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Mr. Smith. I want to concur in that. You have made a very comprehensive statement, Governor.

Senator OVERTON. I have a few questions that I should like to ask you. There are two or three points, Governor, that I would like to ask you to elaborate upon.

Mr. PIERCE. All right.

Senator OVERTON. Does the present bill as it is now written provide for a board to be appointed ?

a Mr. PIERCE. Yes; a real board—not an advisory board.

Senator OVERTON. There is the suggestion that was made by different agencies that there should be a board of three or of five. They have made different representations as to what the authority of that board should be. Do you think that that board should have the power that is now vested in the single Administrator, or should it be, as some suggest, rather an advisory board ?

Mr. PIERCE. I do not see anything in an advisory board. I think it is just a useless appendage.

As to the number on the board, I will admit that there are arguments for a one-man board. I would make it, as I said in my main statement, a board of three.

I would put one lawyer on the board. I would let him head the legal department. I would put an engineer on it, one with some skill and with some training. I would let him handle the engineering department. Then I would have a businessman.

Whoever was made chairman by the President let him preside at the meetings. That board would decide the policies, and have full authority to appoint all employees.

Senator OVERTON. Those who advocate the advisory board state that it would so function that it would come in contact with the general public throughout Oregon and Washington and would have its pulse on public sentiment and public views, and present them to the Administrator; that if that purpose is served, that would be sufficient without having a three-man board vested with full authority.

Mr. PIERCE. Just as I said in my statement, I do not regard that as absolutely fundamental. But if I were to vote on it, I would vote for a real board of three.

Senator OVERTON. Now, Governor, you have followed, I am sure, much more closely than I have, the T. V. A. development?

Mr. PIERCE. I have.
Senator OVERTON. It has a board of three?
Mr. PIERCE. Yes.

Senator OVERTON. It has been stated that, while it has a board of three, it is a one-man board. What is your observation about that? Or are you willing to make any?

Mr. PIERCE. In some ways it looks like it.

Senator OVERTON. What has been your observation throughout the years as to a three-man board? Does it not finally degenerate, if I may use that expression, into a one-man board? Mr. PIERCE. Well, in a way.

It seems to me that you are going to have two strong departments; one is going to be the engineering department and the other the legal department. They will be the ones who will keep it out of trouble and keep it out of losses.

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I think that this is the way it operates now at Bonneville: There is the head of the legal department. He is not recognized as being a member of the board, but he has very close contact with the management. I would make him a member of the board. I would put him on there and place responsibility on his shoulders.

Then I would take some outstanding engineer and let him handle all the engineering work, planning the transmission lines and all those things. And I would let him be a member of the board and let him carry some of the responsibility. That is the result of my studies. That is my view of it.

Senator OVERTON. Governor, would you suggest that for the personnel of this board, in the event the board was established, the best talent throughout the United States should be available?

Mr. PIERCE. Yes.

Senator OVERTON. Or that it should be confined to residents of Washington and Oregon?

Mr. PIERCE. I do not think that there should be geographical limits to it. I do not think that geography should be the first consideration.

Senator OVERTON. Is it your suggestion that the appointment of the Assistant Administrator, the general counsel, and the chief engineer should be made by the President and confirmed by the Senate?

Mr. PIERCE. No. I would have them appointed by the Board.
Senator OVERTON. By the Board ?
Mr. PIERCE. By the Board.
Senator OVERTON. That is, a board of three?
Mr. PIERCE. A board of three.

Senator OVERTON. Suppose that there is only a single man or a one-man board or a single authority.

Mr. PIERCE. I would make him appoint them, because the responsibility lies there.

Senator OVERTON. I think that that is the provision of the bill.

Mr. PIERCE. No. The provision of the bill is that the Secretary of the Interior appoint all of those lesser officers, which I do not think is a good plan.

Senator OVERTON. Your suggestion is that instead of the Secretary of the Interior appointing the subordinate officers

Mr. PIERCE. I would not let him do it.
Senator OVERTON. Have them appointed by the Administrator?
Mr. PIERCE. By the Administrator.

That is because you might have a lot of friction. Suppose that the Secretary of the Interior says, “I want this man to head the legal department." Then the Administrator says, "I don't want him at all." Perhaps he may be absolutely opposed to the Administrator, appointed by the President.

I would not do that; not for a minute. The man to whom he has to report, the Administrator or the Board or the Authority, is the man who should make that appointment. It so seems to me.

Senator OVERTON. Would you suggest an amendment to the bill providing that there should be no increase in the present wholesale rate?

Mr. PIERCE. Yes; except by act of Congress.
Senator OVERTON. Except by act of Congress?

Mr. PIERCE. Yes. I think that that is fundamental.

In that way we can avoid some of the possible danger, Senator, that ruined the effect of Niagara on the American side as a regulator of rates in New York and Pennsylvania and in your country, Mr. Dondero. You got no advantage of the cheap power from hydro at Niagara.

Mr. DONDERO. We are beyond the distribution limit, Governor.

Mr. PIERCE. I am not talking about that. I am talking about the effect on the whole country about there.

The idea is that that is the way Alcoa built up its monopoly at Niagara.

Senator OVERTON. Just exactly what amendments do you suggest, if any, to give Congress full authority over this Administration! Your summary is that we should preserve congressional authority and keep the funds separate, for review by Congress and the Budget.

Mr. PIERCE. In reading the bill I found places where the reports are made to the Secretary and then on to the President, instead of to the Congress, where the authority lies. They ought to come to the Congress. I could not cite exactly the place, but I will be glad to find it for you, if you would like.

