Mr. JONES. It sounds all right to me.

Senator MALONEY. I do not think there is much relationship between subsection (d) of section 7 and subsection (f) of section 8 to which you have just referred. I think obviously it is a Federal obligation and a Federal risk. I do not think the same thing will apply to the building of roads, bridges, tunnels, and schoolhouses. I think that is a responsibility that very definitely ought to be originated by the States and for which the States or subdivisions of the States should be definitely responsible.

I hope you will have an opportunity to look at the testimony given yesterday when we asked Mr. MacDonald concerning the creation of projects that he had in mind. He had about 17 projects for bridges, roads, and probably tunnels, and I asked him if any of those were sponsored by States, and none of them were. I think it will be definitely a Federal spending program unless we do something to tie up the States.

I think you would be in sympathy with the thought that I have on the subject.

Mr. JONES. Your discussion of that brought the other to my mind, and I wanted to call it to your attention.

Senator MALONEY. I think you are quite right about that case.

The CHAIRMAN. Of course you will be available to the committee, Mr. JONES; I am sure we shall want you again.

There is another important witness we have this morning. Are we finished with Mr. Jones, for the time being?

(There were no further questions.)

The CHAIRMAN. Well, thank you very much, Mr. Jones.

Senator BARKLEY. Mr. Chairman, while we are waiting for Mr. Page, I should like to put into the record the little sheet or table, if it has not already been placed in the record, showing the equivalent percentages of the low rate interest over a period of years, as compared with the grants; in other words, how much it would amount to, in percentage, on the total obligation, on the particular rate of interest as compared with the 45-percent grant.

The CHAIRMAN. All right; we shall put that in the record. (The table referred to is as follows:)

Effective capital grants, for projects with loans of selected maturities, provided by reduced interest rates under Barkley-Steagall bill

TABLE A.-LOANS OF SELECTED AMORTIZED MATURITIES (EQUAL ANNUAL DEBT

Senator MALONEY. My fear is that it completely removes the lending features and makes it definitely and directly a spending bill. I would be in favor of what I think you want to do, Senator Barkley, and that is, providing, if it is necessary to provide I do not think it is for some such agency on the part of the State government as is done in many States.

Senator BARKLEY. That language can be worked out so that it will not carry any implications of that kind.

Senator TAFT. Do you think the Interstate Commerce Commission ought to have something to say about this railroad equipment, Mr. Jones? Or are you asking for the removal of the restrictions which now require railroad loans to be approved by the Interstate Commerce Commission?

Mr. JONES. I have always thought that the R. F. C. should have the approval of the I. C. C. in any railroad loan. As to this subject which is not covered in the bill, there is certainly no objection to having it, and it might be helpful.

On page 13, with reference to this provision which you are talking about, Senator Maloney, about these corporations, we are given the same authority. We have a suggested change in that. It is a very small one. It merely gives us the right

Senator BARKLEY. Suppose you read it.

Mr. JONES. It is in substitution of paragraph (f) on page 13 (reading):

The corporation is hereby empowered to create one or more corporate Federal instrumentalities, by the issuance of charters thereto, to be subsidiaries of the corporation to aid it in carrying out its functions under section 8 hereof, and to be operated under such rules and regulations as it shall prescribe and to capitalize and make loans and advances to any such corporation.

Senator ADAMS. As a good lawyer who does not happen to have been admitted to the bar, do you think the R. F. C. can be given authority to create a corporation? Is not that a power that must come from a sovereign?

Mr. JONES. You might say an instrumentality instead of a corporation. It is just a matter of convenience. I think we have something else to add to that which I do not have here with me now but provides for recording with the Interstate Commerce Commission and eliminates the necessity of recording in the different States.

Senator HUGHES. You cannot create a corporation.

Senator BARKLEY. Congress can authorize it to set up an agency within its own jurisdiction. It has done that in the Import-Export Bank, and a mortgage corporation was set up.

Mr. JONES. Congress directed us to set up the Disaster Loan Corporation, to furnish it capital and to manage it.

Senator ADAMS. You created it under State laws. You went to one of the States and created it?

Mr. JONES. No.

Senator ADAMS. The act created the corporation?

Mr. JONES. Yes.

Senator BARKLEY. It directed the R. F. C. to set up the corporation. Mr. JONES. A subsidiary corporation is a facility we think we will need if we are going to buy equipment and lease it.

Senator TAFT. Would you object to our creating a corporation and calling it the Equipment Trust Corporation? Would not that be the simplest way to do it?

Mr. JONES. It sounds all right to me.

Senator MALONEY. I do not think there is much relationship between subsection (d) of section 7 and subsection (f) of section 8 to which you have just referred. I think obviously it is a Federal obligation and a Federal risk. I do not think the same thing will apply to the building of roads, bridges, tunnels, and schoolhouses. I think that is a responsibility that very definitely ought to be originated by the States and for which the States or subdivisions of the States should be definitely responsible.

I hope you will have an opportunity to look at the testimony given yesterday when we asked Mr. MacDonald concerning the creation of projects that he had in mind. He had about 17 projects for bridges, roads, and probably tunnels, and I asked him if any of those were sponsored by States, and none of them were. I think it will be definitely a Federal spending program unless we do something to tie up the States.

I think you would be in sympathy with the thought that I have on the subject.

Mr. JONES. Your discussion of that brought the other to my mind, and I wanted to call it to your attention.

Senator MALONEY. I think you are quite right about that case.

