds to campaign and promote political and legislative activities favorable to the utilities. The Washington State Taxpayers' Association was of this character, and during the 28 months ending with November 1940, received $115,000 from the utilities, substantially more than half of its revenues. During 1940 this association, in turn, advanced some $48,000 to the "Let the People Vote League" to support Initiative 139, a measure designed to cripple public power districts in the State of Washington. All the revenue of the Let People Vote League came from this source. There were many other allegedly disinterested organizations financed in large part by respondents in Oregon and Washington. Some of the principal ones, in addition to the Washington State Taxpayers Association and the Let the People Vote League, were: Washington Bureau of Governmental Research, Washington Business and Investors, Spokane Taxpayers Economy League, Oregon Business and Tax Research, Inc., Oregon Tax Fax, Inc., Oregon Tax Review Publishing Co., and many other so-called citizens' committees and local groups.

Mr. SMITH. So, Mr. Bennett, every time that you refer to those names as being a taxpayers' league, that should be "tax dodgers," shouldn't it?

Mr. BENNETT. Sure, it should be. That is what it was for [continuing reading]:

Typical of the public deception was the fact that the Washington State Taxpayers Association, far from being the independent public-spirited organization its name implied, was used as a tool of the utilities for their political purposes. For example, the Taxpayers Association, along with F. H. Young and the Washington Business and Investors, was used by the Pacific Power & Light Co. and Northwestern Electric Co. as a vehicle by which funds paid out by these utilities were conveyed to the United States National Bank in Portland, Oreg., to repay a debt of $48,000 ($46,000 plus interest) incurred by 60 of the companies' higherpaid employees in financing the political activities of the companies.

Employees' committees supporting the utilities' political activities were directed and financed by the utilities. Sixty of the higher-paid employees of the Northwestern and Pacific companies, referred to above, formed a committee known as the Northwestern-Pacific Employees Protective Committee. The committee never functioned as such, although the employees in question posted notes equal to their salaries for 2 months with the United States National Bank of Portland and secured a loan of $46,000.

The work of the committee and its funds were handled by Charles M. Sanford, political agent for the companies, in a devious series of check and cash transactions.

When the political campaign was over the companies bailed out their employee "protectors" and did it with the aid of their organizational "fronts" by a series of financial transactions based upon falsified vouchers.

Senator BONE. Will you tell the committee who signed that report? Mr. BENNETT. Who signed the report?

Senator BONE. Yes.

Mr. BENNETT. This is only a part of it.

Senator BONE. Yes; I know. I have all of it.

Mr. BENNETT [reading]:

Leland Olds, Chairman; Claude L. Draper, Commissioner; Basil Manly, Commissioner; Clyde L. Seavey, Commissioner; dated at Washington, D. C., this 27th day of February 1941. Leon M. Fuquay, secretary.

Then it goes on down and it shows that they also got a front composed of the leading lawyers in Yakima County. I am not going to name any names, because they are all my friends, every one of them. One of them got $5,500. Another got $1,600. Another got around $1,500; and so on down the line, for their services.

Those boys went on the air, you see, and made big speeches in favor of the power company, saying that we were just putting them out of business, that we were stealing their property, and all the rest of it and so on and so forth. And this thing tells it from A to Z, and I would advise any one of you that would like to read it to get a copy of it.

Senator BONE. There is also a concurring opinion by Commissioner Scott, which makes it unanimous. It concurs in the other, but it is a little more salty than the other.

Senator OVERTON. And all of this happened in Washington?
Mr. BENNETT. Yes. This happened in Washington.

Mr. SMITH. And in Oregon, too.

But, Mr. Bennett, these funds, of course, that these companies expended unlawfully in this vicious manner, as set forth in this report, were moneys that they collected from the public for electric light and power?

Mr. BENNETT. Everything came from the people. It didn't make any difference whether we agreed with them. We didn't have anything to say. My money and my electric bill for my hotel, $100 a month or $50, or whatever it was, went right into that to help these people to work against my interest.

That I don't like. Other people out there don't like it either. In other words, our money goes in to buy something that we don't want. Senator OVERTON. Is that all?

Mr. BENNETT. That is all, gentlemen.

Senator BURTON. Just one question. Then, as I understand it, your complaint is and your purpose in supporting this bill is that you cannot get lower rates without taking over the properties, and you cannot take over the properties without the help of this bill?

Mr. BENNETT. Without the help of this bill. That is the sum and substance of the whole thing.

STATEMENT OF G. A. PETERS, LEWIS COUNTY, WASH.

Senator BONE. Our usual practice is to let the folks know who you

are.

Mr. PETERS. My name is G. A. Peters. I am a poultry man in Lewis County, producing eggs and poultry.

