Colonel PARKER. Starting at the top of page 8, and covering pages 8 and 9.

Representative WOLVERTON. We don't want to read all of that into the record.

Colonel PARKER. I simply refer to that as indicating that very, very considerable and mature consideration was given to various types of allocation theories, such as the benefit theory, beneficial use, and others.

Representative WOLVERTON. But the committee, in making its report to the President, stated very definitely that the problem is one of judgment rather than scientific calculation, that is the point that I am making, that after all this is just a question of judgment that cannot be scientifically calculated.

And then in the next paragraph the words, "The committee's conclusions are therefore in the form of a recommended policy based on judgment, and not on any one allocation theory," so that in the final analysis it does not represent anything more than what these individuals wanted to make it; isn't that right?

Colonel PARKER. No, sir. It is judgment based on the use of several scientific theories.

Representative WOLVERTON. Well, the words are very definite in this report in which it is said, "The problem is one of judgment rather than scientific calculation."

Colonel PARKER. I think that you will find that questions of appraisal and valuation, upon which I do not pretend to be an expert at all, always depend in the last analysis on the exercise of considerable judgment. The courts have repeatedly held that questions of value can usually be determined only after careful consideration of all evidence leading up thereto, and the application of judgment to the final assembly of data.

This question of allocation is very similar, is a problem which is very similar, to appraisal and valuation problems. And it is very reasonable to assume that it could be solved, approached and solved, in the same way. It is a very difficult problem to solve exactly.

At the same time I think we can say that several approaches to the problem result in very similar results, and that the difference between those results in their effects on the final allocation of the final cost is rather minor.

Representative WOLVERTON. Was there any difference of opinion among the groups that made recommendations to the board of directors with respect to what percentage of allocation should be made to these different activities?

Colonel PARKER. This group was perfectly selected to include a number of different points of view. It included a lawyer, accountant, and engineer, and so on, and each one of those individuals necessarily represented the point of view of his calling, and the result, after a lot of discussion, was, of course, a compromise between different points of view and a very bona fide effort to arrive at a correct

answer.

Representative WOLVERTON. When was the task given to this

Board?

Colonel PARKER. I think we really started on intensive considerations along in January preceding this report; January 1938.

Representative WOLVERTON. Congress had passed an act requiring you to have the report in its hands by January 1, 1937; had it not? Colonel PARKER. I had no connection with this matter prior to being appointed to this committee. I couldn't say.

Representative WOLVERTON. In view of the Congress having passed an act requiring a report to be made by January 1, 1937, why was it that active work was not done on this until January of 1938?

Colonel PARKER. I am informed that a great deal of consideration and attention was given to discussing this problem, and that there were difficulties of a practical nature which prevented their arriving at a conclusion. But I really had no connection with this problem prior to being appointed on this committee, and I am afraid it would simply confuse matters if I tried to talk about it.

Representative WOLVERTON. When was your first connection with the T. V. A.?

Colonel PARKER. November 16, 1935, at which time I was appointed as chief construction engineer, and was concerned entirely with the construction of the dams.

Representative WOLVERTON. So that until your appointment you don't know whether there had been any studies with reference to this matter prior to the time you entered upon the studies with the committee, nor you don't know by whom any such studies were conducted, if any?

Colonel PARKER. I know a great deal by hearsay, sir, but I presume you would not wish me to testify to some fact which I would not be at all sure of.

Representative WOLVERTON. It might be helpful in getting at those who do know. What information can you give as to the effort that was made to make an allocation of these costs prior to the appointment of this committee of which you were one?

Colonel PARKER. I would suggest that since it is a most important matter, and one on which the committee wishes to have conclusive and consistent testimony that that matter be taken up with Mr. Kohler, the comptroller, who although he was not present any more than I was in the earlier stages, he was chairman of this committee, and I think should testify as to those matters.

Mr. BIDDLE. For the benefit of the committee

Representative WOLVERTON. Do you think that would give the best picture of the situation?

Mr. BIDDLE. I think he can give some.

