Mr. BIDDLE. There was a representative of the comptroller's office of T. V. A. yesterday, but there is none here today. Is there any representative of the comptroller's office of the T. V. A. present? (No response.)

Representative WOLVERTON. Is Mr. Stone here?

Mr. BIDDLE. He is not here; he is getting ready for next week. Senator SCHWARTZ. It is a case of mental telepathy when you saw his face light up, isn't it?

Representative WOLVERTON. There is a face out there that lights up occasionally, and it isn't mental telepathy that I see. I saw that he was Mr. Stone, which caused me to make that remark.

Now, turning to page 354 of your report-or before we turn to that, I can't quite understand the position that would be taken by the General Accounting Office on the matter of the President's economy order. You have excepted to all kinds of expenditures by the T. V. A. in your report; some, as you have stated, run to a few cents and some run to thousands of dollars.

The pay roll for 12,000 employees of the Government would run to a considerable amount each month. I guess that it would run as much as a million dollars a month at least. Wasn't there any notice taken by the General Accounting Office of the order that had been made by the President, making a 15-percent reduction in salaries? Mr. TULLOSs. Yes, sir.

Representative WOLVERTON. Well, then, why can't we have the statement as to whether it was effective or wasn't effective with respect to the T. V. A.?

Mr. TULLOSS. I thought that I had made a statement that it was effective generally.

Representative WOLVERTON. What do you mean by "generally?" Mr. TULLOSS. That there were a few exceptions which are noted in the report.

Representative WOLVERTON. Who were the exceptions? What page of the report? I didn't see that.

Mr. TULLOSS. I will try to find that.

I am unable to find the items here. I think that we had a few items in small amount. The question there, however, was whether or not the particular employees were truly employees of the T. V. A. It was contended by the T. V. A. that they were not employees of the class covered by the Economy Act, whereas we disagreed with them, but

Representative WOLVERTON. It is your opinion, then, that the law was observed but with a reservation that they didn't have to do it if they didn't want to?

Mr. TULLOSS. That is, I understand, what it is.

Mr. BIDDLE. Do you know whether those exceptions have been recommended for removal? I understand that they have.

Mr. TULLOSS. I do not know.

Representative WOLVERTON. I am not interested in that little picayune stuff that you are referring to there, in the matter of exceptions. What I was interested in, and I couldn't find anything in the report about it, except that reference to the Classification Act, that as a result of an order made by the President-I wanted to know whether

the Economy Act was effective in the T. V. A., or whether they took the position there as they have elsewhere, that they were not amenable to the law because they were not a part of the recognized departments of the Government, a separate agency.

Mr. TULLOSS. I am quite sure that if T. V. A. had not given effect to the act the exceptions would be in here.

Representative WOLVERTON. Now you made an exception, in your report, with respect to the classification order, the Executive order, issued by the President, because it only applied to those having salaries up to $4,000. What was done about those having salaries beyond $4,000 or what was the basis of your criticism?

Mr. TULLOSS. I am unable to answer that question accurately. Representative JENKINS. I would like to ask a question, to see if this would throw some light on it, and if it doesn't I would like you to get some information on it.

We were in session down at Knoxville, and I figured the development very clearly, that the T. V. A. is not under the regular Federal civil service, the employees, they are trying to build up a civil service of their own and of course they are outside of the civil service, apparently, they claim that they are outside of the departmental connection, as Mr. Wolverton indicated, and he makes the further suggestion that the T. V. A. Act excepts them singularly and specifically from civil service, but they do have a semblance of civil service themselves.

Now, he has asked a very important question, then, and we ought to be able to get the facts and if you don't understand it, I understand that that is what you are supposed to do and if I am wrong I want you to do this, to bring us information as to why these T. V. A. people claim that they are not under and amenable to the Economy Act, and give us the authority both ways, as to what the law does say, and what it does not say.

In other words, bring it to us as fully and completely as possible, so that we might know, because it is very important.

Representative WOLVERTON. Then this Classification Act seems to be still in the air, so far as the report is concerned, or at least such part of it as I have had an opportunity to see.

Mr. BIDDLE. I didn't mean to interrupt you but answering Mr. Jenkins' question, the T. V. A. have made their statement with respect to the applicability of the Economy Act at some length in this answer, and I don't know whether you want the witness to refer to that.

Representative JENKINS. Was the statement made before us in our hearings, or is that

Mr. BIDDLE. No, as I said, the statement has been made by the T. V. A. in their answer to the 1934 audit, with respect to the Economy Act.

