AVERAGE MONTHLY CONSUMPTION OF COPPER Mr. DIRKSEN. Roughly, that would take how much copper? Mr. HAGEN. Yes, sir. Mr. DIRKSEN. Now, you received none in August, September, or October? Mr. SLATTERY. Not in September and October. Mr. DIRKSEN. Did you received any in September and October? Mr. SLATTERY. We received O. P. A. C.'s allotment for August, 4,500 tons but none for September and October. Mr. DIRKSEN. Now in November you expect what, 1,973,000 pounds? Mr. SLATTERY. That is right, 1,973,000 pounds. Mr. DIRKSEN. In December we expect none. SERIOUSNESS OF COPPER SHORTAGE Mr. DIRKSEN. You have a very serious copper shortage in the country when you speak of October, and it is becoming much more so at the present time? Mr. SLATTERY. Yes, it is. Mr. DIRKSEN. There is a present shortage, and with the defense production coming on, with the enormous increase in demand for defense production, the reason for the shortage is accentuated by the defense need and demand for copper? Mr. SLATTERY. Yes. Mr. DIRKSEN. Do you agree with the statement, Mr. Slattery, made by Mr. Hill of Baltimore at a recent meeting of the Rivers and Harbors Congress, that for every ton of available copper there were orders for 4 tons of copper? Would you say that was approximately correct? Mr. SLATTERY. I could not answer that, Congressman. We have known for sometime that the whole defense effort was taking copper in the making of shells, battleships, and so forth. Mr. DIRKSEN. Assuming that statement is correct, it means that there is only 25 percent of the copper available to cover the needs of the country, and the ratio of the supply compared to the needs is as 1 to 4. That means that everyone, of course, all along the line, is going to make a sacrifice, and that the R. E. A. will have to sacrifice along with everybody else. Do you agree, Mr. Slattery, unless you can justify your building of a transmission line, or the extension of an existing project, or the construction of a line, on the grounds of its relation to the defense project, that it should not be built? Mr. SLATTERY. I said as far as R. E. A. is concerned, some time ago in our little Rural Electrification News that naturally the co-ops would not want 1 pound that should go for shells or for the purposes of national defense, but I do not think that is all of the picture. I think the many various other uses of copper and the possibility of substitutes for copper of different kinds certainly could come into this picture. Mr. DIRKSEN. Do you believe that a co-op is in any different position from a municipal project for a sewage disposal plant or a water plant, where the assessment has been made, and the district has been organized, and bonds have been issued, and O. P. M. or Civilian Priorities comes along and says, "Sir, you cannot build it, because there is a priority on for steel. You got along without it before, and you can get along without it for a little while longer during the emergency." Do you agree that is pretty sound philosophy to follow? Mr. SLATTERY. I do; but I do think this, too: I think the cooperatives and the whole agricultural field is clearly contributing to national defense, too, Congressman. They are taking men off the farms and putting them in the Army, which creates a rural labor shortage at a time when as part of the defense effort we are trying to increase the production of critical foods; that is a great factor in national defense and in national strength. Mr. DIRKSEN. Do you agree that is only an indirect, rather than a direct factor? Mr. SLATTERY. Yes; but nevertheless it is a defense factor. Mr. DIRKSEN. It is an indirect factor? Mr. SLATTERY. Yes. Mr. DIRKSEN. And unless it can be justified by reason of its direct relationship to defense needs today, it should not be projected, it should not be installed, and it should not be extended. I think that is pretty clear. Mr. SLATTERY. Of course, food is a great national-defense item. Mr. DIRKSEN. You and I have fought across the committee table lots of times, Mr. Slattery, but I do want to say this, that it looks to me like the fuss at the present time, and the controversy we have here, if I may term it that, is over who is going to get some available copper, and if the utilities are going to get some, then you should get some also, but is it not a better philosophy that in emergency times neither a private utility nor R. E. A. should be allocated any copper for the building or extension of transmission lines, unless it can be definitely shown that that has some relationship to national defense? In other words, put them both in the same boat. LIMITATIONS ON SMALL INDUSTRIES Mr. SLATTERY. We must consider as a whole the picture of national defense. We are talking about putting small industries out in the field, and rural electrification is the key to the whole problem of decentralized small industries. I had a survey made, which I should be