Thank you.

The CHAIRMAN. Thank you, sir.

I now recognize Mr. Greigg of Iowa.

Mr. GREIGG. Mr. Chairman, I certainly want to introduce the next witness before the committee. Mr. Walter Bernoski comes from my hometown of Sioux City. I have known Walt for many years.

is a most respected official of his organization.

And, Walt, I am pleased to welcome you before this committee.
Mr. BERNOSKI. Thank you.

He

The CHAIRMAN. You know, the great State of Iowa has too much. representation on this committee. We have got two of them, both of them very distinguished and able Members of Congress.

Mr. CONNLEY. Mr. Chairman, may I have permission to read the resolution, sir?

The CHAIRMAN. Yes, sir.

Mr. CONNLEY. Whereas labor should have a universal right to organize and function under negotiated conditions of wages, hours, and other conditions of employment; and

Whereas the investor-owned utility companies of Iowa are all organized, and the members are now enjoying the rights of collective bargaining; and

Whereas the investor-owned utility companies of Iowa, when subcontracting for construction and building, employ union contractors; and

Whereas the employees of various Government owned and operated electric systems have been denied the right to so function as organized labor; and

Whereas only scant recognition to organized labor has been given by municipal, REC's, and public power districts; and

Whereas it is creating an unfair situation to labor with these nontaxpaying, low-wage-paying groups: Therefore be it

Resolved, That the Iowa State Federation of Labor pledges its support and assistance to the efforts of the Iowa Utility Workers Conference to combat the encroachment of Government in the utility business.

And this is the same statement that was passed by the other labor groups in Iowa.

The CHAIRMAN. If you will file it with the reporter it will be made a part of the record.

We will now hear from Mr. Bernoski.

STATEMENT OF WALTER BERNOSKI, LOCAL 880, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, SIOUX CITY, IOWA

Mr. BERNOSKI. Mr. Chairman, I would like to take the opportunity to thank you gentlemen of the committee for being so gracious as to allow us to appear here on schedule so that we could return home and make a report to our members who are anxiously awaiting to see what we have accomplished.

Mr. Chairman and members of the committee, I am Walt Bernoski. I am the secretary of the Iowa Utility Workers Conference, representing approximately 6,000 electric utility workers in the State of

Iowa. I am also the business manager of Local Union 880, IBEW, representing some 250 members, and a member of System Council U-14, representing close to 800 members of 3 IBEW local unions.

I appear here today to testify against the proposed bills, H.R. 14837 and H.R. 14000, which would create an REA bank. I feel that it is against the public interest to create a taxpayers' burden for the benefit of a select segment of the American society, especially when such a bank is entirely unnecessary. Everything I know and understand about the establishment of the REA's under the law has been approximately 99 percent accomplished. Why must my job and my fellow union members' jobs be placed in jeopardy? The REA has done a wonderful job in electrifying the farms of the Nation. However, they are not satisfied to stay within the limits for which they were established. The intent of Congress that established REA was not to have them electrify already established and served areas by investor-owned utilities. In my State of Iowa, it is very difficult to talk to people who head up the various types of public systems. The wages, working conditions, tax exemptions, interest rates, and so forth, give these public systems an unfair and absolutely unjustified competitive position in the electric and gas business. To establish a bank of this nature would only open the door to an uncontrolled bureaucratic form of government. If there is such a lucrative amount of money in the electric business, why not let everybody operate honestly and fairly under the same set of rules. Let the public systems pay all the same taxes, the same interest rates, and operate under the same regulations as are placed on the investor-owned companies. And let them pay the same wages, establish the same pension provisions, vacations, insurance, and all the other items that I am allowed by law to negotiate. And the most important factor that is so dear to clear-thinking Americans, the right to be allowed to express yourself to an employer as a union member with the protection of the NLRB.