Representative JENKINS. Is it too lengthy to have read at this

time?

Mr. BIDDLE. I don't care; you are asking for the information. Representative JENKINS. If you have it, there is no use of these men looking it up. Let us have it read, if it is not too long.

Mr. TULLOSS. On page 226 of the reply of the T. V. A. to the 1934 audit report, appears the following:

Immediately upon the appointment of the Board of Directors of the Tennessee Valley Authority, the Board began a study of the status of the Authority, its relation to the various governmental departments, and to the applicability to the Authority of various acts of Congress. At this time Chairman Morgan suggested that it would be appropriate for the directors to voluntarily assume the reduction provided in the Economy Act, and an attendant resolution to that effect was drafted. However, in the course of the general study in order to determine the status of the Authority, the question of the applicability of the Economy Act to the Authority was submitted to counsel. The Board was advised that the Economy Act did not apply to the Authority; that the Board had no discretion in the matter; and that to voluntarily take the reduction in salary would be interpreted as an implication that all of the provisions of the act applied to the Authority. The following is a brief summary of the reasons given by counsel for this conclusion.

The percentage-reduction provisions of the Economy Act refer to compensation received under "any existing law, schedule, regulation, Executive order, or departmental order." The Tennessee Valley Authority Act was enacted subsequent to the enactment of the Economy Act. Accordingly, giving to the words of section 2 (a) their plain and ordinary meaning, that section applies only to compensation received under a law, schedule, regulation, Executive order, or departmental order in force at the time of the enactment of the Economy Act. When Congress passed the Tennessee Valley Authority Act without reference to the Economy Act, it must be deemed to have done so advisedly. Congress fixed a flat rate for the directors and left the salary to be paid to other employees completely in the discretion of the directors, with the sole limitation that no regular officer or employee of the corporation shall receive a salary in excess of that received by the members of the Board.

This section, together with other provisions in the Tennessee Valley Authority Act of 1933, indicating a definite congressional intent that the Authority should have a flexibility in its organization and operations not generally granted to ordinary Government departments, supported the conclusion that the Economy Act was inapplicable to the Tennessee Valley Authority. On the basis of these facts, the Board was advised by counsel that the fixing of salaries of employees and officers was wholly an administrative matter within the discretion of the Board except for the one limitation mentioned above.

Subsequent to the receipt of this advice of counsel, several decisions rendered by the Comptroller General seemed to confirm the accuracy of this advice.

In an opinion to the Federal Coordinator of Transportation on June 20, 1933 (12 Dec. Comp. 655), the Comptroller held that the percentage reduction established under section 3 of the Economy Act of March 20, 1933, and the related Executive orders did not apply to employees appointed under the terms of the Emergency Railroad Transportation Act approved June 16, 1933, since "at the date of the approval of that act, June 13, 1933, there was no existing law, schedule, Executive order, or departmental order by which the compensation of such employees could be determined." In a decision of July 6, 1933 (13 Dec. Comp. 3), to the Administrator of the Federal Emergency Administration of Public Works, the Comptroller held that the Economy Act was not applicable to officers and employees appointed under the terms of section 201 (a) and (b) of the National Industrial Recovery Act of June 16, 1933, for the same reason given in his opinion holding the act inapplicable to the employees appointed under the Emergency Railroad Transportation Act.

Executive Order No. 6440, issued on November 18, 1933, directing the heads of Tennessee Valley Authority and other agencies to apply the terms of the Economy Act to their employees could not, of course, change the terms of the act of Congress. In view of the previous interpretation of the act, the Executive order was of doubtful validity, and whether for this particular reason or not, it was superseded by Executive Order No. 7646, issued on June 21, 1934, specifically excepting all employees of the Tennessee Valley Authority and certain other agencies from the terms of the act.

In view of the discussions in the Senate, where the question of directors' salaries was considered and fixed without reference to the Economy Act (Congressional

Record, vol. 77, pp. 2730–2731), it was presumed that the $10,000 was in the nature of a net salary. Furthermore, the salary was fixed by the act and it was not considered necessary or appropriate to reopen the issue. On the other hand, the matter of fixing employees' salaries was expressly delegated to the Board as an administrative function. In adopting the policy of fixing a basic and net salary for each employee, the Board did so, not in the belief that the Economy Act required it, but because it was believed to be an advisable administrative measure, in view of all the circumstances.

In view of that, do you still wish us to furnish a statement?

