New Albany reported net income of $6,600. It had a net loss of $15,000.

Okolona reported a net income of $2,500. It had a net loss of $13,000.

Tupelo reported a net profit of $40,000. It had a loss of $120. Alcorn County reported a net profit of $41,000. It had a net loss of $40,000; and so on down the line.

We included these communities that had had power for as much as a year. There were two communities that had only had a few months' service, and we had no reports on them. It is that study that brings out a total loss of $167,000 instead of a total profit of $305,000.

That is subtracting the surcharges, amortization, and promotional losses, but not subtracting other expenses which are very substantial but are not on the T. V. A. books and therefore are not accounted for.

DESIRABILITY OF PROGRAM

Now, in summing this up I would like to say that the T. V. A. organization has wonderful possibilities. The river-control program represents a great advance in engineering. That advance ought not to be lost, it ought not to be disintegrated. It ought not to be hampered in its development, and if I may interpose there just a minute a word with reference to the Gilbertsville Dam, that has been criticized a great deal. I think that the Gilbertsville Dam is a sound development. It is largely for flood control down the Mississippi and the lower Ohio.

Questions were asked about why the delay in building the Gilbertsville Dam. There were two or three reasons for that delay. One was the objection, obstruction within the T. V. A. Board to buying out the private power rights on the river. That took longer than I think it should.

Then there was the matter of finding a foundation. The obvious course would have been to build a dam at Aurora Landing, which the Army engineers had picked out. I believe that if a dam site could be found farther down the river it would be possible to join that with a dam across the Ohio at some time in the future; that is, it would save that possibility from being lost. If that were possible, we should know about it.

We had our engineers work for a year or more. They came back and said they found no such possibilities and they were ready to quit. I insisted on their spending another year on that exploration. You have to explore through 50 feet of mud and gravel and quicksand, and so forth, which is hard work.

In the course of time we did discover two possible dam sites down near the mouth of the Tennessee River that are better than anything that had been found, that will enable us to build a dam now. It does not commit us to a dam across the Ohio later, but it saves that possibility. My opinion is that after a great deal of discussion and conflict, the Government will come around to build that Ohio River dam, but I am not worrying about that. We simply save the possibility for it.

If the other dam is built, you will have an inland sea of 500 miles navigation without a lock, a rather remarkable thing in the world.

Dr. A. E. MORGAN. So I am strongly of the opinion that the building of the Gilbertsville Dam is sound public policy. I might say that with reference to some of the criticisms that have been made about the T. V. A. program, some of them are not well taken. I have forgotten whether it is in this committee or publicity surrounding it, the criticism has been made that only $31,000,000 was taken over as the cost of Wilson Dam by the T. V. A., whereas Wheeler Dam, only half as high, cost as much.

On the surface that looks like-as though the Wilson Dam had been charged too little on the T. V. A. books, but the fact is that the Wheeler Dam included a very large expense for reservoir properties, railroad charges, and so forth, whereas the Wilson Dam was in a deep gorge and covered very little land, so that I think that the criticism of the T. V. A. on the amount of charges it assumed on Wilson Dam by comparing with Wheeler Dam, I think that that is an improper criticism. Then it has been charged that there should be no charge against navigation, at least until navigation is built up. I think that that is an improper criticism of the T. V. A. because the Congress of the United States established a policy concerning making the Tennessee River navigable, and the T. V. A. has been carrying out a policy, established before there was any T. V. A., and under a former administration, and I think that it cannot be charged with impropriety in carrying out that mandate of Congress.

I am strongly of the opinion that in many respects the T. V. A. is a most valuable part of our Government; it is valuable from the engineering standpoint, it is blazing a new trail in engineering achievement.

