Mr. RAKER. Then, so far as you know, California, Nevada, Arizona, and that country are sort of a unit in favor of the Government commencing on this Boulder Canyon power project?

Professor DURAND. Yes; I so understand, and I know furthermore that the communities generally in that section of the country are in immediate need of additional power and are desirous of its prompt development from the Colorado River. To come back to the point I was speaking of

Mr. BARBOUR (interposing). Before you leave that, could you give us any statement as to the amount of horsepower, or electric energy in horsepower, that is now used by the city of Los Angeles?

Professor DURAND. The present developments in its own plants, as I said a moment ago, represent 100,000 horsepower.

Mr. BARBOUR. And that is all along the aqueduct?

Professor DURAND. Yes, sir. It is, furthermore, a purchaser of power to a large degree and I am sorry I am unable to give those figures. I should, perhaps, state for the benefit of the committee that I am appearing here in some small way representing Mr. Scattergood, the electrical engineer of the city, who is, unfortunately, ill in the hospital and is unable for that reason to appear before the committee. I have myself just returned from Europe and was caught by a telegram when I landed in New York and asked to come over here to assist in presenting this situation before the committee. I have been quite familiar with certain phases of these problems but the chief electrical engineer of the city would have all of these figures at his fingers' ends while unfortunately I have not. Subsequent examination develops the figure of about 160,000 horsepower capacity as representing the present total requirements of the city of Los Angeles, with proper reserve in addition to insure reliability of service.

I was about to say a moment ago, with regard to the aggregate amount of power which will be developed on the Colorado River at Boulder Canyon, 600,000 horsepower that unquestionably the interests in the territory to be served from that site will not remain without some further power development in the meantime, but it is very sure, as far as we can in any way humanly forecast the situation, that the future power developments within the next six or eight years are going to run far short of the requirements in that period, so that at the time the Boulder Canyon project shall be completed and ready for service there will be a very large void for power ready to be filled up promptly from that source, and I am satisfied in my own mind that within a very short period of time after the completion of that project the entire output of the plant will be required and can be marketed at figures which, as I shall show in a moment, will represent an economic security for the money invested.

Furthermore, I believe that the communities interested in this power will be ready, on the completion of the project, to become immediately responsible not only for such an amount of power from the Boulder Canyon plant as shall represent their immediate deficits, but also for such further amounts as will anticipate to some extent their future, and that in this manner the section of the country interested in this power will be ready to assume responsibility for the entire output of the plant and thus relieve the Government of all carrying charges. I believe that I am justified in saying that the city of Los Angeles is ready to assume such responsibility to an extent far beyond its presumable deficit of power at the time the Boulder Canyon project is ready for service, and I am confident that other communities will in like manner wish to safeguard against their future growth. I believe that on a conservative estimate, from one-half to two-thirds of the total output will be immediately required by the time the project is ready for service and that responsibility for the balance will be eagerly accepted by communities interested, thus covering the entire carrying charges as already stated.

Mr. RAKER. Through what means and from what source are you going to secure the power you say you need between now and the time the Boulder Canyon dam is completed?

Professor DURAND. The private power companies in the southern part of the State have still other projects in contemplation and in progress of development. These projects, by and large, will cost more per unit than will the power at the Boulder Canyon Dam, but the customers will not wait; there will be a market for power which will justify the development of some considerable amounts in the meantime but I can not undertake to say how much.

Mr. RAKER. Is it your view that the private individuals and concerns that are now developing power and will have developed it by eight years from now, if the Boulder Canyon Dam is completed in eight years, will, at the time the Boulder Canyon Dam is working, lose their customers?

Professor DURAND. No. I mean, they will not be able to develop power enough to supply the market.

Mr. RAKER. In the meantime?

Professor DURAND. Yes.

Mr. RAKER. When the Boulder Canyon Dam is completed and 600,000 horsepower is developed will these private indiduals and concerns be put out of business?

Professor DURAND. No; I take it they will not be put out of business, but there may be required some readjustment of rates.

Mr. RAKER. Of course, that would be one of the things to be adjusted, but Mr. Hoover says that all of those things are now adjusted by commissions and, therefore, we do not have to worry about them, but if in the next 8 or 10 years there was a large development outside of Los Angeles by these private concerns and private individuals to supply the demand that is increasing all the time, I was wondering whether or not by the construction of the Boulder Canyon Dam they would thereby be put in the position that their property would be practically worthless?

Mr. BARBOUR. Would not the developments in the other parts of the State result in the consumption of all that power? Even though Los Angeles did not use it other sections would be developing and thus result in a demand for more power in those sections.

Mr. RAKER. I was trying to get the professor's view on that.

