Senator BONE. And of the National Grange also?

Mr. ANGELL. Yes.

Senator BONE. This is his letter to me, dated June 6, 1942.

It took this war to prove that the leaders in public ownership of power were far more foresighted than the leaders in the private power industry. They had a vision of a development of the Pacific Northwest through advancement of the public power program. They pointed out to President Roosevelt the possibilities of developing Columbia River power. Then came Bonneville and Grand Coulee. Had it not been for the vision and foresight of these public-spirited leaders in the public power movement, the situation would have been disastrous. Leaders in the private power companies ridiculed the possibilities of selling the power from these systems. Today we know that they are absolutely essential in winning the war. This is not the first example of short-sightedness on the part of the private power companies. Generally speaking, as a class, they have been ruthlessly selfish and lacking in public spirit. Leaders in the movement for public ownership of power have faced a difficult fight. The private power companies were well financed and were strongly fortified with their trade connections. They had great influence with public officials and with the legislators.

Leaders in the movement for public ownership were short of funds but full of energy and courage. The leading organizations in the movement were the Oregon and Washington State Granges. Determination and persistence on the part of public power leaders has brought about gradual advancement of this movement, until today a large portion of both States has been organized into public utility districts, Rural Electrification Administration cooperatives, and municipal ownership. These public agencies stand ready to take over and operate the private power systems. Under present conditions this transition would be largely on a piecemeal purchase of the systems, bringing with it the problem of severance damages.

It

The logical program is to pass this bill so that the Government can purchase an entire system and in turn resell it to the local public agencies. The ultimate purchase of all private companies will lead to a more feasible system of joint cooperation. Public ownership can and does eliminate waste and expenses. brings cheaper electric power rates which expand and develop the service. By eliminating profits the greed and selfishness of the private system are displaced. The private power companies thus eliminated remove a bad influence from civic life.

Purchase of private holdings through the Government agencies would eliminate long drawn out litigation and piecemeal condemnation. It would assure to the private companies a fair price and prompt payment. It would assure to the public lower rates for power and greatly expanded development of the territory. The bill is very satisfactory and meets the views of the majority of the leaders for public ownership in this territory. It is in line with the policy of legislation endorsed by the Oregon State Grange at its last session. The source of hydroelectric power is the rivers and streams that belong to the people. If the Government has seen fit to create these giant power systems with the people's money, for the people, it is also consistent that public ownership thus established be continued from the source of the power out to the place of distribution to the retail customer.

The Government can and should be the intermediate agent to assist in the transition of private power plants over to local public agencies such as Public Utility Districts, Rural Electrification Administration, and municipalities. This is a consistent, sound program in the interest of the people and in the development of this important territory.

Private power companies have taken advantage of the war situation to argue that public funds should not be raised to purchase these private systems. To a great extent the transactions involved would be a transition from one debt to another. Regardless of that it is definitely apparent that the change from private to public ownership is in the interest of winning the war and in the development of the post-war period. Lower power rates will enable the people to make considerable savings which they can invest in War bonds. The arguments of the private power companies in this respect are good catch words but are lacking in sound argument and facts.

Let us change from the operation of a private power business based upon selfish profit and often maintained along with corrupt political influence, to that of

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public ownership operated in the interest of all the people, guided by leaders in public welfare who have a vision for the future development of this great section. The annual convention of the National Grange at Worcester, Mass., last November adopted a resolution dealing with the Columbia Valley Authority legislation which establishes the policy of the National Grange on this type of legislation. The resolution as adopted is herewith set forth:

"Whereas there are two bills pending in Congress dealing with legislation for the Columbia Valley Authority; and

"Whereas one of these bills provides for a one-man administrator under the Department of Interior, appointed by the President and the other provides for a three-man board administration with unit authority and appointed by the President; and

"Whereas the operation of the Bonneville power project under a one-man administrator has proved satisfactory; and

"Whereas the pending legislation provides for authority to purchase private power companies and sell them to public agencies; and

"Whereas such authority is very important to the agricultural and industrial development of this area: Therefore be it

"Resolved, That the National Grange approve the. authority for purchase of private power companies provided in pending legislation and that the National Grange approve legislation providing for a one-man administrator as in the Bonneville project, instead of a three-man board.

"Adopted."

Then I have a letter in my hand from Mr. E. R. Hoffman, head of the City Light of the city of Seattle. That is the largest municipal plant in the West, outside of Los Angeles. He states:

For years many people of Seattle have been awaiting some feasible plan for the acquisition of the properties of the Puget Sound Power & Light Co. within the area serviced by the light and power system owned by the city.

The late J. D. Ross, who for most of its years was superintendent of Seattle City Light, had worked on a plan for the purchase of the entire properties of the Puget Sound Power & Light Co. and the sale of parts thereof to various public bodies. This plan did not come to fruition, nor has it seemed practical to give all of the people of the Puget Sound area the benefit of the Northwest's low-cost power through such a plan because adequate legislation does not exist.

