Mr. BIDDLE. Yes.

Colonel PARKER. That navigation which I am giving as 28.4 percent, compares with a round figure of 28 percent, which was given for the three-dam system for navigation.

Representative WOLVERTON. Before you pass that, will you just make that plain, because as I read this report, on page 4, the printed report, it would seem as if navigation had been given 35 percent, and the same percentage appears on page 6 with reference to allocation. Colonel PARKER. I believe that what you are referring to is the allocation of the common cost, if you will turn to page 4 of the financial policy committee's report at the top of that page, you will find the allocation is for the three-plant system.

Representative WOLVERTON. So that there may be no misunderstanding, will you explain just what that percentage of 35 percent allocated to navigation means, on page 4 of the printed report to the President, and the same percentage on page 6.

Colonel PARKER. That 35 percent is the proportion of the so-called common cost, which is chargeable to navigation, and to that has been added the direct cost, making the total figure there indicated.

Representative WOLVERTON. Well, if there is a difference between. the percentage based on common cost, and the percentage on direct cost, will you explain what you mean by "common cost."

Colonel PARKER. I wonder, since we are getting now to the explanation of this method, I wonder if you would allow me to complete these figures in this 10-dam allocation, a mere statement of these figures, and then I would be very glad to go into the methods involved.. Representative WOLVERTON. Very well.

Colonel PARKER. This tentative allocation is to navigation, $115,800,000, or 28.4 percent of the total cost as compared with the 28 percent in the three-plant allocation.

To flood control, $99,100,000, which is 24.3 percent of the total, as compared to 20 percent for the three plants.

To the allocation to power, $192,900,000, which is 47.3 percent of the total, as compared to 52 percent for the three plants. That is a total in investment of $407,800,000.

Representative WOLVERTON. Does that figure include the Gilbertsville Dam?

Colonel PARKER. That includes Gilbertsville.

Representative WOLVERTON. When completed?

Colonel PARKER. Yes, and the inclusion of Gilbertsville with its very large proportion of flood control is the factor which increases the flood-control percentage.

Mr. BIDDLE. What is the cost of Gilbertsville?

Colonel PARKER. In this instance it is $103,689,000. It includes provision for four generating units.

Representative WOLVERTON. Does the total figure of $407,800,000 include power equipment at Gilbertsville.

Colonel PARKER. It does; it includes provision for four generating units at Gilbertsville.

Representative WOLVERTON. Does this figure include any dams that may be built on the tributaries of the Tennessee River?

115943-39-pt. 11-16

Colonel PARKER. It includes only Norris and Hiwassee, on the tributaries.

Representative WOLVERTON. Is it contemplated to build any other dams on the tributaries of the Tennessee except those which you referred to?

Colonel PARKER. We are planning, in order to provide complete and adequate flood control for Chattanooga, the addition of dams on other tributaries, such plans not being completed, but we expect that there will be required something like 2,000,000 acre-feet of storage in addition to what is now provided at Norris and Hiwassee.

Representative WOLVERTON. Does that provide for the ultimate protection that will be given to Chattanooga?

Colonel PARKER. That in combination with the local flood protection at Chattanooga, which we are recommending, will provide complete protection.

Representative WOLVERTON. But whatever that cost may be, it is not included in this $407,000,000 plus?

Colonel PARKER. That is not included.

Representative WOLVERTON. If consideration is given to those items, and their ultimate cost added to that which you have already given to the committee, would that change these percentages that you have given?

Colonel PARKER. It would presumably change it in some minor degree. I don't like to make too many such estimates of the future, I don't think from what we have observed in studying the results of this method-I doubt if it would change it very much.

Representative WOLVERTON. The reason the thought occurred to me was the fact that we do not contemplate to provide any power facilities at those dams on the tributaries, as I understand it, and it seemed to me that if that is true, then it would necessarily increase the percentage that would have to be allotted to the total for flood control.

Colonel PARKER. I see no present reason why such upstream development should not be, if the economies justified it, why they should not be at least dual purpose flood control and power development.

Representative WOLVERTON. Well, that may be, but at the present time there has been no indication on the part of the T. V. A. of an intention to join power with those dams that they have contemplated on those tributaries, has there?

