of money now or hereafter levied or assessed against all such properties for purpose of taxation by the local taxing agents of such State, county, municipality, or other local taxing district. All such amounts to be from time to time ascertained and fixed by such State and local taxing authorities as now exist or may hereafter exist or be created or authorized by law in all States, counties, municipalities, and taxing districts in which Tennessee Valley Authority may now or hereafter own property: Provided, however, The sums of money so paid by it shall not be greater than the sums required to be paid by other persons and corporations owning property of like character and value in the same community, State, county, and local taxing district.

The CHAIRMAN. Governor, don't you think that is a pretty democratic amendment?

Governor COOPER. It is a pretty good amendment. Now, the things that we are asking for I don't want to keep repeating this, but we are not asking for revenue from the Federal Government. We are asking that the revenue the Tenneseeans are paying in our electric bills be restored to them.

They have paid in these revenues before in the counties that that revenue has gone to keep up. Polk County I might mention, Meigs, Lewis County, and many others that we could name-about 80 of them. And we want the money that we are paying in in our electric bills to come back to Tennessee and we want credit for that money. We are not asking that the Federal taxpayers in any of the other States have their burdens increased. But we don't want to pay taxes twice. We don't want to pay taxes in our electric bills and then be told, "Well, you are going to have to pay twice."

Mr. ELSTON. Governor, you did not make that point when you were here before, did you?

Governor COOPER. My answer was this when I was here beforewe were trying then to facilitate the purchase of the utilities, it is true, and there was a certain date set for the consummation of that transaction. We promised the committee then that we would cooperate in studying the tax problem, the problem of tax replacement. We lived up to our word.

When I went back to Tennessee I created a tax replacement committee and instructed them to get to work. We provided every facility for them to acquire dependable information, and the fruits of the work of that committee have been supplied to every member of the House Military Affairs Committee.

It was my instructions that they be so supplied. We have given you every bit of the dependable data we knew how to collect in the State of Tennessee and we think that every bit of that data is beyond refutation. We think it will stand. We think it will hold up. We have tried to supply you with dependable, accurate, detailed information on our tax replacement problem in Tennessee.

We don't think that that data can be refuted and we think it all goes to show that we are entitled to this tax replacement which we are asking for up here today.

Mr. ELSTON. Didn't you take the attitude before that you would rely entirely on T. V. A. to make adjustments?

Governor COOPER. Well, we are not relying entirely on them. We have got, I might say, a staggering tax problem in Tennessee. In addition to this we have got the problem of restoring taxes on the municipally owned system. We have got the problem of tax replacement on the county-owned systems and to some degree on the cooperatives, although they are paying ad valorem taxes.

All we are up here today for is to try to get the replacement allowed us on the T. V. A.-owned properties and that is only about 43 percent of the total public utilities that have been transferred into public ownership.

Mr. ELSTON. Didn't you say when you were here before, Governor, that you hoped the kind of legislation which we are considering today would pass? I asked you the question:

What position would the State of Tennessee be in even though you had entered into an agreement with the Tennessee Valley Authority, if the legislation that you are expecting should not pass Congress?

Governor COOPER. Yes, sir.

Mr. ELSTON. And didn't you say in answer to that, on page 82 of the hearings:

Well, we are content to rely on Tennessee Valley Authority as assurance that we could save two-thirds of the situation by passing our own proper legislation to tax the municipalities and other governmental subdivisions in Tennessee that had assumed their portion of this deal, and we think that we will be entirely safe in taking that view.

Governor COOPER. Yes; now, I would like to reaffirm that statement, because I think it is surprisingly accurate, as such statements sometime go. Here is what we said in that statement, and here is what we are saying today———

The CHAIRMAN. The statement shows what you said.

Governor CoOPER. That is right. I am just repeating now just what I said a moment ago, that the tax replacement problem today is, instead of as I said there, 3313 percent, but I say today it is slightly more than that. It is 43 percent, because the municipalities and the cooperatives own the rest of the properties estimated there, roughly, that T. V. A. would own only a third of it. I was estimating then that the dams and transmission lines would roughly be a third of the property acquired by the Commonwealth and Southern, whereas today it turns out to be, instead of 33% percent, it turns out to be 43 percent. There is a very slight difference there.

