it, but under this plan it does not necessitate raising the rate during this period.

Mr. HAYDEN. If you had such a guaranty for eight years and if, at the end of that time, there was no market for all your power if your expectations were not fulfilled, would you not be perfectly free to go to the Arizona Corporation Commission or the California Railroad Commission, and say "We have so much money invested here, and, in order to get a return on it, we must have a higher rate "? What guaranty is there you would not do that very thing?

Mr. CLARK. The generating equipment was to be installed as the demand for power justified as determined by the power commission. The proposal we put before the power commission was that the rate should be established by the Federal Power Commission and that this power generated should not be distributed to the consumers, but turned over to the existing power companies, municipalities, and railroads, so that it did not come under the jurisdiction of the State corporation commissioners until it was delivered to the State corporations.

Mr. HAYDEN. You will find two things to be true: First, the Federal water power act does not confer any jurisdiction on the Federal Power Commission to regulate rates where there is an existing State regulatory body; in the second place, you will find that in the States of Arizona, California, and Nevada the State commissions will not surrender that right, and they will insist upon regu lating the rates for power as they clearly have authority to do.

Mr. CLARK. That is, if the power plant were located in Arizona, it would have to secure the consent of Arizona.

Mr. HAYDEN. But the dam has to be half in Nevada and half in Arizona, according to your plan?

Mr. CLARK. The plan we proposed was to go before the Federal commission and confess jurisdiction and ask Congress to permit us to put it entirely in the hands of the Federal Power Commission.

Mr. HAYDEN. You will have great difficulty to induce Congress to invade the jurisdiction of the States concerned in regulating water power rates.

Mr. CLARK. That would be for Congress to determine.

Mr. SWING. Do you now propose to limit the period of Federal aid to eight years, or to such time as the plant is in operation?

Mr. CLARK. Under the application before the board. we stated until the demand for power was such as to justify the installation of certain horsepower of equipment.

Mr. SWING. Now you are using the expression "eight years: 1 I was wondering if you had modified your plan in that respectyour proposition?

Mr. CLARK. You will find on the proposal it is figured at eight

years.

Mr. HAYDEN. You stated there was some modification in your plan. Just what is the difference between what you are now asking and what you proposed before?

Mr. SWING. Let me follow this up first. That would be the guaranteeing of interest upon the amount of money which went into the project, which would include not only the dam but the power

92265-24--PT 4· -16

plant and the main transmission line to some central point, would it not?

Mr. CLARK. No; only the money that went into the dam.
Mr. SWING. Only the money that went into the dam?

Mr. CLARK. Only the money that would actually go into the construction of the dam.

Mr. SWING. What would that be at the end of the eighth year: have you estimated it?

Mr. CLARK. It is right there.

Mr. SWING. This is something else.

Mr. CLARK. I thought that was my testimony before. It was the interest and sinking fund on $50,000,000. That is $20,000,000 if it went to the full eight years. The Government would be called upon to bear $20,000,000 if it went for the full eight years, assuming a 5 per cent bond.

Mr. SWING. And estimating the cost of your works and how much? Mr. CLARK, $50,000,000.

Mr. SWING. I thought you said it would cost $64,000,000?

Mr. CLARK. We are taking the Reclamation Service estimate of

cost.

Mr. SWING. I am talking about your dam; not their dam.

Mr. CLARK. We calculated it at $500,000,000, that is the Government to guarantee $500,000,000 to go into the dam, which I said was less than we calculated we would provide the balance.

Mr. SWING. You said it would take eight years to fill the reservoir, eight average years. If it was eight dry years, it would take more than that.

Mr. CLARK. I did not say that; I said eight average years was the maximum time required.

Mr. SWING. You mean eight years minimum flow, or average? Mr. CLARK. Including the minimum flow. The minimum flow would come within those eight years. Mr. SWING. You still make it the average.

on?

What do you figure

Mr. CLARK. The average includes the years of minimum flow; but it does not include the years of maximum flow.

Mr. SWING. What do you figure on as the average flow in eight years?

Mr. CLARK. 15,000,000 acre-feet per year.

Mr. SWING. Is not that the average How now?

Mr. CLARK. No.

Mr. SWING. Is not that the average flow now below that point for the utilization of the water in the upper basin?

Mr. CLARK. No; that runs 16,200,000 feet at that point if you take the high flows into consideration, as well as the low flows.

Mr. HAYDEN. Please tell me what the changes are in your plan. as mentioned by Mr. Stetson?

