STATEMENT OF W. J. CARR, PRACTICING ATTORNEY, PASADENA, CALIF., VICE PRESIDENT AND DIRECTOR BOULDER DAM ASSOCIATION

Mr. CARR. My name is W. J. Carr. I am a practicing attorney, holding no official position. I live in the city of Pasadena, and my law office is in the city of Los Angeles. I am the vice president and a director of what is called the Boulder Dam Association, which is an association of a large number of organizations in southern California, and some in Nevada and Arizona, which are interested in this project. I have been here several times, my compensation usually being paid by the city of Pasadena, which has a very direct interest in the consummation of this project from at least two different angles.

The CHAIRMAN. Did you appear before the House Committee on Irrigation?

Mr. CARR. Yes, sir.

The CHAIRMAN. In regard to this particular matter?

Mr. CARR. Yes, sir; and I appeared in 1922 when some preliminary hearings were held.

The CHAIRMAN. Of course we want to avoid going over the same ground. We have eight volumes here, and I should like to have you address yourself to those matters that have arisen since that time, or which you failed to mention, or any new circumstances that may have arisen.

Mr. CARR. Yes. My purpose was not to cover the same ground. I had thought that about a two-minute statement of what the project really is, and of the relationships of the different parts; a few words as to its history, and then a consideration of a matter that occupied a great deal of time in the House committee, would be helpful. That will be the general trend of my talk. I will not go over the general ground that I went over in the House, except in considering the so-called Colorado River compact. I think we will save time, by taking that up thus early in the hearings.

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Some of the questions asked at the first hearing indicated some misconception as to the nature of the project. Permit me to give a very terse statement of what the project is.

It is generally termed the Boulder Canyon project, because it centers around a great dam in the vicinity of Boulder Canyon. The original plan was that the dam should be in the canyon where Boulder Creek comes down, but later investigations indicated that there was a better site at Black Canyon, about 25 or 30 miles below. The site, however, is always spoken of as the Boulder Canyon site because the same territory will be flooded whether the dam is at Boulder or Black Canyons.

The CHAIRMAN. Is that site up the river or down the river from the Grand Canyon of the Colorado?

Mr. CARR. Both Black and Boulder Canyons are far below the Grand Canyon. The Black Canyon site technically is about 20 or 25 miles below the Boulder Canyon site. Both sites look very much the same, and they will in each case flood the same territory. It is just a question of bed rock.

The dam will be either 550 feet high or 605 feet high. And will create a reservoir in the one case of a capacity of 26,000,000 acre

feet, and in the other of 34,000,000 acre-feet. Probably the 550-foot height is preferable, because another site has been discovered between Boulder Canyon and the boundaries of the Grand Canyon National Park, which, if on investigation is proven feasible, would be flooded if the 605-foot dam was constructed, and that, of course, would be a mistake.

Or the same dam might only be built to the height of 550 feet. I think for practical purposes we had better assume a 550-foot dam, which will store 26,000,00 acre-feet, and the cost of which will be $41,500,000.

That dam will incidentally produce heads which can be utilized for the generation of power of 550,000 horsepower, constant power. Now there is a good deal of confusion in speaking of power of heads or rights. One engineer will say 550,000 horsepower, another engineer will say a million horsepower, and they may mean the same thing, because power can not be used, in ordinary practice, continuously. The 550,000 horsepower means using the water continuously every minute of every day of every week. As a practical matter the installation would probably be of a million horsepower, which would be used on what is termed technically a 55 per cent load factor. There is some confusion as to that.

The CHAIRMAN. Do you use "continuous power" synonymously with "primary power"?

Mr. CARR. Yes; the bill does not provide for the Government in any way going into the power business. The project does not contemplate that. It contemplates that these power heads, that is, the right to use the water for the generation of power when it is released from that great dam, will be disposed of by the Government and will bear the entire $41,500,000 cost of the dam, so that there will be no charge upon lands either for reclamation benefits or on account of flood protection.