In substance, the statement that I made there is entirely correct. We didn't have the means then-we were only making a guess. Now we know what happened because we know the amount of property involved. The thing has been studied, and I want to say that the assurance that I had there in T. V. A. has been in the main justified because they cooperated with our tax committee.

It is true there is some-we are in entire agreement on the tax replacement on all the counties, and that is our major problem. But it is true we feel we should not be asked to bear more than half of the tax loss to the State of Tennessee.

Mr. ELSTON. At that time, however, you said you could, within your own State, have proper legislation to take care of two-thirds of the replacements.

Governor COOPER. Well, it is almost-it is roughly two-thirds. It is not quite two-thirds, but it is almost. Instead of 33 percent it is 43 percent that we are asking you to help on. We have got to take care of, let me see, it is the 57 percent, I believe, that we have to take care of instead of 66% percent, which would be two-thirds.

The statement I made there is roughly correct, and the statement made then was only a guess. We are in a position to know more about it now, and it has increased a little bit, but not much.

Mr. ELSTON. Well, I want to ask you another question. You said that the earnings of the T. V. A. in time might go to $25,000,000. Governor COOPER. That is gross earnings.

Mr. ELSTON. Gross?

Governor COOPER. Yes; on those matters, gentlemen of the committee, I would like to say this: That in the nature of things we have to rely on the technicians and engineers employed by the Tennessee Valley Authority, on such internal matters as what it will gross and what future earnings are going to be. We don't have access to the figures have no way of knowing, and we are trying to only make statements here that we believe to be true. My speculation on that would not be worth nearly as much as that of some engineers that you can get up here from the Tennessee Valley Authority.

Mr. ELSTON. I haven't any doubt about that. But the fact of the matter is that you are at the mercy of the T. V. A. aren't you?

Governor COOPER. Well, we think we are at the mercy of Congress. I don't think we are so much at the mercy of Congress as we are at the mercy of this committee and of Congress, but we have confidence in the fairness of this committee and of Congress and I want to say that we Tennesseeans have confidence in all the citizens of this country. We think that by and large if the citizens of the country understand the facts they will be satisfied with an equitable solution.

Mr. ELSTON. We are here representing all of the States in the Union. There are only 6 States benefited through lowered rates in the Tennessee Valley area. That is correct, isn't it?

Governor COOPER. That is correct.

Mr. ELSTON. Now, all the rest of the States in the Union have to make their contribution in order that you have those low rates. Now, just a minute until I finish. We have already appropriated and spent over a half billion dollars. Before we get through we may spend a billion dollars. Now, the people in the other States. outside of the area are paying that bill. They have to pay interest every year. They have to pay their portion of the principal and there has been no provision made whatever to reimburse them for any of the losses that they are going to sustain.

Now, why shouldn't they be protected against their losses the same as the people in your State who have lost by reason of taxes?

Governor COOPER. I think we can give a full and complete and sound answer to the question.

I understand that the Federal Government has spent $600,000,000— $100,000,000 more than the cost of T. V. A., on improving navigation and on flood control of the Mississippi River. Well, you did not charge that loss up to the people who live along the banks of the Mississippi. The whole Nation bore that expense, and very justly, because it was conserving and developing our greatest navigational resources of the Mississippi River. People in California contributed to that

The CHAIRMAN. This argument between the gentleman on the committee and the Governor is very interesting but we are not dealing with the Mississippi River nor with the other sections of the country.

We have this problem to solve and I wish you would get at the thing before us and answer the gentlemen's questions directly and see if we cannot get through.

Governor COOPER. Mr. Chairman, I was trying to answer the best I could.

The answer in a word or two is that those things have not been charged up to the local citizens. They have been recognized as national assets and the local citizens have only come in for a very small portion.

Now, we think that the portion of the burden which the Tennessee people are willing to share and to shoulder in this connection exceeds any contribution that was ever made by local citizens for the development of a national asset.

Mr. ELSTON. Well, only a part of the $600,000,000 is for flood control in the Tennessee Valley.

Now, why should the taxpayers of the rest of the country assume the part that has been allocated for electric power development, of which only the persons who live in that area can benefit?

