and if it is possible I would like to have them testify before the committee, and I know the committee members want to hear them. Will the committee meet tomorrow?

The CHAIRMAN. To meet tomorrow on Saturday is very difficult. We will meet on Monday. I think I will adjourn the committee over to 3 o'clock, and if there is not anybody here but me I will hear the statements.

Mr. KEFAUVER. I dislike very much to inconvenience the chairman or any members of the committee.

The CHAIRMAN. I think we will get through the agricultural bill by 3 o'clock.

Mr. KEFAUVER. I will tell them to make their statements very brief.

The CHAIRMAN. I am very anxious to accommodate everybody I can. I do not want to cut anybody off, and do not intend to even if I have to hold these hearings over. I would suggest, Mr. Sparkman and Mr. Costello, that you get back here at 3 o'clock.

(Whereupon, at 12:30 p. m., a recess was taken until 3 p. m. of the same day.)

AFTER RECESS

The committee reassembled at 3 p. m., pursuant to recess.

The CHAIRMAN. The committee will please be in order. We want to accommodate a witness who appeared yesterday, Mr. Butt, the county attorney of Fannin County, Ga. He wishes to make a correction and says it will only take him a minute.

ADDITIONAL STATEMENT OF WILLIAM BUTT

Mr. BUTT. Mr. Chairman, thank you. Rather it is to make clearer a statement that I made. When I appeared before the committee yesterday I stated that the people of Georgia had approved a constitutional amendment, two constitutional amendments, one exempting real estate from taxation up to the amount of $2,000 and personalty to the amount of $300. I should have stated in connection with that statement that those exemptions do not apply to bonds issued by the State of Georgia, any county, any municipality, or any school district.

The CHAIRMAN. Are there any questions by the committee? Thank you, Mr. Butt.

Mr. BUTT. Thank you very much, Mr. Chairman. Mr. Clason of Massachusetts seemed to be intensely interested in that question, and I wanted to get that in the record.

The CHAIRMAN. Judge E. D. Austin, of White County, Tenn. Judge, if you have a statement to make, we will be glad to hear

you now.

STATEMENT OF HON. E. D. AUSTIN, COUNTY JUDGE, WHITE COUNTY, TENN.

Mr. AUSTIN. Mr. Chairman and gentlemen of the committee, I have a short statement of the facts that will take me a very few minutes to present.

White County, Tenn., has a population of 16,000, approximately 2,500 of which is in the town of Sparta, the county seat. It had an assessed valuation for the year 1939 of $4,655,439.50, with a tax aggregate of $109,402.82; $15,302.65 of the 1938 taxes are yet delinquent.

Two dams and hydroelectric plants, together with most of the transmission lines in said county were purchased from the Tennessee Electric Power Co. by the Tennessee Valley Authority. The Tennessee Electric Power Co. paid White County for the year 1939 $35,735 based on a tax levy of $2.35 per $100 assessed. The 1938 and 1939 tax levy was $2.35 per $100, and to replace this loss the rate would need to be raised to $3.32 per $100 of taxable property.

The county has outstanding a bonded indebtedness of $407,000, consisting of $330,000.00 Federal-aid road bonds, $68,000 county road bonds, and $9,000 general county purpose bonds. There is also a floating indebtedness of $17,364.70, rural school warrants of $3,650, high school warrants $8.200, making a total indebtedness of $436,214.70, practically all of which indebtedness was contracted after the building of said dams and transmission lines, and in anticipation of revenue there from and before the loss was foreseen, and the county can turn to no other source of revenue except real estate to recoup this loss. While the State has agreed to take over $266,000 of the Federal-aid road bonds, they are still a primary obligation of the county. In other words, they are White County bonds, and of course we hope the State will take care of them, but yet they are chargeable

to us.

This being an agricultural county, at least 75 percent of the burden will fall on the farmers, very few of whom have electric service available.

