CALIFORNIA DEPARTMENT OF AGRICULTURE APPROPRIATION BILL, 1943 RURAL ELECTRIFICATION ADMINISTRATION HEARINGS CONDUCTED BY THE SUBCOMMITTEE, MESSRS. MALCOLM C. TARVER (CHAIRMAN), CLARENCE CANNON, CHARLES H. LEAVY, DAVID D. TERRY, ROSS A. COLLINS, WILLIAM P. LAMBERTSON, EVERETT M. DIRKSEN, AND CHARLES A. PLUMLEY, OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, IN CHARGE OF THE AGRICULTURE DEPARTMENT APPROPRIATION BILL FOR THE FISCAL YEAR 1943, ON THE DAYS FOLLOWING, NAMELY: WEDNESDAY, NOVEMBER 19, 1941. RURAL ELECTRIFICATION ADMINISTRATION PROGRAM AS RELATED TO THE COPPER SUPPLY STATEMENTS OF HARRY SLATTERY, ADMINISTRATOR; ROBERT B. CRAIG, DEPUTY ADMINISTRATOR; RICHARD J. BEAMISH, POWER CONSULTANT; ARTHUR C. HAGEN; THOMAS H. MILLER, UNITED STATES BUREAU OF MINES; J. A. KRUG, CHIEF OF POWER BRANCH, OFFICE OF PRODUCTION MANAGEMENT PURPOSE OF THE HEARING Mr. TARVER. Gentlemen of the committee, the purpose of this hearing is to develop facts with reference to impediments which seem to have arisen in the rural electrification program, occasioned by lack of copper on the part of rural electrification administration cooperatives, and of other materials necessary in the completion of projects which are now underway, and other projects which have been approved or are awaiting approval and are not underway. This is a matter which would be certain to challenge the attention of the committee in connection with its consideration of the Budget estimates for the fiscal year 1943. However, in view of the immediate and widespread interest on the part of the membership of the House and of the Senate generally, it is deemed pertinent and expedient that this subcommittee should go into the matter now with a view of ascertaining for the Congress and the country the facts with regard to conditions which may have arisen in connection with the carrying out of the rural electrification program and suggest measures for their rectification, if the possibility of rectifying them through congressional action may appear. M226066 1 Mr. Slattery, of the Rural Electrification Administration and representatives of the Office of Production Management have been requested to be present for the purpose of advising on this subject matter. I think unless there is objection we will hear Mr. Slattery at this time. Mr. Slattery, we are interested in ascertaining such facts as may be available concerning the rural electrification program for the present fiscal year, the expenditures or nonexpenditure of funds which have been made available by Congress for your organization, the reasons which may have prevented the orderly expenditure of those funds as was anticipated by the Congress, and just what if any action may be suggested either by your organization, the Office of Production Management, or anybody else which would facilitate the carrying out of the purposes of the organization in an orderly way despite the emergency conditions which prevail. We will be glad to have you make a statement for the benefit of the committee as to the progress of the work of your organization, so far as any impediments thereto or anything else in the nature of the subject matter which I have indicated we desire to be advised about. RELATION OF RURAL ELECTRIFICATION ADMINISTRATION PROJECTS TO DEFENSE INDUSTRIES Mr. SLATTERY. Mr. Chairman, I should like to say concerning the question of national defense and the priority of the Rural Electrification Administration for materials, which I assume fits very much into the picture, that the President appointed me as a member of the Power Committee of the original National Council of Defense, a committee of which Mr. Stettinius, Mr. Olds, Mr. Dunn, Mr. Kellogg, and others were members. I state this as a background because I participated in the preliminary hearings on the National Council of Defense. I appeared before the full committee on one occasion at the suggestion of Senator Norris and outlined how rural electrification is related to the question of small decentralized industries as part of the national defense picture, and how Rural Electrification Administration is a defense agency because of the possibility of aid to the Army and the Navy and other branches of the Government through R. E. A.-financed rural electric cooperatives, of which there are over 700 in operation in two-thirds of the counties of the United States. Mr. Smith of the Bureau of Agricultural Economics presented at this meeting certain maps showing the distribution of raw materials and raw-material industries. R. E. A. presented maps showing R. E. A.-financed lines, and together they showed the relation of availability of electricity in rural areas to the development of these raw materials. At that time I appointed in Rural Electrification Administration a small organization to follow up defense problems with Mr. Beamish, who is here today as the head of it, and we cooperated on many of the power-supply problems of the War Department. We were asked particularly on one occasion concerning the rural cooperatives, and we supplied data showing the aid we had already given to the War Department at Camp Shelby; and I issued a statement which I should like to put in the record, which I think was sent by the Quartermaster General to his officers throughout the country, to show how rural electrification could aid in defense and aid the War Department. Mr. TARVER. Let the statement go in the record at this point. (The statement referred to follows:) WAR DEPARTMENT, OFFICE OF THE ASSISTANT SECRETARY, Memorandum for the Chief of Engineers. Subject: The Rural Electrification Administration. 