Representative JENKINS. Not unless that is inconsistent with the findings of your department. It seems to me that that is a very complete answer, unless you have something to refute it, it will have to stand.

Mr. TULLOSS. I don't have anything here.

Representative JENKINS. If you have anything on file, it seems to me that they have about answered the question in there.

Representative WOLVERTON. Did I correctly understand your reading of that language that the President had amended the order so as to exclude the Tennessee Valley?

Mr. TULLOSS. It is so stated here; yes, sir.

Representative JENKINS. Do you know this? It is a hypothetical case; for instance, they hold there that the law applied only to those positions that were extant at the time that the law was passed and to the persons holding those positions.

Now, suppose here is A working in the Post Office Department, and he and his position are both covered by the Economy Act. Suppose, in a month after the Economy Act goes into effect, A dies and a new man comes in and takes his place. I presume, of course, that the Economy Act would apply to him because he takes the same place?

Mr. TULLOSS. Yes, sir.

Representative JENKINS. Now, then, is there, or do you think that there would be, positions anywhere in the Government that the law applies to the individual only, and not to the position, so that would there be cases where if A should die and B comes into the position to take his place, it wouldn't apply to that person?

Mr. TULLOSS. Generally speaking, I think that that is correct; but I think, as I remember the Economy Act, it did have some special provisions in there, in recognition of certain positions, and there may have been some who were exempted by reason of their status whose successors in office would not have the same exemption. I think that that was so, but I will not be sure about the law in that respect.

Representative JENKINS. Anyhow, I don't think that these last questions I have asked you would apply here, because it seems that the T. V. A. having been-the whole Act having been passed after the Economy Act, and nothing having been said to relate it to the Economy Act, and the further action of the President to clarify itit looks to me like the T. V. A. is pretty well out.

Senator SCHWARTZ. Mr. Wolverton, can I ask a question? To go back to a question that I asked awhile ago, I think that I didn't bring out what I had in mind. I asked the witness in reference to the remaining 4,628 exceptions, and then subsequently asked for the

total expenditures of the T. V. A. over the applicable time, and the witness evidently understood me to refer only to the expenditures of 1934; but I now have tabulated the statement which was introduced awhile ago, and it shows that these 4,628 exceptions cover the fiscal years beginning in 1934 and including 1938 up to June 15, and what I wanted to know was the total expenditures of all kinds by the T. V. A. during the fiscal year 1934 up to and including June 1938. Mr. TULLOSS. As I recall now, I was advised and so replied, that the total aggregated about $214,000,000.

Senator SCHWARTZ. That is the total amount that the T. V. A. has expended up to June 15, 1938.

Mr. TULLOSs. June 30, 1938.

Representative WOLVERTON. So that there won't be any misunderstanding about it, do I understand that you are to submit to the committee a memorandum that will show how the $6,000,000 of exceptions is made up?

Mr. TULLOSS. Yes, sir.

Representative WOLVERTON. Are you able to say when you will get that?

Mr. TULLOSS. No, sir; as I remarked awhile ago, we haven't classified these items as a rule, and we are having to start, or did have to start, from scratch on that, and it will take some time to get that information.

Senator SCHWARTZ. I understand further that when you do submit it, you will submit it also with whatever explanations the T. V. A. has which are of record in your Office?

Mr. TULLOSS. We have the reply to one audit report, which I understand also is in the possession of the committee.

Senator SCHWARTZ. Whatever you do have on these 4,628 exceptions, whatever you do have explanatory from the T. V. A., that will be submitted with your showing?

Mr. TULLOSS. If I may suggest, I think that our reports will be out by that time, if we wanted to take the time to assemble that information. There must be thousands of communications, and to copy them will take us a very long time, and considerable expense.

Senator SCHWARTZ. I think that the original proposition to submit your objections to the 4,628 cases will take a long time, too, and if we are going to go into that, I don't know where we will get off, but then

Mr. TULLOSS. Maybe I haven't made myself clear there, but the statement that we are preparing is a summary statement, by classes, of the expenditures that were made. It will not show the detail; the detail on that statement would probably exceed in volume several times what is shown in this reply.

Senator SCHWARTZ. As a matter of fact, that would require you to do all of the stuff that you are going to do in the future in order to settle all of these accounts?

Mr. TULLOSS. I think that we can get our reports out by that time, and our reports will then show the information.

Chairman DONAHEY. It seems to me that that is a good suggestion. When these reports are completed and submitted, this committee will have the answer, and it will save a lot of work.