As an adventure in Government it is important. Democracy is getting unwieldy, we are trying to find out how to handle democracy, and the regionalizing of certain functions is a new way of handling our problems. I think the T. V. A. offers a great opportunity for working out difficult Government problems, in an area, and I hope that that possibility may not be destroyed, but if it is to be saved, then there are certain limitations that you have heard me discussing about the T. V. A. that I think ought to be removed. If it is to live long, it has got to be open, aboveboard. There are certain issues that are even more important than the T. V. A. One of them is that Government shall be impartial, that there shall be no punitive action, that we shall not follow the attitude of Germany in setting aside a minority and saying that anybody that calls for a square deal for that minority is thereby a traitor. Whether we like that minority or not it must have a fair deal under our Government, and it has hurt me very much when I was simply trying to get our accounts open and aboveboard to be charged with undue friendliness for the people for whom I wanted a square deal. I think if the T. V. A. is to be established it must be established in openness and fairness and honesty in its accounting. That is what I have been fighting for, and I hope that can be achieved without in any way interfering or disrupting the T. V. A. That responsibility is especially keen for the reason that T. V. A. doesn't have ordinary controls. For instance, as to its power program, under Mr. Lilienthal's guidance, the States there have passed legislation to the effect that T. V. A. and T. V. A. yardstick communities shall not be under the State utilities commissions.

Under

T. V. A. urging, those limitations have largely been removed. The T. V. A. tried to remove that supervision in Kentucky and they were unsuccessful, but they have been successful in Tennessee and Alabama. The T. V. A. is without that control and it is not under State control, it is not under the Federal Power Commission control; it is not under S. E. C. control. It has about as little control as any organization. It is not under direct consumer control. T. V. A. dictates the prices at which the communities shall charge for their power.

It is largely free. I think that the best government can come when you have a large degree of freedom with a very keen sense of responsibility, but if you have that large degree of freedom and the slight control and irresponsibility, then you are in a dangerous situation, and my criticism of the T. V. A. is that having this great opportunity to perform a great service, showing how freedom and responsibility can go together, we have been showing how freedom and irresponsibility may go together. That is my primary criticism of the T. V. A. Now, there are parts of this program that I have not discussed at all. There is, for instance, the lay-out of our transmission lines. I have not discussed that because it is useless to discuss it before this committee. It is so technical, such a difficult problem, that if everyone of your committee members was a qualified engineer, they couldn't, by listening to such testimony, get at the facts and significance of the situation. It has got to be handled by a nonpartisan, disinterested committee of qualified men who can sit down and work with all of the records, and as I look ahead I don't see any other way to get at the facts about the T. V. A. If I may venture a remark in closing, I would like to quote a few words from Felix Frankfurter, on this general matter. This is from his book, The Public and Government, page 162. He was referring to such inquiries as this. This is written in 1930. Mr. Frankfurter said:

We have no standards to guide the technique of inquiry, the mode of procedure, the relations to the public and the executive. Yet such commissions of investigation ought more and more to be called into use to deflate feeling, define issues, sift evidence, formulate alternative remedies. * * * To be effective, such inquiries into political problems must be pursued in a scientific temper. Like all scientific work, this must be pursued with complete indifference to politics. It must be dedicated to the search for fact and be as free from dependence on the actual or supposed wishes or needs even of the President as is the Supreme Court of the United States.

*

I have not discussed here our distribution system which I think gravely requires that is, our transmission distribution system, which I think gravely requires examination because I do not see how that could be handled profitably except by some such organization as Felix Frankfurter mentions, and which unfortunately is not in the tradition of our Government. It would be wonderful if this committee would originate such a tradition.

Thank you.

Chairman DONAHEY. Have you concluded your statement, Dr. Morgan?

Dr. A. E. MORGAN. Yes, sir.

Chairman DONAHEY. You may file such exhibits as is agreeable with the committee.

Dr. A. E. MORGAN. I have no exhibits, only these that are to go in the record itself, as I understood.

Mr. BIDDLE. One of these, is this?

Dr. A. E. MORGAN. No; that goes into the record. It happened to be marked that way as going along with the other.

Mr. BIDDLE. You want all of these statistics copied in the record? Dr. A. E. MORGAN. Yes; they are important to the knowledge of the Mississippi situation.

Mr. BIDDLE. Can you give me the order of these?

Dr. A. E. MORGAN. I have put it into the testimony; part 1 is this general statement.

Mr. BIDDLE. If you will pardon me I will get the record in order so that they are copied correctly.

(Discussion off record, not reported, at the direction of Chairman Donahey.)

Mr. BIDDLE. I have the record now in order.

Chairman DONAHEY. Mr. Biddle, what time will you require for examination of this witness.

Mr. BIDDLE. Of this witness-I don't think that I will ask Dr. Morgan any questions. I may at the end if anything occurs to me, but I have none that I can think of now.

