main bases of the entire chemical industry. Electrolytic production of chemicals therefore had many economic advantages at that time which it does not enjoy at present, and hydroelectric power therefore must compete at present on a very much closer margin than in the first days of Niagara.

"On the other hand, the electric furnace for the production of metals has a manifest advantage over any other process in the purity of its product and is particularly adaptable to the manufacture of alloys, the use of which is constantly growing. This industry is relatively in its infancy and has promise of great expansion within the next few years.

"It is the opinion of your advisers, after weighing all the considerations, that there is a very large potential market for St. Lawrence power in continuous industries at the site but that power must be sold to these industries at a highly competitive price." (P. 70.)

These facts I have quoted as advanced by these experts, who had every facility to make a complete report, and did, cannot be overstressed as relating to Ålabama. I have read a great deal in the papers about certain plans the Government has in mind in its effort to balance industry and agriculture. The idea is sound, and the place to do it is in the South, and the opportunity is presently available at Muscle Shoals. I have a chart, which is on file with the committee, which shows the per capita production of wealth of the various States of the Union, that is, the value added by manufacture, and the value added by mining, in 1929, and the gross farm income in 1930.

If you want to find out what is wrong with the South, look on the chart for Tennessee, Kentucky, Florida, Alabama, Georgia, South Carolina, Louisiana, Arkansas, and Mississippi. Why should not the opportunity be granted the Southern States to grow and develop from their own natural resources? Why could not Muscle Shoals be made a yardstick for the cultural development of a people who have been struggling since 1866. We cannot have an idealistic culture without a materialistic culture. "Our materialistic culture, while doing the obviously prosaic thing of paying the bills for the idealistic culture, has developed man to a high state of civilization. Idealistic culture has ever traveled on the back of materialistic culture. Business has never followed civilization, because there has been no civilization without business. The first savage who discovered the value of a trinket he did not own, and started bargaining for it, started civilization."

Here is why the South offers a splendid opportunity for balancing industry with agriculture:

"Of our present industrial civilization, 25 per cent of the 210,000 manufacturing plants in the United States are in 7 counties, out of 3,073 counties total; another 25 percent are located in 46 counties, and still another 25 percent are situated in 340 additional counties. In short, 169,000 manufacturing plants, representing 75 percent of American industry, are credited to 339 counties, while the remaining 25 percent are widely scattered throughout 2,680 counties. And the South is more than proportionately represented in these latter counties. Out of a total annual value of $70,000,000,000 in manufactures, 25 percent or $17,500,000,000 is contained in 7 counties; another 25 percent in value is contained in 29 additional counties, while still another 25 percent is shared by 102 other counties. The remaining 25 percent in value is distributed among 2,935 scattered counties from Maine to California."

Out of a total of 8,805,786 wage earners employed in the 210,000 manufacturing plants in the United States, 2,214,690 or 25 percent are employed in 11 counties; another 25 percent are employed in 40 counties, while still another 25 percent are employed in 158 counties. The remaining 2,500,000 industrial workers are scattered throughout 2,864 counties, with a negligible average of 76 workers per county and this is the farmers' market.

In addition to these facts, do you know that in a normal year three fourths of the wealth added in the United States through manufacture is produced in 11 States, and the other 37, included in which are all the Southern States, produce the other one fourth? And it is interesting in this connection to note that one fourth of the wealth of the United States added in a normal year through manufacture is produced by New York and Pennsylvania, and the contributing factor in the wealth added through_manufacture in New York is the great electrochemical industry at Niagara Falls.

Isn't it perfectly plausible that the application of principles established by the St. Lawrence Power Development Commission could be effectively applied to the area adjoining Muscle Shoals, to the benefit of a section of the country that needs and deserves it?

And then there is one other quotation that I would like to make from the St. Lawrence Power Commission report.

On page 182 of the report of the Commission are the questions of law by counsel and legal staff, and I mention this reluctantly, because I am not a lawyer, but I do it primarily for the benefit of the gentleman from Alabama.

"Similarly, in March 1927, the State of Alabama, by a memorial directed to the President of the United States, protested against the use of the property rights of the State through the Muscle Shoals development. The memorial

recites:

"Subject only to the authority of the United States relative to navigation and to war purposes, the State of Alabama claims absolute title to and ownership, jurisdiction, and control of that portion of the Tennessee River which is within the State of Alabama, its waters, banks, beds, and soil, including the power in the water and the value thereof, and all other property rights in anywise incident thereto or arising therefrom.

"Our contention that such title is in the State for public purposes is upheld by the uniform decisions of the Supreme Court of Alabama.

"The Supreme Court of the United States has uniformly held that each State has the right to determine this question for itself.'

"This protest was supported by able briefs, which expressed the same view as to property and constitutional rights of the State as we have expressed above. For reasons not apparent on the record, but which we are informed were not due to doubt of its legal position, the State of Alabama never pressed this claim by itigation."