The CHAIRMAN. Of course you will be available to the committee, Mr. JONES; I am sure we shall want you again.

There is another important witness we have this morning. Are we finished with Mr. Jones, for the time being?

(There were no further questions.)

The CHAIRMAN. Well, thank you very much, Mr. Jones.

Senator BARKLEY. Mr. Chairman, while we are waiting for Mr. Page, I should like to put into the record the little sheet or table, if it has not already been placed in the record, showing the equivalent percentages of the low rate interest over a period of years, as compared with the grants; in other words, how much it would amount to, in percentage, on the total obligation, on the particular rate of interest as compared with the 45-percent grant.

The CHAIRMAN. All right; we shall put that in the record. (The table referred to is as follows:)

Effective capital grants, for projects with loans of selected maturities, provided by reduced interest rates under Barkley-Steagall bill

TABLE A.-LOANS OF SELECTED AMORTIZED MATURITIES (EQUAL ANNUAL DEBT

40.

30

20.

10.

SERVICE)

Effective capital grants, for projects with loans of selected maturities, provided by reduced interest rates under Barkley-Steagall bill-Continued

TABLE B.-LOANS OF SELECTED AVERAGE MATURITIES (OR TERM LOANS)

STATEMENT OF JOHN C. PAGE, COMMISSIONER OF THE BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR, WASHINGTON, D. C.

The CHAIRMAN. Very well, Mr. Page, we should like to hear from you now.

Senator CLARK of Idaho. Before Mr. Page begins his statement, may I make one brief remark for the benefit of the members of the committee who were not here yesterday when I asked permission to have Mr. Page called? This is with respect to an amendment that, at the proper time, Senator O'Mahoney, who joins with me, and I will present, granting the sum of $83,500,000 to the Department of the Interior, Bureau of Reclamation, for expenditure under the reclamation laws on self-liquidating reclamation projects, more than half of them already under construction, and the other half either authorized or ready to go. We feel that we have the only proved self-liquidating projects, outside of the Reconstruction Finance Corporation's experience, in our reclamation projects; and I called the attention of the committee, yesterday, to the fact that our repayments are 97.7 percent, to date, and all of the money advanced on these projects will ultimately be repaid, and that our record of repayments, over a long period of years, is 97.7 percent.

Senator BARKLEY. Senator Clark, do you propose to take this $83,000,000 from some other fund here, or is that in addition?

Senator CLARK of Idaho. The way I have the amendment drawn, Senator Barkley, it is in addition. However, I also said to the committee yesterday that we in the West got practically very little benefit from this proposed act, as now set up; we would get nothing from the toll roads provision, because they all will be located in the industrial East; we would get very little from the farm tenancy loans. Of course we would get our share of the rural electrification, but we would get practically none of the railway equipment loans, because our railroads in the West do not need them, and the president of our Union Pacific has already so stated in the newspapers.

I have asked Mr. Page to prepare a list of projects already under construction but, by reason of the limitation of the reclamation fund,

from which this money comes, which are going ahead very slowlywhere he can justly and with sound means step up construction or build corresponding units that will later have to be built, a year or two from now, and also a list of projects that can be immediately started and that have been surveyed and approved and authorized by Congress, or deemed authorized, with a view to giving the committee this picture.

Senator TAFT. Are these Federal projects or loans to irrigation districts?

Senator CLARK of Idaho. All Federal projects.

Senator TAFT. So they do not come under the non-Federal loans? Senator CLARK of Idaho. No, sir.

Mr. Page, I think you might tell us your experience as Commissioner of the Bureau of Reclamation, from the point of view of self-liquidating projects and how these loans have been liquidated in the past.

Mr. PAGE. The Bureau has been operating since 1902, being organized by the act of Congress of June 17, 1902. During that period the total investment put in by the Federal Government, in the Western States where irrigation is essential, has approximated $400,000,000 of Federal funds. Those funds have been put out on the security of repayment contracts with the beneficiaries of the projects, or in some instances by power contracts, where power was developed as an incidental to the irrigation works.

To date, from fifty to sixty million dollars has been repaid of those funds; and during the early years the total investment was materially less than the $400,000,000 which I just mentioned. In other words, the return which has been made was approximately 25 to 30 percent of the investment in the projects which are now in a position or in a state of development which permits repayment. In other words, on the projects which are completed to the point where repayments are possible.

Of the amounts due, the statement given by Senator Clark of Idaho, that 97.7 percent had been paid, is accurate. On different occasions, Congress has set up different standards for this repayment, starting first with the 10-year and then later with the 20-year, and now the standard maximum is 40 years for the repayment of the principal of this investment. The investment is made by the United States in actual construction of the projects themselves, under the supervision of the Bureau of Reclamation. The policy has been to contract all the construction work; and at the present time we have construction contracts amounting to approximately $102,000,000 in operation. In addition, there are purchase contracts, for equipment and supplies, amounting to about $70,000,000, outstanding at the present time. That gives some conception of the scope of the operations which are now going on and which could be hastened if additional funds can be provided.

It may be of interest to the committee to know that in connection with the expenditures we have made, we have to a limited extent traced the destination of the money, and we find that something over 50 percent of the money spent in the 17 Western States lodges in the manufacturing and equipment centers of the Eastern States. Senator BARKLEY. What percentage is that, please?

Mr. PAGE. Something over 50 percent-51 or 52 percent, directly. The indirect, beyond that, we have not followed to the final origin.