AFTER RECESS

The CHAIRMAN. The hearing will come to order.
The Chair recognizes Mr. Weaver.

STATEMENT OF HON. ZEBULON WEAVER, REPRESENTATIVE IN CONGRESS FROM NORTH CAROLINA

Mr. WEAVER. Mr. Chairman and members of the committee, I will just keep you for a few minutes. I know that this hearing has been going on for some time and has gone very carefully into the T. V. A.

matter.

I would like, however, to have the privilege, if I may, of supplementing my remarks with a statement.

The CHAIRMAN. Your remarks will be submitted to you for correction.

Mr. WEAVER. Yes. My first interest in the subject matter of this legislation, H. R. 7424, occurred some years ago.

On March 1, 1939, I introduced H. R. 4640, which is an amendment to the original T. V. A. Act. The chairman and other members of the committee will recall that under the original T. V. A. Act, 5 percent of the gross proceeds received by the Board for the sale of power generated at the dams in Tennessee and Alabama, should be paid to the States of Tennessee and Alabama.

At that time there were no other dams. All of the T. V. A. dams constructed and under construction were situated in Alabama and Tennessee. Since that time the Tennessee Valley Authority has constructed the Hiawassee Dam which is situated in North Carolina just across the Tennessee line. But all of the lands flooded by this dam are situated in North Carolina.

Now, in the original bill I proposed an amendment to extend that 5-percent provision to dams situated in North Carolina. I think that the committee would immediately recognize the fairness of that proposition.

The CHAIRMAN. Will the gentleman pardon me for an interruption? The proposal as contained in the Sparkman-Norris bill undertakes to provide for a graduated scale of percentages of the gross receipts and to provide a means of distributing them over all of the States concerned, and carries a further provision which provides, I think for $10,000

Mr. WEAVER. Yes; I will come to that. Now, since I introduced my bill Mr. Sparkman introduced his bill which, of course, in a very large measure, in fact, entirely, displaces any necessity for the bill which I introduced, because it will take care of the counties and States affected by the T. V. A., and I wish to say that I am very thoroughly in accord with the purposes of the Sparkman bill. But I merely want to call the attention of the committee to the fact that I have had this bill pending which would equalize the situation between dams built in North Carolina and Tennessee and Alabama. And that was rather important to Cherokee County.

Now, the Hiawassee Dam is located in Cherokee County, North Carolina. It is the only county that will be affected by it. The withdrawal of these properties from Cherokee County creates a very difficult local problem. I will leave with the clerk here some itemized figures, but I will read them to the chairman.

The Tennessee Valley Authority for the purpose of constructing the Hiawassee Dam condemned 12,000 acres of land. These lands were held by a private corporation which had in mind the construction of a hydraulic dam on the Hiawassee River. In addition to these 12,000 acres the T. V. A. purchased 8,000 acres, making a total of 20,000 acres taken from this very small county.

These lands are estimated to be worth $2,100,000. In 1933 the valuation of land for taxation in Cherokee County was $7,468,799. In 1934 the tax value was $7,355,626, but in 1939 the tax values slumped to $2,247,987.

Now, the committee will immediately see that that creates a very difficult situation for those people. The County of Cherokee has outstanding today $1,400,000 in bonds. Now, to withdraw the right to tax these properties with this outstanding bond issue, necessarily creates a very acute condition and has resulted or, if it has not resulted, will result in the county having to default in its indebtedness. Now, that is the exact situation that this has created in that county. The tax rate in that county is $1.39 per hundred, so this emphasizes the necessity, as I see it, of doing something to aid these small counties in which so large an amount of their taxable property has been withdrawn.

Now, I have no utility problem in North Carolina. I think Mr. Sparkman referred this morning in his statement to the fact that none of this power is sold in North Carolina.

The CHAIRMAN. There is none of the production resulting from any of the power plants that belong to the Tennessee Valley Authority sold in your district?

Mr. WEAVER. None that I know of. All of the power that is used for municipal purposes and so forth is produced by the North Carolina Power Co. and the Duke Power Co. and similar concerns, so that we have no sales in North Carolina on any large basis at least, and none that I really know of, unless it might be a small amount at Murphy, N. C., which comes from the generation of power by the Tennessee Valley Authority.

