Mr. LILIENTHAL. $14,959,000.

Senator MCKELLAR. $14,959,000?

Mr. LILIENTHAL. Yes.

Senator BANKHEAD. What page is that on, Mr. Lilienthal?
Mr. LILIENTHAL. Let me restate-pardon me.

Senator BANKHEAD. What page is that on?

Mr. LILIENTHAL. It is table No. 1.

Mr. CLAPP. If we just take the summary, Senator BankheadSenator BANKHEAD (interposing). I do not want the summary. I simply want to find the page first.

Mr. CLAPP. Here is the page.

Mr. LILIENTHAL. Those expense items, now, are supplied by us and split up into whatever detail the various committees of Congress desire it, from time to time. Sometimes break-downs are asked for as to relatively minor items in size; sometimes that is not the case. However, the purpose of the budget and the purpose of the hearing is to afford that complete review.

Senator BANKHEAD. Where do you make your separation here, your statement of expense separated from capital investment? Mr. LILIENTHAL. Do you mean, in total, or as to detail? Senator BANKHEAD. Give some of the items if they are there. Mr. LILIENTHAL. Note the figures under "Navigation, flood control, and power."

Senator BANKHEAD. Is that for the estimated fiscal year 1943? Mr. LILIENTHAL. Yes, sir. The first figure is for asset accounts, capital. The second is for expense accounts.

Mr. CLAPP. That is net income from

Senator BANKHEAD (interposing). Do you mean that is from operating?

Mr. CLAPP. I would say this

Senator BANKHEAD (interposing). Wait a minute. Wait a minute. Let me now see if I understand that table. You have included on that table the item called Navigation, flood control, and power asset accounts. The figure being $143,000,000, using round figures. Right under it you have a minus sign, $19,892,000.

Mr. CLAPP. Yes.

Senator MCKELLAR. What page are you referring to?

Senator BANKHEAD. Table 1, right in the beginning. It is opposite page No. 1.

Senator MCKELLAR. I see. I have it now.

Senator BANKHEAD. As I understand that, now, $19,000,000 in round figures covers the expense account?

Mr. CLAPP. Yes.

Senator BANKHEAD. The original amount, less $19,000,000, is for capital investment on the space named there as "Navigation, flood control, and power asset accounts."

Senator AIKEN. Does that mean that you paid in the profit on operations toward the cost of expense to the Government of these operations?

Mr. LILIENTHAL. That is right. They were paid in to those accounts for that purpose.

Senator AIKEN. You put into the expense of operations the profit. from the operations?

Mr. LILIENTHAL. That is right.

76098-42-6

Senator AIKEN. Deducting the profits from the amount you required for assets account.

Mr. LILIENTHAL. In a current year we utilize all our revenues for operation and since the revenues are larger than expense the balance is applied against the need for asset accounts.

Senator BANKHEAD. Let me ask your budget officer a question. Who is he?

Mr. AGER. Paul Ager, chief budget officer of the Tennessee Valley Authority.

Senator BANKHEAD. Explain that table to me from the standpoint that I am trying to get at it as to where you show your operating

expenses.

Mr. AGER. If you will note, referring to the navigation, flood control, and power program, we have in the first section asset accounts. Then, we have a reference table

Senator BANKHEAD (interposing). Wait a minute. Wait a minute. I did not say anything about assets. I think my question is simple. Mr. AGER. Right under "Navigation, flood control, and power assets account."

Senator BANKHEAD. Power asset accounts. flood control, navigation, and anything else?

Does that mean the

Mr. CLAPP. Did you understand the question, Mr. Ager?
Mr. AGER. I did not.

Senator BANKHEAD. Power asset accounts. Does that mean flood control and navigation asset accounts, too? I will put it that way. Mr. AGER. Yes, sir. Now, that total of $143,599,000 or, I believe the figure is $143,598,000, that figure is separated in detail in table No. 2 on page 5. If you will turn to that table you will see there listed all of the major projects estimated to be under construction in the fiscal year 1943.

First, are the major, unified system projects. Total expenditures on these, in 1943, are shown to be $118,317,000.

Below that are the items also relating to the navigation, flood control, and power program; investigations for future unified system projects $86,000; transmission and other electric plant, $25,076,000; property transfers and advances to municipalities and associations $215,000.

