Mr. DONDERO. Suppose that the time allotted is not sufficient for them to present their views on this matter; do you not think that additional time should be allowed? Senator OVERTON. The committee can take that up at the time and determine just what can be done in that regard. Mr. DONDERO. The purpose of the inquiry is that no one shall be foreclosed. Senator OVERTON. That is the very reason that I sent the telegrams to these companies. I understand that they know that the hearings are being conducted, and they have made no application to be heard, but I wanted to assure them that the committee would be very glad to hear them and to set aside 2 days for them, and I hope that they will have 2 full days in order that they may fully present their side of the case. Of course, what I had in mind in setting 2 days for them was that they are interested perhaps in only one feature of the bill, and that is the right of condemnation proposed to be vested in the Columbia Power Administration to acquire the privately owned utility companies. Other features of the bill, in all probability, they would not be interested in at all. So that I assume that 2 days will be sufficient time for them to present their views on the question of acquisition through condemnation proceedings. Mr. DONDERO. I would like to know, and I made that inquiry yesterday, how many witnesses there are here from Grand Coulee and Bonneville? Senator BONE. I think perhaps one or two on some of the less important aspects of the bill. I doubt that they will take very long. Secretary Ickes, I understand, would like to come down and be heard. I imagine that he has a prepared statement, and I do not think it will be very long. Senator OVERTON. We will be glad to hear him. Mr. DONDERO. Is the Secretary coming today? Senator OVERTON. I wish also to state that I have agreed to hear two representatives of the United States Chamber of Commerce who wish to be heard on this bill next Tuesday. I hope that will be satisfactory to the members of the subcommittee. All right, Mr. Dittmer. STATEMENT OF W. A. DITTMER, CHIEF OF THE SYSTEM PLANNING AND MARKETING DIVISION, BONNEVILLE POWER ADMINISTRATION Mr. DITTMER. I had almost finished my remarks yesterday, but there are two or three additional points that I would like to comment on, and I will make it just as brief as I can. I think that the question was asked yesterday afternoon, and not answered, as to the total capitalization of these eight companies in the Northwest, and I have the figures here as of the end of the year 1941. The total long-term debt, including first mortgage bonds, debentures, collateral notes, and one advance from affiliated companies. amounted to $196,509,788, just under $200,000,000. Senator OVERTON. That is for all of them? Mr. DITTMER. I cannot tell you as to that. There never has been a valuation of the Puget Sound system by the State public utilities commission, and therefore there has been no order adjusting rates based on such a valuation. The company has filed revised rates in certain instances, on its own motion, or there have been complaints, but those things have been adjusted for the district in which the complaint arose. As I have said, there has never been an over-all valuation and rates based thereon. That is also true of the Washington Water Power Co. I was astonished when I learned that, but I was advised of it by a State officer. Mr. DONDERO. That is a private enterprise? Senator BONE. Yes; both the Puget Sound system and the Washington Water Power Co. Neither had been subjected to an over-all valuation for rate-making purposes. Senator OVERTON. Let me ask you, as the author of one of these bills, whether it is contemplated that Congress shall place a value on these properties. Senator BONE. I do not think that Congress could. I would not want Congress to undertake it. Senator OVERTON. There is nothing in here that indicates that the Congress should fix values? Senator BONE. I do not think that Congress could. It would be an utterly impossible problem. We would have to turn ourselves into valuation experts and go out and count poles Senator OVERTON. Is it not true that in case of a transfer by any of these companies to the administration as contemplated in the bill, the price would first be the result of a voluntary agreement, and, if the price could not be agreed upon, then it would be determined by the courts? Senator BONE. That is the usual practice in that area, as in other places. Senator OVERTON. It seems to me that there is no question about that. Is there? Senator BONE. No. Senator OVERTON. So that it would either be the result of a voluntary agreement, or of a decree of the court? Senator BONE. If they were unable finally to agree, and it is my judgment that they could agree on a price, then they could have it settled in court. Mr. ANGELL. If it were settled in court, it would be by a jury trial. Mr. DONDERO. I wanted to ask Senator Bone a question. In condemnation proceedings, two things must appear: First, the public necessity, that is, the necessity for the taking, and second, the fixing of just compensation for the property taken. Senator BONE. That is right. Mr. DONDERO. What is your position in regard to the necessity for the taking in this case? Senator BONE. Our courts would probably not look back of the statutory declaration when the proper procedure was adopted for condemnation. Mr. DITTMER. If those figures are fair, and those prices were paid, that would be the result. Mr. ANGELL. That would be the common stockholders? Mr. DITTMER. The preferred. Senator OVERTON. We had four or five sets of figures yesterday on value. First there was the assessed value, which is very low. Then we had the value fixed by the Board of Equalization. Then we had the value shown by the report of the Puget Sound Power & Light Co. to the Federal Power Commission. Then we had this other valuation of from $65,000,000 to $70,000,000. Mr. DITTMER. That is correct. Senator OVERTON. It depends largely on what experts look into the properties as to what value you will get; but I assume that under this bill, in case of controversy, the court would determine the value after a fair hearing? Mr. DITTMER. In case condemnation were necessary, that would be true. In case of sale- Senator OVERTON. In case of a controversy as to values after negotiations fail, that would be taken to court; would it not? Mr. DITTMER. I assume that that is so. In dealing with this problem, we are hopeful that we will not have to think in terms of condemnation, but rather in terms of negotiation in arranging a price, as was done in the case of the West Coast Power Co. That was a case in which the price was arranged between the public bodies on the one hand and the owners of the property on the other, and a satisfactory price was arrived at without going to the courts. Mr. DONDERO. Are the stockholders now receiving any return on their investment from the earnings of these companies? Senator OVERTON. In the case of the Puget Sound Power & Light Co., the holders of the first