I am sure that this banking bill will destroy a taxpaying, free enterprise system that was built by industrious, hard-working people in the years since Thomas Edison's inventive mind created the light bulb. I am positive that there are people in Washington who have spread some seeds in the great State of Iowa to create a public power district scheme such as exists in Nebraska. There is no doubt in my mind, from my personal experience, that my job and the jobs of thousands of others of local IBEW members are on the line for survival because of wasteful duplication of systems that have been adequate throughout all these years. These duplications are being built in Iowa for the purpose of pushing my employer out of the picture. The trend for Federal bureau control is obvious. The pressures on small towns by so-called "friends of the small businessman" is also obvious. The thought that troubles me is the fact that the Congress and the Senate are slowly being replaced by bureaus established by their own hand. When the bureaus are firmly entrenched in every facet of this Great Society, there will be no need for Congressmen or Senators. Just as public power districts restrict the workingman from bargaining for a better standard of living, so the bureaus will restrict the authority of Congress and the Senate.

I believe in what President John F. Kennedy said, "Ask not what your country can do for you, but what you can do for your country."

Does this honorable committee believe that creating an unregulated bank for competition in an industry that helps pay their wages through taxation is what helping your country means? I am sure that each of you believes that, to be a strong nation, our industries should be treated fairly and justly. This belief will not be attained if any bill is established as the law of the land where I have to pay a double cost per kilowatt-hour. My fellow employees, friends and relatives are very disturbed by the ever-increasing tax deductions on the workingman's check to support all the giveaway programs emanating assistance from Federal and State capitals. There is no need for G. & T. or powerplant construction by public systems. An industrious Iowa is not suffering because of lack of generation capacity. Just give our industry under the free enterprise system a fair, competitive chance, and I and many thousands of your constituents will not become wards of the Government. Why destroy your jobs and mine by destroying incentive?

With the Government looking for ways to increase its tax revenue to fight the Vietnam war and to pursue its social welfare policies, it could well look to the tax potential of Government-subsidized electric systems. It is estimated that between 1954 and 1965 the Government could have realized at least $3.6 billion if the electricity sold by governmental agencies had been sold by taxpaying, investor-owned utilities.

In addition to the tax revenue which the Government has lost, we are discriminating against a large majority of our electric users by requiring them to subsidize through taxes the users of power from governmental agencies. This economic discrimination is as great as any that exists today. This REA bank will perpetrate this tax squeeze and unjust discrimination.

Thank you.

Mr. Chairman, I would like to ask your permission to explain a little bit on why we are exceptionally disturbed in the State of Iowa. We have heard testimony by the Secretary of Agriculture and all the people from the REA, and we feel sincerely that we have justification for our disturbance in this electrical industry.

I have with me at the present time a map furnished by the Commerce Commission of the State of Iowa, with six investor utility companies colored in blocks to show you the saturation of the private investor companies in the State of Iowa, with generation produced by municipals, REA, and the Bureau of Reclamation. And we sincerely feel that expanding this into a Federal bank is unjustified.

Mr. Chairman, we have 85 municipals in the State of Iowa generating a total of 347,585 kilowatts.

We also have REA systems generating 347,585 kilowatts, and a private utility industry generating 1,856,535. And superimposed onto our great State is the Bureau of Reclamation. The expansion of the Bureau of Reclamation-and I was on the first experiment performed at Linton, Iowa, when the 115,000-kilovolt line was brought in by the Bureau of Reclamation. Our company was gracious enough with the Government to perform tests so that the line was correct. We find now that there are 330-kilovolt lines coming into the Bureau of Reclamation. And if this committee would care to look at this map you will

see just about every county in the State is covered by a private utility. There are duplications by public systems all over the State. And the franchise elections that we are having in the State of Iowa are coming to be hotbeds of feudalism, because there is a movement by the Federal Bureau of Reclamation to do things in our State that we feel the Government does not and would not allow.

We had an election in Alton, Iowa. And this added another business system, which makes it 86.

Now, the Secretary of Agriculture testified that to have efficiency you have to have big units. And I agree with him about a hundred percent. Technological advances in big generating uses are necessary to bring the rates down so that the people can have economical electricity.

