trol service and rates, and regulate issuance of securities. The administrative provisions of the section are required to be in accordance with the procedure and practices of the interstate commerce act.

Mr. BALLARD (continuing). If the Edison Co. becomes the distributor of electric power through California, Arizona, and Nevada, it will be subject to regulation by the regulatory commissions of each of the three States, provided they are able to agree in some way, and if not, then to the regulations of the Federal Power Commission. Now, in closing, if I may have just one more minute, I think I am through with that presentation.

Taking the bill as it stands, the particular things that I wish to refer to are section 2, the last sentence, which provides that the political subdivisions shall have preference in applications, with no restriction as to the terms of preference; in other words, it says that, subject to such allocation, the Secretary of the Interior "shall give preference to applications made by political subdivisions."

That is contrary to the provisions of the Federal water power law.

I refer also to section 4 of the bill, which provides that any political subdivision may, by the payment of a certain sum of money on account of the dam, then have the right of the use of the power in perpetuity; and it is not limited to 50 years.

I refer to the last sentence in section 3, providing that the United States is to be reimbursed for the entire cost of such dam and incidental work, within a period of not to exceed 50 years from the completion thereof; and I inquire, Who is to pay the interest?

I refer to section 3, and all of the language on page 4, which, to a very great extent, has been lifted from the provisions of the Federal water power act, but which language does not place the development of power under this bill under the jurisdiction of the Federal Water Power Commission, nor subject to its rules and regulations, or its accounting system, which is of great importance in these

matters.

That is all, Mr. Chairman. I thank you very much.

Mr. HAYDEN. Does that complete your general statement, Mr. Ballard?

Mr. BALLARD. Yes, sir.

Mr. HAYDEN. When the committee meets at 2 o'clock this afternoon. I would like to ask you some questions.

The CHAIRMAN. We will have to adjourn now; but we will convene this afternoon, when Mr. Ballard may finish his statement, if he has anything to add, and answer any questions.

Mr. RAKER. There are so many important questions that have come out, Mr. Chairman, that I would like to have a little time to read over these particular statements. I do not know when the reporter will have the record of this morning's hearings ready; but I hope it will be ready to-morrow morning.

The CHAIRMAN. We will resume at 2 o'clock.

(Thereupon, at 12 o'clock noon, a recess was taken until 2 o'clock p. m.)

AFTER RECESS

The committee reassembled, pursuant to recess, at 2 o'clock p. m.

STATEMENT OF MR. R. H. BALLARD—Continued

Mr. BALLARD. I have something additional that I would like to incorporate in the record. Our understanding of the interest of the Government primarily in this matter is to provide a means of flood control for the Imperial and other valleys down there, which we believe may be accomplished in two or three years, under some coordinated general plan and in making such a plan could provide that revenue from power development over a series of years would pay all costs, starting in the first year, after the completion of the flood-control dam, and the first electric power house.

One objection to the plan under the bill now under consideration appears to our engineers, is, from the standpoint of flood control, the dam is unnecessarily expensive for that purpose, and that the time of completion, 8 or 10 years, is unnecessarily long, and perhaps too long a period to leave these valleys in danger.

Investigation of water records on the Colorado River show that with a storage or a place for storage of four million to five million acre-feet of water, the flood control problem would be solved, that is, it would reduce the flow of the river at flood times is to about onequarter of the present condition which confronts them, and the small remainder could be taken care of by the flood-control works now existing in the Imperial Valley.

Mr. SWING. Will you repeat the capacity of the dam?

Mr. BALLARD., A storage capacity of from four million to five million acre-feet of water. I think you will find the flood control feature of the Davis Dam, the six hundred foot dam, contemplates only five million acre-feet of storage for that purpose. As to the water for irrigation, we feel the complete development will not be needed all at once; at least 15 years or longer must elapse before the development of all the lands requiring irrigation water in the lower basin could take place.

