Representative WOLVERTON. The mention of the name of Mr. Moreland just brings up a thought in my mind. Was he one of the consulting engineers that assisted this committee of the T. V. A. in making up the report submitted to the President on June 9 of the present year?

Colonel PARKER. No, sir.

Representative WOLVERTON. What Moreland was it?

Colonel PARKER. There was no Moreland in that capacity; there was a Morehouse. Is that what you are thinking of?

Representative WOLVERTON. Maybe it was Morehouse.

Colonel PARKER. Yes.

Representative WOLVERTON. It wasn't Moreland?
Colonel PARKER. No.

Representative WOLVERTON. Now, how did you make up the $94, 000,000 in your estimate?

Colonel PARKER. That $94,000,000 is made up of the actual construction costs of the Wheeler and Norris developments, plus the valuation of the appraised valuation of the Wilson development. Representative WOLVERTON. How much was the figure for Wheeler, the actual figure, can you state-the construction cost?

Colonel PARKER. $32,473,542.

Representative WOLVERTON. That is the total cost?
Colonel PARKER. Yes, sir.

Representative WOLVERTON. For navigation, flood control, and

power?

Colonel PARKER. In a single project.

Representative WOLVERTON. Well, now, do I understand it to be $32,473,000 plus?

Colonel PARKER. That is correct.

Representative WOLVERTON. Well, when you gave me the figures that made up that $160,000,000, you gave the cost of power alone at Wheeler to be over $32,000,000.

Colonel PARKER. I explained that that figure was reduced in proportion to the amount of power developed; it had to be added to similar amounts for the other two plants and then proportioned to the amount of power which was developed by the actual multiplepurpose system.

Representative WOLVERTON. Let me see if I understand that. You have now stated that a multiple project at Wheeler would cost or did cost $32,473,542?

Colonel PARKER. That is correct.

Representative WOLVERTON. Is that right?
Colonel PARKER. Yes.

Representative WOLVERTON. And yet when you figured out the $160,000,000 costs, you gave Wheeler a cost of over $32,000,000— $32,060,000 and something, just for power.

Colonel PARKER. I explained that that was entered into a figure which was reduced in proportion to the power output, that $32,000,000 was added to figures at the other two dams, and the sum of those figures was reduced in proportion to the amount of power which they could put out, so that the final single-purpose power development was the equivalent of producing only as much power as the multiplepurpose system.

Representative WOLVERTON. Then, according to your figures, if they had just built it for power, at Wheeler, without any regard to flood control or navigation, it would have cost within a few thousand dollars of what the unified system cost?

Colonel PARKER. No; that is not correct.

Representative WOLVERTON. Well, it is according to the figures. Colonel PARKER. Such a development, costing that amount, would have produced more power than the present Wheeler Dam as it is now operated in the interests of flood control, navigation, and power. You see, under our operating schedule, these dams are not operated to produce the maximum amount of power; they are operated in the joint interests of all of these purposes, and therefore if a dan were built there costing $32,000,000 for power alone, it would produce a great deal more power than the present development is capable of producing under present conditions.

Representative WOLVERTON. How much more?

Colonel PARKER. At least 20 or 25 percent more.

Representative WOLVERTON. All right. I am glad to get that figure. It seems rather important, in my way of thinking. Now, are you sure that that is about right? Colonel PARKER. Approximately right. If you are interested in getting the exact figure we would be glad to get it. Representative WOLVERTON. Very well.

the unified project at Norris? Colonel PARKER. $31,532,120.

Representative WOLVERTON. At Wilson?

Colonel PARKER. That is $30,120,009.

Now, what is the cost of

Representative WOLVERTON. How much did the project at Wilson actually cost the United States Government?

Colonel PARKER. Was your question as to the actual cost, original cost, of Wilson Dam?

Representative WOLVERTON. Yes, sir.

Colonel PARKER. That was $45,022,999.70.

Representative WOLVERTON. That included power?

Colonel PARKER. That was the total original cost of the entire project-that includes power; yes, sir.

Representative WOLVERTON. So that that was a perfectly unified system, so far as you can consider Wilson as having flood-control value.