preferred stock are receiving a dividend, but the other stockholders, the second preferred, are not receiving any. Mr. DONDERO. Did they pay dividends heretofore? Prior to 1932? Mr. DITTMER. I do not have the figures back of 1931 here, but up to about that time, I think some dividends were paid. Mr. DONDERO. What has been the reason for their failure now to make any return to their investors? Mr. DITTMER. Fundamentally I think it is due to an overcapitalized condition. I think that their earnings currently represent a fairly good return on the property that is used. Mr. DONDERO. Has competition entered into it? Mr. DITTMER. In the city of Seattle, there is competition by the City Light Co. Mr. DONDERO. Does that represent the major part of their investment-I refer to the Puget Sound Power & Light Co.? Mr. DITTMER. It represents a substantial part of the investment. I do not have the figures. I would say it is less than half. My recollection is that it is somewhere around a third of the property that would be represented by the metropolitan area-not the city itself, but of city and the immediately surrounding territory. Mr. DONDERO. Has any order been made by the Washington State Public Utilities Commission forcing a reduction of the rate, and, if so, has it had anything to do with it? Mr. DITTMER. I cannot tell you as to that. There never has been a valuation of the Puget Sound system by the State public utilities commission, and therefore there has been no order adjusting rates based on such a valuation. The company has filed revised rates in certain instances, on its own motion, or there have been complaints, but those things have been adjusted for the district in which the complaint arose. As I have said, there has never been an over-all valuation and rates based thereon. That is also true of the Washington Water Power Co. I was astonished when I learned that, but I was advised of it by a State officer. Mr. DONDERO. That is a private enterprise? Senator BONE. Yes; both the Puget Sound system and the Washington Water Power Co. Neither had been subjected to an over-all valuation for rate-making purposes. Senator OVERTON. Let me ask you, as the author of one of these bills, whether it is contemplated that Congress shall place a value on these properties. Senator BONE. I do not think that Congress could. I would not want Congress to undertake it. Senator OVERTON. There is nothing in here that indicates that the Congress should fix values? Senator BONE. I do not think that Congress could. It would be an utterly impossible problem. We would have to turn ourselves into valuation experts and go out and count poles Senator OVERTON. Is it not true that in case of a transfer by any of these companies to the administration as contemplated in the bill, the price would first be the result of a voluntary agreement, and, if the price could not be agreed upon, then it would be determined by the courts? Senator BONE. That is the usual practice in that area, as in other places. Senator OVERTON. It seems to me that there is no question about that. Is there? Senator BONE. No. Senator OVERTON. So that it would either be the result of a voluntary agreement, or of a decree of the court? Senator BONE. If they were unable finally to agree, and it is my judgment that they could agree on a price, then they could have it settled in court. Mr. ANGELL. If it were settled in court, it would be by a jury trial. Mr. DONDERO. I wanted to ask Senator Bone a question. In condemnation proceedings, two things must appear: First, the public necessity, that is, the necessity for the taking, and second, the fixing of just compensation for the property taken. Senator BONE. That is right. Mr. DONDERO. What is your position in regard to the necessity for the taking in this case? Senator BONE. Our courts would probably not look back of the statutory declaration when the proper procedure was adopted for condemnation. Mr. DONDERO. You mean that the necessity would be assumed? Senator BONE. The declaration by the condemning party that it was for a public purpose would probably be sufficient. That is the universal rule of practice in the State of Washington, and the Federal courts there follow the State practice in those matters. Mr. DONDERO. So that there is no necessity for producing evidence to show necessity? Senator BONE. Both public institutions, that is, the municipal corportations and the State itself, and all forms of private-utility enterprises in the State of Washington, have precisely the same powers of eminent domain. Any one of these private power companies could take my home or my land that they wanted for its corporate purposes. There is no fundamental distinction in the law between the two. Mr. DONDERO. But the private corporation would have to show necessity. Senator BONE. Yes; and the public shows that necessity. For instance, many years ago we wrote into the laws of the State of Washington a Port District Act, which authorizes a county or a part of a county to acquire waterfront property to serve in the marine transportation business as a shore facility. I was one of the men interested in it, because we have enormous port facilities in the city of Tacoma, and I subsequently became general counsel of that organization and remained general counsel for 14 years. The law merely said that this port district might be called into existence by a vote of the people in precisely the fashion a P. U. D. would be called into existence by P. U. D. operations. It was largely the same language that we employed in drafting the public utility district law. I worked on that bill for the Washington State Grange in 1929, and lifted a lot of the language right out of the Port Act, which recited that this municipal corporation might acquire such property as it needed for its corporate purposes by the process of eminent domain, or it might purchase it. Those two powers are given, the right of purchase and the right of acquiring by eminent domain. Mr. ANGELL. Do you not think that there is an additional element when one concern, as in this case of the power authority, is condemning a public utility to be used for the same purpose to which it was then devoted? Senator BONE We were condemning docks out there, and we had precisely the same legal principle involved. We went in and took the water-front property. It is my view that we could have taken dock property. Now, in the State of Washington there is a recognized principle of law-and my friend Mr. Kizer will tell you that this is the casethat municipalities have a superior right, and if it comes to a showdown they can acquire private power utilities. The Supreme Court has sustained this grange power law, and without any question I do not think that there is a good lawyer in the State of Washington who would not say that the city of Spokane could condemn and acquire the private municipal utility there. That would be true of your town of Portland. Mr. ANGELL. That is true, but the point that I was raising, on the question of necessity raised by my colleague from Michigan, was |