We have now for consideration Senate bill No. 2430 of the second session of the Seventy-seventh Congress, a bill amending the Bonneville Act in several respects and of particular interest in that it contains a plan for the purchase and sale to public bodies of privately owned light and power properties.

The movement for public ownership of light and power facilities has long been under way within this State, and a number of communities have owned and operated successfully in this field for many years just as most communities now own and operate their own domestic water supply.

The people will not be denied. The trend to public ownership of power has increased tremendously within the past 10 years and is marked now by aggressive action to accomplish by piecemeal condemnation that which might be accomplished by over-all purchase, or condemnation if necessary, under legislation such as that proposed by the bill under consideration.

It is my opinion that the proposed amendments to the Bonneville Act, if they should become the law, will make it possible for all of the communities of our State, as cities or as public utility districts, to enjoy the benefits of low-cost power. The tremendous power resources of the Northwest belong to all of the people, and through utilization will become the greatest of benefactors to our reople and to our Nation. The power flowing from the Bonneville and Grand Coulee projects is now producing implements that stand or fly between us and the enemy.

I personally endorse the objectives of the legislation that you have proposed, and for that matter the bill itself, although I do not profess to be a lawyer and thus qualified to pass upon the wording of the law.

The third is a letter from the attorney general of the State of Washing, in response to an inquiry of mine as to his professional views, or official views on revenue bonds. If there is any man living who ought to know what they mean, it is the attorney general of the State of

Washington, who is thoroughly familiar with the dicta of the courts and with the statutory provisions of that State.

Senator OVERTON. He endorses the revenue bonds?

Senator BONE. He refers to the general principle involving revenue bonds, and he says:

In response to your oral request for an opinion as to the probable general liability of the United States Government for retirement of revenue bonds contemplated to be issued pursuant to Senate bill 2430, this is to advise you that this office is unable to come to any other conclusion than that where the act provides for the issuance of revenue bonds, without a statute by Congress providing that said bonds would be general obligation bonds of the United States, only the revenues derived from the sale of the electricity generated could be applied to the retirement of said bonds and the payment of interest on same.

This conclusion is arrived at after consideration of State and Federal authorities. In the case of Twichell v. Seattle (106 Wash. 32), our court held that where the city was to pay for the purchase of a street railway system with revenue bonds to be issued in accordance with ordinances authorizing the same, the payment of same did not constitute an indebtedness of the city but the bonds could be retired only from the revenues obtained from the operation of the system. The same principle was applied by our court in the case of Asia v. Seattle (119 Wash. 674).

The Attorney General of the United States, in an opinion issued on October 26, 1933, in discussing the liability of the United States for the payment of interest on Home Owners' Loan Corporation bonds, emphasized that there must be express statutory provision for the assumption by the United States of that interest. In that opinion the Attorney General cited the cases of United States v. Bank of North Carolina (6 Peters 29, 35), Price v. United States (269 U. S. 492, 499-500). See also the opinion of the Attorney General of September 14, 1934, in which it was stated that only where there is an express statutory provision for payment of interest and principal by the United States is the United States obligated to pay the principal and interest.

The provision in section 6 (g) of Senate bill 2430, reading as follows, should be noted in connection with the congressional delegation of power to the Administrator:

** Before the Administration undertakes the acquisition of a utility system or part thereof, the Administrator shall certify that in his judgment operation of such system or part thereof will increase the power revenues in an amount estimated to be sufficient to pay the operation and maintenance costs thereon and the principal and interest charges on the investment therein, and that the value of the acquired system or part thereof will be sufficient upon any sale or disposition pursuant to subsection (i) of this section substantially to repay the investment therein

* **

Subsection (h) then authorizes the Administration to issue, sell, or exchange revenue bonds, revenue notes, etc., and to use the proceeds thereof for carrying out the provisions of subsection (g) of this section. This is then a congressional investiture of power in the Administration to, when certain facts have been determined, and before the Administration undertakes the acquisition of a utility system, make findings of fact, which, when found, authorizes the issuance of revenue bonds. The Congress then has legislated with finality as to the payment of these bonds by the revenue derived from the sale of the power generated by the agency.

After full consideration of the provisions of Senate bill 2430, we are unable to find anything upon which the opponents of the bill can rely to contend that issuance of revenue bonds as provided for in said act would become a general obligation of the United States, unless an express provision is inserted in the bill making the United States the guarantor of payment of said bonds and interest.

Then I have a letter in my file from a former colleague of mine, Senator Dill, in which he very aggressively supports this pending legislation. I have other letters in the file, but I do not want to encumber the record with them too much.

Senator Dill in his letter advises me of his full and complete and even enthusiastic support of the bill. He has been in many campaigns

in the State with me for public power, and he helped put the Grange power bill through, and he supported the Bone bill in 1924 and again in 1934.

Senator Dill has always been in the foreground in a fight of this kind.

I also have a letter from Mr. O'Neal, in the light division of the city of Tacoma, who expresses the view that he holds about this matter, and it is very strongly contradictory of those expressed by Mr. Lean, in the letter that he referred to. My city of Tacoma belongs to this association of municipals, five or six, of which we have had a specimen in connection with Seattle's actually sending a man down here through the action of the city council, where I think there can be no doubt of the attitude toward the use of water power. If there is any doubt about the attitude of Tacoma voters, I would not have had the support that I had in Pierce County, where my views were well known.