To illustrate: Of the $83,995 of the rural school revenue for 1938-39 year, $9,892.15 was paid in taxes by the Tennessee Electric Power Co. Of the $42,400 expended for high-school purposes, $10,349.71 was paid by the Tennessee Electric Power Co., making a total loss of $20,241.26 for school purposes alone. The failure to raise this amount from the already overburdened real estate would cause the loss of State aid and necessarily require the school operation to be reduced to a minimum. The city schools of the town of Sparta being operated the first 8 months on the same basis as the county rural schools is calculated to suffer proportionately from the loss of county school revenue in the approximate sum of $6,000.

The other functions and operations of the county would be required to be reduced in proportion to the total loss of $35,735, unless about 60 percent increase in assessment is made on the remaining taxable property.

Unless this loss of revenue is immediately restored, th credit of the county will be greatly impaired and it is possible that a tax revolt may occur among the farmers if such an increase in the levy is required to be made, the result being bankruptcy and default on our bonds and other indebtedness.

White County and the town of Sparta filed formal protest with their Congressman and with this committee against the passage of the bill making the appropriation for the purchase of this property without an amendment requiring full restoration of tax losses.

The Federal Government, without our consent or advice and against our protest and in the face of our bonded and other indebtedness, by its act removed our chief source of revenue which we had in good faith pledged and had a right to rely upon to retire this indebtedness, and we feel that this same Government in equity and good conscience should save us from this perilous situation which we had no part in creating or encouraging.

I thank you, Mr. Chairman.

Our next witness is Mr. Grover C. Ault.

Mr. KEFAUVER. Mr. Chairman, I would like to say that Jim Camp, mayor of Sparta, which is the county seat of White County, is also here, and also Mr. Malcolm Hill, county attorney of White County, came with a delegation from White County. Of course, Judge Austin is spokesman for the delegation.

The CHAIRMAN. Very well. Now you may proceed, Mr. Ault. STATEMENT OF GROVER C. AULT, CHAIRMAN OF THE COUNTY COMMISSION, BLEDSOE COUNTY, TENN.

Mr. AULT. Mr. Chairman, I want to leave this map here, with your permission which shows the condition of the county. Most of our land up there is cut-over land, and that little place in there that you thought was inundated with water is what carries the load. You have a member on the committee from Tennessee who will understand that.

Bledsoe County has an assessed valuation of $2,814,793 less the Tennessee Electric Power property of $609,611, which leaves the net assessment, including the railroads, $2,205,182. The present tax rate, including the utilities assessment, is $3.05. With the loss of the Tennessee Electric Power taxes of $18,000, the rate will have to be increased to about $4 in order to maintain the present running expenses of our county.

The total bonded and floating indebtedness of Bledsoe County is $288,534. We have a floating debt up there of about $65,000 that we have got to issue some new bonds for now, and I don't know how we are going to pay these bondholders if we lose this $18,000. The committee can see from these figures that the only salvation for our county is to have this utility tax replaced by the passage of the Norris-Sparkman bill.

The population of Bledsoe County is 7,128. The total acreage is approximately 250,000. Two-thirds of this is cut-over mountain land, the assessed value of which is about $3 per acre. Now, I have been adjusting some of that land. There are taxes due from 1930 on up to 1939 that have not been paid. That land when it had timber on it was worth a lot of money, but these big companies have logged it all out. This Pennsylvania Lumber Co.-you have a man from Pennsylvania here and I talked to him about it today, and I think they have been interested in that, and they have logged it and cut everything that will make a fence post. There is nothing left but a lot of stumps and wild grass. We have reduced the assessment to get them to pay up these back taxes, and the assessed valuation of that now is about $3 an acre.

The resources of Bledsoe County, indicating some of the phases of the taxpaying ability, are as follows-this is over an average of

some years, you see:

Annual value of agricultural products.

Livestock and products--

Dairy products

Coal products

Manufactured products (hosiery mill).