Mr. CLARK. I have prepared a plan and communicated with New York to know whether or not the financial side of the proposition was satisfactory to the underwriters there. They replied that in principle, yes; but they did not know that it was entirely satisfactory as to detail; I think I have not gone far enough to put it before the committee as a definite plan. However, if you want me to, I will read it.

Mr. HAYDEN. Is it very long?

Mr. CLARK. No. Four pages. The plan is as follows:

779

Ask Congress to authorize the creation of corporation for $100,000,000 under Federal control; $50,000,000 to be cumulative preferred stock with a 1 per cent amortization or retirement fund; and $50,000,000 common stock to pay if or when earned. 5 per cent until one-seventh of the preferred stock is retired; then to pay 6 per cent until two-sevenths of the preferred stock is required, thereafter to pay 8 per cent; all excess earnings to go to the Federal Government; all dividends on the common to be if when or as earned, after the payment of all interest and amortization on bonds and dividends and amortization on preferred stock.

The corporation to be allowed to issue (if the Swing bill does not pass) $100,000,000 in bonds carrying a 2 per cent sinking fund; or (if the Swing bill passes and the $50,000,000 is appropriated for dam construction) then $50,000.000 in bonds carrying a sinking fund of 2 per cent.

The bonds to be offered to the States of Arizona, California, and Nevada, to purchase or to guarantee; and the water conserved by the dam (not including that now utilized) to be allocated to the States in proportion to the bonds purchased or guaranteed. Bonds not purchased or guaranteed by the States to be taken by the underwriting syndicate at a price to be agreed upon.

That is the underwriting syndicate to guarantee to carry the whole thing through.

Bonds guaranteed by the States to be sold by the States making the guaranty, or if not sold, to be taken by the underwriters at a price to be agreed upon.

The water allocated to the States under this plan to be paid for by the users in the several States at $2 per acre-foot per year for 25 years. $1 per acre-foot per year for 25 years, and to be free to water users thereafter.

If the Swing bill passes, water to be paid for at the above stated rates per year, but one-half of the receipts from water to go to the Federal Government to meet the interest charge and amortization on the $50,000,000 expended by the Government. The preferred stock to be offered to the counties, cities, towns, existing transmission companies, and railways at par. therefor to be used for the installation of electric generating plants and The funds received transmission lines as per the plans and specifications submitted; the power generated to be allocated to the various political divisions, transmission companies, and railways in proportion to their acquisition of preferred stock.

The underwriters to take any stock not taken up as above provided for, and the corporation to receive an allocation of power in proportion to the stock acquired, which power the corporation shall be at liberty to sell to individuals or corporations as it may elect.

The underwriters to acquire from Stetson and his associates all of the property water rights, engineering data, etc., held by him and required in connection with the developments as planned. And, in consideration of the said properties, and the contract to underwrite the bonds and stocks as above outlined and to supervise and guarantee that the properties will be developed and the generating plants constructed as outlined, the syndicate shall receive all of the common stock herein provided for.

The work performed and the structures erected by the corporation to be under the supervision of and constructed to the satisfaction of properly appointed Government engineers.

The impounded waters at all times to be released under the control of the
Department of the Interior.

The rates at which the power is sold to be determined by the Federal Power
Commission.

The contract with the Federal Government to continue for a period of 50 years. At the expiration of this time, the Federal Government to have the right to take over all of the properties of the corporation at the par value of the unamortized portion of the preferred stock plus the par value of the outstanding common stock. In the event that the Government does not elect to take over the properties at the expiration of 50 years, then the contract shall be extended for another period of 50 years, with the provision that the rates for power shall be reduced in proportion to the amortization of the preferred stock of that date.

Under the foregoing plan the interest on $100,000,000 of bonds would be:

Per year. at 6 per cent
Amortization at 2 per cent..

Total

7 per cent on $50,000,000 preferred stock would be.. Amortization fund, at 1 per cent.

Total

5 per cent on common stock would be_____'

A grand total of

$2,000, 000 2,000,000

8, 000, 000

3,500,000 500,000

4, 000, 000 2, 500, 000

14, 000, 000

Assuming a sale of an average of 4,000,000 acre-feet of water per year in addition to that now utilized, the income from this at $2 per acre-foot per year would be $8,000,000, leaving for the first period of 25 years $6,500,000 of interest and sinking-fund charges per year to be provided out of the sales of electric power.

During the second period of 25 years the income from the water on the same basis would be $4,000,000 per year, the charges $10,625,000, leaving $6.625.000 per year to be provided out of the sale of electric power, the above covering only the interest and sinking-fund charges. The taxes, maintenance. and operating expenses would be paid entirely from the returns from the sale of electric power.