Professor DURAND. My opinion as to that point is this: That there will possibly be required some careful consideration of rates on the part of the rate-making power at that period of time, but I do not foresee the putting out of business of any of these present or even immediately prospective power plants. I believe, furthermore, it is a fact that certain of these power companies are looking forward with considerable care to the projects which they propose undertaking in the immediate future, having an eye on the possibilities of the developments at Boulder Canyon Dam; they are, in other words, discounting to some extent the possible developments at Boulder Canyon Dam.

To develop this thought in a little further detail, I should consider that by the time the Boulder Canyon project is ready for power service, the actual deficit or void awaiting to be filled will amount to one-third of the total output or more, and this without counting on more than the normal growth in present modes of power use. Additional or new industrial uses of hydropower, stimulated by favorable rates, will undoubtedly be planned for operation concident with the completion of the project. Among such uses mention may be made of irrigation pumping, mining and chemical industries and the electrification of railroads in the section within economic reach of this source of power. It is a matter of common knowledge that the Sante Fe Railroad is already manifesting an active interest in the possibilities of power from this source. Those new or extended uses, over and above what may be termed normal growth, will easily carry the total demand at the completion of the project to the amount of one-half or twothirds the total output, as stated at an earlier point.

This would leave say one-third of the output only, as reserve against future growth, an amount representing only a moderate provision against the future and certainly in nowise justifying the scrapping of any of the earlier existing plants.

Furthermore there are certain areas served by these existing companies which would not so readily come within the scope of service from Boulder Canyon and normal growth within such areas would aid in furnishing an outlet for their power product.

Again, it is common practice with power companies, as the time approaches for bringing in a new station or a new block of power, to allow the margin of reserve power (power capacity over and above that normally required and serving as an insurance against interruptions in service) to gradually decrease, thus diminishing the margin intended to secure reliability and continuity of service. This policy will undoubtedly be followed in the case of the Boulder Canyon project and all power companies will thus anticipate service from this source by a continuous decrease in the desirablemargin of reserve power and in a correspondingly increased use of their steam plants. This is what was referred to a moment ago as an anticipation of or a discounting of the future with reference to the influence of Boulder Canyon on the general power situation. It thus results that a considerable block of the Boulder Canyon power, when brought in, may be considered as no more than restoring the proper margin of reserve power desirable in order to insure continuity and reliability of service.

Taking these various considerations into account, it seems clear that there need be no apprehension that the advent of Boulder Canyon power will result in puttingout of business the earlier and smaller plants. There will be use for all the hydropower which we shall be able to develop.

Mr. SMITH of Idaho. Do you know whether or not the city of Los Angeles is in a position or is inclined to make a proposition to the Government to take over and use a certain amount of this power in the event the Boulder Canyon Dam is constructed, so that we might have some idea as to when the Government will be reimbursed for its expenditure?

Professor DURAND. I can say yes to that question. I believe the city of Los Angeles is ready to make an immediate proposition. Just what the terms of that proposition might be, of course, I am not prepared to state, but I do know that she is so anxious to insure for herself an adequate supply of power in the future as to be quite ready to enter into an immediate understanding with regard to the point you have mentioned.

Mr. SMITH of Idaho. It has been represented in the newspapers that at least onehalf of the expense of constructing this dam would be taken care of by power sold to the city of Los Angeles, and that is a question which will have to be worked out before the matter comes up on the floor of the House.

Professor DURAND. Whether it will be one-half or some other fraction, of course,
I could not tell offhand at the present time, but I am sure that the city of Los Angeles
is very desirous of entering into some understanding in regard to these matters.
Mr. BARBOUR. Mr. Creswell, I understand, intends to discuss that feature of the

matter.

Mr. RAKER. Possibly I did not make myself plain. Taking your statement as to the demand for power during the next 10 years, and assuming that the Boulder Canyon Dam will not be completed and ready for 10 years, and these private concerns and private individuals proceed to develop their present projects, at the end of 10 years: will there be a demand for the power created by the Boulder Canyon Dam, in addition to the developments of the private concerns and private individuals I have spoken of, that will justify the private concerns and private individuals in continuing in buisness and getting a fair return from the power they sell to the public as well as from the energy to be taken from the Boulder Canyon Dam?

Professor DURAND. Yes, sir; I think there will be; I think the demand for power will be so great that within a period of seven or eight years it will absorb the output of the Boulder Canyon project and at the same time let these other projects continue on a reasonable business basis.

Mr. RAKER. So that the contemplated construction and completion of the Boulder Canyon Dam, with an ultimate capacity of 600,000 horsepower, will not, in your view, interfere with the general development now contemplated by the private concerns and private individuals for the purpose of building up the country generally?

Professor DURAND. No, sir; it will not. I will now pass to the next point which I had in mind.