Representative WOLVERTON. Before I ask any questions or bind myself as to time, I first would like to know what is going into the record.

Mr. BIDDLE. Everything that

Representative WOLVERTON. Pardon me until I get a statement in. The fact is this witness has previously indicated to the committee that he had a statement that would run between 200 and 300 pages, and the committee, in considering the matter, determined that there was not sufficient available time to permit Dr. Morgan to give that complete statement, and he was therefore limited to 3 hours for presentation of such matters as he thought he could properly present, taken from the 200- to 300-page study that he had made.

I am interested in knowing how much of that study that we were informed would run between two and three hundred pages is going into this record—that is, first, may I have an answer as to that?

Mr. BIDDLE. The question is addressed to Dr. Morgan or myself? Dr. A. E. MORGAN. I think substantially all of it.

Representative WOLVERTON. I have before me sort of a booklet containing different studies that have been made by Dr. Morgan-first, a summary of the power operations of the Tennessee Valley Authority; second, the power operations of the Tennesse Valley Authority.

Dr. A. E. MORGAN. That first one is simply a summary for information and not to be a part of the record. I am perfectly willing that it should be a part of the record, but it was intended for a brief summary of the whole.

Representative WOLVERTON. May I just run through this until I see what we have? As I have stated, we have a summary of the power operations of the Tennessee Valley, a study submitted by Arthur E. Morgan to the Joint Congressional Committee on the Investigation of the Tennessee Valley Authority, December 1936.

Second, the power operations of the Tennessee Valley Authority; also a study submitted by Arthur E. Morgan.

And then there is part 2, entitled "Power Operations of the Unified Dam System," which contains approximately 170 pages.

The first two that I mentioned contain approximately 32 pages. Then there is, accompanying those reports, a table showing sales of electricity by the Tennessee Valley Authority for the 5-year period, June 30, 1933, to June 30, 1938. This is attached to part 5.

Part 5, which contains exhibits and schedules, relating to yardstick communities, surcharges, promotional expense of T. V. A., prorated, the cost of power sold in Mississippi, and supporting schedules; loss on power sold in Mississippi, with supporting schedules; proration of loss on power sales in Mississippi; comparative unit costs. That is a part or is the booklet that I referred to, that comes to us in a folder. Then a few days ago I received, or it was made available to the committee-I don't know whether all members received it or not-a plan of reorganization by Dr. Morgan.

Then I have also before me this morning a further statement on allocation of costs of the T. V. A. dams and reservoirs between navigation, flood control, and power, prepared by Dr. A. E. Morgan; and also a memorandum concerning charges of losses by the T. V. A. through litigation.

Now, the reason that I am bringing the question up at this time is to make certain that all that Dr. Morgan wishes to go into this record, goes in. I am personally of the opinion that he is entitled to a great deal of credit for the study that he has made, which is shown. by these different pamphlets. It indicates a vast amount of work, and must have taken a long time, and I think that, as he stated, with his limited facilities, it is perfectly astonishing that he has been able to present to this committee such worth-while information.

In view of the fact that he has been limited in his time of presentation, I, as a member of the committee, am interested that the entire result of his study be made a part of the record.

Chairman DONAHEY. That has been decided previously; that that was to be the case, and

Representative WOLVERTON. That is what I understood. Do I understand from that that all that I have referred to becomes a part of the record?

Dr. A. E. MORGAN. There are two items that you referred to that have not been made a part of the record, the summary and that "Notes on reorganization"; neither of those has been made a part of the record, but it is perfectly suitable that it should be, although that "Notes on reorganization" I sent that to the chairman, and I think that I would like to be more deliberate about that, and put it in somewhat better form, if I might.

Chairman DONAHEY. You might have that privilege.

Dr. A. E. MORGAN. If I may do that, I would like to.

Chairman DONAHEY. The witness has a right to put in the record such matters as he has to submit. If there is no objection, it is so ordered.

Representative WOLVERTON. Now, do I understand, Doctor, that if this file, as I have read it into the record, during the last few minutes, is made a part of the record, that then you have given to the committee all of the information that you have to offer?

Dr. A. E. MORGAN. No: throughout the statement that is here included are a large number of references to T. V. A. reports, to