After allowing for a diversion of water from the surface of the reservoir to supply Los Angeles, it is probable that 800,000 firm horsepower could be generated. This, at a 65 per cent load and efficiency factor, would give 520,000 horsepower. At $35 per horsepower, the gross income would be $18.200,000 per year after a market had been found for this quantity of firm power, which would be at the expiration of 12 or 15 years. In addition to this, it is probable that these $4,000.000 per year could be secured from the sale of occasional power generated during the irrigation season and used for irrigation by pumping.

Mr. HAYDEN. The difference between your plan and that of the Swing bill is that the lands to be irrigated below the dam are to be required to pay $2 per acre-foot for water; whereas, under the Swing bill the entire cost of the dam is to be charged to power. The second difference is that under the Swing bill the allocation of power is to be in the hands of the Secretary of the Interior; and under your bill it is to be allocated according to who has money enough to buy the stock of the company.

Mr. CLARK. Or it can be otherwise apportioned to the purchasers. Mr. HAYDEN. Whoever has the cash gets the power. Your proposal is for 50 years, with the right of renewal at the end of the 50 years. if the Government does not exercise its option to take over the dam. You are a little more modest than Henry Ford; you propose to take the 100 years in two bites, rather than one. [Laughter.] Mr. CLARK. I am glad I am more modest than he.

Mr. HAYDEN. You spoke of the diversion of the water from the reservoir for use by the city of Los Angeles. I should like to know a little about that.

Mr. CLARK. The surface of the reservoir, under our plan, would be 1.560 feet above sea level. The major part of the city of Los Angeles is below the 550 foot contour. By taking the water 250 foot below the top, or at the 1,360 foot contour, it would be possible to deliver water in Los Angeles by gravity-true at great cost. but it would be possible to deliver water at the 500-foot contour by gravity.

Mr. SWING. Your overflow is at what elevation for the power plant?

Mr. CLARK. You mean the spillway?

Mr. SWING. Yes; at one time you planned to take it out over what is called a hog-back.

Mr. CLARK. That is under the 1.200 foot dam.

Mr. SWING. Now, you have lowered it, and at what point do you propose to take it out now-at the bottom?

Mr. CLARK. Oh, no.

Mr. RAKER. Still at the top?

Mr. CLARK. Still near the top. That is with the reserve that it would be about the 1.300-foot contour.

Mr. RAKER. What would that be from the present water surface? Mr. CLARK. That would be approximately 600 feet from the present water surface.

Mr. HAYDEN. I am very much interested in your proposal to take water out from Los Angeles by gravity. It has been suggested once before that that be done.

Mr. CLARK. It would require a tunnel for 2,000 second feet. I put the figure at 2,000 second feet because as I told the committee in Los Angeles I am of the opinion that the entire area from Tapango Canyon south to the Santa Anna River will have to be regarded as the water district, and water from the outside delivered by gravity will have to be provided for that district, so it will eventually require approximately 2.000 second-feet. When all of the cities within that area are provided with water then it will be possible to pump the subsurface water back for the irrigation of the land. Now, part of that water supply is pumped from below the surface and sewage can not safely be used for irrigation while that is being done, but eventually the cities will have to be provided with water from an outside source and the sewage turned back to irrigate the land.

Mr. HAYDEN. Have you submitted your proposal to the committee on city planning and water supply committee of the chamber of commerce of Los Angeles?

Mr. CLARK. Yes; I am a member of the committee on city planning and water supply of the Los Angeles Chamber of Commerce. Mr. HAYDEN. Are you aware of a report, made by three Los Angeles engineers, Murphy, Lippincott & Bernard, on a similar plan? Mr. CLARK. I know it has been prepared, but I have not read it. Mr. HAYDEN. Mr. George H. Maxwell proposed to carry water by gravity from the Colorado River to Los Angeles-I imagine a larger quantity of water than you have spoken of-but your 2,000 secondfeet is a considerable quantity of water. As to the Maxwell plan this was their conclusion:

There is nothing in the entire so-called plan of Mr. Maxwell to recommend it to serious consideration. It is impossible to make any showing which would justify the expenditure of funds, either public or private, for investigation er for the planning or construction of works along the lines outlined.

We are unable to determine whether the so-called plan is a dream of such baseless fabric that mountains, rivers, and other physical obstructions fade away before the eyes of the dreamer or whether it is a deliberate attempt to divert the public mind from practical and legitimate development of irrigation and power possibilities of the Colorado.