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APPROPRIATION BILL FOR 1943

REA PROGRAM AS RELATED TO THE COPPER

SUPPLY

PRELIMINARY HEARINGS

.. BEFORE THE

SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
SEVENTY-SEVENTH CONGRESS

FIRST SESSION

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COMMITTEE ON APPROPRIATIONS

CLARENCE CANNON, Missouri, Chairman CLIFTON A. WOODRUM, Virginia JOHN TABER, New York LOUIS LUDLOW, Indiana

RICHARD B. WIGGLESWORTH, Massachusetts MALCOLM C. TARVER, Georgia

WILLIAM P. LAMBERTSON, Kansas
JED JOHNSON, Oklahoma

D. LANE POWERS, New Jersey
J. BUELL SNYDER, Pennsylvania J. WILLIAM DITTER, Pennsylvania
EMMET O'NEAL, Kentucky

ALBERT E. CARTER, California
GEORGE W. JOHNSON, West Virginia ROBERT F. RICH, Pennsylvania
JAMES G. SCRUGHAM, Nevada

CHARLES A. PLUMLEY, Vermont JAMES M. FITZPATRICK, New York EVERETT M. DIRKSEN, Illinois LOUIS C. RABAUT, Michigan

ALBERT J. ENGEL, Michigan DAVID D. TERRY, Arkansas

KARL STEFAN, Nebraska JOHN M. HOUSTON, Kansas

FRANCIS H. CASE, South Dakota JOE STARNES, Alabama

FRANK B. KEEFE, Wisconsin
ROSS A. COLLINS, Mississippi

NOBLE J. JOHNSON, Indiana
CHARLES H. LEAVY, Washington ROBERT F. JONES, Ohio
JOSEPH E. CASEY, Massachusetts
JOHN H. KERR, North Carolina
GEORGE H. MAHON, Texas
HARRY R. SHEPPARD, California
BUTLER B. HARE, South Carolina
HARRY P. BEAM, Illinois
ALBERT THOMAS, Texas
VINCENT F. HARRINGTON, Iowa
JOE HENDRICKS, Florida

MARCELLUS C. SHEILD, Clerk

SUBCOMMITTEE ON AGRICULTURAL DEPARTMENT

MALCOLM C. TARVER, Georgia, Chairman
CLARENCE CANNON, Missouri WILLIAM P. LAMBERTSON, Kansas
CHARLES H. LEAVY, Washington EVERETT M. DIRKSEN, Illinois
DAVID D. TERRY, Arkansas

CHARLES A. PLUMLEY, Vermont
ROSS A. COLLINS, Mississippi

DEPARTMENT OF AGRICULTURE APPROPRIATION BILL,

1943
RURAL ELECTRIFICATION ADMINISTRATION

HEARINGS CONDUCTED BY THE SUBCOMMITTEE, MESSRS. MALCOLM

C. TARVER (CHAIRMAN), CLARENCE CANNON, CHARLLS H. LEAVY, DAVID D. TERRY, ROSS A. COLLINS, WILLIAM P. LAMBERTSON, EVERETT M. DIRKSEN, AND CHARLES A. PLUMLEY, OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES. IN CHARGE OF THE AGRICULTURE DEPARTMENT APPROPRIATION BILL FOR THE FISCAL YEAR 1943, ON THE DAYS FOLLOWING, NAMELY:

WEDNESDAY, NOVEMBER 19, 1941.

RURAL ELECTRIFICATION ADMINISTRATION PROGRAM AS RELATED TO THE

COPPER SUPPLY

STATEMENTS OF HARRY SLATTERY, ADMINISTRATOR; ROBERT B.

CRAIG, DEPUTY ADMINISTRATOR; RICHARD J. BEAMISH, POWER CONSULTANT; ARTHUR C. HAGEN; THOMAS H. MILLER, UNITED STATES BUREAU OF MINES; J. A. KRUG, CHIEF OF POWER BRANCH, OFFICE OF PRODUCTION MANAGEMENT

PURPOSE OF THE HEARING

Mr. TARVER. Gentlemen of the committee, the purpose of this hearing is to develop facts with reference to impediments which seem to have arisen in the rural electrification program, occasioned by lack of copper on the part of rural electrification administration cooperatives, and of other materials necessary in the completion of projects which are now underway, and other projects which have been approved or are awaiting approval and are not underway.

This is a matter which would be certain to challenge the attention of the committee in connection with its consideration of the Budget estimates for the fiscal year 1943. However, in view of the immediate and widespread interest on the part of the membership of the House and of the Senate generally, it is deemed pertinent and expedient that this subcommittee should go into the matter now with a view of ascertaining for the Congress and the country the facts with regard to conditions which may have arisen in connection with the carrying out of the rural electrification program and suggest measures for their rectification, if the possibility of rectifying them through congressional action may appear.

Mr. Slattery, of the Rural Electrification Administration and representatives of the Office of Production Management have been requested to be present for the purpose of advising on this subject matter. I think unless there is objection we will hear Mr. Slattery at this time.