The total expenditure for providing the irrigation water should not be made so far in advance of the development of the lands, because this would entail a very considerable, or really a terrific waste of money, due to idle capital. On the other hand, electric power development may be augmented somewhat to meet the market conditions, and for the purpose of increasing the revenue; in other words, electric power development may be somewhat in excess of the necessities, under a strictly flood control proposition. Our engineer, Mr. Barre, believes that an initial development beyond 300,000 horsepower would be very inadvisable, and would beyond question result in annual deficits; in other words, his idea is that the initial development should be limited to not exceeding 300,000 horse power, if it is expected that the proposition will be self-sustaining. Now comparing that, take Senate Document 142, on page 30, the cost of the Boulder Dam project includes $55,000,000 for the dam, and $49,000.000 for electric power development and transmission of 600,000 horsepower of electric energy.

Mr. RAKER. What page is that?

Mr. BALLARD. That is on page 30, the Sixty-seventh Congress. Analyzing this it will be found that the cost of the dam for each horsepower is $91.70, but if the market will absorb only $300,000 horespower, then the cost of the dam for each horsepower would be twice that amount, or $173.40.

Mr. SINNOTT. Will you go into the economic cost?

Mr. BALLARD. I will come to that, I think, throughout the state

ment.

The proposed dam is merely 750 feet high from the bottom of the foundation. It is about one-third higher than the Washington Monument, I understand, providing an opportunity for the development of 600,000 horsepower. With 300,000 horsepower used, the dam cost then is $183.40, instead of the $91.70, upon which certain of the calculations have been based, and then the total cost per horsepower of the 300,000 horsepower, assuming the 300,000 horsepower must carry the full cost of the big dam, would become $273, instead of $173.40, as estimated.

Mr. RAKER. Repeat that, will you?

Mr. BALLARD. The cost per horsepower of 300,000 horsepower, taking into consideration the full cost of the 600 foot dam, would be $273 for each horsepower, instead of $173.40. We think these higher costs would be a heavy burden, compared, for example, with the latest installation of our own company, the Big Creek No. 3 plant, with 100,000 horsepower, which we constructed at $150 per horsepower, including the dam and transmission line.

It has been suggested that a dam, 310 feet high, somewhere in the vicinity of Black Canyon, in the general location of Boulder Canyon, as the Boulder Canyon term is used, would sufficiently control the floods, storing about 4,000,000 acre feet of water. At this site it has been reported that 300,000 horsepower of electric energy could be developed at a cost, for the dam and electrical machinery, without transmission, of $104.30 per horsepower. If we add the transmission, it would increase it $145 per horsepower, and that would compare favorably with late developments of our own company; in other words, it would be low or cheap power.

Mr. SINNOTT. What is your rule for calculating horsepower that may be developed at a given point?

Mr. BALLARD. I do not know of any particular rule. The developments are based largely upon the market conditions.

Mr. SINNOTT. Knowing the fall, given the height of the dam, and the amount of the water.

Mr. BALLARD. On this particular Colorado River stream I am told by the engineers that one foot of fall will produce 1,500 horsepower. Mr. SINNOTT. Some calculate, I understand, by multiplying the volume of water by the height, the volume in second feet by the height, and divide by ten, and it gives something like 80 or 85 per cent efficiency.

Mr. BALLARD. Eighty-five per cent efficiency? Well, that is getting into technical engineering, and Doctor Hoxie can discuss that with you. My matter is a general conclusion from an economic or business standpoint. My statements are based upon statements to me of our engineers.

As I said in the beginning, Doctor Hoxie is here, and can discuss these features with you, or I would like to make this further suggestion: much of this engineering data that I am giving has been handed to me by my executive engineer, Mr. Barre, and if the committee would like to see him, we will send him down to discuss these questions with you, but just for the purpose of these hearings and getting the matter into the record, I am giving you what generally is the thought of these engineers, and particularly Mr. Barre, and I want to say again that all of this matter I am giving to you is merely by way of suggestion, something that the committee might have investigated. It can discover for itself whether or not these matters are true, or rather this is to indicate the general trend of the investigation which will accomplish the result desired.