We then have the item of repayments from municipalities and associations $162,000.

Below that we have the item of power inventories which is a figure for estimated inventories for this year of 1943 and the figure for that is $66,000. This gives a total of $143,598,000.

Referring now to the next item, which is the one that seems to be giving so much trouble here, that figure of $19,892,000 is the net cash income from our navigation, flood control, and power operation. Senator McKELLAR. Where is the break-down that shows that? Mr. AGER. On page 15, Senator.

Senator MCKELLAR. Page 15?
Mr. AGER. Page 15, table No. 3.

Senator McKELLAR. Wait a minute.

Senator AIKEN. This represents the amount of operating income less operating expenses.

Mr. AGER. Yes, sir. If you will refer to table No. 3.
Senator AIKEN. Which table is that?

Mr. AGER. Table No. 3. The first group of items represented there are navigation, flood control expense; direct navigation and flood control expense. The total for 1943 is $152,000.

Now, in the next section, power operations is referred to.
Senator AIKEN. Power operations?

Mr. AGER. Power operations: We have tried to present to Congressand, incidentally, this entire document is reproduced in the House hearing before the Independent Offices Appropriation Committeewe are trying to present here an income statement for our power operations reduced back to a cash basis. There is no depeciation shown in this table since depreciation is not a cash item.

The first group of figures under the heading "Revenue" represents our estimated revenue. It shows that for the fiscal year 1943 we expect to take in from the sale of power and from minor sources $36,938,000.

The next group of figures represents our direct expense, that is, direct power expense, which includes the items of production, transmission, distribution, payments to States and counties, customers' accounting, sales promotion, undistributed power expense, general and administrative expense proration. The total estimated direct power expense for the fiscal year 1943 based on average year conditions is $12,339,000.

The next figure is under the heading "Allowance for unrealized revenues and increased production expense in event of a dry year." That is a contingent fund of $2,000,000. Included in our estimates is a reserve against the eventuality of lack of stream flow. Below that is our estimated interest expense on bonds outstanding of some $65,000,000. The total of this item is $1,495,000.

The next figure is for the interest income which is deducted from interest expense to get the net interest expense.

The remaining figure under power is the net income from power operation. This is estimated for 1943 to be $21,244,000 as compared with the actual net income before depreciation and allocation of common expenses of $11,868,000 for the fiscal year 1941. There is another section

Senator MCKELLAR (interposing). Just one moment, please sir. Where do you get this figure of $21,244,000 from? In other words, where is it kept?

Mr. AGER. Senator, we are now operating for the fiscal year 1942. I am talking about the figures for the fiscal year 1943.

Senator MCKELLAR. Let us turn right back for the fiscal year 1941, $11,868,648; where is that money?

Mr. AGER. That money is in the Tennessee Valley Authority fund. Senator MCKELLAR. Where is that?

Mr. AGER. In the Tennessee Valley Authority fund in the Treasury of the United States.

Mr. LILIENTHAL. All of our money is kept there.

Senator MCKELLAR. It goes to the Treasurer of the United States but you still have control of the funds. They do not go into the general receipts of the Treasury?

Mr. LILIENTHAL. We pay all of our expenses out of those funds. Senator MCKELLAR. You pay your expenses, yes; and you fix your The money is paid in, not as general receipts but as a specific fund of the Tennessee Valley Authority.

own expenses.

Mr. LILIENTHAL. We have a single fund that includes appropriation funds and receipts. That was approved by the 1935 amendment which provided for that procedure.

Senator MCKELLAR. In other words, you simply use that as a storage place? That fund is not turned in as general receipts to the Treasury. That fund is turned in for such use as you may make of it. Mr. LILIENTHAL. Such use as we are authorized to make.

Senator BULOW. Do these items include salaries?

Mr. AGER. Yes, sir.

Senator BANKHEAD. And publicity?

Mr. AGER. There is no publicity, as such, but we have an information office.

Senator BANKHEAD. Information office. I am trying to see if it covers all of your operations.

Mr. AGER. Yes, sir.

Senator BANKHEAD. On these matters that Senator McKellar mentioned here yesterday, would you say it covered them?

Mr. AGER. Traveling expenses are included in these items.