pleased to submit to the chairman and the members of the committee, showing the enormous number of small contracts, many of them defense projects, that are located on R. E. A. lines. I think it would be unfortunate if those cooperatives were strangled; and, incidentally, if you are going to put a lot of defense manufacturing in the Middle West, away from the eastern seaboard, R. E. A. fits very much into the picture. Mr. DIRKSEN. The power transmitted through your lines is not threephase industrial power, is it? It is domestic and lighting power, is it not? Mr. SLATTERY. No. The reports will show that R. E. A. co-ops serve many small industries that make all kinds of things, some of them things that are used in the Army. It is quite an impressive list. Mr. DIRKSEN. What percent would you say this constitutes of the whole list of projects? Mr. SLATTERY. I could not answer that off-hand, but I will send you the report, and you will be surprised at the number of them. Mr. DIRKSEN. There is much conjecture about whether or not the private utilities bought copper stocks and had them on hand, or whether they have gotten copper from O. P. M. Is it not essential, before anyone attaches himself to that kind of a figure, you have got to distinguish between any copper that they may have or may have gotten, which is for the purpose of building lines to transmit industrial current to a defense plant and copper that might be used for the building of transmission lines out in rural areas? It is very essential, in my judgment; do you not think that is correct, Mr. Slattery? Mr. SLATTERY. When we were before the Agriculture Committee some time ago, a question arose involving a plant in my own State. The question came up of the possibility of an enormous supply of copper going to what was known as the Baden plant in North Carolina. That clearly would have been a duplication of power for we could have handled it over our lines. Of course, that item probably will not go through, but it is illustrative of some that take an enormous quantity of copper. Mr. DIRKSEN. But, considering for a moment, the basic premise, you have got to make that distinction that if copper is needed for the purpose of getting some three-phase lines to a defense plant, nobody can kick about that. Mr. SLATTERY. That is right. USE OF AVAILABLE COPPER FOR DEFENSE NEEDS Mr. DIRKSEN. I think our whole problem now is to determine the availability of copper and the use of whatever is available for this purpose; that is, to meet defense needs, and, if somebody else is going to get hurt because of a lack of copper, you cannot help it; somebody is just going to get hurt. Mr. SLATTERY. In our little publication, R. E. News, I said 2 years. ago that I knew what was happening. We set up a national-defense organization and we urged then that everything be done to fit in with the national-defense plan. That is one of the reasons I came in on this survey of small industries. I say again, Mr. Dirksen, that R. E. A. does not want to stand in the way for 1 minute of the manufacture of shells and the similar things necessary in the defense picture, but I do not think that is all of the picture at all. QUESTION WHETHER MR. KRUG DISCRIMINATED AGAINST RURAL ELECTRIFICATION ADMINISTRATION Mr. DIRKSEN. How long have you known Mr. Krug? Mr. SLATTERY. I think I met Mr. Krug when he was out in Wisconsin. Mr. DIRKSEN. Mr. Krug is sitting here in this room, and I am going to say this, right in his presence: He and I have fought across the committee table for the last 5 years. However, I respect the gentleman as one of the ablest proponents of public power in the United States. He has also been with the T. V. A., and he knows what he is talking about when he appears before a committeee. Now, do you think that Mr. Krug, with that kind of a background, would for one moment discriminate against R. E. A. in favor of private utilities? Mr. SLATTERY. I was one of the originators of Muscle Shoals, and I went down there in 1929. I was a great friend of Senator Norris, and I think that when he wrote the story of his life he gave me credit for a share in the building of Muscle Shoals. That was before Mr. Krug and Mr. Lilienthal ever came on the scene. I knew T. V. A. has done a great job, and I know Mr. Krug is an excellent engineer, but that has nothing to do with the fact that in the last 2 months R. E. A. has not had 1 pound of copper, except for some direct defense projects, and I will say to Mr. Krug, very sincerely, that I do not think we have had a square break. DOLLAR-A-YEAR MEN IN THE OFFICE OF PRODUCTION MANAGEMENT Mr. DIRKSEN. I want to allude to the observation that you made this afternoon that it seemed some dollar-a-year men had been ensconced in the O. P. M. and that R. E. A. was discriminated against. I do not think anybody in the United States would say that about Mr. Krug. I will bet all the tea in China that he would