I mention that merely as an indication of the apparent stepping up of Congress up to the point of having some means of determining the proper value of property to be taken.

Now, this thought has been in my mind, and if you would care to express an opinion on it, I would be glad to have it. I have asked the same question of Mr. Lilienthal, and he has promised to give it consideration, and at a later date to advise the committee with respect to it. It is this:

Up to the present time we have had private initiative in the utility field as a general governmental policy, and the same applies to other utilities, transportation, and so forth.

Now, there seems to be something of a trend toward public ownership, either Federal or local.

That has found some favorable opinion on the basis that it was affording customers a cheaper power yardstick, and its basis of value has played a large part in that.

Now, the point that I have in mind is this, that if the general policy in the past has been one of private initiative, in which the individual investor has provided the funds that have built up our utilities of one kind and another, and because of which this Nation has progressed over a period of years, that now, if there is reason or otherwise for a change in that policy, so that instead of private initiative and private funds that it is desirable to have Government ownership, based on Government funds, then is it not fair to the investors who have supplied their money on that basis, to be protected when the Government changes the policy that has heretofore prevailed; and wouldn't the suggestion that you have made, that there be some third party set up as a disinterested, impartial group to determine the value, enable the Government then to have the benefit of its changed policy, and the consumers the benefit of whatever might come from it, at the same time without doing an injustice to those who have already invested their funds when the policy of the Government was to the contrary?

Mr. WILLKIE. I have this to comment on that, Mr. Wolverton. It is not alone the question of being fair to the investor. That of course to one sitting in my seat, or occupying the trusteeship that I occupy is extremely important. But over and beyond that the whole capital market will be disturbed until this relationship is worked out, and all the people, whether they are investors in utilities or not, have a very great stake in it being worked out.

No. 2. I suggest, if it is not presumptuous, to Congress that they create a board so fair that no man can raise a question about it, because it is not alone a question of how fair the board will be, but it is a question of how fair people think it will be, because this transition, if it is going to happen and personally I don't think it is going to happen that this country is going to come to public operationbut assume it is coming, during that period, and that will be 15 or 20 years even if the pace is very rapid, billions of dollars have to be raised, and it will only be raised if not alone the prospective investor— he has got to know, I should say, or got to feel that the board is fair, in addition to it being fair. You want to create some kind of commission or board that no man can raise a legitimate objection to, because you want to lure this money in, and capital is timid.

That has nothing to do with what you may feel about the past operation of utilities, about public ownership, or what may be your political or social affiliations. It is just vital and important; that is all.

Here we have the first example of it, and I think you gentlemen can make a very great contribution to the national welfare if you work out some such thing.

TAXES PAID BY COMMONWEALTH SYSTEM

Representative WOLVERTON. One other question I have in mind: Would it be possible for you to give to the committee the amount of taxes and the kind of taxes paid by the Commonwealth and Southern, including its subsidiary companies, both to Federal, State, and local municipalities.

Mr. WILLKIE. Yes. I think it is about $16,000,000 a year, sir. Representative WOLVERTON. Well, I didn't have in mind that you would have to do it right now.

Mr. WILLKIE. I will file it.

Representative WOLVERTON. I thought it was, in a measure, covered by the request that Senator Schwartz made; I was not sure. Mr. WILLKIE. All companies for 1937 paid $18,764,823.20. We will file an allocation and division of that into the various taxes that we paid. Of that amount $12,260,000 is State and local, and $6,504,178 is Federal.

Mr. BIDDLE. Do you have that broken down into the different types of taxes, and the amounts that are paid?

Mr. WILLKIE. Yes.

Representative WOLVERTON. I don't ask to take the time of the committee now.

Mr. WILLKIE. We will file it with the committee.

Representative WOLVERTON. If it could be put in the record right at this point in your testimony.

Mr. WILLKIE. Yes.

Representative WOLVERTON. Now, do you have the same information that which you have just given relates to the Commonwealth and Southern, does it?

Mr. WILLKIE. That is right.

Representative WOLVERTON. Do you have the figures for the subsidiary companies?

