Colonel PARKER. There is the navigation aspect.

Mr. BIDDLE. Well passing quickly from navigation,.

Representative WOLVERTON. I think you had better pass that quickly.

Colonel PARKER. There are available certain natural resources in the form of minerals, in regard to which we have had a report from our chief geologist, and which are available to a considerable extent in the valley. Do you wish me to go into details?

Mr. BIDDLE. I would like to have some idea of how that would help national defense. What sort of minerals are used in the manufacture of war materials, for instance?

Colonel PARKER. I am quoting now from a report made by our chief geologist, Maj. Edwin C. Eckel.

The Tennessee Valley region, using that term in a broad sense, should become one of the leading munitioning areas of the United States for two entirely separate reasons. One reason is its geographic situation. The other reason is its supply of certain necessary raw materials.

Geographic situation. Referring to the accompanying map entitled "Munitioning Centers of the United States and Transportation Systems," we show the strength of the Tennessee Valley geographic position. It is protected on the east not only by the Atlantic, but by a range of mountains which would make land attack impossible and air attack very difficult. On the south, its main mineral deposits and main manufacturing centers are still a safe distance from the Gulf of Mexico which it is assumed would, in any case, be fully protected by the United States Fleet. On the west it, of course, borders on the transMississippi and Plains States, which give ample protection for some thousands of miles. On the north, the coal field areas of West Virginia and Kentucky give protection to considerable heights.

Within this area lie such critical points as Birmingham, Memphis, Muscle Shoals, Chattanooga, and Knoxville, and immediately north of it is St. Louis which might be considered part of the same region. All of the points mentioned are protected, in a fashion which has just been described, from enemy attack. As distinct from this favorable location, the present chief manufacturing points of the United States have also been placed on the map. It will be seen that every one of them is easily reached either from the Atlantic or from the Canadian border. Our main iron-ore supply at the moment, for example, comes down to Duluth on Lake Superior by rail, and thence moves by ship through Sault Ste. Marie Canal, which is half in Canadian territory, and could be broken at any moment. Cutting off that ore supply would put absolutely out of business every steel plant from Buffalo and Pittsburgh to Gary and Chicago. It would leave the remaining northern plants subject to securing ore from across the Atlantic, and that assuming a serious war would seem impossible.

Within the Tennessee Valley region, as here described, there is an ample supply of intelligent labor and of electric power, in addition, as noted below, to numerous coal supplies and adequate supplies of other minerals. The strength of the geographic position seems to be clearly established and there is no need to discuss it in more detail here.

Representative WOLVERTON. That sounds like a chamber of commerce article.

Colonel PARKER (reading):

It is clearly evident that the safety of a munitioning area such as this will be far more important in future wars than in 1917, owing to the slow depletion of the Lake Superior ore fields, the probable absence of the protecting British Fleet which covered out Atlantic transportation, and the almost certain lack of 10 or 20 allies which we had in the World War.

Mineral supplies. From the standpoint of military minerals, there are five absolutely essential elements in either war or peace. These are coal, iron ore, limestone, salt, and sulphuric acid. Other metals and nonmetals are desirable, but in general are not really necessary. Their absence would increase the ex

pense of munitioning, but they would not make it impossible. To repeat, lack of any of the five first essential mineral resources would make war impossible under modern conditions. Lack of other mineral resources makes war difficult, but substitutes can always be found except for the five first named.

Representative JENKINS. How much more of that is there? Why not have it put in the record?

Mr. BIDDLE. How much more is there?

Colonel PARKER. A couple of pages.

Mr. BIDDLE. Let's put it in the record. We have a pretty good idea now.

(The remainder of said article is as follows:)

The Tennesse Valley region is very rich in coal, iron ore, and limestone. It is moderately well supplied with salt and sulphuric acid from nearby regions, and it has moderate supplies of various other needed materials.

In addition to its chemical use in the form of lime, limestone is of important military service in the form of cement for cantonments, roads, and trenches. The salt and sulphuric acid enter into a large number of chemical products needed at various stages of the munitioning program. The coal and iron ore are, of course, basic raw materials-and no nation can fight a war without them.

Next in importance to the five materials noted above, and in some cases of even equal importance, come the three raw materials, potash, phosphate, and nitrate. Of these three, the Tennessee Valley region has large deposits of phosphate rock from which various phosphorus derivatives can be secured by processes in part developed by the Tennessee Valley Authority itself. As for potash, there are two sources, both in north Georgia, which have been examined by the Tennessee Valley Authority carefully, and which, though not competitive with German and French potash in time of peace, could supply considerable additions to our reserve in time of war. As for nitrogen, the supplies from the coke ovens of the district and possible use of the Government plant at Muscle Shoals would cover all the needs of even a great war.