Some misunderstanding has arisen, and you, Mr. Chairman, spoke about an estimate of the cost of the project of some $200,000,000. That was a rough estimate of what it might cost for the power plants, transmission lines, etc., that would be put in by whoever gets the allotments of these power heads.

The CHAIRMAN. It was not my estimate; it was the estimate of the Secretary of the Interior.

Mr. CARR. I know, but that is what he referred to, and sometimes careless readings of the bill have indicated that it contemplated the Government going into the power business, which it does not. There is not a word in there that authorizes it, and the Government is not authorized to do so. All it can do is to sell the power right.

Another feature of the project is the all-American canal. This is a canal connecting the Laguna Dam with the Imperial Valley and Coachella Valley. The entire cost of that, according to the plan of the project and the terms of the bill, must first be charged upon the land benefited, so there is a different financial plan in the case of the reclamation feature of the project and in the case of the dam. The project has been spoken of roughly as a three-way project. It is really a five-way project. It meets the flood danger and the somewhat related problem of silt. The silt that comes down the river each year amounts to over 100,000 acre-feet per year, enough

to cover the District of Columbia several feet deep. It is equivalent to the earth taken out of the Panama Canal. And that makes a problem that aggravates the flood problem. Incidentally, it will create an immense amount of horsepower, which will be needed in the southwest, and which will finance the dam.

And lastly, a new interest, a new situation has arisen, and that is a large number of southern California cities, because of the rapid growth of population there, realize and this has been brought home to them because of the fact of dry years such as we have had this year that they must go elsewhere for an additional domestic water supply, and the only place that we can discover is the Colorado River. The Government, of course, is interested in the domestic water supply feature, because, as will be shown subsequently, its existence adds an entirely new market, and a quite large one, for the power heads or rights, and adds to the assurance to the Government of certain reimbursement for the cost of the dam.

The CHAIRMAN. Is it your opinion that the demands of commerce and industry are sufficient in that part of the country to absorb 500,000 horsepower?

Mr. CARR. Yes; I have no doubt of it, nor have I very much doubt but that the Secretary of the Interior could easily get a very large proportion of the cost of the dam for use during the course of construction through the disposition of these heads or rights. As a matter of fact, there would be very sharp competition for the privilege of purchasing those heads from the Government. financial side of this great dam is a very simple one. And as the hearings proceed I think the committee will see that from the standpoint of the National Treasury the financing of the dam presents practically no problem.

The

Senator JOHNSON of California. The fact is that already there are municipalities that stand ready to bid, are there not?

Mr. CARR. Yes; the city of Los Angeles has voted by 412 to 1 to contract with the Government for its share of the power of this dam. The fact of the matter is that there will be a fight to get these power rights. It is a very fortunate situation for the Government, because it will find a competitive market for what it will have to dispose of.

Senator KENDRICK. Is it the plan to sell this power on a basis that will amortize and return to the Government the cost of the dam?

Mr. CARR. Yes, sir. The full cost, plus 5 per cent interest on the deferred payments. We are asking no financial favors from the Government in respect to the cost of the dam. It is extremely cheap power, and it is extremely desirable, and there is an active market for these heads.

Senator KENDRICK. What rate of interest would you say that would provide? You say plus 5 per cent.

Mr. CARR. The bill provides 5 per cent.

Senator KENDRICK. That would mean perhaps 4 per cent, and the amortization of 1 per cent to take care of the cost of the dam. Is that it?

Mr. CARR. No; the bill provides that the entire cost shall be returned in annual installments which may be paid in advance, plus interest on deferred payments. That is to say, if an allottee paid

one-half down and had $5,000,000 more to pay, he would have to pay 5 per cent on the $5,000,000 until he paid it. That is the plan of the project and of the bill.

Senator KENDRICK. Then the Government's investment would only be employed during the length of time the dam was under construction?

Mr. CARR. Yes, largely; and I have always been of the opinion that there would be quite a large amount of money available actually during the course of construction; that is, the bill reappropriates money received during the course of construction for construction purposes. It is rather hard to estimate just the amount which would be available during construction. We may be able to do it more definitely before the hearings are closed. But there will be undoubtedly some considerable amount. As for the financial aspect of the project you will find it, I think, very desirable.