Mr. SINNOTT. Would you prefer to go on and not be interrupted until you complete what you have to say?

Professor DURAND. Not at all; I am perfectly willing to be interrupted at any point. I will now say a word with regard to the possible figures at which this power might be sold. Of course, it will be understood that any such estimates are entirely tentative in character, especially so far in advance of the realization of any part of the project; still estimates can be made which will apparently indicate the order of figure at which such power might be sold.

I have taken the estimates of the Director of the Reclamation Service as to the cost of the dam, and I have made other estimates with regard to the cost of the power plant and machinery; I am applying fixed charges of 9 per cent which, I take it, will be sufficient to cover an interest charge of 5 per cent; depreciation on such part of the entire plant as will be subject to depreciation and provision for the retirement of the bonds at 24 per cent; this, together with a reasonable operating charge, would result in a total annual charge of about $8,000,000. The total annual output of the plant, operated as the equivalent of 600,000 horsepower continuous throughout the year, would be 3,920,000,000 kilowatt hours, and this works out almost exactly to one-fifth of a cent per kilowatt hour-that is to say, this power could apparently be generated and delivered at the plant with a fixed charge, which would insure the interest depreciation where required and retirement of bonds at a charge of about one-fifth of a cent per unit or kilowatt hour.

Mr. SINNOTT. It is now 12 o'clock. What is the wish of the committee?
Mr. SWING. Professor Durand must leave to-night.

Mr. SINNOTT. How much more time do you wish?

Professor DURAND. I can finish very promptly and it would be a great privilege to me if I might be permitted to do so.

Now, with regard to the cost of this power at distant points. Such cost will depend entirely on how much is taken and how far it is transmitted. I have simply taken an illustrative case. I have assumed one-third of this total amount of power transmitted a distance of 280 miles, which would lay it down substantially in what might be called the center of gravity of the power market of the southern part of the State of California; and under those circumstances, allowing similar charges, etc., it could be laid down at this point in the southern part of the State of Callfornia for about

four-tenths of a cent per kilowatt-hour. It would then, of course, remain to distribute it in further detail. Those who are familiar with the cost of power will see that there is here a very attractive possibility for power users and at the same time at rates which should provide a safe economic basis for the return of the investment, and not only the return of the investment but of the interest charges at the same time.

In this connection and in answer to a question asked of Mr. Criswell I would state, on behalf of the chief electrical engineer of the city of Los Angeles, that the losses in transmission over a distance of 250 to 300 miles and at a voltage of 220,000 volts will average not far from 10 per cent and such loss has been assumed in the illustrative case assumed. With somewhat higher voltages which may be looked for in the future it is to be anticipated that this loss may, perhaps, be somewhat reduced.

The only further point I have had in mind-and which I do believe is of importance is that with regard to the significance of this power at Boulder Canyon Dam in reference to our soil reserves. Last week while here I had a conference with Director Smith of the Geological Survey and was provided by him, as set forth in authorized public information, with the latest estimates which have been made by a special commission entrusted with the duty of determining, as far as was humanly possible, the amount of our oil reserves. The amount of such reserves is represented by a figure of about 9,000,000,000 barrels, according to the best estimate which can humanly be made at the present time.

Mr. SINNOTT. Does that include the shale oils?

Professor DURAND. No; I believe it does not include the shale oils; it is basically the oils which are recoverable by methods at present approved and in use.

Mr. SMITH of Idaho. Is that in the entire United States or just in California? Professor DURAND. That is in the entire United States. The amount of the reserves correspondingly on the Pacific coast, or in the State of California, is 2,000,000,000 barrels.

Mr. RAKER. How does your estimate as to what this power could be produced for at the Boulder Creek Dam compare with the cost of power per kilowatt hour now? Professor DURAND. It is distinctly cheaper.

Mr. RAKER. About how much?

Professor DURAND. The present cost, of course, is extremely variable, depending

on circumstances.

Mr. RAKER. Well, on the average?

Professor DURAND. I should say perhaps 60 per cent of the average cost under other conditions.

Mr. RAKER. This would be 60 per cent cheaper?

Professor DURAND. No; 40 per cent cheaper.

Mr. RAKER. Forty per cent cheaper from the Boulder Canyon Dam than it is now produced for?

Professor DURAND. Yes, sir. However, understand that that is a very general statement.

Mr. RAKER. I understand.

Mr. SINNOTT. Do the figures you have give the length of time it would take us to exhaust the 9,000,000,000 barrels?

Professor DURAND. I was just coming to that. Our present rate of production is a little under 500,000,000 barrels per year and the consumption a little over 500,000,000 barrels, which means that we have to go abroad for the balance. If these various conditions should continue about as they are we should exhaust these resources in about 20 years.