Colonel PARKER. As I understand it, if the original Wilson Dam was designed for power and navigation, there was no thought of flood control.

Representative WOLVERTON. $45,000,000 plus covers the entire cost? Colonel PARKER. Well, there is some additional cost for transmission lines and buildings; I was excluding those.

Representative WOLVERTON. I don't think that they would be included; and you gave it a value of $50,000,000 instead of $45,000,000? Colonel PARKER. That is the present value.

Representative WOLVERTON. So that when you used your figures you took that difference as a saving that was being made between the T. V. A. system, and what it would have cost if separately constructed, using depreciation as a saving.

Colonel PARKER. You, of course, appreciate that the Wilson Dam was built under nearly wartime conditions, with very different costs and circumstances surrounding its construction, different than our present costs, and it was a very decided difference in the cost, in addition to the depreciation. The depreciation is a much smaller factor, in these differences in cost.

Representative WOLVERTON. Was that built by the Army engineers? Colonel PARKER. Yes.

Representative WOLVERTON. Well, then, the war condition necessarily wouldn't have made it such a great difference as you are trying to intimate, because it was constructed by Army Engineers and not by contract, so that I don't think that that is the answer.

Senator SCHWARTZ. Is that an observation or a question?

Representative WOLVERTON. I haven't any questions to direct to you. If I have any questions I will direct them directly to you; and if the witness doesn't understand whether it is a question or an observation, I will be pleased to answer.

Colonel PARKER. Would you be kind enough to repeat the question, Mr. Wolverton?

Representative WOLVERTON. When you figured this as having a value of $30,000,000 instead of $45,000,000, do you think that it is a true basis of deduction there to say that it is because Wilson Dam was constructed during the war?

Colonel PARKER. That is one reason.

Representative WOLVERTON. Are there others?

Colonel PARKER. You will doubtless recall that the construction of Wilson Dam extended over a considerable period; I am not entirely familiar with the details of that, but I believe that the total time was involved between 1918 and 1925, and that the construction was stopped and started again, and conditions of that sort introduced which contributed to a cost which was greater than would otherwise have been the case.

In accordance with the instructions contained in the Tennessee Valley Authority Act, we have proceeded to the revaluation of this dam. I would refer you to section 14, on page 11 of the Tennessee Valley Authority Act, where the Board is instructed to make a thorough investigation as to the present value of dam No. 2, and

so on.

Representative WOLVERTON. My point, Colonel, is this: That when you are figuring out a saving, or the extent of the saving between the T. V. A. system, and what it would otherwise have been, it doesn't seem to me that you are entitled to take a credit for depreciation on Wilson Dam in figuring out what was saved by T. V. A.; that is a matter, of course, that would follow in any system that was adopted, and you can't point to that as a saving made by T. V. A. so far as Wilson Dam is concerned.

Mr. Chairman, I won't proceed any further at this time. I think that I have got the basic information that will enable me to go into it further with Mr. Krug and some of the other witnesses.

Chairman DONAHEY. Are there any further questions? If not, the witness may be excused, and Dr. Morgan will prepare to take the stand.

Dr. Morgan having been sworn, you may interrogate the witness.

115943-39-pt. 11--18

TESTIMONY OF ARTHUR E. MORGAN

Mr. BIDDLE. Dr. Morgan, have you prepared for the benefit of the committee a study of the power operations of the T. V. A.?

Dr. A. E. MORGAN. I have some notes, as I wired to you here a day or two ago; a good part of the data that I wanted to use was not quite finished, and I asked if this could be postponed until Monday. I have some rough notes that I can use this morning.

Mr. BIDDLE. What I want to get at, will you be able later to submit in writing your study, for the benefit of the committee when it is complete, or do you wish to?

Dr. A. E. MORGAN. I have some notes, I have some statements that are incomplete in themselves.

Mr. BIDDLE. I meant when you have whatever you have completed, do you want to submit anything in writing to the committee at a later date?

Dr. A. E. MORGAN. I should like to.

Mr. BIDDLE. We will be glad to receive it.

