Mr. ARENDS. What position do you find yourself in, Governor? The thing that won't move, or the thing that runs into the thing that won't budge? If you can't get this through the House of Representatives what position do you find yourself in as Governor of Tennessee?

Governor COOPER. We will find ourselves in difficulty.

Mr. ARENDS. Absolutely something that you must face in all practicality which you are up against?

Governor COOPER. No, sir; we think that this is a problem just as the members of the committee seemed to think at the last session, and that something should be done, namely, that the tax should be replaced.

The CHAIRMAN. What the Governor thinks is that the Federal Government has done them a great wrong down there and ought to repair it.

Governor COOPER. No, sir; I don't think that. We are grateful for the Tennessee Valley Authority. We think it should be viewed in some aspects as a national development and we don't think the people of Tennessee alone should bear the cost of this national develop

ment.

Mr. EDMISTON. I have seen a lot of things that I did not think were fair. It may be that you are up against the same thing.

Governor COOPER. We hope not.

Mr. CLASON. You haven't at the present time formulated any plan to take care of this situation if the Congress does not pass the bill! Governor COOPER. We have been studying the problem for months. Mr. CLASON. And you have accomplished nothing?

Governor COOPER. There is no way we can see how these taxes can be replaced.

Mr. CLASON. Do I understand then that if the Congress does not pass the bill that the State of Tennessee will do nothing to prevent the bonds of these counties being defaulted?

Governor COOPER. Nothing we can do.

The CHAIRMAN. There is nothing he can do. The Governor says he is not an expert on these matters. Probably the question of how this 122 percent is included in the rate down there should be submitted to somebody else. I think we have asked the Governor enough. He wishes to get home and unless there is some other statement you care to make, Governor Cooper, that will be all. Governor CoOPER. That is all.

Mr. SPARKMAN. Governor, Mr. Elston, in his questioning of you, referred to the fact that over one-half billion dollars had been spent in the T. V. A. development. You in your answer did not attempt to confirm such an erroneous statement as that, did you? Governor COOPER. No, sir.

Mr. SPARKMAN. It was $257,000,000 at the close of the last fiscal year.

The CHAIRMAN. Yes; with the $40,000,000 appropriation passed last week, it is just a little over $300,000,000, and when they get through they estimate $535,000,000.

Mr. SPARKMAN. He said at the present time it probably would be over $1,000,000,000.

Mr. ELSTON. I was assuming when they complete the project they

mind.

The CHAIRMAN. If they complete it with an expenditure of $106,000,000 they wouldn't stop there.

Thank you very much, Governor.

There is a gentleman here representing the utilities commission, Mr. Hudson. Come around, Mr. Hudson, and tell the committee your name, experience, and so forth.

STATEMENT OF W. D. HUDSON, MEMBER, RAILROAD AND PUBLIC UTILITIES COMMISSION OF THE STATE OF TENNESSEE

Mr. HUDSON. Mr. Chairman, and members of the committee, my name is W. D. Hudson. I am a member of the Railroad and Public Utilities Commission of the State of Tennessee. I am also a member of the city power board of the city of Clarksville, Tenn.

ers.

I organized one of the cooperatives operating there among farmWe have more than 6,000 rural customers.

In the beginning, I want to state that it is not my proposal to increase the burden of taxation on the Federal Government one dime. All I want and ask you for is the proper distribution of this temporary tax we are asking for as a replacement for taxes lost to us because of the purchase of privately owned utilities by the Tennessee Valley Authority.

We are at present under the present T. V. A. Act, receiving 5 percent of the gross receipts on various dams where electricity is generated by water. But there are a number of plants in Tennessee purchased from private utilities where the electricity is generated by steam, and the State is receiving nothing from that generation.

I am speaking strictly in favor of the Norris-Sparkman bill. As I understand, this bill provides the tax shall be paid on a sliding scale downward, which makes it a temporary tax. This makes it possible to adjust the taxes as the Tennessee Valley Authority sells sufficient electricity to go back to the 5 percent.

It is not a question of constitutionality, because that was settled by the Supreme Court on the original bill, which provided 5 percent. All we are asking is that that be increased to 10 percent, and then downward. As the bill provides, it is a temporary measure for tax adjustment.