Mr. WILLKIE. That is the total, that is consolidated.

Representative WOLVERTON. I mean do you have that total amount broken down for the different companies?

Mr. WILLKIE. Yes, sir.

Representative WOLVERTON. I think that would be helpful also. Mr. BIDDLE. Do you think if we had it for the companies operating in this section it would be sufficient?

Representative WOLVERTON. Yes.

Mr. BIDDLE. The three companies mentioned, possibly four?

Mr. WILLKIE. Yes.

Mr. BIDDLE. The Tennessee Electric Power Co, the Alabama Power Co., the Mississippi and Georgia companies?

Representative WOLVERTON. Will you put that in the record?
Mr. WILLKIE. Yes, sir.

115943-39-pt. 10-17

Acting Chairman SCHWARTZ. And will you add the investment on which that burden has been placed?

Mr. WILLKIE. Yes, sir.

GENERAL VIEWS ON YARDSTICK QUESTION

Representative JENKINS. Mr. Willkie, before you go, may I ask this question? I would like to ask a question or two on a matter that is kind of-not very clear in my mind. I think it is the most important matter we have got to decide as a committee. In other words, everybody knows that in this transaction you are either on one side or the other; the T. V. A. is on one side, Government controlled and Government subsidized, as you classify it; and on the other hand are your companies and the companies similarly located like you, so that I think that we still have the one great question before us, and that is the yardstick. That is going to be the ultimate question for decision. They may put you out of business by the tactics that you describe, and so forth, and they may not. And that is a matter between you and them; but after you have gone out of business, or if you don't go out of business, and the yardstick is established, as I see it, that yardstick will affect other people besides you. It will be taken as a model of price and production for power all over the United States. There will be a continuous warfare between the people and the utilities every place as to-I know it has already been at work in my State; they point to these rates, T. V. A. rates, and so forth.

Here is what I want to know from you: You are looked upon as the leader of this group of utilities-you on one side, and Uncle Sam and the Government, or somebody, on the other.

Now, have you done up to this time everything that has been requested of you with reference to the production of books and figures that would enable disinterested people not necessarily T. V. A., but disinterested people-engineers, to tell what would be a fair yardstick as far as you are concerned?

Mr. WILLKIE. Well, I think so. Of course we live practically in a goldfish bowl, you know. We report to so many commissions that practically every figure about our operations is available for public scrutiny. On the yardstick question I have had much to say, not in any spirit of contention, but I occupy a position of trusteeship here. I have felt very deeply that I should protect the security holders. I hope this works out.

Representative JENKINS. You have been here in this, and you have heard in this room your own testimony and heard other testimony. Now, do you think your group has had an ample opportunity to present to this committee enough facts upon which we can come to a conclusion with reference to the correctness of the yardstick?

Mr. WILLKIE. Without being presumptuous, I don't think that your committee, without the employment of a good many experts, will be able to do that. It is not any reflection on the committee; it is rather a highly technical subject. I don't know just who you all have studying it, but I don't think evidence of the general character that is submitted is sufficient to arrive at such conclusions. Maybe I don't know a lot of things that you have done.

Mr. BIDDLE. No; I agree with you.

Representative JENKINS. Now, as long as human minds disagree. nobody could prepare a yardstick that would be just as accurate as a

steel tape, and that nobody could dispute, but you don't have to do that.

Mr. WILLKIE. You mean, in other words, one that isn't 18 inches long instead of 36?

Representative JENKINS. Yes. You don't have to refine it down to that fineness, but here is our responsibility: We are going to have to make some finding with reference to a yardstick that will be a yardstick that will be fair and at the same time attractive to other people. There are a good many sections of the United States besides the Tennessee Valley.

Mr. WILLKIE. That is right.

Representative JENKINS. And there are a good many millions of dollars invested, and it is mostly the common people's money all over the United States. But the moral and psychological effect of this yardstick is going all over the United States.

If you, as the head of your group, if you have not presented all of the facts that you have to present, you ought to say so now.

