department was dealing with another, permitted routines to be simplified to the end that construction schedules were met.

3. In the case of Camp Shelby, Miss., the rate originally proposed by the power company for service to the camp was considerably modified by negotiations through Rural Electrification Administration's Rate Section, with the result that a saving in cost of power of $30,000 per year was effected.

4. In the case of two camps in. Louisiana, the power company's proposal contained a provision that the War Department make a contribution of $350,000 toward the cost of construction. In the case of a camp near Savannah, Ga., a similar $55,000 contribution was asked. Rural Electrification Administration was invited by the power section of the Quartermaster Corps to submit proposals covering the construction of power facilities to these camps. Rural Electrification Administration promptly submitted a proposal providing for long-term amortization of construction costs; whereupon the power companies withdrew their original proposals and asked permission to submit new proposals which eliminated any contribution by the War Department for construction work. Rural Electrification Administration's interposition saved contributions by the War Department of $405 000 in these two instances.

5. The fact that Rural Electrification Administration has for extended periods supervised the construction of 500 miles of rural line per day enables us to give unusual service in the matters of speed of construction and low costs; and of a quality so excellent that Rural Electrification Administration's design and construction have been adopted generally by the private industry. For instance: Rural Electrification Administration was given an order by the War Department to proceed with the construction of electric facilities to serve Camp Shelby, Miss. The line and substation for the construction load was completed 24 hours after receipt of order by Rural Electrification Administration, and the large substation and 71⁄2 miles of 110,000-volt transmission line from the power source to the camp was completed and energized 52 days after instructions to proceed were received by Rural Electrification Administration.

6. It must be emphasized that Rural Electrification Administration cooperatives, through which financing of power facilities is done, are strictly nonprofit organizations and therefore the War Department is assured of service from these cooperatives at actual cost. The following general policy as to amortization of the cost of construction of power facilities for War Department use illustrates the extremely liberal arrangements that can be entered int in this respect by Rural Electrification Administration, by virtue of the fact that after the War Department is through with the use of these power facilities they may be put to work elsewhere on our extensive rural systems, which are in the process of continuous growth and development.

In general, one-half of the cost of construction of facilities is amortized over a period of five years, and the balance over a period of 20 years. This amortization may be effected by an increment to the wholesale rates at which the cooperative receives the power, or by means of a flat monthly charge.

III. Mobile Diesel generating units have been developed by Rural Electrification Administration to a high state of perfection. These units, of 100kilowatt capacity, are mounted on trailers and can be readily moved over the highways or on flatcars to any point where embergency power is required. It is planned to establish these mobile Diesels in groups at strategic Rural Electrification Administration load centers all over the country, primarily for the purpose of having an emergency source of power available for our cooperatives. These units are available also to the War Department for use in case of need for power for emergency construction work, or because of break-down for any reason in electric power facilities serving essential defense projects.

IV. Other services have been rendered by the Rural Electrification Administration engineering staff to the War Department in numerous instances involving surveying, designing, and planning transmission and distribution systems, although we were not participating in the actual financing or construction work involved. We have, for example, just been ordered to proceed with the financing and construction of a large substation and 25 miles of transmission line to serve the camp now building in Pulaski County, Mo. The essential materials for this project were immediately placed on order,

and our best available construction engineers are ready on their way to expedite the work.

Speedy consummation of the defense program challenges the maximum effort of every branch of Government that can offer relevant facilities. Rural Electrification Administration has something substantial to offer in making low-cost power available; and accordingly we stand ready to cooperate with the War Department in a coordinated and effective manner along lines the value of which has been demonstrated during recent months.

Sincerely yours,

HARRY SLATTERY, Administrator.

SERVICE TO MILITARY BRANCHES

Mr. SLATTERY. This statement showed where we could through the co-ops serve military stations and camps that would be built throughout the country. We quoted prices on power for many projects to the Quartermasters General, and we have a pretty good record of service to the War Department. In one particular and notable instance we served the Navy Department in an installation for the large camp of the Navy near Cape Hatteras; we built the original generating station there, and we are building additional stations, and the Navy Department has complimented us on that work.