So far as the coal industry is concerned, it isn't exactly fair to junk an industry for an experiment. When you classify a movement such as is contemplated here as a yardstick, you immediately brand it as something of problematical value, and there is no justification for it when untold injury will result to so many thousands of our citizens.

The New York Power Authority is directed to study the desirability and means of attracting industry to the State of New York. That is sound and a proper duty of a State agency, the power development being made by the State with its own funds.

If you remember that the States of Tennessee, Georgia, Alabama, and Mississippi pay a small proportion of the income taxes and that other sections will, therefore, make the substantial contribution to this effort, it hardly seems fair, even to a southerner, to raid the National Treasury in this far-flung effort to relocate industry in the South; and in the end its very unfairness will break down the effort. Therefore, you ought to approach it from the standpoint of preserving the coal and other local industries, utilizing their organizations to develop and solicit business and pay as you go, along sound lines.

The average citizen, I think, is in complete agreement with measures recently passed and many that are being contemplated by the Congress to tide the country over an emergency. As a matter of fact, the emergency alone justifies such action, but here, relating to Muscle Shoals, what is being proposed is permanent, and the state of mind and the temper of our people now should not be the gage of neasures of such permanent nature. We believe in "the new deal," not in the sense that Stuart Chase used it, not in the sense that Stuart Chase conveys in his book, not if it is to affect the fundamentals of our Government, but rather do we in the South adopt it, because we have in our hearts complete faith that the "new deal" of today is but an enlargement of the "square deal" of 25 years ago, and it can only be a success if it has as its basis this same “square deal”.

The CHAIRMAN. Now I will ask Mr. Judson King to come around. Mr. King, will you please state your training and studies and experience, as a basis for forming some opinions about matters you have heard discussed before this committee in the last 3 or 4 years?

Mr. MONTET. Will you have the gentleman tell us where he is from, please.

The CHAIRMAN. Just proceed and tell all about that.

STATEMENT OF JUDSON KING, DIRECTOR NATIONAL POPULAR GOVERNMENT LEAGUE, WASHINGTON, D.C.

Mr. KING. Judson King; director of the National Popular Government League, Washington, D.C. This league was founded in 1913. Its leading founders were United States Senator Robert L. Owen; United States Senator George W. Norris; Hon. William Kent, Member of Congress; Prof. E. A. Ross, Wisconsin University, and so forth and so forth-men of that caliber and standing. I am a writer by profession; I have been a general student of the power questions and utility questions since 1908.

Mr. Goss. Let me ask, for the purpose of the record, Mr. King, Are you an engineer, or not?

Mr. KING. I said I am a writer. I am not an engineer; I am a general student of the question. Since 1920 our organization has been strongly supporting Senator Norris in his attempt to save the Muscle Shoals for the people of the South and of the country and it is a very happy day for us to see this bill, rejected by President Hoover and President Coolidge (Senator Norris' bill), received and approved by Governor and now President Roosevelt, and about to be passed by this Congress-ending a conflict of 12 years.

Mr. Goss. Would you permit an interruption to ask that you differentiate between the Norris bill and the McSwain bill in your remarks. Are you going to speak on either one or both on the Norris bill or the McSwain bill-so that we will have it in mind?

Mr. KING. Mr. Goss, I had intended to devote myself to some economic sides of the question, but I have changed my intention, I trust with the consent of the committee, because I feel that from the time President Roosevelt's attitude was first stated by Mr. Arkwright, president of the Georgia Power Co., up to the last gentleman who spoke, that Mr. Roosevelt's position has entirely been misinterpreted to this committee; and I ask the privilege of telling you what Mr. Roosevelt does stand for on the power question along the transmission line. Is that agreeable?

The CHAIRMAN. Go ahead.

Mr. Goss. You are going to give the President's views to the committee?

Mr. KING. AS I interpret them from the official record. I am not speaking directly for him.

Mr. Goss. I would be glad to get them, for myself.

The CHAIRMAN. What is the source of your information now-what he has written there?

Mr. KING. May I say just a word

The CHAIRMAN. Yes; go ahead.

Mr. KING. Mr. Roosevelt, when drafted into the New York gubernatorial conflict in 1928, inherited the power problem in New York from the conflicts of Gov. Alfred E. Smith for the previous 10 years. During that period, Governor Smith had advocated the government ownership and operation of the plant, but that private companies should be allowed to distribute the current, "under contract" with the distributing companies as to what they should sell it for to the ultimate consumers. I do not think, from all of the investigations I have made, that Governor Smith ever went beyond the word "contract," to know just how he could fuse public currents into a private

hydroelectric system and come out at the end. He might have found out about it in 1928. But we find Governor Smith's proposition, his principle, was put into the Democratic State platform, on which Mr. Roosevelt was drafted to run and thereafter we begin to find out what Governor Roosevelt thought about the transmission of power, in his very first utterance to the people of the State in his inaugural address. He made it the outstanding feature of his short inaugural address and I call your attention to these words:

How much of this distribution shall be undertaken by the State, how much of this carried out by properly regulated private enterprises, how much of this by some combination of the two, is a practical question which we have before us. And you have that same question right here.