There are several minor metals which would be desirable for a munitioning center, but which occur in rather limited quantities in the Tennessee Valley region. The most important and the one which exists in greatest quantity in that region is manganese ore. Next in importance for munitioning purposes come chromium and nickel. The deposits of these two, both existing in North Carolina, have been examined by the geologic division, Tennessee Valley Authority, with results which are not seriously encouraging.

There are other minerals and mineral products which exist in satisfactory quantity within the region. These include such varied products as zinc, copper, titanium, cement, fluospar, and bauxite. Taken as a whole, the region compares favorably with any other industrial region of the world in its supplies of military minerals. Most of these have been investigated by one or the other divisions of the Tennesse Valley Authority, and the second map accompanying this report shows the distribution of the deposits within the region. Several bulletins covering work on various minerals of that type also accompany this report.

Mr. BIDDLE. Now had you completed your testimony?
Colonel PARKER. Yes.

BASIS FOR ALLOCATION RE HIWASSEE AND NORRIS DAMS

Representative JENKINS. I want to ask him a question or two. May I, Mr. Chairman?

Acting Chairman SCHWARTZ. You may.

Representative JENKINS. What I have to say won't be as well said as what you have been reading, but it might be just as important. I would like to ask you this, and I am reading-I wonder if you agree with this statement-I am reading a statement, and I wonder if you agree with it. The statement says:

Tributary projects (being Hiwassee and Norris) increase fivefold the amount of firm power which could otherwise be produced on the Tennessee River.

Colonel PARKER. Would you mind repeating that, Mr. Jenkins? Representative JENKINS (reading):

The tributary projects increase fivefold the amount of firm power which could otherwise be produced on the Tennessee River.

I presume it means that these two tributaries, two big dams, Hiwassee and Norris, on the tributaries, produce five times as much firm power as the rest of the projects.

Colonel PARKER. I would presume that that means the increase in output of firm power on the downstream plans by the addition of upstream storage. I cannot confirm that particular statement, but that sort of statement sounds reasonable.

Representative JENKINS. Yes. Well now that is what I am coming to. If that is true, that these two dams on the upper reaches of the river, as was brought out this morning, beyond which there can be no navigation except pleasure boats, it would appear then that if they produced five times, or increased the power capacity five times, and have no navigation benefits at all, that that would be a very important factor in your determination of your allocation, because if they produce five times the load for power and don't do any good so far as navigation is concerned, it would appear that the navigation percentage ought to go down very materially and the power percentage go up. Colonel PARKER. Perhaps it might be appropriate in answer to that to attempt to explain the principal theory upon which this allocation was based.

The mechanics of that operation involve the setting up of estimates of the cost of what are known as alternate single-purpose developments; that is three separate developments, each of which would produce the equivalent result produced for the three projects by a multiple-purpose scheme.

You might say that each of these single-purpose costs would be a measure of the amount which we would be justified in expending for that purpose, the total amount which would be justified in spending for that purpose.

Now if we take these alternate single-purpose estimates and subtract from each of those estimates the amount which we are spending directly for that purpose, we have as a remainder an amount which is in a way the measure of the saving which is being made for that particular purpose.

As an example, if we were allocating a total expenditure of $100,000,000, it might be done in this way. This is purely a hypothetical case, to try to explain how this is done. We might say that a navigation system to achieve the purposes achieved by this multiple purpose $100,000,000 development would cost $40,000,000. We might say that an equivalent flood-control scheme would cost $35,000,000; that an equivalent power scheme would cost $60,000,000.

Now that is a total of $135,000,000 as compared to the multiple purpose $100,000,000 development. Now we might go back and say that the direct charges to navigation which would serve a like purpose would total $15,000,000. Then a measure of the saving in the direction of navigation would be the $40,000,000 of the single purpose minus that direct $15,000,000, or $25,000,000.

Suppose the direct flood-control charge, which might be an increased height on a dam or sluice gates in it, or something of that sort, suppose that were $10,000,000. Then the $35,000,000 single-purpose floodcontrol project minus that $10,000,000 would leave $25,000,000 as a measure of saving.

The direct power costs we will assume, which would consist of a power house and equipment and other accessories, might total $25,000,000. Taking that away from the amount of $60,000,000 would leave $35,000,000 as a measure of the saving.