Senator OVERTON. I think you are right about that.

Mr. PIERCE. I think the funds should be kept separate, so that they can be reviewed by the Congress. We are going to have in the Congress I have seen several things pointing to it in the Housesome kind of a check ultimately on the funds that we vote, to insure that they go where we intend them to go.

Of course, the Comptroller General is supposed to do all of that. But I have heard several of the experienced men on the Appropriations Committee speak very strongly about following through the activities of the bureaus to see that the moneys were used as intended by the Congress.

Senator OVERTON. Are you satisfied with the provisions of the bill with reference to such authority as is given to the General Accounting Office?

Mr. PIERCE. Yes. I think that is where authority should be.

There is another provision of the bill that I forgot to mention earlier. It concerns organized labor. I approve of those provisions.

. Senator OVERTON. You suggest that the Authority should be given the right to establish competing lines?

Mr. PIERCE. I do.

Senator OVERTON. I assume that that is for the purpose of making these private companies, if I may use the expression, behave themselves?

Mr. PIERCE. That is it exactly.

Senator OVERTON. But the Administrator will have the right of condemnation.

Mr. PIERCE. Yes. He should have it.

Senator OVERTON. When he exercises that right, the court will determine what the value of the property is and what the price is that is to be paid. Is not that a sufficient protection without the Administrator being given authority to indirectly accomplish that purpose by driving private power companies out of the field or making them

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sell out at a reasonable price? Is that not better than to establish competing lines and have the Government engage in the distribution of power in the various communities?

Mr. PIERCE. You know, I was in the power business myself at one time.

I know that one of the things that private utilities feared more than anything else—that was in the times of Insull—was competition. The one thing that they prided themselves on was the monopoly that they had. They could not stand a competitive business.

It is true that nothing will so thoroughly scare the tar out of an overcapitalized company as a threat of competition.

We have that right in our State Capital of Oregon today. The Bonneville line is in Salem, and the people can buy that power for about half of what they can buy it for from the private utility.

Senator OVERTON. Making a practical application of your suggestion, what the Administrator would do would be to undertake to negotiate with the private power companies?

Mr. PIERCE. Yes.
Senator OVERTON. That is the purpose ?
Mr. PIERCE. Yes.

Senator OVERTON. And if the price of a certain company was out of line, then, instead of necessarily insituting condemnation proceedings, the Administrator would say, “Well, I am going to establish a competing line right in the district that you serve.

Mr. PIERCE. There is plenty of room for them to come together at a reasonable price. I cannot see why these private utilities, just because they have enjoyed their gold mine for so many years, have any divine right to continue to exact their tribute through a monopoly.

We have the power down on the Columbia River. When the war ceases, it will be available to the people at extremely cheap rates.

Senator OVERTON. There may be some danger about that provision, because the Administrator might use it as a bludgeon to force the private company to sell way below value.

Mr. PIERCE. Xe cannot keep up with the private utility bludgeons. Senator OVERTON. All right, Senator Burton.

Senator BURTON. Governor, I want to thank you for your presentation. It has been constructive. It has been extremely helpful.

Mr. PIERCE. Thank you.

Senator Burton. Particularly I gathered from your statement that you emphasized the value of power at low cost to all of the agencies marketing this power, and that you approve of the use of the revenue bond.

Mr. PIERCE. I do.
Senator BURTON. Those are fundamentals?
Mr. PIERCE. Yes.

Senator BURTON. Now, if you have them in, then we should proceed to spend whatever time is necessary to make the mechanics the best possible?

Mr. PIERCE. That is it.

Senator BURTON. Speed is not as important as the soundness of the mechanics?

Mr. PIERCE. Yes. We are making fundamental law now.

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Mr. PIERCE. Yes.

Senator Braux. It seems to me, ther fore, that in that isste of the sole discretion of condemnation, it would be sy'ntial to provide for more than one man to make that tinal decision. Therefore your proposition of a board would be vital to that particular factors and me advisory board could take the place of it, even though it is a bent which one man dominates. It seems to me that the presence of the other two members may curtail his domination, although he may still dominate.

Mr. PIERCE. They will have a wonderful etfect on it.

Senator Burtox. Is that correet! Do you think it is vital that there be more than one to decide!

Mr. PIERCE. Yes.

Senator Burton. Now we come to the price to be paid for any property purchased. That brings up this question of competing lines. That, of course, would have a vital etfect upon the negotiaa tions. Is there anything in this bill that prohibits the Administrator from erecting a competing line the way it stands now!

Mr. PIERCE. No. As I said, I think that the faults in the bill lio more in omissions than in inclusions.

Senator BURTON. Is it not true that under the bill as it now stands the Administrator would have ample authority to build competing lines, and that he has built one to Salem?

Mr. PIERCE. I would like to have it so stated in the bill.

Senator BURTON. When that line was built to Salem, wasn't thing a competing line?

Mr. PIERCE. Indeed it was. They put it across the river, too. I admire them for doing that very thing. I would have given any thing if I could have had that when I was Governor of the State

Senator BURTON. Then it is your thought that under the bill as it stands they have exercised their right to build a competing trans mission line?

Mr. PIERCE. They certainly did.
Senator BURTON. And they would still have that authority?

Mr. PIERCE. Yes. But I would express it. I would not ask them to go ahead without the express authority. I would juit it in the bill.

Senator BURTON. Then you are of the opinion that there shoule not only be the authority to build a transmission linse, but that the Authority should have the right to build a distribution Myntein within a community?

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