Colonel PARKER. I see no apparent reason why those developments should differ essentially from what has been done at Norris and Hiwassee.

Representative WOLVERTON. Yes, I know, but

Colonel PARKER (interrupting). They might be developments of the same general character, the inclusion of those two purposes increases the economy, in general.

Mr. BIDDLE. May I ask a question, just to bring this out? The allocation of the 10-dam system, I understand, is to be used in Mr. Krug's testimony, with respect to the production of electricity on the 10-dam system and it fits in with that, does it not?

Colonel PARKER. That is right.

Representative WOLVERTON. But I wanted to ask this question.

Mr. BIDDLE. Just a minute; and the studies with respect to dams on other tributaries is not included in Mr. Krug's figures, so that with respect to the investment, your study dovetails with his study, is that correct?

Colonel PARKER. That is correct.

Representative WOLVERTON. The only purpose in my asking the question at this point is to ascertain what will be the ultimate cost of the T. V. A. as contemplated now by the Authority, and on that ultimate cost what would be the allocation with respect to navigation, flood control and navigation, national defense, fertilizer, and so forth. All I am trying to find out is whether this $407,800,000 represents the ultimate cost of the total unified system contemplated by the T. V. A. in the Tennessee Valley.

Colonel PARKER. This 10-dam program carries us forward to about the year 1945. The extent to which such a system should be extended beyond such a capacity and beyond such a date I believe can only be determined by what future conditions justify. I believe it is much too early now to do more than make tentative plans for such development. Representative WOLVERTON. You probably misunderstood the purpose of my question, Colonel. It isn't that the T. V. A. should indicate what they are going to do, but I am merely ascertaining whether this $407,800,000 contemplates that, or doesn't contemplate that. In other words, to know definitely just what is contemplated in this $407,800,000.

Colonel PARKER. This $407,800,000 only contemplates these 10 dams, there is nothing in there to provide for anything other than those particular dams.

Mr. BIDDLE. Does that include any fertilizer figures?

Colonel PARKER. That is just the dam program.

Mr. BIDDLE. Just the dam program; I think that that ought to be clear, also.

Colonel PARKER. Just the water-control program.

Representative WOLVERTON. The reason that I included fertilizer, I was under the impression that the original act required something about allocation of fertilizer and I included that in the question.

Mr. BIDDLE. The original act doesn't require allocation for fertilizer, it requires that accounts be kept for the production of fertilizer.

ALLOCATION COSTS RE NATIONAL DEFENSE

Representative WOLVERTON. It did include national defense. Mr. BIDDLE. I think that that is true. May I ask Colonel Parker a question about that? My recollection is entirely with Mr. Wolverton's, that it contemplated allocation on 5 bases; 2 of those which you haven't mentioned were fertilizer and national defense, and was anything allocated to either of those 2 purposes, either on the 3-dam allocation or the 10-dam allocation?

Colonel PARKER. No.

Mr. BIDDLE. Why not?

Colonel PARKER. The expenditures for fertilizer have, I believe, been recorded as separate expenditures, which can be isolated, and require no allocation. As far as national defense is concerned, may I read this-I am now reading from the report of the committee, at the top of page 6, the financial policy committee:

The three completed projects represent a great national defense asset, but because they are not in operation for that purpose during peacetime, it appears to be impracticable to attempt to allocate any portion of the investment to their wartime use, and the committee recommends that no part of the investment be assigned to that function.

That represents the view that we took in that respect.

Mr. BIDDLE. I just wanted to find the provision of the act-where is the provision of the act with respect to the allocation to that? Will you read the provision of the act with respect to the allocation? This is, in the amended act.

Colonel PARKER (reading):

SEC. 14. The Board shall make a thorough investigation as to the present value of dam numbered 2, and the steam plants at nitrate plant numbered 1, and nitrate plant numbered 2, and as to the cost of Cove Creek Dam, for the purpose of ascertaining how much of the value or the cost of said properties shall be allocated and charged up to (1) flood control, (2) navigation, (3) fertilizer, (4) national defense, and (5) the development of power. The findings thus made by the Board, when approved by the President of the United States, shall be final, and such findings shall thereafter be used in all allocations of value for the purpose of keeping the book value of said properties. In like manner, the cost and book value of any dams, steam plants, or other similar improvements hereafter constructed and turned over to said Board for the purpose of control and management shall be ascertained and allocated.