Over at Diamond Creek they tell me 268,000 horsepower can be developed at a cost of $112 per horsepower, without transmission. There is no storage at that point, no appreciable storage. There is. however, an opportunity for flood control at another site on the river, and there flood control could probably be accomplished. This is reported to me as one-tenth of the amount of money asked for in this bill. I am not urging any particular site. I am told if the Msite were provided for flood control purposes, that this reservoir would provide a certain amount of secondary power which would fit in with other power development now existent, or with power development when made a little higher up in the river, and later this Mdam could develop continuous power, while acting as a reregulating reservoir for larger reservoir and power development up above.

We believe the greatest benefit to the country will be attained by the development of the whole river under a single, comprehensive coordinative plan, by eliminating all waste and eliminating all conflict. We think that if the Government will move along the lines of the flood control question, that the people in our own territory and the investors throughout the country could be relied upon to finance the power development through the purchase of securities of our company and other power companies, which securities are taxable. The United States would supervise the whole operation. and State commissions would regulate all of our activities.

Over 3,000,000 horsepower could be developed on the Colorado from Lee's Ferry to the Gulf of California, without touching the Grand Canyon National Park. No development, as I understand. can be made within national parks without a special act of Congress.

Mr. RAKER. How many horsepower?

Mr. BALLARD. About 3,000,000. About $1,000,000 a year would be taxes, payable to the State and an equal amount to the United States, by power companies and their security holders, as a result of the first 300,000 horsepower development. The complete development of the 3,000,000 horsepower will increase the tax payment to about $18,000,000 annually.

Mr. HAYDEN. How many applications has your company pending before the Federal Power Commission for power sites on the Colorado River?

Mr. BALLARD. Our first application, filed with the Federal Power Commission, on December 4, 1920, having to do with Glen Canyon, and some of the upper developments.

Mr. SINNOTT. What is the status of that application?

Mr. BALLARD. That application is held up, as I understand all applications are held up, pending a decision with regard to the interstate pact. The information we have is that the Federal Power Commission is not willing to move in any application until the pact proposition is settled.

Mr. HAYDEN. You might answer Mr. Sinnott's question by stating whether a preliminary permit has been granted to your company. Mr. BALLARD. No, sir; no preliminary permit has been granted to us for development on the Colorado River.

Mr. HAYDEN. The Southern California Edison Co. filed its application with the commission, and there it rests?

Mr. BALLARD. Yes. There are other applications.

Mr. HAYDEN. Please name them all?

Mr. BALLARD. I want to complete that statement.

On June 4,

1921, an amended application was filed to include Glen Canyon, Marble Canyon, and Diamond Creek.

Mr. SINNOTT. What is the possible development at those three points?

Mr. BALLARD. They are about two and a half million horsepower. Mr. SWING. The last one you named was Diamond?

Mr. BALLARD. Diamond Creek; yes, sir.

Mr. SINNOTT. Those were filed in good faith, I assume?

Mr. BALLARD. Yes; all were filed in good faith.

October 11, 1921, our company filed for development in Boulder Canyon and the lower stages of the river; that completes our filing. Mr. SWING. Will you amplify the lower stages of the river? Mr. BALLARD. Down in the lower section.

Mr. SWING. What are the sites you have in mind?

Mr. BALLARD. We have already filed an application between two points in the lower part of the river.

Mr. SWING. How far down was the lowest point?

Mr. BALLARD. As far down as Pyramid Canyon.

Mr. HAYDEN. If these applications were granted by the Federal Power Commission, please tell the committee how your company would proceed with the development on the Colorado River. How many horsepower would you develop, and when and where, so that the committee may understand the general idea that you have as to how your company should be permitted to proceed if you had your way about it?

Mr. BALLARD. The first thing that would be granted to us would be preliminary permits, the object being to give the applicant time enough to work out detail plans, make surveys, spend quite a little money in that respect, in order to effect the complete plan, to answer the requirements of the Federal Power Commission for license. Generally speaking, if the whole thing were approved and we were permitted to go ahead, we would start in first with the development of the lower end of the river, about 300,000 horsepower. and that would provide the flood control, and provide a sufficient amount of power for the market. That would put the proposition