Mr. WILLKIE. If you find any water in this property I am perfectly willing for you to take it out. There is none. Mr. BIDDLE. No write-ups? Mr. WILLKIE. No write-ups; no. Acting Chairman SCHWARTZ. That doesn't apply to the water in the dams, does it? Mr. WILLKIE. I don't care much what becomes of that, after I get my problems out of the way. I will suggest a third method, sir, and that is the award of a proceeding in condemnation. NEGOTIATIONS WITH TENNESSEE VALLEY AUTHORITY Acting Chairman SCHWARTZ. Are you still negotiating with the T. V. A.? Mr. WILLKIE. Maybe I shouldn't say this, but I understand Mr. Lilienthal is quite sick. Maybe I am wrong about that. Mr. BIDDLE. Yes; he is. Acting Chairman SCHWARTZ. Aside from his illness you are still negotiating? Mr. WILLKIE. We have had an exchange of correspondence. Acting Chairman SCHWARTZ. If you did arrive at what you considered a fair price, we would have had all of this time wasted, we would have all wasted a lot of time characterizing each other? Mr. WILLKIE. Yes, but it won't happen that way. You have got your cities with this money, and here are your pressures, and they are terrific, and they are responsive to human nature, they have that vast amount of money in their hands which they didn't have to make. If this committee could create some fair method-it is not alone this thing Acting Chairman SCHWARTZ. Why add that, that they "didn't have to make"? Did you make all of the money you represent as trustee? Mr. WILLKIE. No, I didn't make it, but I am charged under the rule of business with it. I think they have a little different sense of responsibility about it. But let me say this. It is not alone this problem. Don't you see that unless there is a formula of some kind arrived at, that it is not alone here. The Government is developing things in the Northwest. Gentlemen, to be really serious, just as serious as I can say to you, I ought not to have the power to fix it, you ought not to have the power to fix it, no other individual ought to have the power to fix it, or to have pressure to do it with. There either ought to be a permanent form of arbitration, permanent form of condemnation, a permanent forming of value, because here is the effect it has-I am not discussing the question of public or private ownership, that is a disputatious question on which men have violently different views, but let us assume the Federal Government follows this policy, and let us assume that the people want wide areas of public operation, let's just assume that. There are 12 or 15 billion dollars invested in this utility business. Let's assume 15 years from now it is all going to be taken over by the Government. In the meantime a tremendous amount of capital has to be attracted into the business to keep it going. The Government, if it is eventually going to take it over, wants that money to go into it. I say you cannot have that power in the hands of individuals that way, to fix these prices. You ought to create some formula of value that is going to be uniform in its application, so whether my hair is red or white or somebody likes me or doesn't like me, or whether my property is in Tennessee or the State of Washington, or where, that I am entitled to go according to that formula. Or if you don't want to establish the formula, then there should be a method of arbitration set up, so that both parties can come in in hearings where they feel that they are justly and properly represented and have a fair hearing, and have the value determined, or there should be a method of condemnation, because you put a scare by this process into investors in other sections. This has nothing to do with what you gentlemen Representative BARDEN. I believe the ultimate goal of the representatives of the Government, or the agencies of the Government, is going to be to arrive at a fair conclusion in connection with it, and you are now trustee for these people. I accept that term to a certain extent. I think you are, if you are at the head of the organization. But it might be that it might reach the point where those who were buying out the properties could not assume freedom from bad faith or bad management of some former trustee who has handled it. Mr. WILLKIE. Let's assume all that to be true Representative BARDEN. Who has handled the companies? It may be in the past that there has been a tremendously bad management or financing in connection with it. If that is true, then as sad as it may be, the stockholders were responsible for that, and if it is their mistake they must assume their loss. But that doesn't relieve the Government of paying what it is now worth. Mr. WILLKIE. No, sir; nor does it do this, if that is true, and they think