I would like to speak about Polk County in particular. The situation in Polk County is this: It is not the loss of land in Polk County. I think they have two large dams which were purchased from the Tennessee Electric Power Co. in Warren County, where the tax loss would be about $36,000 a year. In White County the tax loss will be about $34,000 a year, and in Van Buren County the tax loss will be about $7,500 a year. Those losses will occur because of the acquisition of dams and not because of the flooding of lands.

Of course, in Meigs County, Rhea and Benton Counties, and other counties, where a large part of the territory will be flooded, those counties have set up their budgets in the past to pay for the operation of their schools, and to pay for the operation of county government. Unless something is done to relieve that situation until these tax adjustments can be made by the State of Tennessee, and until the consumption of the T. V. A. increases considerably so they

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can get by on the 5 percent, I don't know what those counties are going to do.

It looks like they are going to have to close their schools.
The CHAIRMAN. Do they have a bonded indebtedness?

Mr. HUDSON. They are heavily bonded. They are taxed almost now beyond their ability to pay. One of those counties-I was born and reared in White County, and in that county is located a dam known as the Great Falls Dam at Rocky Island. That little county I will lose about $34,000.

The CHAIRMAN. $34,714.91?

Mr. HUDSON. Yes. Now, Warren County, the adjoining county, will lose about $36,000. There is Marion County. Those properties have been acquired by the Tennessee Valley Authority and in the years have set up their budgets where they have so much money to operate their schools and meet the indebtedness by reason of interest on their bonds and other things and unless something is done I don't see how those counties can operate. This bill only provides for temporary relief which will go back in a few years to 5 percent.

According to the information I have received from the Tennessee Valley Authority, in computing the rate, which is known as the yardstick rate, they set up as part of the cost 12 cents on every dollar paid by the consumer for electric current as a tax-replacement

measure.

Now, this bill only provides for 10 percent for temporary relief. In the name of equity and justice, something should be done. Those people-the Chairman knows the situation in that section of the country because you live in the same kind of country yourself. The top soil has been depleted. They are poor people. They are trying to educate their children and unless there is something done, at least temporarily as provided under this bill, I don't know what substitute can be offered because the State has no authority to donate or give money to those people.

The CHAIRMAN. Is that Marion County you are talking about?

Mr. HUDSON. Yes; that is a large county. That is where the Hales Bar Dam is located.

The CHAIRMAN. That country, according to the book you presented here, stands to lose $82,133.90?

Mr. HUDSON. Yes, sir.

The CHAIRMAN. In county taxes?

Mr. HUDSON. Yes.

The CHAIRMAN. Now, is that due to the dam?

Mr. HUDSON. The big dam; the Hales Bar Dam there across the Tennessee River.

The CHAIRMAN. And that was privately owned?

Mr. HUDSON. Yes, sir; owned by the Tennessee Electric Power Co. Now, what that county is going to do unless this Congress does something for them as a temporary measure, I don't know. It looks to me like they will have to close their schools.

The CHAIRMAN. Mr. Hudson, does your book or exhibit C, which you filed with the committee, mean that prior to the purchase of these utilities that the private utility was paying to this county this $82,133.90?

Mr. HUDSON. That is exactly what it means.

The CHAIRMAN. And it all comes out——

Mr. HUDSON. It all comes out the same way with Warren, White, Polk, Van Buren-those small counties which have had to depend upon taxation of properties formerly owned by the private utilities for generating sites.

Mr. HARNESS. May I ask a question there, Mr. Hudson? If the utility was paying to Marion County $82,000 what was the total tax raised in that county?

Mr. HUDSON. That is on page, let me see what page that was onlook at page 16.

Mr. HARNESS. I mean the whole tax, not only the tax from utilities. Mr. HUDSON. Well, I just don't know what percent it was but I think it was more than 50 percent.

Mr. HARNESS. In other words, that county was obtaining more than 50 percent of its taxes from one utility?

Mr. HUDSON. I would not say that is the exact figure but that was the biggest taxpayer in that county. The same in Warren, White, Van Buren, and Polk Counties.

Mr. EDMISTON. What thought must have gone through your mind before the time of the purchase of these private utilities by the T. V. A.? Did the thought ever occur to you before of these possibilities?