Director Smith points out, however, that, taken by itself, this statement might be misleading, because conditions are not going to remain as they are. Our production is apparently going up a little more; it is progressing toward a peak and then it will gradually and necessarily decline. On the other hand, the future alone can determine as to where our consumption may go in the meantime. This will involve questions of world supply, of our representation in foreign fields, of the cost of imported oil and other economic and industrial factors. But as Director Smith states, we shall go on producing for some years to an increasing extent and then the production will gradually decline, so that the total oil reserves in the United States will last beyond the 20-year period. That is to say, there will be some oil of the reserves above referred to still available 20 years hence and some 30 years hence.

Mr. SWING. But importations will have to greatly increase?

Professor DURAND. Absolutely, and I was about to emphasize that very point. Importations will have to increase in order to balance the increased consumption. Now, if we equate the power at Boulder Canyon into fuel oil we find that the 600,000 horsepower a year equated into terms of oil represents something like 23,000,000 barrels.

Mr. BARBOUR. And the supply is inexhaustible?

Professor DURAND. And the supply is inexhaustible. That brings me to another point, and I am glad you emphasized it in that way, because I had it especially in mind to point out this fact: That when we are using oil we are using a deposit which was made by nature-by the sun primarily thousands or millions of years ago, and so far as we know, nature is not engaged in the program of making oil at the present time. Here is a bank deposit which lay untouched through geologic ages until a few years ago, when we found out how to use it. We are now using up our principal, and when anyone constantly draws on his bank principal, and there is no interest accruing, there is only one end to the program. If instead, however, we utilize present day sun power-which, of course, water power is we are drawing on and living on an interest account, and there is going to be just as much next year as there was last year, and so on through an indefinite period of years. It, therefore, seems of the most fundamental and serious importance that we should do our utmost to conserve the use of fuel oil wherever possible by substituting therefor this interest-bearing account represented by water power.

Mr. RAKER. Not to be facetious, but really for information, when did old nature cease to produce this oil?

Professor DURAND. Petroleum oils have apparently been formed in all geologic ages from the Devonian through the Carboniferous down to the Pleocene and Pleistocene. but presumably not in significant quantities since the latter period.

Mr. RAKER. That was before my time, so I do not care to go into it.

Professor DURAND. There is one further point in this connection to which, I think, attention should be drawn.

Mr. SMITH of Idaho. It seems to me the facts you are stating should be the basis of a very good argument in favor of this legislation, because it would save the consumption of fuel oils.

Professor DURAND. Quite so, and I feel that it is a very important argument. And there is a further point, which relates to the same fundamental question. Petroleum furnishes a wide range of products; thus the lighter products, such as gasoline, kerosene, engine distillate, etc., then heavier fuel oils, and again that most important series of products, the lubricating oils. Indeed it is not too much to say that industrially the entire world is lubricated by these special petroleum products.

Mr. SWING. I will ask that Professor Durand be permitted to file later a written statement amplifying the remarks he has made to-day.

Mr. SINNOTT. Without objection, that may be done.

Professor DURAND. In that connection let me add that water power represents a practicable and effective substitute for fuel oil used for power purposes. This is not true for the lighter petroleum products, and especially for the lubricating oils. It is thus clear that there are certain products which we derive from petroleum and which are fundamentally necessary in our modern civilization and which can, so far as we can see, be derived from no other source. This serves to further emphasize the serious import of this entire question of the use of our petroleum oil and points to the absolute importance of substituting water power for oil fuel power wherever humanly possible to do so, thus conserving our petroleum reserves as far as possible for those uses for which no substitute is available.

Mr. RAKER. Is it your view that the construction of the Boulder Canyon Dam would be justified for the generation of power alone?

Professor DURAND. Yes, sir.

Mr. RAKER. What is your view as to whether or not the Government should undertake the enterprise or private individuals or corporations undertake it?

Professor DURAND. Are you speaking of the dam?

Mr. RAKER. The Boulder Canyon Dam and all this development.

Mr. SWING. You mean from a power point of view?

Mr. RAKER. I am speaking about power. He said it would justify its construction for power. I am asking for the professor's point of view as a man of great experience, as to the relative advantage of having the Government construct it, or having it constructed by private enterprise.

Professor DURAND. As I see it, Mr. Raker, the only agent which could adequately proceed with the construction of such engineering work is the National Government, having in view particularly the interrelation of the problems of irrigation, flood control, and the settlement of the various questions in controversy among the several States that will arise not only in connection with the construction of the work, but later on in connection with the operation of the reservoir. I believe that the Federal Government is the only agent which could undertake this proposition, especially having in view this particular aspect of the situation.