« ПредыдущаяПродолжить »
Now, there may be some explanation, there may be some proper explanation of it, that remains for the comptroller of the T. V. A., when he gets before us, to give. And I think he should be given every opportunity to do so.
But I won't go any further than to say that I do have those figures here before me now, and I worked late last night in an endeavor to bring it to the attention of the committee.
Senator SCHWARTZ. The only observation I would like to make on that is that as a member of this committee, don't you think you might reserve your judgment as to whether or not the T. V. A. had an intent to deceive Congress until after you hear the other side of this story?
Representative WOLVERTON. I think every member of the committee, as the chairman has so frequently said, is sovereign in his own right, and I have no objection to a member, if he wishes to express an opinion, doing so, or I have no objection if he wishes to withhold an expression of opinion, for him to do so.
But under the circumstances, it might be termed "jugglery” properly. It might be improper to do so.
Šenator SCHWARTZ. That will be determined when we get through.
Representative WOLVERTON. I don't know whether we will all agree on it or not.
Vice Chairman Mead. In order that I may make myself clear, I want to be sure. I don't know just how direct Mr. Wolverton's reference to improper reports that T. v. A. may have made-I am not ready as yet, as one of the committee, to decide they were improper, and I don't want to agree with him in his statement of yesterday that there was jugglery actually taking place.
I don't want it assumed that in my statement today, in which I used the word "honesty" that I mean that that was to apply to any individual. What I had in mind was that I believed in all honesty we ought not to go part way with half-measures. There was no dishonesty except if one would give it a narrow interpretation by saying "You only told the truth so far and then didn't tell anything after that." What I was trying to bring out was that 1934 was a construction period, that there was in the law the necessity for valuation and allocation to be presented to the President for approval before they really could be specific and tangible items, and that law was carried out, and that was done in the year of 1935 which can be listed as a year in which there was actual power development under the T. V. A.
Now, with regard to this report, which I read, and I believe is accurate, until somebody tells me it is not, it is the report of the T. V. A., it is signed by Dr. Arthur E. Morgan, chairman, at a time when the chairman had no disagreement with the other members of the Board, and evidently everything was going along swimmingly, insofar as the chairman was concerned.
Therefore until I find that the chairman wrote his name and attached it to a report that was not accurate, I am going to believe that the chairman signed an accurate report. And I am also going to believe in you boys, too, but I just want you to tell all of the story. If you don't, I will try to bring it out.
Representative WOLVERTON. I have not finished with what I wished to say, but merely to illustrate for the time being the point, the Senator quoted from page 57 of the report of June 30, 1934, to Congress that the net operating revenue available for interest, construction, amortization, and so forth, was $548,657.58, and yet the T. V. A. in its 1935 report to Congress, giving the 1934 figures, on page 66, Mr. Biddle, of the Tennessee Valley Authority report for 1935, you will find two-thirds of the way down the page the item "Total reserve for amortization, construction interest, and other purposes," which can be readily identified as the same item to which the Senator referred, is given there as $572,505.39, a difference of $22,000 in that one item.
As I say I am not able to understand how the report to Congress showed it to be $548,000 plus in their 1934 report, and when they submit their 1935 report to Congress for comparative purposes, they give it as $572,505.39.
Now, I just mentioned that one to illustrate the discrepancies that appear even in the reports of the T. V. A. itself to Congress.
But coming back to the original point
Representative THOMASON. Right there, weren't those figures gone into fully by Dr. Arthur E. Morgan and his associates when they testified before the committee, the Committee on Deficiency Appropriations?
Representative WOLVERTON. I don't know, I am not a member of the Deficiency Appropriations Committee, and I don't know that those figures were gone into, but of course I appreciate the fact that you are using Dr. Morgan to substantiate them with the idea that he is dependable in his judgment, I suppose?
Mr. BIDDLE. If it would be proper for me to say so, I think this will be borne out by later testimony, I am advised that the 1934 figure was adjusted because they found additional expenses which have not been charged, and of course it was adjusted the following year.
Representative WOLVERTON. That is just exactly what I expected to hear.
Mr. BIDDLE. Don't most accountants adjust when they find charges of that sort? I should think they should.