Retail sales-

Wholesale_-_

Bank deposits (approximately)

$700,000 750, 000 81,000

6, 450 50,000 500, 000 100,000 300, 000

We have no industries or anything to tax to take care of the Tennessee Electric Power loss. We have been running behind about $6,500 each year for the past 10 years and will have to take up this deficit by further bonds. So we have got to have something from somewhere. I do not know whether we will get it from your committee, but we are in such straits that we cannot run our schools and keep going. And our children down there, the way we look at it, are just as precious to us as the children of the rich, populous counties where they have large industries. I live right in the north end of this county in the sticks. I am a little farmer and storekeeper out in the country. I live right in the north end of the county, and you are getting testimony before this committee from the raw. Mr. Kefauver has been right up there. He really comes out and visits us and knows our problems, knows what we are doing, and we are glad to come up here and assist in any way we can. It is a life and death matter with us. It is not much in dollars and cents-$18,000-but it means a lot if we have to close our schools and deprive our children of an education. You see, if we cannot meet certain State moneys in our county, and if we do not put up so much in taxation, they do not give it to us, and that deprives us of 8 and 9 months school, 8 months in the elementary schools and 9 in the high school. If you cut it down below the State requirements, those children cannot graduate.

The CHAIRMAN. The whole situation in your county is that without some form of relief in replacement of these taxes, you will not only have to repudiate your bonds and floating indebtedness, but you will have to greatly curtail many of your schools?

Mr. AULT. That is right. We will have to return to that old system like it was back 15 or 20 years ago.

The CHAIRMAN. What did the Tennessee Electric Power Co. own in your county that was taken out of taxation? Can you state that just briefly?

Mr. AULT. The high-powered transmission line that runs through the county from Muscle Shoals, coming in at the lower end of the county and out at the other end of the county.

The CHAIRMAN. There were no power houses or substations or hydro dams in the county?

Mr. AULT. No, sir; none of that.

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

Next we have Mr. P. N. Moffitt. I believe he is county judge of Warren County.

Pardon me, Mr. Kefauver; did you want to make a statement in advance of these gentlemen, or do you want to follow them?

Mr. KEFAUVER. Mr. Chairman, I would rather give my brief testimony later on. I did want to say, however, that Judge Moffitt is the

county judge of Warren County, and accompanying him is Mr. Patton, the county attorney.

The CHAIRMAN. Yes; I have his name here.

Mr. KEFAUVER. They both came, but Judge Moffitt is the spokesman.

STATEMENT OF HON. P. N. MOFFITT, COUNTY JUDGE, WARREN COUNTY, TENN.

Mr. MOFFITT. Mr. Chairman and gentlemen, the total assessed valuation of Warren County for tax purposes is $6,408,073. Of this amount, $2,360,985 represents the assessment of the properties formerly owned by the Tennessee Electric Power Co. which were taken over by the T. V. A. I want to say here that that property has been in our county and we have been receiving taxes from it for the last 25 years.

The assessed valuation of the properties taken over by the McMinnville Corporation is $135,000, which leaves $2,125,985 as the net assessed valuation of the properties taken over and now owned by T. V. A., and which will be removed from the tax rolls of the county, thereby decreasing the total assessed valuation of the county for tax purposes to $4,086,662.

The 1939 tax rate for the county is $1.75 per hundred, and the amount paid in the tax aggregate to be derived by the county from the total tax assessment on $6,408,073 will be $111,213.23. Öf this amount, the tax levied against and paid by the Tennessee Electric Power Co. for the year 1939, based on the rate and assessment aforementioned, amounts to $41,252.70, which represents approximately 37 percent of the total tax revenues of the county.

The tax rate of $1.75 is made up by the following items:

It will be observed that five-sevenths of the total tax revenues of the county is exclusively used for public-school purposes.

To illustrate the effect of the loss of the tax paid in 1939 by the Tennessee Electric Power Co., the following is the manner in which the total tax of $41,252.70 is apportioned: General county purposes, $8,263.45; rural roads, $1,115.96; social security, $2,360.98; public schools, $29,512.31.

There is the school proposition with us, too. If this property is to be taken off of the tax books of the county and not replaced in some manner, the public schools will automatically lose 37 percent of their total tax revenue. On the other hand, if the amount of this tax loss is made up by increasing the rate on the remainder of the taxable property in the county, it will be necessary to increase the rate from $1.75 per hundred to $2,73 per hundred, or an increase of 56 percent over the present rate. This would certainly be such a burden upon the remainder of the taxpayers in the county that it would be unreasonable to expect the payment of such an exhorbitant rate. Unless the bill before this committee is passed authorizing the replacement of this tax, the ultimate burden of the loss will be laid at the door of the