Mr. Goss. What is that book, Mr. King?

Mr. KING. That book is the Official Public Papers of Governor Roosevelt, of date 1929. It is a personal copy, if you would like to know.

Mr. Goss. No; I just wanted to get it for the record, that is all. Mr. KING. All right; good.

Mr. Goss. And from what page are you reading?

Mr. KING. I am reading from page 14. [Continuing:]

* * * and in the consideration of the question, I want to warn the people of this State against too hasty assumption that mere regulation by public service commissions is, in itself, a sure guarantee of protection of the interests of the

consumer.

That is his idea of regulation.

The questionable taking of jurisdiction by Federal courts, the gradual erection of a body of court-made law, the astuteness of our legal brethren, the possible temporary capitalization of our public servants and even of a dormant public opinion itself, may, in the future, as in the past, nullify the rights of the public. I, as your Governor, will insist, and I trust with the support of the whole people, that there be no alienation of our possession of and title to our power sites and that whatever method of distribution be adopted there can be no possible legal thwarting of the protection of the people themselves from excessive profits on the part of anybody.

Mr. Goss. Has he changed his mind or has he changed his opinion? Mr. KING. I shall develop it right straight through, God thank you for your suggestion.

Now, then, that was on the 1st day of January, and on the 12th of March, 1929, Governor Roosevelt sent a message to the legislature of the State recommending the establishment of a commission to propose a plan of development of the water power resources of the St. Lawrence. And what then? "Transmitting a proposed bill."

I want you to know that this is an investigating commission. In the course of his message to the legislature dealing with the question of transmission, I shall not take all of your time to go over it all-I would like to put that whole message into the record-that whole message, about three or four pages. But never the mind. It is good reading for you. Now, he said:

There are two great basic principles, the natural water power sites now owned by the people, and in effect, must be held in their possession.

Second-now we come to transmission:

Power developed therefrom shall be transmitted and distributed, if possible, through the employment of private capital so as to secure adequate distribution throughout the State. This distribution, however, shall secure the lowest rates to consumers compatible with a fair and reasonable return on the actual cash

investment. In other words, the rates shall be based on actual cash outlay. That is, on operating expenses, capital outlay representing money actually spent in plant investment and working capital, with a reasonable allowance for obsolescence and depreciation, and a return on the investment not exceeding interest actually paid on borrowed money, and dividend rates not in excess of guaranteed rates on preferred stocks.

How does it end? It ends this way:

The power generated by the agency of the State, called the trustees, shall be sold only on a contract basis which will take into definite consideration all the steps between the sale at the power house and the ultimate sale to the home owner or industrial establishment.

We arrive here at the first consideration in respect to Mr. Roosevelt's ideas of having private power companies develop it and Mr. Arkwright and Mr. Willkie and all the rest of them that are trying to build up in the minds of this committee the idea that President Roosevelt is ready to turn this over to the Alabama Power Co. for distribution never states the conditions on which he lays down his policy.

Now let us go on. He says:

I want to see something done. I want it done in accordance with sound public policy. I want hydroelectric power developed on the St. Lawrence, but I want the consumers to get the benefit of it when it is developed. They must not be left for their sole protection to existing methods of rate-making by publicservice commissions. Are the business men of this State willing to transmit and distribute this latent water power on a fair return on their investment? If they are satisfied, here is their opportunity. If not, then the State may have to go into the transmission business itself. It cannot on the one hand let this power go to waste, nor on the other be required to yield to anyone who would aim to exploit the State's resources for inordinate profit.

Now, listen to that. I continue to read:

We shall soon know whether or not such a contract can be made. If the trustees can make it, and it commends itself to the people of the State, then the legislature and I will approve of it and we can go ahead. But, if no such contract can be made we shall know the reasons why and protect ourselves accordingly. I want to be in accord with sound business principles. I believe there are enough good business men in this State to see this problem as clearly as I do and will be glad to join with the State in its endeavor. I want to give to business this big opportunity to participate in a public service.

Now, what Governor Roosevelt's original idea was is this, that if the power companies are willing to buy this current, say at 4 mills— just guessing at it-or 2 mills, and have a return of 7 percent, say, on the actual cash they have got invested in their transmission lines and in their distributing lines in the cities all over the State of New York, then we can go ahead, but, gentlemen, do you visualize how much wind and water, as Senator Bone calls it, will have to be blown off of that glass of beer? Do you think that the utilities of the State of New York are willing to come down and deliver it at the actual cost of the investment? If they do, let me tell you what will happen, and I am not going into technical investments this time. It will reduce the price of the electricity throughout the whole State 2% cents per kilowatt-hour.

Mr. Goss. Have you figures on that?

Mr. KING. I have them later.

Mr. Goss. Will you put them into the record?

Mr. KING. I will come to that later. I am just mentioning the policies that were laid down, and not referred to, though quite for