Mr. HUDSON. Yes.

Mr. EDMISTON. Well, what did you think about it? Did you say "Let us go ahead and see if we can work it out afterwards"? Mr. HUDSON. Yes, sir.

Mr. EDMISTON. You did?

Mr. HUDSON. Yes. Of course, I am not responsible for those taxes. I am only a member of the Utility Commission which administers these taxes.

Mr. CLASON. You would not have any objection to having the distributing company charge the consumer a little more in their rates and then have the State recapture the sums repreesnted by this increase in rates to pay these different counties and other municipalities the sums necessary to take care of these lost taxes, would you?

Mr. HUDSON. Now, this 10 percent asked for in the bill

Mr. CLASON. Just answer my question. There is no sense in bringing up the 10-percent question.

Have you any objection to the distributing authorities being permitted to charge a little additional rate to the ultimate consumer and then having the State recapture this additional rate and repaying and redistributing to the counties such as those you have named, the amounts which they have lost?

Mr. HUDSON. That is a question I cannot answer because I am not an engineer and that is a function of the T. V. A., sir. That is their policy.

The CHAIRMAN. Mr. Clason, pardon me just a minute. I just reecived a note here from the clerk of the committee. It advises there is an important roll call on a veto message, called for members on the floor at 3:40, and that is the exact time now. How much longer will your statement be?

Mr. HUDSON. I will be through in just a few minutes.

The CHAIRMAN. All right; go ahead.

Mr. HUDSON. In fact, Mr. Chairman, I can quit now if that will facilitate the convenience of your committee.

The CHAIRMAN. That is all right, go ahead. Maybe some of the members will want to ask a few questions.

Mr. HUDSON. My recommendation is to pass the Norris-Sparkman bill for the reasons I have stated.

It is most imperative that it be done. We want to keep the schools running in the counties where the utilities properties have been sold. The CHAIRMAN. In other words the counties and school districts have found themselves unable to go ahead with the ordinary activities of government?

Mr. HUDSON. They can't do it. They are being taxed now beyond their ability to pay. This is only a temporary measure.

The CHAIRMAN. Are there any further questions? If not, you may be excused. We are very glad to have had you, sir, and we appreciate your coming to us. I had a question or two I wanted to ask but I will ask some of the T. V. A. men.

you

Mr. HUDSON. I can answer this one question that you asked Governor Cooper awhile ago about the functions and duties of the Railroad Public Utilities Commission.

We have no jurisdiction whatsoever over the Tennessee Valley Authority or any other publicly owned utility.

The CHAIRMAN. How were you relieved of that?

Mr. HUDSON. The act which created the utilities commission provides that we can only exercise jurisdiction over private utilities. The CHAIRMAN. Then your legislature did exempt the T. V. A. from any regulation by your commission?

Mr. HUDSON. That was in 1917.

The CHAIRMAN. Wasn't there a later act?

Mr. HUDSON. There was a later amendment.

The CHAIRMAN. What was the amendment?

Mr. HUDSON. Well, I will tell you what that was. A certain member of the commission wanted to exercise jurisdiction over the sale of property of the utilities to the T. V. A. and then there was an amendment to the original act which provided that they didn't have to have the approval of the utilities commission where a private utility was sold to a public agency.

The CHAIRMAN. Did not relate to the production of electricity but to the sale of the property?

Mr. HUDSON. That is right.

The CHAIRMAN. In other words that opened the gate for this sale that we recently authorized, so far as the State was concerned? Mr. HUDSON. It facilitated matters; yes, sir.

The CHAIRMAN. Thank you very much.

Will Mr. Fargerson give us his statement?

STATEMENT OF W. H. FARGERSON, SUPERINTENDENT OF SCHOOLS, FANNIN COUNTY, GA.

The CHAIRMAN. Mr. Fargerson, you are from the State of Geor

gia?

Mr. FARGERSON. Yes, sir.

The CHAIRMAN. What county?

Mr. FARGERSON. Fannin County.

The CHAIRMAN. What is your position in Fannin County? Mr. FARGERSON. I am superintendent of the Fannin County High School. We are right there on the shore of this lake, the Blue Ridge