for the pooling and standby in a manner customary in the utility business.

Upon questioning by the Senate Public Works Committee, the companies flatly refused to provide the standby for our G. & T., thereby relieving the Government of its obligation to supply the power. While Louisiana may be an exception in some respects as far as relationships between the cooperatives and companies are concerned, the testimony of Mr. Person, Mr. Bouldin, and Mr. Horton before this committee reflects an arbitrary attitude of the power companies that we cannot afford to ignore-particularly in regard to the right of cooperatives to generate their own power when the companies will not apply it as reasonable rates, or when their monopoly actions toward their retail customers are such that to continue doing business with the companies means higher rural rates or certain death for the cooperatives.

Suppose we in Louisiana accept the latest wholesale power offer of the companies, which was designed purely to kill our G. & T. loan? Suppose we sign 5-year contracts for 6.25-mill power, or 5-mill or even 4-mill power? Would such a contract be reasonable, if 5 years hence the companies can again demand 9-mill power in the absence of our G. & T. and G. & T. loan funds from the Congress? In my position as a co-op board president, would you gentlemen sign such a contract, 11. view of the companies often announced determination to put the cooperatives out of business in Louisiana? I do not believe you would.

Our only alternative to a slow death in Louisiana is the ownership and control of our generating and transmission facilities. Take away the right to generate and transmit power, and you take away our bargaining power with these monopoly enterprises at the negotiating tables. It is understandable that they want no G. & T.'s and no more G. & T. loans, for without them the cooperatives are at their mercy.

Just before he passed away, the late great Congressman Clarence Cannon astutely observed the efforts of the companies to eliminate REA loans for generation and transmission thusly:

Their main target has always been, and still is, loans for generating plants. These loans the main defense of the electric cooperatives against the raiders have been the lifeline of the rural electrics.

Only last year, we defeated an attempt to cut down that lifeline. And we can expect the companies back again this year. Like Khrushchev, they have warned us they will be back.

Well, gentlemen, they are back. Would that the great Congressman Cannon and the great Congressman Sam Rayburn were here to help send them back where they belong. Long will these great Congressmen be remembered, while those who champion special interests will be quickly forgotten.

Of course, Congressman Cannon was never more right.

When our contracts with the companies began to expire in the mid1950's, the companies began to apply pressure for high rates. At first, they insisted upon a dual rate with a 9-mill base for other than residential consumers.

When the co-ops refused the notorious dual rate, the companies immediately began to apply a long dormant fuel escalation clause in the existing contracts, which boosted wholesale rates as much as 30 percent to some cooperatives. In 1958, Louisiana Power & Light Co., acting as the bell cow for the others, summoned the co-ops it serves

and presented a take-it-or-leave-it contract to the co-ops L.P. & L. serves. The take-it-or-leave-it contract proposal was based upon cost of fuel projections over a 10-year period which would have raised rates to approximately 8.5 mills. Alarmed, the co-ops organized the G. & T. Cooperatives as a last alternative to raising rates to their consumers, thereby abolishing our proud record wherein Louisiana is one of the two States in the Nation where rural electric consumers enjoy rates and services on parity with citizens in towns and cities.

Then came a series of rate reductions, each carefully designed to kill the progress of the G. & T. Meanwhile the companies launched massive territorial invasions, coupled with an almost unbelievable advertising campaign designed to undermine any and all things associated with electric cooperatives. The airways and news media were flooded with propaganda, alleging us to be "Socialists," even un-American for trying to protect ourselves.

Gentlemen, I have here in my hand an employee information and indoctrination pamphlet prepared by Louisiana Power & Light Co., a segment of Middle South Utilities of New York. It gives specific instruction on how to talk to the public. "Be a smoothie," it tells employees. "Recognize opportunities-Government in business is socialism-in the power business, it is a threat to your job, your security." Attached is a document giving highly unfactual information about our G. & T. Finally, it was labeled as "uneconomical, unfair and un-American."

Gentlemen, how can the cooperatives in Louisiana survive such tactics of their wholesale power suppliers?