For the benefit of the committee, I suppose we have 50 or 60 pages of testimony on this point from Mr. Lilienthal, taking step by step each delay, picking out those cases, for instance, in which the engineers, outside engineers, were sick. I have summarized that. I will be glad to send it to the committee.

In addition to that, I think both Mr. Kohler and Mr. Krug should be asked about it.

That is already spread in the record, taking up in detail each meeting, and each member of the committee, and so forth.

Representative WOLVERTON. You mean Mr. Lilienthal testified on that?

Mr. BIDDLE. He has already testified on that before our committee at great length.

Representative WOLVERTON. Is that testimony on his part or an exhibit put in the record?

Mr. BIDDLE. It was oral testimony on his part before the committee. Representative WOLVERTON. I think that summary might help us very considerably.

Mr. BIDDLE. I will be very glad to make that available to you; I will have that summary sent around to the members of the committee.

Representative JENKINS. Mr. Chairman, may I ask a question? With reference to Mr. Lilienthal's testimony, of course that would just simply be a historical recitation of what had taken place.

Mr. BIDDLE. No, I think most of it is not historical, because the Board was continually considering this problem of allocation, and Mr. Lilienthal, I think, has probably a more complete composite knowledge of it than any single witness. Of course some of it is historical

Representative JENKINS. It is true the Board assigned this work to this committee, of which the distinguished witness is a member. Isn't that right?

Mr. BIDDLE. Well, that is right, but it is also true that there were a good many starts in the valuation before this committee was organized, and that a great deal of work had been done before the organization of the committee.

Representative THOMASON. That is what I understand Mr. Wolverton has asked for, what happened before Colonel Parker became a member of the committee.

Representative JENKINS. I think it would be very appropriate to put in section 14 of the law just at this point, to indicate what was expected. Here is what it says:

The Board shall, on or before January 1, 1937, file with Congress a statement of its allocation of the value of all such properties.

Now, then, in line with and by reason of this order this committee, of which you were a member, was appointed, is that right, Colonel Parker?

Colonel PARKER. I assume so; yes, sir.

Representative JENKINS. Let's read the list over and see who these men are. They are Mr. Kohler, and he is the comptroller-he is not an engineer is he?

Colonel PARKER. No, sir.

Representative JENKINS. You are the chief engineer. The next man is Mr. Woodward. He is the water control planning engineer. Mr. Fitts is a lawyer, isn't he? Mr. Krug is another, he is a power engineer; Mr. Ager is the budget officer.

Don't you think the chief engineer would be the proper person to testify about this very technical matter that we are talking about, this allocation for power purposes?

Colonel PARKER. Of course, I should be extremely glad to help you all I can with a description of this allocation. My own part in it was mainly the engineering part, which was involved in the estimates of the cost of these various schemes, the compilation of them, and that sort of thing.

Representative JENKINS. I know that the policy and the idea of Congress was, when this was passed, to have the T. V. A., some of its

officials, furnish Congress with a report as it says in the law, right in the law, of an allocation for power and flood control and navigation, and so forth. Now, that was the purpose of that law.

Apparently you were appointed to do that very thing. Up until that time you were operating, selling power, up until that time, just on a basis of judgment, that is all. That has been testified. But you had no scientific calculations or computations at all. You sold it on judgment.

After you made your report, although Congress wanted you to come forward with something different than you had before, then you come straight along and make your elaborate report, and still say you haven't anything to recommend only on the basis of judgment. Now, then, you, as an engineer, you surely have to say that a yardstick, if there is anything that ought to be accurate from a figure standpoint, from the standpoint of calculation, if there is anything in the world that ought to be accurate that your science, that your profession can give us, if there is anything in the world that is accurate, it would be a yardstick.

Now, Congress expected you to bring a yardstick in, and what have you brought? Nothing but judgment, have you in your report, I mean, now?

Colonel PARKER. I should be very glad to attempt to describe the method, the theory, upon which this thing is principally based, if that will help you to an understanding of the thing.

Representative JENKINS. If you have time to do that, you can go ahead with your answer. I promised the Senator I wouldn't take

but a minute.

