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Representative WOLVERTON. Now, let us look at the item of nonoperating revenue. What does it appear in the General Accounting Office report of 1934, page 13, as being?

Mr. MATCHETT. $32,337.33.

Representative WOLVERTON. Will you look at the T. V. A. report to Congress of 1934, at page 57, and see what was reported to Congress as the nonoperating revenue by the T. V. A.?

Mr. MATCHETT. Are you referring to page 57 of the 1934 T. V. A. report to Congress?

Representative WOLVERTON. Yes.

Mr. MATCHETT. An item of $12,000,000 plus?
Representative WOLVERTON. No; I had $334.35.
Mr. MATCHETT. Now I have it. Interest, $334.35.

Representative WOLVERTON. Now, do they report any other nonoperating revenue?

Mr. MATCHETT. Not on that statement.

Representative WOLVERTON. Do you know, or can you give any explanation of why you reported nonoperating revenue in 1934 as $32,337.33, and the T. V. A. only reported it to Congress as $334.35.

Mr. MATCHETT. Yes; schedule B, on page 22 of the General Accounting Office report, there is a statement which shows the analysis of that item, which includes $20,000 plus of house rents, water rents, and water sales, from houses at Muscle Shoals.

Representative WOLVERTON. How did you make up that item of $20,000; will you explain to us what that means?

Mr. MATCHETT. It was taken from the books of the Tennessee Valley Authority.

Representative WOLVERTON. So that when you give the figure, in your report, from which you are now testifying to this committee, for the year 1934, your figures of nonoperating revenue amounting to $32,337.33 are figures that you took from the books of the T. V. A., from the several items that would give that total?

Mr. MATCHETT. That is right; with the exception of possibly certain minor adjustments.

Representative WOLVERTON. Then, if that is the case, that you took it from the books of the T. V. A., and got your figures from the T. V. A. books, what explanation is there that T. V. A. didn't report it to Congress, beyond the $334?

Mr. MATCHETT. The Tennessee Valley Authority considered revenues from houses rented, and miscellaneous revenues of that same type, water sales, as a reduction of the expenditure of maintaining Muscle Shoals, or any other town, and in this report it is taken up

as a revenue.

Representative WOLVERTON. Now, turn to net profits of power, or the total reserve for amortization, construction, interest, and other purposes.

Mr. TULLOSS. What page are you reading from?

Representative WOLVERTON. Will you look at your General Accounting report of 1934, at page 13, and inform me what the figure you have in your report as the net profit of power, or the total reserve for amortization, construction, interest, and so on, is?

Mr. MATCHETT. Of power alone there is an indicated profit of $56,911.63.

Representative WOLVERTON. What does the T. V. A. report to Congress of 1934, page 57, give?

Mr. MATCHETT. $548,657.58.

Representative WOLVERTON. And that would indicate a difference of approximately or nearly $500,000? Mr. MATCHETT. Yes, sir. Representative WOLVERTON. Mr. MATCHETT. Yes, sir.

Or $490,000?

Representative WOLVERTON. Now, that is a very considerable amount, when you are figuring whether there is a profit of $56,000 or a profit of $548,000.

Mr. MATCHETT. The difference is, sir, in the item of $447,000 plus shown on the General Accounting Office statement as maintenance and operation of Muscle Shoals, plus the difference in the nonrevenue items.

Mr. BIDDLE. You mean that item was charged against power operations by the General Accounting Office.

Mr. MATCHETT. Yes, sir; qualified in the General Accounting Office report.

Representative WOLVERTON. I am not going into that.

Mr. BIDDLE. I just want to understand the item. The difference was so great, and the witness said that he charged maintenance of Muscle Shoals against the power operations.

Mr. MATCHETT. That is clearly stated in the report.

Representative WOLVERTON. Did you get those figures as to the maintenance of Muscle Shoals from the books of the T. V. A.?

Mr. MATCHETT. From the books of the Tennessee Valley Authority. Representative WOLVERTON. So that the item on that book which appeared in the sum of $400,000-odd for maintenance at Muscle Shoals, and which necessarily would cut the profit down, was not reported to Congress by the T. V. A. in its report of 1934, giving $548,000 plus as the profit?