In view of such activities, it is little wonder that our general manager got late night, crank telephone calls questioning his patriotism and calling him "un-American"-frightening his family. When we received approval of our $56.5 million loan application, it was hailed as a "vote buying" scheme, and as a steal of taxpayer money. Is it little wonder we have strong feelings, for I, too, was named as a participant in the alleged vote-buying scheme in a "letter to the editor" which appeared in my home newspaper, as well as in publications throughout the State.

Congressman James Morrison is well aware of all this, and of the almost hysterical tirade that followed approval of our G. & T. loan. It became so bad on the airways that that President of L.S.U. demanded the companies cease sponsorship of what he termed "unethical" advertising on the L.S.U. football network. How can there be any doubt that we must gain independence from such companies, if we are to survive?

Are the companies so frightened at our proud record of parity of service with their own customers in towns and cities? Are they so frightened of an independent yardstick to show what wholesale power should cost in Louisiana?

In conclusion, permit me to point up that in our written statement for the record, we noted that we are a prideful people. We wish to pay as much as we can. Some of our co-ops undoubtedly can participate in the proposed bank at higher interest rates; others cannot at the present. These must have continued 2 percent financing for some time to come if they are to continue to meet the great and idealistic objectives of the rural electrification program which have meant so much to the rural American economy.

Mr. Bonner's statement of May 31 reveals a close parallel between the future capital requirements of our Louisiana co-ops and the findings of NRECA on a national level. Over the past 28 years, our total investments have been $90,363,011. During the past 5 years, our coops have invested $24.5 million.

Our survey shows they will have to invest $29 million within the coming 5 years to meet the expanding needs of our rural consumers and for area development. And, no matter what the gentlemen from Colorado, Alabama, and California tell this committee, I can assure you all that none of this money will be spent on "needless" line duplications.

It is not enough to build lines to bring "lights" to the rural family, the lines must be constantly upgraded, rephased, and rebuilt as our rural consumers learn to live better electrically and to produce more food and fiber at less expense with electricity. In 1955, our yearly kilowatt-hour consumption per member was 2,103. In 1970, it is expected to reach around 7,000 kilowatt-hours per member.

In the early years, it cost about $600 per mile to serve farmers with "lights." Today, modern service with facilities costs as much as $3,000 per mile in many areas. The increase in capital investments is not to be lamented. To the contrary, it spells progress in rural Louisiana and business for our industries and main street business firms.

And I might add, increased tax revenues will follow this progress. The question is: Where is the money to meet the expanding needs of our rural citizens coming from? Will we obtain the proposed bank without crippling restrictions, enabling us to become prideful and permanent institutions within the framework of our great private enterprise system, or will we be relegated to a constantly dwindling Federal dole, with no hope of ever obtaining financial solvency or of obtaining independence, or of fully meeting the needs of rural America?

Our rural electrics are children of the Congress. Are they to be cut loose before they can fly by themselves, or will they be allowed to mature as envisioned by the great visionaries who conceived them, Senator George Norris, President Franklin D. Roosevelt, Representative Sam Rayburn, to name a few?

If Congress accepts the faulty premise of the companies that "99 percent of the farms are already electrified" and no more money is needed in rural America for electric services, as Mr. Person declared, then rural America is truly dying. With it will ultimately go our greatness as a nation; with it will go our towns and cities for they are dependent upon rural America for their daily bread and the clothes upon their backs.

Surely, we, of rural America, need not remind our urban and city Congressmen and Senators of this elementary fact. No town or city is an island apart from the great and wonderful expanse of rural America.

Mr. Chairman, we farmers of rural America are asking for less than that which is being daily given-not loaned-to so-called developing nations around the world: The tools and the means to help ourselves. The proposed bank is such a workable and practical tool with which we can build an even greater rural America, for both town and country

progress.

I thank you.

The CHAIRMAN. Thank you very much, Mr. Roemer.

Mr. MORRISON. I have a few questions I want to ask. First of all, I want to compliment you for a very excellent statement. I would like to ask you to clarify your statement. You said it was necessary to get this generation and transmission plant, because your rates were being raised. Is that true?

Mr. ROEMER. Yes, sir. We were called into a conference by the power companies and told that we should anticipate this. They had a graph showing just how the rates were going to go up the next 5, 10, 15 years. Some of us who serve on boards of the cooperatives asked questions as to why these rates were going to increase steadily. We were told it was primarily because of the increase in fuel costs in Louisiana. Gentlemen, as you know, Louisiana has plenty of natural gas. Some of us were familiar with the gas business. And we could not understand the basis for their cost projections. We were really told: "Well, this is how it is; take it or leave it. The price is going up. So, we met and engaged engineers and determined it was feasible for us to build our own transmission and generation facilities.