I have a large number of letters from districts in the State. I will merely identify them by name, and indicate that they are all aggressively for the bill. I will put them in the record later.

Mr. SMITH. Mr. Peters, I think it might be well to ask you, in view of the fact that you are president of the State Association of Public Utility Districts of the State of Washington, whether it is your opinion that all of the various P. U. D. districts would want to repurchase, if this legislation were enacted, from the Bonneville Administration any properties of private companies that might be acquired?

Mr. PETERS. We would be only too glad. We are waiting for the opportunity to come, so that they can be purchased.

Mr. SMITH. Does that apply to all of them, so far as you know?

Mr. PETERS. So far as I know, it applies to all of them. As I stated, we had our meeting Sunday, and they said repeatedly that they were in favor of the bill. When the other two bills were presented a year ago, they did not specify which bill they wanted. They wanted bill that could work.

Mr. SMITH. And they would take advantage of the provisions of the bill as soon as it became a law?

Mr. PETERS. They would.

Senator BONE. I have one letter here, which I would like to introduce. It is dated April 6, and addressed to me by the President of the United States. He says:

I am glad to see that you have introduced a bill in the Senate which will authorize the acquisition by public bodies of the utility properties in the Northwest without increasing the indebtedness of the Federal Treasury, and provide an orderly means for returning to the Federal Government its investment in the power facilities at Bonneville and Grand Coulee. Both aspects of your bill are important in connection with the prosecution of the war. It will be helpful to the Federal Treasury to have the finances of Bonneville and Grand Coulee placed on a self-sustaining basis; and it is of great importance to our production program that the Bonneville-Grand Coulee power system, which is now almost entirely devoted to the manufacture of materials of war, should be augmented by the acquisition of other utility properties in the Northwest. Your bill will mean more airplanes, more ships, and more raw materials and implements of war. I know that the people of your State are eager for the success of the program which your bill sets forth. This is not a partisan measure, but a bill which will add substantially to the usefulness of the Bonneville-Grand Coulee developments and which will aid us to win this war.

Sincerely yours,

(Signed) FRANKLIN D. ROOSEVELT.

Mr. SMITH. Mr. Bundy, you said you had something else that you wanted to tell us about, in connection with the situation in Grant and Douglas Counties.

Mr. BUNDY. Just one point that I overlooked when I referred to the joint R. E. A. project in Grant and Douglas Counties.

The stipulation that the R. E. A. set forth in the approval of that project was that they were to get the wholesale rate comparable with Bonneville of seventeen fifty per kilowatt year, or else the project could not be approved, and that as soon as the materials were available, they would be served by the Bonneville Administration. At the present time they are being served by temporary contracts by the Washington Water Power Co. Such projects are available depending on getting this Federal power in there.

Mr. SMITH. That is being held up until this legislation is enacted? Mr. BUNDY. That is right.

Senator OVERTON. We have some witnesses for this afternoon?

Senator BONE. Yes. Mr. Marlett, who will go into the question of the financial structure.

Senator OVERTON. Would it be agreeable to meet at 2, or 2:30? Mr. ANGELL. Any time is agreeable to me.

Mr. SMITH. Any time will suit me.

Senator OVERTON. Then we will recess until 2 o'clock. (Thereupon, at 1 p. m., a recess was taken until 2 p. m.)

AFTERNOON SESSION

The subcommittee reconvened at 2 p. m., at the expiration of the

recess.

Present: Senators Overton (presiding) and Burton, and Representatives Smith, Angell, and Dondero.

Also present: Senator Bone.

Mr. ANGELL. Mr. Chairman, before we take up the testimony of the next witness, there is a matter that I would like to direct your attention to and the attention of the committee.

Senator OVERTON. Very well.

Mr. ANGELL. This is a telegram which I have just received. I want to call it to the attention of the committee. It is from George T. Gerlinger, who is a lumberman in my district. He says:

Information is out that hearings on the Bone bill will be concluded shortly. The lumber operators in western Oregon are very much concerned with respect this bill being so hastily disposed of without hearings here. Suggest hearing in Oregon, preferably at Eugene, before joint subcommittee. People in this territory are vitally interested in this bill and its implications, and they resent being required to travel to Washington to appear before congressional committees regarding legislation that affects only this area. Men who are capable of presenting information concerning this bill are so absorbed directly with the war effort they canot possibly make the trip to Washington at this time. Will you not try to get subcommittee to conduct hearing in Oregon?

Mr. Chairman, it seems desirable from the standpoint of the people in the Northwest who want to be heard, if it were possible, that hearings be held there. It is almost impossible for them to get back here now, with war conditions facing them and transportation uncertain. Senator OVERTON. Don't you think that we get the most vital and essential information in the procedure that we are now pursuing? I do not think much of these junket hearings, if I may use that term.