Representative WOLVERTON. When books are closed, and the report is made to Congress on what those books show, it is very strange to me that the next year and the year following the books are still open and still subject to change.
Mr. BIDDLE. The books are always open and adjustments are continually made, I should think.
Representative WOLVERTON. When do they close their books? Do they close their books at the end of the fiscal year or carry it into the next year?
Mr. BIDDLE. I should gather it was closed, and then carried into the next year, like in any accounting.
Vice Chairman MEAD. I think our great trouble is we expect a good many of our witnesses to have penetrating minds—we ask them questions, penetrating questions along lines that are not really germane to their particular activities. We had a man on the stand that we just went after at great length about T. V. A.'s taxes, and because the man didn't know, there was a sort of an air of mystery.
Representative THOMASON. And suspicion.
Now, we go after these men about certain activities of a cooperative, and these men say "Well, we don't know anything about that, we just go down there and examine the books," and there is an air of mystery and suspicion.
Now, we have taken up a lot of items in the 1934 and 1935 reports, and it occurs to me if we had the right witness who had had to do with that particular item, we could get the answers in 5 minutes.
Mr. BIDDLE. I can only put on one witness at a time.
Vice Chairman MEAD. I know that. The chairman doesn't mean to criticize. The chairman merely means it is awfully easy to ask the Comptroller's splendid representatives all about the manufacture of fertilizer, and they won't know a thing about it, and then if we ask the fertilizer folks a lot of things about cost accounting, they won't know anything about it either, and when we get all through we just ask a lot of questions.
So the chairman would say if you are talking about T. V. A.'s calculations, we ought to get a T. V. A. witness here.
And I think Dr. Arthur Morgan is just as dependable as Mr. Lilienthal. The idea that actuates me is that I show no favorities. I want to be just as courteous and as considerate of Dr. Arthur E. Morgan and his associates as I am of Dr. Harcourt Morgan and his associates. In other words, I don't want to get excited either in favor of or against either one of the two sides in this question.
Representative WOLVERTON. With this judicial statement of position of my colleague, I can say that I am in full accord. I have tried not to get excited at any time, and I regret if any questions have caused a mystery. I assume that there is enough interest in clearing the mystery to see that the facts are brought out before we get through, but I am interested, at least, in asking questions that seem to require an answer, and if it does create a mystery until they are answered I am not responsible for that.
But coming back to what the original situation was with respect to our questioning yesterday, I think that probably the remarks that have been made were directed more to me than to anyone else, due to the fact that I happen to be the one who asked the questions.
At the same time, there are other members of the committee present, and it is unfortunate, as the Senator said, that he didn't have time to bring it out yesterday. Other members interjected themselves in an effort to get at the facts, and now the facts were these:
That we used the figures $51,000,000 for our calculation of a probable 600-year life of this corporation. I know I was rather astounded when it seemed that it ran into the centuries, and I was inclined to think that it was time that the President considered Methuselah as a member of this board so that there would be a unified and continuous Board through all of these 600 years, and then so that there would be no misunderstanding about it, I used $31,000,000 and we calculated it on that basis and that brought 400 years.
Now, if there is some other basis that we ought to calculate it on, I agree with our chairman that it ought to be brought out for the purpose of the record, and I would think that it would be very appropriate now, on the basis of 10 percent of revenues, as a proper depreciation charge for some members of this committee to use some other amount than that used yesterday, and was taken from the records of the T. V. A. in determining what the life of a property would be on the basis of the depreciation method that was used.
Now, there is no intent on the part of anybody to be dishonest and no intent on the part of anybody to do anything but bring all of the facts out.
Vice Chairman Mead. Nor to juggle, that is right, and we will all get straight.
Representative WOLVERTON. I am speaking of the committee now.
Vice Chairman MEAD. I could expand that and include the Comptroller's Office, and T. V. A.
Representative BARDEN. I think that we are the ones being entertained. You are not going to talk about us, are you?
Representative WOLVERTON. I would like to have this witness given the figure that he should have used yesterday. You stated that last night you had calculated it differently, and I would be very glad to have the benefit of that calculation put in the record so that there is no doubt but that we are getting all of the facts.