Mr. MORRISON. Then, you were granted a loan?

Mr. ROEMER. Yes, sir.

Mr. MORRISON. By the REA?

Mr. ROEMER. Yes, sir.

Mr. MORRISON. And likewise the private companies opposed it in

court?

Mr. ROEMER. Yes, sir.

Mr. MORRISON. And the court decided in your favor?

Mr. ROEMER. Yes, sir; so far, sir.

Mr. MORRISON. Is it not a fact that REA loans for generation and transmission to supply rural electricity are not uncommon in the United States, like maybe some private companies would have you believe? Are not approximately 20 generation and transmission plants throughout the United States owned by REA co-ops, are there not? Mr. ROEMER. As I understand it, there are over 30.

Mr. MORRISON. Over 30?

Mr. ROEMER. Yes, sir.

Mr. MORRISON. I think that there is a cooperative generation and transmission plant in Ohio where the power company owns one-half interest and the REA owns the other one-half interest. If the generation and transmission cooperatives were so bad as some of the private power companies say, why would they go together and use the same plant with the cooperative?

Mr. ROEMER. I understand that there is one in Ohio, yes, sir; also one in Kentucky. It is possible and practical, engineeringwise in the utility business, for such pooling arrangement, and joint efforts to serve a common cause. It has proved quite satisfactory. It is my understanding that this was part of the intent of congressional committees last year, when they attempted to direct this ype of an arrangement in the Southwest Power Administration. The effort there was for SPA, a Federal agency, to contract with the utilities to wheel some of the Federal hydropower, to tie together the generation and transmission facilities for better and more economical distribution of this power, not only to the rural areas but to some of the towns and municipalities.

Mr. MORRISON. Mr. Chairman, at this point I would like to put into the record various REA cooperatives that own generation and transmission plants throughout the United States.

(The information follows:)

Hon. JAMES H. MORRISON,

House of Representatives.

U.S. DEPARTMENT OF AGRICULTURE,
RURAL ELECTRIFICATION ADMINISTRATION,
Washington, D.C., May 20, 1966.

DEAR MR. MORRISON: As you requested in our recent conversation, we are sending you a list of the principal power-type borrowers of the Rural Electrification Administration.

You will note there are three types of these borrowers:

Those that generate only;

Those that transmit only; and

Those that do both.

REA has made loans to 35 federated cooperatives, including the Louisiana Electric Cooperative, for the purpose of doing both. They are located in 20 states. For easy identification we have checked these in red pencil.

There are two federated cooperatives engaged only in the generation of power. They are located in Colorado and Kansas. Six are engaged exclusively in the transmission of power and, as the list indicates, are located in Oklahoma, Iowa (2), Minnesota, Nebraska and South Dakota.

In summary, then, there are 43 federated cooperatives in 22 states which have received loans to generate and/or transmit power.

There are two power-type borrowers in Nebraska, both public power districts. One of these, as shown in the list, is primarily concerned with generation, the other primarily with transmission. They serve the same 26 REA-financed systems.

The two remaining borrowers in our report are a state agency, the Lower Colorado River Authority, and a commercial power company, the MontanaDakotas Utilities.

The latter became a borrower through assumption of the debt of the Dakotas Electric Cooperative which had borrowed from REA with the understanding that the company would build and operate the generation and transmission system, and buy it at a later date if it so desired. The company has since exercised that option by assuming the indebtedness and is owner of the system. The reason for this arrangement, made in 1949, was the urgent need of distribution cooperatives in portions of North and South Dakota for an interim power supply while waiting for completion of certain Bureau of Reclamation projects. The option feature enabled the cooperatives to avoid the higher cost of power from their plant, as compared with the cost of Bureau power, after the Bureau power became available. It was an arrangement mutually beneficial to both parties. Sincerely your,

NORMAN M. CLAPP, Administrator.

[Enclosure]

Loans approved to principal active power-type borrowers by Rural Electrification Administration