it is true here, if they do think it is true, why won't they submit it to arbitration? Representative BARDEN. Oh, well, now, you are asking me; I am listening. Mr. WILLKIE. All right; rhetorically. Representative BARDEN. I didn't direct my questions at you to start an argument. Mr. WILLKIE. I beg your pardon. Representative BARDEN. I really have a whole lot better feeling about the situation than you do. You are about to scare me off. Mr. BIDDLE. We will submit that question to the T. V. A. Mr. WILLKIE. I am sorry. Mr. BIDDLE. We will press it very strongly. Mr. WILLKIE. I want a fair method of determining these values. I know these properties are under a gun down there, with this P. W. A.T. V. A. combination. RELATIONSHIP OF CHATTANOOGA DEVELOPMENTS TO NEGOTIATIONS Representative WOLVERTON. In that connection, may I ask what has been the attitude of Chattanooga while you and Mr. Lilienthal have been carrying on negotiations? Mr. WILLKIE. Don't you see, Mr. Wolverton-let's take the picture in Chattanooga. We operated in Chattanooga for a good many years. Of course, the city votes in favor of municipal ownership under the circumstances. The arguments were made in these southern towns. that "Why, here is free money." Representative BARDEN. Which towns was that? Mr. WILLKIE. In these towns down in that area. "Here is free money, and you know that even as to the balance that the Government loans you, even if you don't pay it, they will never come down here and take it away from you. You get so much money free, and you get so much on a loan." They don't think the Government will ever foreclose; and then they get power from the T. V. A. There is no process by which you can stop that. Representative WOLVERTON. I think I have not made my question clear. COOPERATION FROM CHATTANOOGA POWER BOARD Mr. WILLKIE. The Chattanooga Power Board works in complete cooperation with the T. V. A. Representative WOLVERTON. In other words, you have plainly indicated, and there is no dispute about it, there is no method of condemnation at the present time? Mr. WILLKIE. That is right. Representative WOLVERTON. And there is no agency to fix, a disinterested agency, to fix a value of the property. I am interested in knowing, particularly with your reference to the gun on more than one occasion, what has been the attitude of Chattanooga, having voted for public ownership, toward your company during the time that you and Mr. Lilienthal have had the matter under discussion? Mr. WILLKIE. The Chattanooga Power Board works, in my observation, completely in accord with the T. V. A., in complete cooperation with the T. V. A. Representative WOLVERTON. When the president of that board appeared before us in Chattanooga, if I remember his testimony correctly, it showed that for a period of time at least that Chattanooga had insisted upon going on with its program, regardless of the negotiations that were being carried on between you and Mr. Lilienthal, and I wondered if under those circumstances you were exactly a free agent? Mr. WILLKIE. Of course, Mr. Wolverton, you understand, when I am negotiating with Mr. Lilienthal, and then the Chattanooga Power Board gets active that that assists Mr. Lilienthal greatly in talking to me about a less price. Representative WOLVERTON. In other words, the argument would be that "If you don't agree to my price, we will construct it anyway?" Mr. WILLKIE. Yes; sure. Representative WOLVERTON. Well, has that been the attitude at Chattanooga? Mr. WILLKIE. There has been an interesting coincidence of threats of duplication at the high points of negotiation. Representative JENKINS. Let me ask you a question right there. As I remember it, Mr. Wolverton, at Chattanooga, it was brought out very specifically by the chairman of the board, power board there, that they had served an ultimatum on Mr. Willkie's company, that if you didn't do it by a certain time, they expected to duplicate all of your equipment, and then it would be too late for you to sell even piecemeal. Mr. WILLKIE. That's right, and whenever I get firm in the negotiations, why, something happens. Representative JENKINS. Let me ask you there, it has been 2 or 3 months since we were in Chattanooga, and as I remember the limit was about 2 months. Is there anything imminent now? Mr. WILLKIE. At that time they had $4,000,000 granted to them. Since that time there has been an additional $3,000,000 granted and loaned to them-$4,000,000 granted and loaned, half grant, half loan, and since that time about $3,500,000 more, and the Chattanooga Power Board now is building some substations and entering into contracts, and so forth. Mr. BIDDLE. You have always refused, haven't you, to negotiate with