Total liabilities and investment of U. S. Government. 2, 026, 186, 638 2,040, 171, 975 2,092, 812, 975

Budget authorizations and receipts, expenditures and balances—Continued

1 Not included in these figures are commitments for fuel contracts which were $122,607,953 at June 30, 1955; $103,544,021 at June 30, 1956; and which are estimated at $100,000,000 as of June 30, 1957, and $100,000,000 as of June 30, 1958.

INTRODUCTION

The Tennessee Valley Authority is a corporation wholly owned by the Federal Government. It was created by the Congress in 1933 for the unified conservation and development of the resources of the Tennessee Valley. TVA is charged with the responsibility for developing the Tennessee River for navigation, flood control, and the generation of electric power; for chemical research and the production of experimental fertilizers useful in agriculture and national defense; and for encouraging, in the national interest, the agricultural and industrial development of the Tennessee Valley region.

The TVA is an independent agency under a Board of Directors responsible to the President and the Congress for the conduct of a coordinated resource development program. It is currently financed from two sources: Appropriated funds and corporate funds available as proceeds of its operations. The enactment of proposed legislation would provide for the issuance of revenue bonds as an additional means of financing power facilities.

APPROPRIATION FINANCED BUDGET

This budget proposes for 1958 an appropriation of $14,782,000 and utilization of $12,681,000 estimated to be carried forward from 1957, a total of $27,463,000, for the projects and programs summarized on pages 1 and 2. Of this amount, $1,784,000 is for power facilities continuing construction of generating units underway-and $15,556,000 is for navigation facilities, including $15,344,000 for continuing construction of a new lock at Wilson Dam. Capital additions required for other programs and distribution of administrative and general expenses bring the total estimate for acquisition of assets to $19,966,000. Appropriation financed operating expenses are estimated at $7,497,000.

CORPORATE FINANCED BUDGET

The Corporate financed obligations for 1958, summarized on pages 3 and 4, are estimated at $273,960,000: acquisition of assets, $102,269,000; expenses of operating programs and reimbursable services for other agencies, $170,562,000; and inventories, $1,129,000. Income is estimated at $282,345,000, of which $257,046,000 is from power operations. Estimated payments to the United States Treasury in 1958 total $12,480,000, of which $10,000,000 would be from power proceeds and the remainder from other proceeds. Payments from net power income made and budgeted through June 30, 1958, are considerably more than the amounts required to that date to provide for total payments over a 40-year period equal to appropriations made for power facilities in service. Mr. CANNON. The committee will be in order.

HISTORY OF MUSCLE SHOALS

Before we hear your opening statement, Dr. Paty, in the fall of 1906 I made a trip which covered the Mississippi, the Ohio, and the Tennessee Rivers, and I visited Muscle Shoals. That was 51 years ago. I looked at it with an unseeing eye; without realizing what it meant; without appreciating fully its possibilities, but I was tremendously impressed by it.

About a decade later I sat on the floor of the House at the desk when they were enacting legislation for TVA. We were approaching the war and the authorities were apprehensive for fear that we would be cut off from our supplies of nitrogen from Central and South America, and they were urging the construction of a plant down there to produce nitrogen. I remember very well hearing the statistics on how much nitrogen was in the air above an acre of land, and so forth. Those advocating the bill explained that this project would produce nitrogen for the manufacture of gunpowder in time of war and would produce nitrogen for the manufacture of fertilizer in time of peace.

Just about the time that we completed the plant and it was ready to start operation the war ended. We thought this plant would immediately start, as they explained in the debate, producing fertilizer for the benefit of the whole country. But along about that time Henry Ford, who had electrified the country by announcing that no man that worked in his plant should receive less than $5 a day no matter in what capacity, became interested in the plant and an effort was made to sell the plant to him. The matter was battled vigorously and rather bitterly at the time. Finally they decided not to sell it to Henry Ford. Thereupon they closed it down and they did not turn a wheel down there, so far as I am aware, until 1932.

I wish that you would give us by way of résumé, because I am not familiar with it-I do not know whether the rest of the committee are familiar with it or not-a sentence or two of the original purpose for which it was designed, by whom, so forth.

Dr. PATY. Do you refer to the Muscle Shoals area and the Wilson Dam?

Mr. CANNON. Yes.

Dr. PATY. You have brought it up to the period of the closing down of the plant when the war ended and there was no longer need for the nitrates.

Mr. CANNON. My account is merely from recollection. I may be, wrong about it. There may be some inaccuracies in the statements that I have made. Did I about outline the history of Muscle Shoals? Dr. PATY. I believe that you referred to 1932. It was 1933 when the TVA Act was passed.

PURPOSES OF TVA

Since that time--and you gentlemen are familiar with the actthe idea has been to develop the resources of a whole river basin for the benefit, not for just the people who lived in the basin, but the whole country. Navigation and flood control were incorporated in the act as among the primary purposes for which the water in the river and its tributaries was to be controlled and conserved. In addition to building engineering structures for these purposes, and for the generation and sale of power, TVA was directed to carry on a complementary program of land use to control the water on the land and prevent the erosion of the region's soil resources. I do not know how much into detail you want me to go.

Mr. CANNON. The feature of it that I mentioned was only one of many?

Dr. PATY. Yes.

Mr. CANNON. It was a multipurpose dam?

Dr. PATY. Yes.

Mr. CANNON. What were the various purposes intended to be served by the installation, who first conceived the idea, and when did construction really start?

Dr. PATY. Senator Norris on the Senate side was the author and the coauthor was Senator Lister Hill for the TVA Act, which gives the broad and specific purpose for which the development of the river system was to take place. As I stated, first, for flood control and then navigation; power incidental to the uses for flood control and navigation; reforestation; development of new and better fertilizers; an overall resource development program that would bring a region