We then have what we will call alternative costs, which in each case is the single-purpose project minus the direct charge. It would then be for navigation $25,000,000, for flood control $25,000,000, for power $35,000,000, totaling the amount of $85,000,000. Those percentages would be 29, 29, and 41 percent, approximately, of the total. Now we have to allocate the remainder of that original $100,000,000. That is, we had certain direct charges which would be added to those purposes anyway; that is, $15,000,000 to direct navigation, $10,000,000 to direct flood control; and $25,000,000 to direct power. That leaves a total of approximately $50,000,000, which is common costs, which must be allocated.

We allocate that common cost in direct proportion to these percentages which we have developed for those remaining alternative costs. That is, we allocate 29 percent of that to navigation, which becomes about $14,700,000. We allocate 29 percent to flood control, which becomes $14,700,000; and we allocate 41 percent to power, which becomes $20,600,000, which together total $50,000,000.

We then add to the direct charges previously determined these allocated joint costs, and get a total allocation to navigation of $29,700,000, to flood control $24,700,000, and to power $45,600,000.

Now, that in essence is the method which we have followed in our three-plant allocation, with some corrections and some use of judgment, as I stated, in particular instances. In general, it is a reasonable theory. It presupposes that the amount of the common cost to be allocated to particular uses is measured by the justifiable investment which could or should be made in that particular instance.

Representative JENKINS. Yes, but Colonel, of course, your answer may be an answer to my question, I don't want to follow all of those figures through there, and I don't want you to repeat them, and I don't want to develop it any further, except I would like to read into the record once more this question that I asked you.

Tributary projects increased fivefold the amount of firm power which could otherwise be produced on the Tennessee River.

I want to ask you another question on that. I want to read this one to you. I have a statement here that says this:

Two and six-tenths times as much flood storage could have been provided at the site of Norris for less than one-quarter of the cost of Norris.

Now let me give you the reason I am asking you this question. I maintain that if Norris and Hiwassee furnish in effect five times as much power as the rest of the development, and if neither of them

have any apparent navigation advantages whatever, then the only thing left would be their flood control.

Now, then, I want to ask you this question, if this statement is true. It says:

Two and six-tenths times as much flood storage could have been provided at the site of Norris Dam for less than one-quarter of the cost of Norris Dam.

Now, if that were the case, if Norris Dam has any flood control at all, it is a terriffic expense, if you are going to give to Norris Dam 28 percent, going to apply to Norris Dam 28 percent of its cost for flood, when this statement, if it is true that you could have gotten 2.6 times as much flood control with less than one-quarter of the cost, it would appear to me that your allocation system has been very favorable and very partial to power.

Colonel PARKER. Well, now, there are a number of things that you said which I cannot identify, all of them, that are difficult to assimilate. One is this statement about the amount of flood control that can be produced at a certain cost, which I should certainly question seriously. And again you mention a certain allocation of flood control at Norris. These allocations which we have made are not made by separate plants, they are made for the three-plant system, and they do not necessarily apply to individual plants.

Now, the single purpose flood-control system-the single-purpose alternate flood-control project for the 10-plan system, which would involve furnishing equivalent flood-control storage to that provided for Hiwassee and Norris in the other systems, would be $140,000,000. That includes Gilbertsville, which is $69,000,000. So excluding Gilbertsville, the cost of an alternate flood-control system for the remaining plants would be about $70,000,000.

The cost of providing equivalent flood-control storage for Norris alone, that is equivalent to that now provided, would be about $21,500,000.

Representative JENKINS. Let me read you this, Colonel, and see how much difference there is. And this has some interest, at least. It says:

Norris Dam cost $36,310,370. This dam provides genuine flood storage for only 497,000 acre-feet.

Colonel PARKER. I question that, sir, right off.

Representative JENKINS. 497,000 acre-feet. That's a whole lot.
Colonel PARKER. It actually provides 2,000,000.
Representative JENKINS. 2,000,000 what?

Colonel PARKER. 2,000,000 acre-feet of flood-control storage.
Representative JENKINS. Let's see now:

This dam provides genuine flood storage of only 497,000 acre-feet with no allowance for the destruction of natural valley storage by the power structure upon which the flood-control structure is superimposed.

It says the flood control could have been built at this site for $8,136,000, which would provide three times as much as Norris provides; in other words, 1,312,000 acre-feet of genuine flood storage. Colonel PARKER. May I ask what that is from, Mr. Jenkins? Representative JENKINS. It is taken from the testimony before the court in the Fourteen-Power Companies Case.