Mr. MATCHETT. That is true, sir; but it must be stated that at that time the books of the Tennessee Valley Authority at Muscle Shoals, where this information was secured, included both power-division operations and operations of the Muscle Shoals project, which was not an electricity project.

Representative WOLVERTON. Did they on their books separate the amount that should be charged to power or to other activities?

Mr. MATCHETT. Yes, sir; they separated it and confined it to power, and the rest is buried and capitalized.

Representative WOLVERTON. Well, the $400,000-odd, is that directly chargeable to power on their books?

Mr. MATCHETT. It was not shown on their books-on their books it was.

Representative WOLVERTON. That is what I am getting at, so that without entering into any dispute, the fact is that they themselves charged that amount on their books.

Mr. MATCHETT. But they questioned it also; it was merely a temporary measure.

Mr. BIDDLE. The point was that they didn't charge it to power on their books, and you did. Isn't that the difference?

Mr. MATCHETT. They had it set up on their power-division books as a part of the power operations, but we questioned them, and they advised that they were not sure that it belonged in there, and nor were we sure, and our report shows such a qualification.

Representative WOLVERTON. What did T. V. A. report to Congress in 1935, on page 56, as the net power, or the total reserve for amortization, construction, interest, and other purposes?

Mr. MATCHETT. $572,505.39.

Representative WOLVERTON. So that between the making of the report of 1934 to Congress and the submitting of the report in 1935, they increased the net profit by several thousand dollars, by as much as $22,000, approximately?

Mr. TULLOSs. Yes, sir.

Representative WOLVERTON. Is there any explanation for that? Mr. MATCHETT. More adjustments.

Representative WOLVERTON. What was it?

Mr. MATCHETT. More adjustments.

Representative WOLVERTON. Are adjustments still going on as to figuring the profit for 1934?

Mr. MATCHETT. That is my belief.

Mr. OWEN. All the time.

Representative WOLVERTON. I think so, because in the T. V. A. report to Congress in 1936, at page 127, it seems to indicate that the net had now grown to $604,334.56, or a difference of approximately $56,000 from the time that they submitted their first report to Congress in 1934. Can you explain that situation?

Mr. MATCHETT. I have not seen it, but it is more adjustments, I would say.

I

Representative WOLVERTON. You can take my figure for it. think I am accurate in it. If you wish to look at the report for 1936 I have no objection to your checking it against the figure I have just used.

Mr. Chairman, that concludes for the time being my examination into these items. It has been necessarily confined to 1934, and the T. V. A. reports in succeeding years, because I have not had the benefit of 1935, or 1936, or 1937, or 1938 reports, but it also indicates to me, and I hope to the other members of the committee, the very great importance of some means being taken by which these discrepancies that run into thousands of dollars and relate to important items in determining what is the proper yardstick may be determined. in a way that will be satisfactory to this committee.

I assume that the T. V. A. will have their comptroller here. I certainly hope so. I think it would be perfectly proper to request. that in the event of his appearing, and I am assuming that he will appear at a later date-I can very readily understand that when he comes before us it will be with a sheaf of statements of a financial character that will be intricate for any layman, and even for an accountant to figure on short notice.

I am assuming in making that up that the records are permanent. enough by this time in T. V. A. that he has well progressed with

that. He probably has it finished, because he was to have appeared at an earlier date.

Would it be out of the way if I should request that the members of the committee, or those who would be specially interested in it, might have immediately, or at least a week before he appears, the statements of a financial character that he will use in his testimony in order that there may be an examination of it?

Mr. BIDDLE. Mr. Chairman, as I have already indicated 2 or 3 days ago, the comptroller general of the T. V. A. is having those statements prepared, and they have been substantially completed. They are to be printed and are expected to be here on Monday, which would be well a week in advance.

Representative WOLVERTON. You said that sometime ago.
Mr. BIDDLE. And I repeat it now.

Chairman DONAHEY. Does that conclude with this witness?
Representative JENKINS. Just one question.