Mr. Slattery, we are interested in ascertaining such facts as may be available concerning the rural electrification program for the present fiscal year, the expenditures or nonexpenditure of funds which have been made available by Congress for your organization, the reasons which may have prevented the orderly expenditure of those funds as was anticipated by the Congress, and just what if any action may be suggested either by your organization, the Office of Production Management, or anybody else which would facilitate the carrying out of the purposes of the organization in an orderly way despite the emergency conditions which prevail. . . We will be glad to have you make a statement for the benefit of the committee as to the progress of the work of your organization, so far as any impediments thereto or anything else in the nature of the subject matter which I have indicated we desire to be advised about.

RELATION

PROJECTS TO DEFENSE

OF RURAL ELECTRIFICATION ADMINISTRATION

INDUSTRIES

Mr. SLATTERY. Mr. Chairman, I should like to say concerning the question of national defense and the priority of the Rural Electrification Administration for materials, which I assume fits very much into the picture, that the President appointed me as a member of the Power Committee of the original National Council of Defense, a committee of which Mr. Stettinius, Mr. Olds, Mr. Dunn, Mr. Kellogg, and others were members. I state this as a background because I participated in the preliminary hearings on the National Council of Defense. I appeared before the full committee on one occasion at the suggestion of Senator Norris and outlined how rural electrification is related to the question of small decentralized industries as part of the national defense picture, and how Rural Electrification Administration is a defense agency because of the possibility of aid to the Army and the Navy and other branches of the Government through R. E. A.-financed rural electric cooperatives, of which there are over 700 in operation in two-thirds of the counties of the United States.

Mr. Smith of the Bureau of Agricultural Economics presented at this meeting certain maps showing the distribution of raw materials and raw-material industries. R. E. A. presented maps showing R. E. A.-financed lines, and together they showed the relation of availability of electricity in rural areas to the development of these raw materials.

At that time I appointed in Rural Electrification Administration a small organization to follow up defense problems with Mr. Beamish, who is here today as the head of it, and we cooperated on many of the power-supply problems of the War Department. We were asked particularly on one occasion concerning the rural cooperatives, and we supplied data showing the aid we had already given to the War Department at Camp Shelby; and I issued a statement

which I should like to put in the record, which I think was sent by
the Quartermaster General to his officers throughout the country, to
show how rural electrification could aid in defense and aid the War
Department.
Mr. TARVER. Let the statement go in the record at this point.
(The statement referred to follows:)

WAR DEPARTMENT,
OFFICE OF THE ASSISTANT SECRETARY,

Washington, D. C., December 26, 1940.
Memorandum for the Chief of Engineers.
Subject: The Rural Electrification Administration.

1. The inclosed copy of a letter from Mr. Harry Slattery, Administrator for the Rural Electrification Administration, is forwarded for your information and retention. Mr. Slattery describes the services which the R. E. A. is prepared to render in the defense program. By direction of the Assistant Secretary of War:

H. K. RUTHERFORD,
Brigadier General, United States Army,

Director, Planning Branch.

UNITED STATES DEPARTMENT OF AGRICULTURE,
RURAL ELECTRIFICATION ADMINISTRATION,

Washington, December 17, 1940. Hon. HENRY STIMSON,

Secretary of War, Washington, D. C. MY DEAR MR. SECRETARY: Along the line of my statement to you on Rural Electrification Administration and your Department, I am pleased to give you more detailed information concerning the former's participation in activities relating to the supply of power to Army camps and cantonments.

I. It is possible for Rural Electrification Administration to cooperate with the War Department by placing its experienced and highly trained personnel at the service of the Department. Already there has been moderate cooperation in an informal manner wherein members of the Rural Electrification Administration staff have:

1. Made surveys of availability of electric power for camps and other defense projects;

2. Expedited negotiations for construction of power lines and other facilities to the end that work might be started promptly ;

3. Negotiated for the lowest possible rates for power and eliminated unwarranted charges by power companies for construction of facilities to serve the camps;

4. Applied mass production technique in the construction of transmission and distribution lines and other power facilities, with the result of unusual speed-up in the construction program;

5. Taken advantage of Rural Electrification Administration's ability to finance at low cost, through its cooperatives, the construction of such facilities, and through its policy of charging off the cost of such construction work over a much longer period than would be warranted from a purely business-risk standpoint.

II. Following are examples of the informal cooperation referred to above:

1. The Engineering Division of the Quartermaster Corps gave Rural Electrification Administration a list of 10 proposed National Guard camps and their sites, and requested information as to the best source of power for these camps, what construction work would have to be done to get the power to the camps, and approximately how much it would cost. Rural Electrification Administration supplied the information within 24 hours.

2. In the case of planning power facilities for one camp, it became apparent that start of construction would be delayed pending completion of negotiations between the War Department and the power company. Rural Electrification Administration accepted a verbal order from the War Department to proceed, and construction of the power facilities for this camp was started immediately although the proper final contractual arrangements were not drawn up until several weeks later. The assurance that Rural Electrification Administration would provide the facilities at actual cost, and the fact that one Government

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