deducted the Government's cost of interest on the total TVA appropriation investment, the 1956 operations would have left approximately $26 million, all of which belongs to the Federal Government. If TVA were a private corporation only about one-half this amount would be paid in Federal income taxes since taxes are paid only on 52 percent of earnings after interest.

Because of the rather considerable amount of money loaned by the Federal Treasury to the Tennessee Valley Authority, for the construction of power and other facilities, it would seem that the Tennessee Valley is a favored region from the standpoint of Federal employment. We find that this is not the case. According to reports of the Bureau of the Census on Federal and civil-service employment in the United States in October of 1956, we find that in the United States as a whole, there are 131.3 employees per 10,000 population.

In the 11 Southeastern States, there are 116.8 employees per 10,000 population. In the New England States, there are 109.4; in California, 173.7; in New York, 115.3; in Illinois, 107.3; and in the Missouri Valley States, 109.2.

In the 201 valley counties, including TVA employees, this figure is 111.7 persons per 10,000 population. We are, therefore, below the national average and approximately the same as the New England States, Illinois, and the Missouri Valley States. What we are seeking here would be to lower the number of employees paid from federally appropriated funds, even though we are now below the national average.

Because my life's work is primarily concerned with providing electricity to homes, farms, stores, and small industries in a predominantly rural area, I am vitally concerned with the power-supply problems of TVA. Í need not go into the great transformation which has already taken place in rural areas because of electric power. I have been profoundly impressed with the opportunities which electricity has opened to us in the past and promises for the future. One of the major tasks ahead of the people in my area is to bring job opportunities up to a level which will prevent the necessity for some of our sons and daughters migrating as they are now-to Detroit, Chicago, and other areas of the country in order to find livelihood. This is a task worthy of our best efforts. If we are again forced to be a liability, the entire Nation will be affected.

One of our most basic tools for economic progress is electric power. And it is the availability of power for growth that is so essential. While most industry considers the cost of power a minor item in its operating expenses and therefore, in any consideration of plant location, the availability of power for both present and future needs a determining factor. Nonavailability of power would be a disadvantage which no area of our country could survive.

Much has been said about "subsidy" in connection with electric service in the TVA area. We know from properly-and repeatedlydocumented facts that our electric bills are not federally subsidized. TVA power is self-liquidating and we seek to make this fact more obvious by imploring the Congress to make it self-financing. We do not desire Federal subsidy. We ask that you make us the people of the TVA area, the electric consumers-the basis of financing TVA power supply. Make our high use of electricty, our integrity as bill

payers, our operating efficiency the basis for financing and we will make these same factors the basis for serving the Federal Government and the area's other consumers at the lowest rates possible.

Appropriations would not be required. The Federal budget or Federal debt would not be increased. The electric consumers would stand back of the financing and pay off the bonds while the Congress and executive branch would control TVA and the people of the Nation would accrue ownership in its facilities.

We further request that you gentlemen carefully guard against any crippling or slow starvation amendments to this bill which could prevent this great agency from continuing so admirably the carrying out of the job assigned it by the United States Congress 24 years ago. I thank you.

(The chart referred to follows:)

Senator GORE. The committee will next hear Mr. Louis Wise, Mississippi Rural Electric Association.

STATEMENT OF LOUIS WISE, COCHAIRMAN, LEGISLATIVE COMMITTEE, MISSISSIPPI RURAL ELECTRIC ASSOCIATION

Mr. WISE. With your permission, I would like to read this statement and ask that the printed copy go in the record along with the comments.

Senator GORE. Without objection the permission is granted.

Mr. WISE. Mr. Chairman, my name is Louis Wise. I am general manager of 4-County Electric Power Association, with headquarters

INDEX (AVERAGE FOR 1937-1939 EQUALS 100)

in Columbus, Miss. 4-County Electric Power Association is a rural electric power association financed by REA, which obtains its power from the Tennessee Valley Authority. This association serves over 14,000 farm and small town families in northeast Mississippi.

I am also here as a representative of all of the farm families in Mississippi because I am representing here today the Mississippi Rural Electric Association which in turn represents over 100,000 farm families of Mississippi. I am also serving these people as Mississippi director on the Board of Directors of the National Rural Electric Cooperative Association. I want to mention also, in passing, that I am a professional registered engineer.

I want to thank you for this opportunity of appearing before you and to make a statement on behalf of Senate bill 1869, known as the Kerr bill, which is a bill to amend the Tennessee Valley Authority Act of 1933. I shall make a statement on behalf of this bill because we in the Tennessee Valley feel that the right kind of self-financing plan for TVA is essential and that the economic welfare of the entire Tennessee Valley depends upon the passage of satisfactory legislation.

I have been in power distribution work in Northeast Mississippi for the past 30 years. During the first 12 years of this 30-year period I held minor executive positions with a private utility company and during that period we had practically no rural lines to speak of. We did attempt to extend some lines into rural areas but were unsuccessful in securing the necessary approval for building these lines.

For the past 18 years I have been manager of 4-County Electric Power Association. During that period it has been my happy privilege to operate in the same territory as before and to observe the great strides made by our rural people through the advent of TVA power into their homes. I have seen a change in the attitude of the farm people and of their way of life, and have throughout the entire period observed a continuing increase in the usage of electricity for all purposes on our farms and in our farm homes. Now, with the decrease in available farm labor, and with greater mechanization of farming practices, it is my opinion that the increase in power demands in the rural areas will be greater than ever and we must look to TVA to furnish us with increasingly greater quantities of power for distribution to our rural people.

For the past 18 years I have also had the opportunity to observe firsthand a tremendous increase in the industrialization of our northeast Mississippi territory. During the past decade, there have been hundreds of small industrial plants developed within our territory utilizing the area's natural resources.