Senator JONES of Washington. Does the bill contemplate that the Federal Government shall perpetually own the dam, or does it contemplate that when the Government gets this money back the dam shall become the property of these various interests?

Mr. CARR. The bill provides that the Government shall always own the dam and control it, as it ought to, because that is the only way by which flood interests and reclamation interests can be given their proper priorities over power. If other interests had it, if interests had it other than the Government, they would use it for power purposes, the development of power, and would sacrifice flood control and irrigation.

Senator ASHURST. This is so gigantic it must be controlled by a monopoly, and the only monopoly that will not practice tyranny, that is the Government.

Mr. CARR. Well, this is not exactly a monopoly, but it is the only plan that has ever been worked out to avoid a monopoly. In other words, there will be certain of the power rights allocated to cities that now have their own distributing works.

Senator GOODING. Does the bill provide that those shall be given the preference?

Mr. CARR. Yes; just as in the Federal water power act. And certain of the power probably will be allotted to the private com-' panies, and this big water district that is being formed to get water from the Colorado, will probably get some of the power. These allottees will build their own power plants and transmission lines. The Government will be in control, and will control the delivery of water to power plants at the dam. But as far as the activities of the Government are concerned, they will be very slight. One man perhaps and two assistants to control the policy of the delivery of water in the interests, first, of flood control, second of reclamation, and lastly of power, and to keep records would be all that would be necessary.

The CHAIRMAN. Do the generators of the power developed at the dam return to the Government the cost of the construction of the dam?

Mr. CARR. Yes, sir; with interest at 5 per cent on deferred payments.

Senator KENDRICK. Within a period of how many years? Fifty years?

Mr. CARR. Within a period of 50 years. Fifty years is the limitation, but the Secretary of the Interior can fix a less time.

The CHAIRMAN. Is it true that those who benefit by the impounding of the water for purposes of irrigation contribute to the cost

of the dam?

Mr. CARR. No, sir; nothing at all. The power carries the entire cost of the dam. It can well afford to do it, because it is very cheap and very desirable power.

The CHAIRMAN. Then the irrigators would be in a position of advantage over other water users on projects developed under the reclamation act of 1902 in which there is a charge for the impounding of the water.

Mr. CARR. Yes, sir; that is true, but the project provides for expensive works for reclamation, and probably the land could not stand both the cost of the dam and the cost of the reclamation works.

Senator JONES of Washington. Let me understand the situation. The bill contemplates the repayment to the Government of the cost of putting in this dam?

Mr. CARR. Yes.

Senator JONES of Washington. But when that is done the dam still belongs to the Government?

Mr. CARR. Yes, sir; the bill specifically so provides, Senator. Senator JONES of Washington. And at the end of 50 years it can resell it, in effect?

Mr. CARR. The dam always stays in the control of the Government. Senator JONES of Washington. I say, after that in effect it can resell it at the end of 50 years by reselling the power?

Mr. CARR. Well, the allotments of the right to use that water for the generation of power-of course the Government could not just do that as a practical matter. Those rights are in effect permanent, except in that they are subject to recapture or may be taken in condemnation proceedings.

Senator JONES of Washington. Well, after they have repaid to the Government the cost of the dam, what do they then pay the Government, if anything?

Mr. CARR. Just the small item that is necessary, for operating expense, which would probably be $20,000 or $30,000 a year.

Senator JONES of Washington. Well, when they have done that do they have a perpetual right to the power that they have paid for? Mr. CARR. In effect. Yes, sir. But the right is subject to recapture, of course.

Senator JONES of Washington. What do you mean by that?

Mr. CARR. If the license is granted, as provided by section 3, it has the recapture provisions such as are contained in the Federalwater power act. And there is another section that has a little different scheme, and the rights referred to there would be subject to eminent domain.

Senator JONES of Washington. That is what I am getting at. At the end of 50 years, as I had understood it, the right of the water power user is at an end, and he must renew it.

Mr. CARR. If he gets a license, yes.