The Board shall, on or before January 1, 1937, file with Congress a statement of its allocation of the value of all such properties turned over to said Board, and which have been completed prior to the end of the preceding fiscal year, and shall thereafter in its annual report to Congress file a statement of its allocation of the value of such properties as have been completed during the preceding fiscal

year.

Representative WOLVERTON. In this case was this presented to the United States court at Chattanooga, in the trial of the 18 power company suit, was evidence presented as to the value of these dams in this system for national defense? In other words, was their usability as an element of the national defense urged upon the court as a basis for sustaining the act?

Colonel PARKER. I am informed that both the court case at Chattanooga, and in the previous Ashwander case, that the position was taken by the Authority that these dams represent a definite asset for national defense, and represent a considerably value for that

purpose.

Representative WOLVERTON. In view of that fact that it was presented to the court as a basis for the court to sustain the constitutionality of the act and the operation by the T. V. A., how is it consistent with that position for you to now state that there has been no allocation for national defense in this set-up that you represented to the committee.

for

Colonel PARKER. There was a considerable amount of discussion on that item, and it was agreed that it would have been purely a matter of judgment in this instance, that there was no accurate means of determining how much of the allocation could be made to national defense, that the entire property had its use as stated in the report that purpose, and that it was much the more conservative attitude to make no direct and definite allocation. Any such allocation would have reduced the allocation for these other purposes, and it was considered that the committee should take as far as possible a conservative position.

Representative WOLVERTON. That is what has been going through my mind; the President has very recently stated the importance of the utilities, the power utilities, in our scheme of national defense, and he has called together a group to consider that, and he has even suggested a plan by which they might be unified, and so that there might be expenditures made by the utilities to carry out that suggestion, and it would seem to me that in view of the importance that the President's suggestion gives to the subject and his indication along that line even at the time that this report was made just a few months ago, it could have taken on equal importance to have given some allocation to national defense, and if so, as you have stated, it would mean a reduction in the allocation to these other activities which you have referred to, power, navigation, and flood control, and that being the case, what would be the change in your opinion?

Colonel PARKER. I don't think that it is possible, I will say practicable, to arrive at any such allocation. I think that the possibility is that a large proportion of the Authority's property might be made useful in the event of an emergency.

We have made a little analysis of what might be done here, should you be interested in that aspect of it, but it would be very difficult as set forth in the committee's report, to make any definite allocation of any portion of the property inasmuch as it is not known what portion, if any, could be or would be so utilized.

Representative WOLVERTON. Congress asked for the information, and you have answered it by saying that it is impossible to do it, or inadvisable to do it. The President, however, has pointed out that the utilities have an important part in our national defense. Now, if that is the case, and there was any recognition given to that in this allocation, it would necessarily increase the percentage allocated to power, would it not?

Colonel PARKER. I am reasonably confident that any allocation to national defense would materially decrease the allocation to power. Representative WOLVERTON. For what reason?

Colonel PARKER. It would decrease the total available for allocating, and the other items would be allocated in the same manner, and therefore the amount allocated to power would be decreased.

Representative WOLVERTON. Of course, that is on the assumption. that by allocating something to national defense, which isn't there now, it would necessarily have to be taken from the percentages of the other activities. But what I had in mind, or the basic thought that I had, is this: If in this report you made no allocation to national defense, then you overlook the fact that power should have a larger percentage of value attached to it than is given to your report.

Colonel PARKER. The use of power during an emergency is still the use of power, whether it is used for one purpose or another, and therefore it is difficult to see how the percentage of allocation between the various three functions mentioned before, navigation, flood control, and power, would be changed.

Representative WOLVERTON. If your thought prevailed, the attorneys shouldn't have made any mention of it in presenting their case to the court. In other words, the very fact that they used na