Governor COOPER. We think that the whole Nation benefits by the program in many many ways. We think that the development of the power program is necessary for the proper defense of the country. That is our view of it. We think it was shown in some measure in the last war and we think that navigation, adding 650 miles of 9-foot channel to the internal waterway system of the country is worth something to the Nation as a whole. It helps the grain man way out West to ship his grain by water to the East. We think the improvement of navigation and flood control is a great help. We believe the impoundment of these waters in Tennessee if it would affect the flood level on the Mississippi River as much as 2 feet would be a very substantial and real benefit to the country as a flood-control measure. The benefits of that would extend all the way down the Mississippi Valley. And then I pointed out this morning that there are many small but important benefits that can come to farmers all over the country by certain things that have been developed by T. V. A.

Those things will benefit all of America. For example, there has been developed quick freezing which is valuable to the farmers of America. It permits them to conserve the soil and better preserve their farm products.

We believe that experiments in better farm machinery, particularly for the small farmers will be very beneficial to all the small farmers of America. And I pointed out how the experiments with phosphate fertilizers will result in a great saving and benefit all over America because phosphate fertilizer is necessary for the growth of grass wherever it is grown in this country. Before that time most of the fertilizer had only a small percentage of phosphatic material that was valuable to the land. Today it has been increased over 60 perIt is difficult to evaluate the many benefits.

cent.

Take the Burbank potato back in the old days. That was of substantial benefit to the farmers of the country. And that is a thing that is going to accrue from year to year to the whole Nation.

We think it is entirely in order and in line with the sound national conservation policy and the policy for developing America's resources to develop these things wherever they are located, whether in Tennessee or some place else.

The CHAIRMAN. Governor, pardon me for interrupting. May I suggest that I have given up all hopes of getting you away. You can make up your mind to stay until about tomorrow evening. Are there any other questions?

Mr. ELSTON. That is all I wanted to ask.

Mr. BYRNS. Mr. Chairman.

The CHAIRMAN. Mr. Byrns.

Mr. BYRNS. Governor, just a couple of questions.

First let me say just a couple of words for the record, since my friend from New York brought it up, about the advantages of a Tennesseean getting a job on the T. V. A. I think I am speaking for the entire Tennessee delegation when I say that we can't get a job in Tennessee. In fact it is entirely to the contrary, so that is not one of the benefits to Tennessee.

You are not asking for tax replacement on anything except the properties that the T. V. A. bought, I believe?

Governor COOPER. That is right.

Mr. BYRNS. You are not asking for tax replacement on anything the cities or various cooperatives bought?

Governor COOPER. Yes, sir.

Mr. BYRNS. You have been asked certain technical questions concerning the operation of T. V. A. Of course, you are not posing here as an expert on the operations of the Tennessee Valley Authority?

Governor COOPER. No. I don't pose as an expert.

Mr. BYRNS. I understand your position to be that the work done by the T. V. A. in flood control and in the production of nitrates for fertilizer, or for use by the Nation in case of war, is a benefit to the entire United States and that, therefore, the citizens of all the United States should contribute just as the citizens of all States contributed to flood relief in Ohio in 1937?

Governor COOPER. That is correct.

Mr. BYRNS. That is all.

Mr. ARENDS. I will ask you a question, Governor. After all, aren't these things incidental to your power, incidental to power, and secondary? Let us be frank about it. I understand the position you are taking, but we have to face this as a practical thing.

Governor COOPER. No; I don't believe that the development of power is the major aspect of the Tennessee Valley Authority. I think though that that will only be proven in years to come. I do think this: I think that the power program is the most spectacular one-building big dams, and so forth, but I don't believe it is necessarily the major benefit that will accrue to the country.

The CHAIRMAN. Is that all, gentlemen?

Mr. SMITH. Just one question. As far as the power program is concerned, whether we agree as to the yardstick set up there or not, the Congress has appropriated these hundreds of millions of dollars, one of the purposes being to establish a yardstick, not only for these communities immediately around the dams, but also for the rest of the country.

Governor COOPER. Entirely correct.

Mr. SMITH. We do argue sometimes about the items in the yardstick?

Governor COOPER. Yes, sir.

Mr. SMITH. But as far as the intent of Congress-that is not the only intent, as I understand it?

Governor COOPER. That is right. I am glad the committeeman brought that point out. I think it is an important one.