PRIORITIES FOR COPPER

This small R. E. A. unit concerned with defense problem's naturally began to follow up the problem of priorities. The first knowledge we had that there was a question of priorities was, I think, in May of last year, when we saw there was going to be application of the priority principle and I went to see the Reconstruction Finance Corporation. I saw the Chairman of the Corporation, and I was sent to Mr. Clayton and Mr. Henderson; and also I saw Mr. Hood. This was all prior to establishment of the priority system.

Later on when it became evident there was going to be a question of granting priorities for production of items for civilian use in connection with the national defense program we, of course, began to file requests for certificates of priority for these particular naval and military projects that we had under way. Then came the problem of securing priorities for materials to construct lines for normal civilian uses; it was evident that they were going to set up such priorities; in fact, in the room that I visited there were tables and charts showing plans that were being made for such priorities. Later I went with Assistant Secretary Hill and Dr. Craig to see some of the officials in the Office of Price Administration. We saw Mr. Leon Henderson and his aides, and he later gave us an O. P. A. C. S. priority for civilian copper which I should like to put in the record; it is found in the Federal Register. This allocated to R. E. A. 4,500 tons of copper per month during each of the 6 months beginning with August 1941 and directed O. P. M. to execute the order.

Mr. TARVER. That was of what date?

Mr. SLATTERY. That order of O. P. A. C. S. is dated July 29, 1941; it appeared in the Federal Register of July 31, 1941, volume 6, No. 148, chapter XI, part 1332. In it the Office of Price Administration and Civilian Supply allotted R. E. A. 4,500 short tons of copper, 3,100 tons of steel, 140 short tons of zinc, and 32 short tons of aluminum.

Mr.TARVER. Let that order appear in the record at this point. (The order referred to follows:)

TITLE 32, NATIONAL DEFENSE

CHAPTER XI. OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY

Part 1332. Materials to be Used in the Program of the Rural Electrification Administration

CIVILIAN ALLOCATION PROGRAM FOR MATERIALS TO BE USED IN THE PROGRAM OF THE RURAL ELECTRIFICATION ADMINISTRATION

1

Increasing demand from all sources and the priorities granted to defense requirements have made it difficult for the Rural Electrification Administration to obtain materials necessary to the continuance of its construction program. As a consequence the program of the Rural Electrification Administration is currently behind schedule and initiation of a further planned program has been delayed.

Accordingly, pursuant to and under the authority vested in me by Executive Order No. 8734, particularly Section 2 (a) thereof the following program is announced.

1332.1. Allocation of materials.”—During each of the 6 months beginning with the month of August 1941 the following materials shall be allocated to the Rural Electrification Administration:

Copper

Steel.

Zinc

Aluminum___

Short tons

4,500 3, 100 140

32

1332.2. Reduction of allocation."-The allocations specified above shall be reduced in any month by

(1) The quantities of any materials allocated to the Rural Electrification Administration for the construction of defense projects.

(2) The quantities of aluminum which the Rural Electrification Administration is able to save by using flat rates and thereby eliminating meters. The Rural Electrification Administration has undertaken to attempt this saving wherever possible.

1332.3. Conditions of allocation. The allocations authorized by this program are conditioned upon the understanding that the Rural Electrification Administration will use the material allocated to complete all work now in progress. It is further understood that the Rural Electrification Administration will not undertake any new projects unless the materials hereby allocated are sufficient to assure the completion of such projects.

1332.4. Effective date and expiration. This program shall take effect on the 1st day of August and shall, unless sooner terminated by the Administrator, expire the 31st day of January 1942.

1332.5. Enforcement."-The foregoing program is to be administered and enforced by the Office of Production Management. Issued this 29th day of July, 1941.

Certified to be a true copy of the original.

LEON HENDERSON, Administrator.

JOHN E. HAMM, Deputy Administrator.

Mr. SLATTERY. Shortly after we were given the allocation on July 29 of 4,500 tons of copper by O. P. A. C. S. an entirely new priorities plan was put into effect; there appeared to be a switch in regard to responsibility for priorities. I should like some of the gentlemen of my staff who are with me-we have had many conferences back and forth-tell you something of it. The whole plan was changed, more or less, and even with respect to the military priorities where we

1 Appears in Federal Register, vol. 6, No. 148, Thursday, July 31, 1941. 21332.1 to 1332.5, inclusive, issued pursuant to the authority contained in Executive Order No. 8734.

were to construct connecting lines, when we started on the work we found a growing difficulty in securing these priorities.