Chairman DONAHEY. It is time to recess for lunch.

Mr. BIDDLE. Before recess, Congressman Wolverton asked a question as to the cost per acre of the acquisition of land at Gilbertsville.

That is found in exhibit 313 of the record, and shows that so far, at least up to the date of the filing of this exhibit, 11,741.92 acres have been purchased at a cost of $62.30 per acre.

In addition to that, there was a question with respect to why the dam was not built by the Army Engineers, and I think we ought to have in the record, though doubtless some of you know it already, the Executive order, which is as follows:

CONSTRUCTION OF COVE CREEK DAM ON CLINCH RIVER

In accordance with the provisions of sections 17 and 18 of the Tennessee Valley Authority Act of 1933, I do hereby place the construction of the Cove Creek Dam on Clinch River in the hands of Arthur E. Morgan, and under his direction of such engineers as may be necessary for that purpose, with the understanding that the work shall be done by and through the Tennessee Valley Authority.

FRANKLIN D. ROOSEVELT.

THE WHITE HOUSE, June 8, 1933. Representative WOLVERTON. From the standpoint of Dr. Morgan that is an excellent testimonial on the part of the President as to the confidence he had in him in connection with this great project.

Chairman DONAHEY. We will recess until 1 o'clock.

(Whereupon, as 12 noon, the hearing was recessed until 1 p. m.)

AFTERNOON SESSION, FRIDAY, DECEMBER 2, 1938

(The hearing was reconvened at 1:15 p. m.)

Chairman DONAHEY. It seems that we have waited until 15 minutes after 1, and no others being present, we will proceed.

TESTIMONY OF COL. THEODORE B. PARKER-Resumed

Mr. BIDDLE. Colonel Parker, you had discussed the allocation question, and then before adjournment had started to go back to your general summary. Would you continue, please?

Colonel PARKER. I would like to continue where I left off, if I might. The allocation of the cost of these three projects is power, 52 percent; navigation, 28 percent; and flood control, 20 percent. On this basis, the Government has secured a navigable stretch of river for less than 60 percent of what this would have cost as a separate project. It has secured a considerable amount of flood-control storage at a cost of $7.50 an acre-foot, acreage foot meaning an amount of water, enough water to cover an acre, a foot deep. That is 43,560 cubic feet, which is considerably less than the cost of the majority of flood-control projects so far proposed.

The indicated cost of generating capacity is about $68 per kilowatt for that part of the cost invested directly in generating facilities, and about $73 per kilowatt for that part of the joint costs allocated to power. The sum of these two items is $141 per kilowatt, which compares very favorably with the cost of the equivalent hydroelectric generating capacity elsewhere.

Mr. BIDDLE. Have you comparative figures-you said that it compared favorably-have you any comparative figures here?

Colonel PARKER. I have an article prepared by Professor Barrows, of M. I. T., and presented at the last annual meeting of the American Society of Civil Engineers, in which he lists a great variety of such projects with their cost per kilowatt, installed.

Mr. BIDDLE. Is that an exhibit?

Colonel PARKER. It hasn't been made an exhibit.

Mr. BIDDLE. Would you let us have the article?

Colonel PARKER. I would be very glad to. I haven't got the entire article.

Mr. BIDDLE. You can get the entire article later, but for the purposes of comparison, I think that it would be interesting for the committee to take your $141 and compare it to the cost of production of hydroelectric energy elsewhere. I take it that that is at the switchboard?

Colonel PARKER. Yes, sir. Shall I read these?

Mr. BIDDLE. Pick out any costs you want and read a few which you think are most fairly comparable.

Colonel PARKER. I wonder if before proceeding with that I could read some of this further?

Mr. BIDDLE. Certainly; go ahead.

BASIC ECONOMY OF PROJECT WOULD NOT BE AFFECTED BY CHANGE IN ALLOCATION

Colonel PARKER. The allocation above referred to is a necessary and convenient means of appraisal. It is not in itself, however, a measure of the fundamental economy of the enterprise. Material