The CHAIRMAN. Now, going back to Cherokee County. As I understand it the entire loss there is due to the removal of real estate by reason of the reservoir areas from taxation?

Mr. WEAVER. That is right.

The CHAIRMAN. And it has been reduced from the 1935 valuation in the sum of three-million-two-hundred-and-twenty-thousand-odd dollars?

Mr. WEAVER. That is the way it appears from the statement which they have sent me.

The CHAIRMAN. Now, what rate of interest does this $1,400,000 bond issue bear?

Mr. WEAVER. I don't remember but probably not less than 6 percent. The CHAIRMAN. From five as a minimum up to maybe six.

Mr. WEAVER. Five or six percent. They have, of course, their internal problems such as schools and roads, which you have heard testified about here so frequently.

The CHAIRMAN. If we could take your problem in your district as a single proposition and handle it we would have no difficulty about it, because it relates to property that has been taken out of taxation. But here we have a crazy quilt set-up. Power is being produced in

one county and sold in another and the income is going to municipalities and nothing to the farmers. It is a very difficult proposition.

Mr. WEAVER. I can readily see the difficulties that arise. Of course, I realized that when the T. V. A. took over these various utility holdings that it would necessarily create a very distinct problem for the Congress or someone to consider. I don't know just how to work it out. I wish I did know.

Now, we have other problems. I notice Mr. Thomason referred to these withdrawals of land for other purposes.

The CHAIRMAN. For national forests.

Mr. WEAVER. They raise just as acute problems as this does. Now, for instance, I might take Swayne County, an adjoining county in my district. When the Smoky Mountain National Park was set aside they took 30 percent of that county's taxable property. The national park yields no revenue directly, but at the same time it leaves them with a heavy bonded indebtedness and reduces the amount of property they can tax, and on which the bonds were originally issued.

The CHAIRMAN. I was afraid you were going to ask this commitee, as a national defense committee, to impose a tax on your tourists. Mr. WEAVER. I am not going to do that, but it is just one of those problems that is confronting us. If Uncle Sam is to become a landed proprietor it seems to me there is going to have to be something done to provide for a fair contribution, at least until these outstanding bonds are retired. That is a problem I guess that confronts very many Congressmen here. I know it does me.

Now, it is estimated that the amount withdrawn from taxation of Cherokee County is about 30 percent of its taxable value. Now, what are you going to do with it?

The CHAIRMAN. We don't know.

Mr. WEAVER. I want to say further, Mr. Chairman, and I am not going to keep you long, that I am very much interested in this phase of the legislation. North Carolina as a State imposes no ad valorem taxes on real estate. That is left to the counties. That field of revenue is left entirely to the counties. Now, this bill provides it shall be paid to the State. I am very much interested in the view that it should be paid to the counties from which these lands are withdrawn.

The CHAIRMAN. I think it is generally agreed that if the bill is reported that it will carry such a provision as will require the county's part to be paid directly to them.

Mr. WEAVER. In the bill which I introduced, if you will read it, 4640, I provided that it should be paid to the State just like the original Tennessee Valley, but that it should be refunded to the county in which the dam was situated.

The CHAIRMAN. Well, the gentleman should remember one thing, and that is that the major portion of all of this tax problem is involved in Tennessee and they are in such a situation down there, apparently from their constitution and their statutes, that they are not able to distribute money back to the counties and if we reported a bill it would be futile to report it without a provision which requires the proportionate part of each county to be paid directly to them.

Mr. WEAVER. Well, I am in accord with 7424. There are one or two provisions which I may like to refer to in a statement which I may put in the record.

The CHAIRMAN. That will be all right.

Mr. WEAVER. The original Tennessee Valley Authority Act provided that 5 percent of the gross proceeds from any particular dam should be paid to the State in which it is located.

This changes that and provides that one-half shall be apportioned according to the gross proceeds of the power sales by the corporation within said State. Now, take the Hiwassee Dam. Suppose all the power from that dam should be sold at Chattanooga or Knoxville, or to some other municipality in Tennessee? I am not criticizing the bill very severely, but we would then be limited to the minimum which is allowed under this act.