Chairman DONAHEY. It is so understood, without objection. Dr. A. E. MORGAN. I would like to have it incorporated in the record, if I may.

Mr. BIDDLE. Did you want to testify with respect to the power operations of the T. V. A., or what particular aspect; we understood that it was in connection with the power operations.

Dr. A. E. MORGAN. There are several matters that I would like to testify on. One is the matter of the cost of T. V. A. power, the wholesale cost of T. V. A. power, in connection with the testimony given by Mr. Lilienthal, and Dr. H. A. Morgan, and another is the data on which that statement would be made. That first is on the basis of a three-dam system, as has been testified to here.

The second is concerning the yardstick program as it is commonly called, that is the cost of the power to the yardstick communities and analysis of public statements that have been made to the effect that those communities are self-sustaining in their power program. The third is a treatment of the seven-dam system.

The fourth point is touching upon some matters concerning which there has been some testimony, the matter of the allocation, the matter of the Arkansas Power Co., and the Aluminum Co. contracts, and others, in general.

Then there are a number of matters concerning the general purpose of the hearing, that will take a relatively small time, that I would like to touch upon at the end.

Now, there are one or two points that were brought up in the testimony here yesterday and this morning, that I would like to mention while the engineers are here who did testify, although it is somewhat out of the order of my presentation.

NECESSITY FOR DEFINITE POLICY IN OPERATION OF MULTI-PURPOSE DAMS

One of those is with reference to the statement that I understand was made yesterday concerning the use of these dams for power as an element of national defense. I think that that is an extremely important issue. Mr. Parker, as I understand, testified that in time. of national need the flood-control storage of these dams could be infringed upon for the development of power, and in that way an additional amount of power could be secured for purposes of national defense.

Mr. BIDDLE. Dr. Morgan, as I recollect his testimony it was that if the Government determined to infringe on the flood-control system for purposes of increasing the power, if that was the policy of the Government, then power could be increased.

Dr. A. E. MORGAN. I am speaking of the necessity of clear Government policy in that respect.

Now, as I mentioned in a memorandum furnished to the committee a few days ago, I have taken the position that multipurpose dams are feasible, that from an engineering standpoint it is feasible to combine flood control, power, and navigation in single structures. It is sometimes cheaper than to separate them in separate structures.

However, if that policy is to be followed, there must be clean-cut definite national policy with reference to the operation of those multipurpose projects. Now, if a region is relying and depending upon flood control by means of dams, and if that protection is taken away for power purposes, those communities may be worse off than though they had not relied on such protection.

Take, for instance, the city of Chattanooga. If Chattanooga were to develop flood control without the help of T. V. A. dams, it would cost substantially more. Chattanooga's method of local protection is by building levees around the city. If we have storage of water behind dams, then those levees will not then have to be built so high, there can be a substantial saving in the cost of flood control for Chattanooga.

On the other hand, if Chattanooga builds its levees high enough for flood control with the dams in operation and working, and then if instead of using those dams for flood control we use them for power, those levees may be overtopped, and levees that are overtopped are much worse than no levees at all.

The disaster may be much greater if you count on protection, or living behind levees, if homes and factories, and so forth, are built there, and then if the levees overtopped, the destruction may be much greater than if there were no levees at all, partly because the flood comes more suddenly with the breaking of a levee than with the gradual creeping up of a flood, and partly because the people have invested and built their homes and factories there counting on flood control. And so I say that if we are to have multipurpose use of dams gradual flood control storage must be held inviolate and for no other use.

Now, in promoting, and in favoring multipurpose dams, I have taken issue with many of the foremost engineers in this country, who say that because of the danger of misuse there ought to be separate structures, that the uses ought not to be combined-I have taken the position that it is well to combine them, but it is only well to combine them if the administration can be so clear-cut, if national policy can be so deeply established that there is no danger of infringing upon flood-control storage.

Now, I will give you an instance of the importance of flood-control storage in the case for national defense. În Ohio, in 1913, they had a very severe flood that cost many millions of dollars and hundreds of lives. We began to plan for protection against that flood. Those plans were completed in the midst of the World War, when the country was straining its energies and straining its resources to carry on a world war.