never discriminate against R. E. A., if his public power record for years means anything at all. I have been familiar with it for the last 5 years, and probably a great deal longer. Mr. SLATTERY. I would say you were correct as to the record, but he is reputed to have a lot of dollar-a-year men over there who are aids of the public utility companies. Mr. DIRKSEN. If he has, I do not know who they are. For instance, Mr. Craig just mentioned a gentleman from the General Electric in St. Louis who had a very shady record. However, it would be possible to get an accountant down there who did not have anything to do with the determination of the policy of the company. You have to be careful about putting the tarred stick on them unless there is reason to do so. I would not want that naked record to stand as it is today without indicating that there may be circumstances which completely alter that situation. I just want to recapitulate and end my part of the discussion here. I think the fuss here is clearly as to whether there has been any discrimination with respect to the allocation of copper out of the available stocks of copper. Now, then, we might just as well make up our minds on the R. E. A. program that, if it cannot be justified by defense needs and considerations, it is going to have to do as little industry is doing, and what business all over the country is doing; it is going to have to take its share of the rap and of the sacrifices today. There will be no way of carrying on this defense program unless we make ourselves amenable to that philosophy. You may find, Mr. Slattery, that you cannot carry on in terms of the funds that this committee has made available to you, but, if so, that is unfortunate; defense is the first consideration today. Mr. SLATTERY. I agree with you, but I think there is also the vital question of the farmers Mr. DIRKSEN. Personally, I do not always agree with O. P. M., because they do not always give me the things I want out in my 66481-41---5 own district, but I think they are sincere in their efforts and that they are doing the best job they know how to do, and I do not think there is any discrimination here if Mr. Krug has anything to do with it. Mr. TARVER. Mr. Leavy. Mr. LEAVY. I just wanted to supplement what the chairman said in response to the question asked at the outset by Mr. Dirksen as to the objectives of this hearing. The facts developed here should prove of great use to this committee in consideration of the bill for the fiscal year that is just ahead of us. Mr. DIRKSEN. I think that is correct. COPPER STOCKS ACCUMULATED BY PRIVATE UTILITY COMPANIES Mr. LEAVY. Then, I want to ask this one question: If one of the issues here is not the fact that the private utilities companies accumulated, or it is at least supposed that they have accumulated, substantial stocks of copper before the emergency came on, and that these stocks have not in any way been commandeered, nor in any way are being controlled in the use of them, and they are being used in instances to the prejudice of the R. E. A. program? Mr. SLATTERY. I would cite the lines, the ones I cited earlier in my testimony. Mr. DIRKSEN. I hold no brief for either side. My contention is that item No. 1, is national defense, and if people on either side are going to get hurt, they will get hurt. Mr. LEAVY. But if there are large stocks of copper in the hands of the private utilities, they ought to be taken into consideration in the matter of line extensions. Mr. DIRKSEN. With that, I agree. Mr. TARVER. This is a fact-finding investigation. If there has been no discrimination in favor of the power companies, and if they are going to toe the line just like the R. E. A. cooperatives, I think it would relieve the minds of a good many people in the country who are interested in R. E. A. to know that. We are going to give the representatives of the O. P. M. ample opportunity to be heard, and I am sure no member of the committee has prejudged the question. We want to get the facts. Mr. COLLINS. I would like to know the actual existing power developments by R. E. A., by types of lines, with the mileage, and I would like to have the same information with respect to the power companies. Mr. SLATTERY. I will get that information for you as concerns R. E. A. and supply it for the record; we do not have the data for the private companies. Mr. COLLINS. I realize that. Mr. SLATTERY. Yes, sir. (The statement referred to is as follows:) Of the more than 325,000 miles of distribution line energized to date by Rural Electrification Administration-financed systems, approximately 90 percent is single-phase, 5 percent 2-phase, and 5 percent 3-phase. Data on types of line and mileage for private utilities in rural areas are not available, and in any event they would not be comparable. Until the Rural Electrification Administration demonstrated the practicability of low-cost lines |