The CHAIRMAN. In other words, the provisions to which you refer would provide the payment to the county in which the production of electricity was sold?

Mr. WEAVER. That is right.

The CHAIRMAN. And you think it ought to be paid in the county in which the dam is located?

Mr. WEAVER. I think it ought to be paid where the dam is located. Of course I am not certain about my position there, but I can readily see that if under this bill all the power from the Hiwassee Dam should be sold in Alabama or Tennessee we would get a very small amount of it.

The CHAIRMAN. Well, that is taken care of in the provisions of this bill which levies the tax upon the gross proceeds with a set-up arranged for its proper distribution and an amendment such as you suggested and as heretofore suggested, to the effect that it be paid to the counties direct instead of to the State.

Mr. WEAVER. And the bill provides that each State shall receive not less than 2 years average of local ad valorem taxation. Of course, that would restore Cherokee County to her former status as far as taxation was concerned.

Then it provides that the amount shall not be less than $10,000 in any case. That is to the State. Now, I don't know but there is this view about it, Mr. Chairman. There was a big power concern going to build a hydraulic dam there. Of course if it had been built as a private property it would have put this little county on its feet. There is no doubt about that. Now, I am just interested in a fair and equitable method of saving this county from the loss which it is now sustaining because of the withdrawal of the properties.

The CHAIRMAN. In other words the gentleman is like his other colleagues, including myself. He is for his district first and then the other fellow next.

Mr. WEAVER. We are all selfish, Mr. Chairman, and we all see our problems probably from a selfish viewpoint, but I can see those people out there with more than $1,000,000 of outstanding bonds and 30 percent of their property withdrawn from taxation.

Now, that is the problem that confronts this committee.

The CHAIRMAN. All right, Mr. Weaver. Do you gentlemen care to ask any questions?

Mr. SPARKMAN. I would like to call Judge Weaver's attention to the other part of that. A part of the 10 percent in any particular year would be distributed in accordance with the amount of power property owned in a particular State?

Mr. WEAVER. Yes; I meant to call attention to that, to the book value of the property.

Mr. SPARKMAN. I know what you are thinking and I am frank to say that I am quite sympathetic with that feeling myself. That is with reference to the location of the generation of the power. However, this was worked out over a long period of time and with the different States concerned and the T. V. A., and taking into consideration the acute situation that existed in Tennessee, and this formula was derived from all of those deliberations.

The second part of the formula does take into consideration generation because it includes the value of the property at that place. Mr. WEAVER. I am in thorough sympathy with the purpose of this bill.

Now, I might say to Mr. Sparkman that I think all the States covered by the Tennessee Valley Authority ought to participate in this. This is the only dam in my district, but I still feel and I tell them that my district should be considered because we furnish so much of the water. I can take my district as a whole and I believe it gives birth to more rivers than any other district in the United States.

The CHAIRMAN. Let me ask you this: What would you do with that water if you did not furnish it to the other fellows in the way that you do?

Mr. WEAVER. Well, it goes down. I don't know whether you ever read a certain piece of poetry by Sidney Lanier: The Song of the Chattahoochee. Go and get it and read it—

Out of the hills of Habersham,
Down the valleys of Hall.

The waters they try to hold it, and it can't—it has to go down and turn the wheels and water the plains, and do all those things.

Now, my district is really contributing not only to the rivers that flow into the Tennessee, but into the Atlantic and flow down.

The CHAIRMAN. It is the Little Tennessee River and the French Broad that starts up in your territory?

Mr. WEAVER. We have the French Broad that drains a half a dozen counties; the Pigeon, the Little Tennessee River, the Hiawatha, the Valley River, all of them-they are great.

The CHAIRMAN. Do they all come into the Tennessee River?

Mr. WEAVER. Yes; they come into the Tennessee River and they make a mighty flood.

Mr. SPARKMAN. I could name a hundred of them.

Mr. WEAVER. We gather those waters up there and we don't want to be selfish about this, but I would like to see some provision made to take care of these people who are really suffering, and I believe this committee will do it.

The CHAIRMAN. Well, we will do the best we can, Mr. Weaver. We thank you for coming here today.

The Chair recognizes the Honorable John Jennings, Jr.