Senator BANKHEAD. Are included in the items that you submit to the Budget; is that right?

Mr. AGER. That is right.

Senator BANKHEAD. They are included in this statement?

Mr. AGER. Not only that but from my experienceSenator BANKHEAD (interposing). Just a moment. any more detail than you have here?

Do you furnish

Mr. AGER. I do not have a copy of the Budget of the United States. However, if you will refer to that document you will find the Budget break-down for the Tennessee Valley Authority, one that is in schedule form and broken down more than it is for any other Federal agency. It is in more detail than it is for the Maritime Commission or any other agency of the Government. It is not an itemized appropriation. The Congress makes the Tennessee Valley Authority appropriation in a lump sum and the appropriation language for the continuation of the Tennessee Valley Authority fund authorizes receipts of the Tennessee Valley Authority to be covered into that fund.

Senator BANKHEAD. I am a little confused by your statement that your schedule breaks it down as much as it is broken down for the Maritime Commission or any other Federal agency. You then say that it is not an itemized appropriation. We will go into that later on in more detail. At the moment I want to ask you this question: When you consolidate your items how much did you appropriate in the last appropriation act outside of capital investment?

Mr. AGER. The total current appropriation for the current fiscal year in one way of looking at it, Senator, you did not appropriate anything for operations, if you want to look at it that way.

Senator BANKHEAD. What was the purpose of the statement here and of the submission of this estimate to the Budget Bureau, then? What was accomplished by it?

Mr. AGER. What was accomplished?

Senator BANKHEAD. Yes. That is my question.

Mr. AGER. It was to give Congress a comprehensive picture of all the finances of the Tennessee Valley Authority.

Senator BANKHEAD. But that does not go into the appropriation bills.

Mr. LILIENTHAL. That is right but

Mr. AGER (interposing). If I may answer that, the appropriation provides the net amount required. It is, in effect, an addition to the revolving fund created by the Congress to carry out all the purposes of the Tennessee Valley Authority Act that are not carried out by the income.

Of

Senator BANKHEAD. That is what I am trying to get clear. course, we will get it by referring to the act. I want to ask you about this point, Mr. Ager, at the moment.

Mr. AGER. Yes, sir.

Senator BANKHEAD. What is the appropriation item contained in the last appropriation act for operating expenses, if any?

Mr. AGER. There is no such item, Senator. It is a lump-sum appropriation, the one now pending.

Senator BANKHEAD. I understand that. I am not asking about the detailed items. I asked you if they were consolidated. If they were consolidated, of the items which carry expenses estimated for operating expenses, of those how much was included in that very appropriation? Is there anything included there except capital investment? Mr. AGER. Oh, yes. Maybe I can make that clear.

Senator BANKHEAD. Is there any amount included by appropriation or for appropriation for other than invested capital; if so, how much?

Mr. AGER. There is nothing appropriated to finance our capital fund except

Senator BANKHEAD (interposing). You know the answer to my question.

Mr. AGER. You must understand

Senator BANKHEAD (interposing). Wait a moment. I am just trying to get the facts. You are not answering me. You are not answering my question. What they do not appropriate, in fact, does not answer the question as to whether they appropriated anythin, and if so, how much?

Mr. AGER. Senator, what is done is that we make a net appropriation request, which is the net amount required after applying all of our estimated revenues to our direct operating expenses, and the balance not required for operating expenses has been applied against our capital outlays. The net amount is $136,100,000. I think that answers your question, but I could say

Mr. LILIENTHAL (interposing). The answer is: We did receive an appropriation which covers the amount of capital expenditure less the sum of the-well, I would put it this way, less the difference. between our gross--less our net; that is what it means, Senator. Senator BANKHEAD. Less your net profit?

Mr. LILIENTHAL. No. It is in the profit.
Senator BANKHEAD. Less your net what?
Mr. AGER. Net cash income.

Senator MCKELLAR. Let me see if I can

Mr. LILIENTHAL (interposing). Yes; but there is

Senator MCKELLAR (interposing). Let me see if I can ask a question that will make it perfectly clear to the committee. You did not get from the Congress any authority for any items in your expenses, did you? There is not a cent appropriated in this, or proposed to be appropriated in this present bill for expenses of your activities, is there?