Mr. WILLKIE. Let me consider that, and I will be glad to submit to your committee-we had not approached it from that standpoint. That is a very difficult thing to do in this kind of a hearing.

I asked Dr. Moreland to come and testify to you, because I wanted somebody not immediately of our company, appreciating that there is a tendency to discount one who has such a great interest in his own advocacy, I wanted him to come here and testify to you.

Now, obviously, we could supplement that, but I really think as far as your committee is concerned, that if they are going into a really detailed study of public operations compared with private operations that you will only be able to do it through a substantial body of experts. That is my own judgment about it. I just don't think you can do it otherwise; I think it is too scientific a subject.

These general statements-you take your tax measurement; it is so easy to speak in percentages. You take, for instance, our taxes are largely on the basis of property value, and when you come into a mere question of percentages, most of our taxes are ad valorem taxes. Theoretically if you just run them on basis of percentage of income, then you penalize us if we put it on our rates, because those ad valorem taxes don't reduce. All of those kinds of things come in.

It is not a question, I believe, that is very susceptible of determination in a general public hearing.

Representative JENKINS. You appreciate this, Mr. Willkie, that this group-this committee-we have been called upon to do something that we are not technically able to do. There is probably nobody on this commission that is a technical expert about this very technical subject.

Now, then, if you as one party will be held back for any reason in the world-you ought to know that the committee, I think every member, is concerned that we have a complete investigation, and you have a wide-open invitation to bolster up your case, if you have any case, because while you are doing that it will be helpful to us. The public is going to be the recipient of punishment out of this contest between you and the T. V. A.; still, the public can't come in here; they can't be here.

Mr. WILLKIE. I wonder if this would be all right, to leave it this way

Representative WOLVERTON. May I interject a thought there?
Mr. WILLKIE. Yes.

Representative WOLVERTON. In the first place, your yardstick rates are fixed by regulatory bodies?

Mr. WILLKIE. That is right.

Representative WOLVERTON. In each of the States?

Mr. WILLKIE. That is right.

Representative WOLVERTON. So that your basis for the making of your rates which might be determined to be the utility yardstick is all now in the possession of these different State regulatory bodies? Mr. WILLKIE. That is right; and Federal, too.

Representative WOLVERTON. Yes. Now, I gather from Mr. Jenkins' question-and maybe he didn't intend that way, but it was the thought that I got, as he propounded his question-he asked you whether you had had ample opportunity to express your opinion with respect to the yardstick.

Mr. WILLKIE. Of course, I here have not discussed the yardstick particularly at all, personally.

Representative WOLVERTON. If I may finish.
Mr. WILLKIE. Yes; pardon me.

Representative WOLVERTON. I had in mind that he was thinking of the T. V. A. yardstick. Now, I am wondering how you or any other individual, on the meager information that has been made public at any time since the inauguration of the T. V. A. organization, would be able to fix a yardstick; in other words, up to the present time this committee has not even been given that information. I sought to get it from Mr. Lilienthal, but it was put off until a later date.

Until we have the basic facts on which the T. V. A. bases its yardstick rates, how can you or this committee or anyone else express an opinion as to whether those yardstick rates are right or wrong, or in what particulars they are right or wrong?

Mr. WILLKIE. Mr. Wolverton, let me say to you in regard to that that I don't think yardstick rates can be established, and I think that now is quite well and almost universally recognized by Government men. Mr. Biddle pointed out one of the factors; for instance, your matter of Government financing.

Now, the Government borrowings are a lien upon every man's income sitting in this room, and of course it is at a much lower rate; it is bound to be at a lower rate. And I think the elements are such in the comparison of the two that men are not dispassionate enough that you will ever work out a yardstick. I don't think that even the Government fellows now think that. And I think they have largely abandoned the advocacy of the yardstick theory; or at least, that is the way I interpret their views. Several have said that to me personally in conversation, though I would not quote them, because this was in private conversation, but I think that is now universally accepted. Representative WOLVERTON. When you speak of yardstick in that connection, you evidently have in mind a yardstick that is comparative with a utility yardstick.