Chattanooga? Mr. WILLKIE. To this extent, sir, and I am glad you brought that question up. Here is the difficulty. The Tennessee Electric Power Co. serves all of middle Tennessee. It has in its system two goodsized towns, cities, Chattanooga, with a population-I am going to guess of 125,000, and Nashville, with a population of 160,000, let's say. It has no other town in its system of over 10,000 people. Chattanooga constitutes, as I recall, about 30 percent of the business. If we sell Chattanooga out alone, the rest of the system cannot carry itself because the only way-you understand this company has the lowest average rates, average I am speaking of, east of the Rockiesand the only way that we have been able to Representative WOLVERTON. What company is that? Mr. WILLKIE. The Tennessee Electric Power Co. (continuing). The only way we have of spreading this throughout the thinly settled areas is by having congested areas. If we took all of this cream and left skimmed milk, the balance of the company cannot survive. Mr. BIDDLE. When did Chattanooga vote for municipal power, what year? Mr. WILLKIE. Oh, I don't know, some 3 years ago. Mr. BIDDLE. 1933? Mr. WILLKIE. I think 1935, the spring of 1935, wasn't it? Mr. WILLKIE. Yes. Mr. BIDDLE. They have only recently begun to build their lines? Mr. WILLKIE. They have been along for the last year, Mr. Biddle, from time to time making additional buildings and getting more money. Mr. BIDDLE. They have been building transmission lines for about, say, 4 months? Mr. WILLKIE. I should have thought a good deal longer than that, about 6 or 8 months. Mr. BIDDLE. And you requested them several times to hold up. Once you requested them to hold up 60 days, to which they agreed. Mr. WILLKIE. I have done everything I could to get them to hold up. Mr. BIDDLE. Once you requested them to hold up for 60 days, to which they agreed; you remember that, don't you? Mr. WILLKIE. If you say so from the correspondence, I don't recall that specific request, but if you say so, I will accept that. Mr. BIDDLE. They have several times held up their program pending an attempt between you and T. V. A. to negotiate on your whole proposition? Mr. WILLKIE. That is right. Mr. BIDDLE. You think nevertheless Chattanooga, which is directed under its law to go ahead and furnish electricity under the contracts in existence, can be expected to hold up that program indefinitely while you and Mr. Lilienthal try to get together? Mr. WILLKIE. Now Mr. BIDDLE. There is some point of view to be thought of from the standpoint of Chattanooga, isn't there? Mr. WILLKIE. It is all part of a whole. Mr. BIDDLE. How much is Chattanooga losing every day they put off building their lines, do you know? Mr. WILLKIE. I read the testimony, or read the press statement of Mr. Wilhoite. If you mean how much are they losing, if they don't have a return on the 45-percent gift, and don't have to make any return on that, I will have it calculated for you. Mr. BIDDLE. The city is losing several hundred thousand dollars a year in difference in rates, aren't they? Mr. WILLKIE. I wouldn't think so. As a matter of fact, the Tennessee Electric Power Co. is the largest single taxpayer in that county. It pays $250,000 a year to that county, and I would say that over any period of time that the city of Chattanooga is gaining. Mr. BIDDLE. You haven't calculated how much taxes they will pay on their own power operations, have you? Mr. WILLKIE. Of course, that depends upon so much. Mr. BIDDLE. I say you have not calculated it, have you? Mr. WILLKIE. I have never seen it operate. Mr. BIDDLE. I say you have never made a calculation under the municipal operation of what taxes it would pay, estimated it, have you? Mr. WILLKIE. Of course, that goes to the fundamental questionMr. BIDDLE. I am just asking you if you have made the calculation? Mr. WILLKIE. That depends upon whether we compete with them. If we compete with them, I don't think they will make anything. Representative WOLVERTON. That was the testimony. Mr. WILLKIE. With a 45-percent gift, and buying power wholesale from T. V. A., I assume it is a profitable enterprise. If it is not, there is something wrong. Mr. BIDDLE. Since Chattanooga determined to have municipal operation 3 years ago, do you wonder they are anxious to put it into operation? Mr. WILLKIE. Of course, you cannot separate the thing. Mr. BIDDLE. I can understand why they might wish to have their own negotiations hurried, can't you? Mr. WILLKIE. It is all a part of a whole. The reason they voted to adopt municipal ownership is because of the money they get from the Federal Government. To separate them and say they are a distinct part of something else, is an arbitrary division. |