Chairman DONAHEY. Are there any further questions?

Representative JENKINS. This witness is about to leave us now, it would appear. I wonder if you will remember to get me what I asked you about this morning?

Mr. TULLOSS. Yes, sir; we have made notes of those.

Representative JENKINS. You will send it to the chairman?

Mr. TULLOSS. Yes, sir.

Representative WOLVERTON. You won't forget to give us the fullest information available from your records with reference to the Tennessee Valley Associated Cooperatives, and the cooperatives with which it has done business?

Mr. TULLOSS. No, sir.

Mr. BIDDLE. I asked you yesterday whether you had been able to get yet, as requested by members of the committee, the amounts recovered by T. V. A. as a result of some of your suggestions. Have you got that yet?

Mr. TULLOSS. No, sir.

Mr. BIDDLE. You will bring that in, too?

Mr. TULLOSS. Yes.

Mr. BIDDLE. You said it was not customary for you to prepare operating statements and balance sheets for these Government departments, but it was made at someone's suggestion. Whose suggestion was it, do you recall?

Mr. TULLOSS. I don't recall.

Mr. BIDDLE. Was the suggestion from your office or T. V. A.?
Mr. MATCHETT. I think this audit calls for that.

Mr. BIDDLE. The answer is you think the audit calls for that?
Mr. TULLOSS. That is the view of Mr. Matchett.

Mr. BIDDLE. Is it your view, Mr. Tulloss? You are the head of the department.

Mr. TULLOSS. So far as I personally am concerned, my recollection is that I was asked to do it. Now, whether it was actuated by some request of some accountant, or whether it was the desire of the Comptroller General I don't recall.

Mr. BIDDLE. Thank you.

Chairman DONAHEY. Are there any further questions?

Mr. BIDDLE. I suppose we can take it, if you were directed to do, that it came from the Comptroller General?

Mr. TULLOSs. I was directed to do it.

Mr. BIDDLE. Then can we assume it came from the Comptroller General?

Mr. TULLOSS. Well, I thought you were going back to the reason that he asked that it be done, why he directed it to be done. Mr. BIDDLE. He did direct it, though?

Mr. TULLOSS. That is right, he did direct it.

Mr. BIDDLE. All right.

Chairman DONAHEY. Are there any further questions?

Mr. BIDDLE. No, sir.

Chairman DONAHEY. If not, we thank you for your contribution to our problem.

You may call your next witness.

Mr. BIDDLE. Čolonel Parker. Mr. Woodward, will you come up at the same time?

TESTIMONY OF COL. THEODORE B. PARKER

Chairman DONAHEY. You may be seated and give your name and title to the reporter.

Colonel PARKER. Theodore B. Parker.

Representative WOLVERTON. Would there be any objection if I asked just one question of the general accounting officer before he leaves?

Mr. RIDDLE. Mr. Tulloss, won't you step up?

Representative WOLVERTON. I have just one more question. I wanted it to be of a general character in closing.

I have now called your attention to many differences between the several statements purporting to inform the Congress with respect to the financial status of the T. V. A. as of June 30, 1934, and with varying differences from $50,000 to $90,000,000 between the several statements.

Would you care to express an opinion, as a general accounting officer of the Government, that such statements were incomplete, unbalanced, unexplainable from the face of such statements, and in fact misleading to anyone who would be required to form an intelligent conclusion in an effort to judge the past transactions of the T. V. A., and thus be guided in future planning?

Mr. TULLOSS. If you please, sir, that would be an opinion to be drawn apparently from the record. I hesitate to make that broad a statement without having the differences analyzed.

Representative WOLVERTON. Well, after having brought to your attention these differences, would you say that the information as contained in the reports was of such character as would have given members of Congress a true picture of the situation?

Mr. TULLOSS. I don't think so; no, sir.

Representative WOLVERTON. That is all.

Mr. BIDDLE. Mr. Chairman, before this witness proceeds, may I say for the benefit of the committee that Colonel Parker who has been sworn is the first witness of a group of three witnesses.

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