Vice Chairman MEAD. The chairman would suggest that the counsel ask a T. V. A. representative to be here and to give us the up-to-date list of calculations, adopted by T. V. A., and while the chairman has the floor, I want to say to my colleague that it was a courtesy on my part, that perhaps humility kept me from breaking into his rather interesting line of questioning, that never let up; and now that I have the floor, I would like to adjourn the committee until 1:30.
(Whereupon, at 12:15 p. m., the committee recessed until 1:30 p. m. of the same day.)
AFTERNOON SESSION, WEDNESDAY, NOVEMBER 30, 1938 (Whereupon, at 1:30 p. m. the hearing was resumed pursuant to recess.)
TESTIMONY OF STUART B. TULLOSS, WITH TESTIMONY OF WIL
LIAM A. OWEN AND FRANCIS T. MATCHETT_Resumed
Representative WOLVERTON. Mr. Tulloss, will you turn to page 129 of your report?
Mr. Tulloss. Yes, sir.
Representative WOLVERTON. What price was paid by the T. V. A. for the property of the Mississippi Power Co.?
Mr. Tulloss. $850,000.
Representative WOLVERTON. Has any portion of that property been sold to the county of Alcorn, Miss.?
Mr. Tulloss. I understand that property to the value of $114,000 has been sold, or rather that is the selling price.
Representative WOLVERTON. That was the selling price to an organization of citizens incorporated under the name of Alcorn County Cooperative Association?
Mr. Tulloss. Yes, sir; I believe so. I am spreaking now as of the time of the close of the fiscal year 1934, as reflected in this audit report.
Representative WOLVERTON. The purchase price was $114,632.60, is that right? Mr. Tulloss. Yes, sir.
Representative WOLVERTON. Did your auditors make any report as to the revenue that that portion of the property sold to the Alcorn County Cooperative produced with respect to the entire revenues of the property sold or purchased from the Mississippi Power Co.?
Mr. Owen. As a basis for the sale, certain figures were presented which had been compiled, showing the revenue and the valuesthat is, the actual cost and the purchase price of $114,000—and we went over those figures, but we did not inspect the properties.
Representative WOLVERTON. Do you have information with respect to the amount of revenue that that portion sold to the Alcorn County Cooperative had produced when it was owned and operated by the Mississippi Power Co.?
Mr. Tulloss. As stated in the report on page 131: The properties of the Mississippi Power Co. appeared to have carried an earning capacity before acquisition by the Authority of $324,230.51 per annum from 4,342 customers using energy for industrial, residential, rural, commercial, and street lighting purposes in 9 counties embracing 31 cities.
$114,632.60, or 1342 percent of the purchase price, was received for properties sold to the Alcorn County Electric Power Association, which had an earning capacity of over 30 percent of the total revenues.
The Government retained 8672 percent, or $735,367.40 of the purchase price, representing the value of the property located in the territory served by what was retained of the line, exclusive of the costs of construction and maintenance of the new line, from which it derived revenue at the reduced rates for June 1934, amounting to $9,209.53, or at the rate of about $110,000 per annum, made up as follows: From Alcorn County Cooperative Association, $1,544.20; from the city of Tupelo, $2,585.20.
Representative WOLVERTON. $2,400. Mr. Tulloss. Twenty-four; I beg your pardon (reading]: $2,485.20; from all others, Mississippi district, $5,108.13, making a total revenue from Mississippi district, $9,209.53.
Representative WOLVERTON. Well, that would seem to indicate, then, that there had been sold by the Tennessee Valley Authority a portion of the property at a price that represented 1372 percent of the total purchase price, and yet the property sold represented 30 percent of the revenues produced by the company?
Mr. Tulloss. Yes, sir.
Representative WOLVERTON. Has that been a subject of discussion between the General Accounting Office and the T. V. A., from the standpoint of that agreement being for a price that did not seem to contemplate the value based upon a revenue-producing basis?
Mr. Tulloss. I do not recall any correspondence on the subject. This report covers the action taken by the General Accounting Office. I presume, however, that there is a reply to that item in the reply of the T. V. A. which was received December 18, 1935.
Representative WOLVERTON. Is that reply available to us?