I am a commissioner of Lewis County Public Utility District No. 1, secretary of that commission, and I am also president of the Southwest Washington Commissioners Association. I am also president of the Washington State Commissioners Association. I reside in Lewis County.

Mr. ANGELL. Those are similar positions to those held by Mr. Bennett in the eastern portion of the State?

Mr. PETERS. Yes; except that one of these organizations is for the whole State.

Senator BURTON. Are you a Granger?

Mr. PETERS. Yes; I also represent the Lewis County Public Ownership League.

I want to present to you what we went through in Lewis County. We organized in 1936. At first, we did not want to go into condemnation. We wanted to try to buy the property by negotiation. Senator OVERTON. What property? Where is this?

Mr. PETERS. Right here [indicating on map].
Senator OVERTON. That is near what large city?

Mr. PETERS. Between Tacoma and Portland. It is just about half way between Portland and Seattle.

Mr. ANGELL. What are the larger cities in that section?

Mr. PETERS. Chehalis and Centralia.

Mr. SMITH. Mr. Chairman, this county happens to be in my district.

Senator OVERTON. You say you wanted to buy the properties. From whom?

Mr. PETERS. We wanted to get into business and buy out the Puget Sound Power & Light property.

Senator OVERTON. You mean that part of the property that is in Lewis County?

Mr. PETERS. Yes. In Lewis County.

The southwest Washington districts at that time organized together, and they were meeting together and working together, figuring how to try to get in business.

Mr. ANGELL. May I interrupt to ask if the cities in this public utility district area are also a part of it, or did they remain?

Mr. PETERS. The city of Centralia has its own municipal plant.
Mr. ANGELL. How about Chehalis?

Mr. PETERS. And Chehalis has another one.

Mr. ANGELL. That is a part of the district?

Mr. PETERS. That is a part of the district.

Mr. SMITH. Mr. Peters, that Centralia plant was one of the pioneer plants in the State. Do you know when that was organized?

Mr. PETERS. I cannot just tell you.

Mr. SMITH. Sometime ago, anyway?

Mr. PETERS. That must have been along about 1934 or 1935, I should judge.

Senator BONE. You have a nice little hydro plant on the Nisqually River, have you not? I was counsel for your city when it went through that fight with private power forces in building that hydro plant.

Mr. PETERS. And at that time, when it was first organized, there was also the Washington State Commissioners Association formed, and, as I said, our Southwest Washington Commissioners Association was formed. And we employed at Southwest Washington at that time a fiscal agent by the name of Guy Meyers to do the negotiations and the financing for this property.

He was to receive no money if he made no deal. If he made a deal, it was on a percentage basis.

Mr. ANGELL. What percentage?

Mr. PETERS. I cannot remember. I think it was around 2 percent. We worked along with that for the 2 years, and at the end of the 2 years we were no further than we were when we started.

He came back to New York and tried to make negotiations, but it seemed like he failed to do so. He hadn't made any headway.

Then we worked on trying at that time to get some legislation. When the legislature met, we thought we could get through a bill giving us authority to form an over-all organization of commissioners so as to take over the system as a whole.

That was badly fought by the private power companies, and finally killed in the Rules Committee.

Senator BURTON. You mean, in the county you were forming that association?

Mr. PETERS. No; in the whole State. All the commissioners worked together to set up that over-all organization by the commissioners. It was not as a private organization, but as commissioners.

Senator BURTON. And you had sufficient of them so that you could have covered the whole territory of the Puget Sound Power & Light Co.?

Mr. PETERS. Yes. That is right.

That was fought bitterly by the private power interest and killed in the Rules Committee.

That being done, we immediately started condemnation actions. Senator BURTON. In your county?

Mr. PETERS. In our county, also in the county of Cowlitz.

Mr. SMITH. And Thurston?

Mr. PETERS. No. Thurston didn't come in at that time. They were a year later.

Mr. ANGELL. They acted as each separate district?

Mr. PETERS. Yes. Each separate.

Mr. ANGELL. So you had to bring separate suits?

Mr. PETERS. That is right.

Shortly after we filed these condemnation suits, we got a letter from Mr. Barnes, who is the head of the Engineers Public Service Co. We got a letter from him stating that he was willing to negotiate, but did not want to negotiate with a gun at his head; that if we would withdraw our condemnation suits and guarantee that no other suits would be filed during the process of negotiation, he would be willing to negotiate.

But he did not say at what figure or in what way. He might negotiate for a hundred years and get nowhere. But he wanted us to guarantee that we would not start another condemnation suit and would drop the condemnation suit that we had already started.

I took the stand, we all did, that we were willing to negotiate at almost any time, but would not be willing to drop the condemnation suit, because it was not necessary, but were willing to negotiate; and if an agreement would be reached, then the condemnation suit would be dropped.

So he wouldn't commit himself on that.