The movement that is on in Iowa is in reverse. They are talking people into going to municipals. Municipals are inefficient, they are a waste of the taxpayers' money. But in the ultimate end-and I am talking about taxpayers in the towns, not the State of Iowa as a whole, or the utility private industry itself-sooner or later these inefficient units are going to be replaced by big equipment.

Who is going to replace these units?

I will tell you who is going to replace them. The formation of an agency joined into a power district system. And we have on record that people have been selected to head up these committees so that these agencies can be formed.

There is an agency in the northwest section of my State that has joined together in a municipal system to eventually go into a large cooperative. We know where their power is going to eventually come from, the Bureau of Reclamation. These people in the small towns aren't going to be able to invest all of this money as money that is on the free market.

I have attended meetings in some of these franchise election towns. I have heard testimony given by the advocates of municipal systems, et cetera. And I shudder to think that my private State of Iowa will someday become a public power district because of all of this free

money.

You see, gentlemen, you can't compete ladies and gentlemen, pardon me you can't compete with 2-percent money and tax exemptions all over the place. I think it is becoming more and more difficult to operate and have a high standard of living because of heavy taxation on property, personal property, income tax, social security and everything else that is coming under-and I am not the only one that feels that way. Sooner or later in the State of Iowa we will go down under, and so will our companies.

And in conclusion I can say this, that my dad always taught me to help myself first and stand on my two flat feet. And I say this, if the REA's and the REC's-and they have done a tremendous job-if all of this money that I have heard proponents talk about of the REA's and REC's in my State, if there is so much money in it, why should the taxpayer pour billions and billions of dollars year after year into building systems? And we are not against the REC's or the REA's, we still think they are a good organization, they are doing a tremendous job. We sincerely believe this, too, that a bank established by the

STATEMENT OF HON. BEN REIFEL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH DAKOTA

Mr. REIFEL. Mr. Chairman and members of the committee, first I want to express my appreciation for letting us come ahead of schedule. We were scheduled to be with you tomorrow. But these gentlemen have come in from South Dakota and want to get back there as soon as they can. We certainly do appreciate your giving us this opportunity.

The CHAIRMAN. We will be very glad to hear you, sir.

Mr. REIFEL. It is a special pleasure for me to come before this distinguished committee, first for the reason that it was my privilege to serve on this committee during the 87th Congress, and, second, because I have had the honor to introduce to you two distinguished leaders of REA cooperatives in my State.

I do have two apprehensions, after listening to 2 days of testimony, with respect to the supplemental financing with regard to REA's.

One is a fear that after the bank is set up it is going to be a little more difficult for Members of the Congress to vote 2-percent funds. There will be a tendency to say that you have a bank to fund REA programs; and second, if the electric bank is set up and established, the possibility of administering it in such a manner as to make it difficult for those cooperatives in the State of South Dakota where we have a density of about one and a half per mile, and the lowinterest loans.

I will leave the discussion of that to the two witnesses that I will introduce.

These two gentlemen can speak much more knowledgeably than I as to the impact of this legislation in low-density areas such as in the Dakotas. They are not necessarily opposed to the idea of supplemental financing at higher interest rates for those co-ops who feel that they can live with this arrangement. Of more concern to them is the necessity that co-ops in our part of the country in particular, where they have an average of only one and a half consumers per mile of line, where they have an average cooperative income of less than $300 per year per mile of line, where we are losing an average of 1,100 farm families every year, should have a dependable source of 1-percent money with the loan criteria spelled out.

They do not feel, nor do I, that we should lodge this amount of power in the director of the electric bank.

Now, these two gentlemen are Mr. Arthur Jones, president of the Basin Electric Cooperative, Bismarck, N. Dak., who is a resident of Briton, S. Dak., and he will also speak for Mr. Virgil Hanlon, who is not able to be here, and he will represent him as far as the East River Electric Co-op is concerned.

The one who will speak first will be Mr. Virgil Herriott, manager of the Sioux Valley Empire Electric Association of Colman, S. Dak., a distribution cooperative.

Also present are Mr. Dale Gibbs, manager of the South Dakota Rural Electric Association, and three members of the board of the Sioux Valley Empire Electric Association.