CONSTRUCTION PROGRESS UNDER 1942 FUNDS

Mr. TARVER. We will be glad to hear from the gentlemen on your staff later on, but at the present we would like to know from you just what you know about the situation; just what you have been able to accomplish this year and what you have done with the funds that were provided.

Mr. SLATTERY. I am able to say, Mr. Chairman, that we have been steadily carrying on a building program; in October there was built over 5,000 miles of line largely on previous years' allotments.

With respect to the new loan money that became available the 1st of July I can submit for the record a statement showing the amount we have used of that. Not much of it as yet, I should say, has gone into the construction program of the R. E. A. There is several months' lag between the beginning of a fiscal year and the time when the funds available for that year get into construction. The construction during the first months of a new fiscal year is paid for generally out of funds of the preceding year. Because of this carry-over there has as yet not been much effect.

Mr. TARVER. What has had no effect? You mean lack of copper has had no effect?

Mr. SLATTERY. Not until recently. It has become evident that it will.

Mr. TARVER. What have you done this year with the funds made available, Mr. Slattery? That is what we want to know. What you have done since July 1941 in your program; what money have you used?

Mr. SLATTERY. I do not have that broken down as between the funds of the current and of the preceding fiscal year, but I can get if for you. As I said a moment ago, we have carried the construction program on, but most of it with fiscal 1941 funds and many miles of it represented only by poles without conductor.

Mr. TARVER. Could you approximate how much money you have used from the 1st of July of this year?

Mr. SLATTERY. We have allotted $49,000,000.

Mr. TARVER. How much of that has been expended?

Mr. SLATTERY. I have not the figures with me but I could supply them.

Mr. TARVER. Can you approximate it, because frankly that is one of the principal things the committee wants to know, what you have spent and why you have been unable to spend the amount of money that was made available. Those are the things that the committee ought to find out about.

Mr. SLATTERY. The total allotments from 1942 funds is $56,904,200, but I do not have the date in advance in this basis.

Mr. TARVER. Of course, the matter of allotment is materially no different from the action which we have taken in making the money available; that does not mean the money available was spent, or that lines have been constructed. It is really no more of an allotment than the Congress made through providing funds for this fiscal year.

How much have you spent this year; how many miles of lines have actually been built, not merely approved for construction?

Mr. SLATTERY. Out of 1942 funds?

Mr. TARVER. This fiscal year; yes.

Mr. SLATTERY. I will have to submit that. I do not have those data with me.

Mr. TARVER. It seems you have not brought up here the things that we want to know. That is one of the most important things that we want to know. Can you give us an approximation? Mr. SLATTERY. I do not have a break-down. I am sorry; we received short notice of these hearings and did not know their scope. Mr. TARVER. We want to know, not how many allotments have been made, but what is being done and has been done in the way of building lines from the funds that are made available. Mr. SLATTERY. Over 5,000 miles were built in October.

Mr. TARVER. You mean allotting money for that?

Mr. SLATTERY. Actual construction.

Mr. TARVER. Did you build 5,000 miles in the month of October of this year?

Mr. SLATTERY. About that, Mr. Chairman.

Mr. TARVER. How much did you build?

Mr. SLATTERY. I have found the figure; we built 5,608 miles in the month of October.

The situation in Rural Electrification Administration as to construction on the incompleted part of its program on November 21, 1941, except as noted was as follows:

Even under normal conditions there is a time lag of several months between the date of allotment and the beginning of construction of any project. During the first few months of any fiscal year actual construction is based on funds allotted in prior periods.

Progress on the fiscal 1942 program has been materially delayed by the lack of materials. On all phases of the documentary work the program is behind schedule, because Rural Electrification Administration has attempted to hold the awarding of construction contracts down to the supplies of material available. The present program was based on the priorities granted in Office of Price Administration and Civilian Supply Order No. 1332, previously inserted in the record, adjusted as current developments have made further restrictions necessary.

It is, of course, impossible to state just what the effect of the priority system has been on the actual construction program to date. Even without priorities the tendency in industry to accumu