In the face of acreage allocations of all crops, the average farm family has come to need outside employment for some of its members and we must be in a position to continue our industrial expansion in order to provide jobs for them. Without sufficient power, continued expansion will not be possible.

At the beginning of the TVA program, rural electric power associations were formed through interest-bearing loans, first from TVA itsel-in the northern part of Mississippi--and later from the Rural Electrification Administration. Both TVA and our power associations were conceived in a great faith that they would be successful in providing power where it was so badly needed, in the rural areas.

Apparently it could not be supplied through private financing. We think that both TVA and the rural electric power associations have justified that faith and after a long period of uncertainty and growing pains have come of age and are now established industries in the utility field. In the case of the rural electric associations, we are paying off our loans with interest and are well ahead of scheduled payments. TVA, also, has paid back to the Federal Treasury many millions of dollars and has put many other millions into additional plant which is owned by the people of the entire United States. It is financially sound and well managed. All its needs is the right to go into the money markets of the country and secure financing in the same manner as is done by all utilities, without hampering restrictions.

This does not mean that we want to eliminate the control of Congress. TVA is a Federal corporation and we agree that Congress should outline the policies to be followed. Congress, in the TVA Act of 1933, has already expressed in considerable detail the job to be done. The Congress, of course, has the right to change its rules at any time and we would abide by those rules.

It does not seem practical to us, however, for the Congress to assume responsibility for the technical aspects of just how much capacity should be added, the location of the proposed capacity, or the timing. These are engineering and administrative decisions which can be determined best by people trained in the utility business and close to to the changing circumstances. Timing and local circumstances are very important in these matters.

TVA must be permitted flexibility to meet situations as they arise, just as a manager of a rural electric cooperative must have flexibility to meet constantly changing conditions. I could cite numerous cases within our own organization wherein it was necessary to make changes in our distribution system practically overnight to meet increased requirements of our consumers. To name all of these cases would be prohibitive but I would like to cite one or two such cases.

The first of such cases is the case of the Bryan Bros. Packing Co. of West Point, Miss. This company started operations approximately 15 years ago with a power demand of approximately 50 kilowatts. This load was served by our association through a 50 kilovolt-ampere bank of transformers. Since that time there have been successive changes. First, the change was to 150 kilovolt-amperes, then to 300 kilovolt-amperes, then to 1,000 kilovolt-amperes and finally to 1,500 kilovolt-amperes.

This company has already outgrown the 1,500 kilovolt-ampere transformer bank and we are at the present time in the process of replacing the 1,500 kilovolt-ampere bank with a bank of 2,500 kilovolt-amperes in order to meet the power demand anticipated at this plant.

In other words, this plant has grown in 15 years from a consumer using 50 kilovolt-amperes to a consumer with a foreseen power demand of 2,500 kilovolt-amperes. Each time this plant decided to increase its requirements, we had to adjust our plant equipment to meet that demand at the time they needed it, and it was pretty fast, too. We didn't have a great deal of time.

Another case is the case of the Babcock & Wilcox plant. That is a boiler plant in West Point. This plant started operations with a 1,500-kilovolt-amphere bank of transformers. Shortly thereafter they installed a 500-kilovolt-ampere welding transformer and in approxi

mately 3 years they have requested an additional 2,000 kilovoltamperes from us and expect to install another 4,000 kilovolt-amperes within the next year or year and a half. We generally do not get that much time a year and a half-to make our plans as the companies usually make their own plans and decide on their needed capacity and then notify us to have it available for them within 3 to 4 months at the latest. Without reasonable flexibility, such cannot be done.

I might add, gentlemen, that when that happens to us, as users of TVA power, it also happens to the TVA because they must supply that power to us to supply the demand to our consumers. And without flexibility to bring the power to our substations, TVA would have to have that flexibility in order for us to meet the demand. We are not the supplier, we are the distributor.

I brought that out because actually the point I want to make is that we must have flexibility in TVA to meet that kind of a demand. Not only on our system but on all systems they serve throughout the valley. Čases like these seem to us to make it clear than any self-financing bill, in which the people of the area are supplying the revenues to underwrite the bond issues, should assure the area that the additional capacity will be provided as needed. We feel strongly that the TVA Board of Directors is the instrument of the Federal Government in the best position to determine what these needs will be and that the limitations provided in the present TVA Act provide sufficient guidance to the Board and assurance to the Congress that their policies will be carried out.

Aside from the self-financing feature of Senate bill 1869, which I have discussed, there is another matter which causes great concern in the valley. This concern has been expressed over possibility of limitation of TVA's power service area. We realize that there are no limitations expressed in Senate bill 1869 but such limitation of its area has been discussed and recommended in several quarters and I want to urge that this committee accept a bill containing no such limitation on area, even though TVA in the past 10 years has made no territorial expansions whatsoever.

I say this not because I feel that TVA should expand but to limit by law the possibility of any expansion by TVA would be disastrous not only to the TVA itself but to the ratepayers of every utility in these United States.

It is a well-known fact, shown by authentic studies, that the further away from the boundaries of TVA you go the higher electric rates become and only in the Pacific Northwest are rates comparable with those in the TVA area. The reason for the low rates in areas adjacent to the Tennessee Valley area is perfectly obvious and any legal limitation on expansion of TVA power into other areas would certainly remove any incentive toward low rates in those areas.

Aside from the rate angle, however, there are other serious implications of such limitation within the TVA area itself. As you possibly know there are numerous agreements with various utilities on the perimeter of the TVA area wherein the power of TVA is transmitted over the lines of the private power companies to various distributors. These agreements, in most cases, were made because the private util

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