1. The inclosed copy of a letter from Mr. Harry Slattery, Administrator for the Rural Electrification Administration, is forwarded for your information and retention. Mr. Slattery describes the services which the R. E. A. is prepared to render in the defense program. By direction of the Assistant Secretary of War: H. K. RUTHERFORD, Brigadier General, United States Army, Director, Planning Branch. Hon. HENRY STIMSON, UNITED STATES DEPARTMENT OF AGRICULTURE, Secretary of War, Washington, D. C. MY DEAR MR. SECRETARY: Along the line of my statement to you on Rural Electrification Administration and your Department, I am pleased to give you more detailed information concerning the former's participation in activities relating to the supply of power to Army camps and cantonments. I. It is possible for Rural Electrification Administration to cooperate with the War Department by placing its experienced and highly trained personnel at the service of the Department. Already there has been moderate cooperation in an informal manner wherein members of the Rural Electrification Administration staff have: 1. Made surveys of availability of electric power for camps and other defense projects; 2. Expedited negotiations for construction of power lines and other facilities to the end that work might be started promptly; 3. Negotiated for the lowest possible rates for power and eliminated unwarranted charges by power companies for construction of facilities to serve the camps; 4. Applied mass production technique in the construction of transmission and distribution lines and other power facilities, with the result of unusual speed-up in the construction program; 5. Taken advantage of Rural Electrification Administration's ability to finance at low cost, through its cooperatives, the construction of such facilities, and through its policy of charging off the cost of such construction work over a much longer period than would be warranted from a purely business-risk standpoint. II. Following are examples of the informal cooperation referred to above: 1. The Engineering Division of the Quartermaster Corps gave Rural Electrification Administration a list of 10 proposed National Guard camps and their sites, and requested information as to the best source of power for these camps, what construction work would have to be done to get the power to the camps, and approximately how much it would cost. Rural Electrification Administration supplied the information within 24 hours. 2. In the case of planning power facilities for one camp, it became apparent that start of construction would be delayed pending completion of negotiations between the War Department and the power company. Rural Electrification Administration accepted a verbal order from the War Department to proceed, and construction of the power facilities for this camp was started immediately although the proper final contractual arrangements were not drawn up until several weeks later. The assurance that Rural Electrification Administration would provide the facilities at actual cost, and the fact that one Government department was dealing with another, permitted routines to be simplified to the end that construction schedules were met. 3. In the case of Camp Shelby, Miss., the rate originally proposed by the power company for service to the camp was considerably modified by negotiations through Rural Electrification Administration's Rate Section, with the result that a saving in cost of power of $30,000 per year was effected. 4. In the case of two camps in Louisiana, the power company's proposal contained a provision that the War Department make a contribution of $350,000 toward the cost of construction. In the case of a camp near Savannah, Ga., a similar $55,000 contribution was asked. Rural Electrification Administration was invited by the power section of the Quartermaster Corps to submit proposals covering the construction of power facilities to these camps. Rural Electrification Administration promptly submitted a proposal providing for long-term amortization of construction costs; whereupon the power companies withdrew their original proposals and asked permission to submit new proposals which eliminated any contribution by the War Department for construction work. Rural Electrification Administration's interposition saved contributions by the War Department of $405 000 in these two instances. 5. The fact that Rural Electrification Administration has for extended periods supervised the construction of 500 miles of rural line per day enables us to give unusual service in the matters of speed of construction and low costs; and of a quality so excellent that Rural Electrification Administration's design and construction have been adopted generally by the private industry. For instance: Rural Electrification Administration was given an order by the War Department to proceed with the construction of electric facilities to serve Camp Shelby, Miss. The line and substation for the construction load was completed 24 hours after receipt of order by Rural Electrification Administration, and the large substation and 71⁄2 miles of 110,000-volt transmission line from the power source to the camp was completed and energized 52 days after instructions to proceed were received by Rural Electrification Administration. 6. It must be emphasized that Rural Electrification Administration cooperatives, through which financing of power facilities is done, are strictly nonprofit organizations and therefore the War Department is assured of service from these cooperatives at actual cost. The following general policy as to amortization of the cost of construction of power facilities for War Department use illustrates the extremely liberal arrangements that can be entered int in this respect by Rural Electrification Administration, by virtue of the fact that after the War Department is through with the use of these power facilities they may be put to work elsewhere on our extensive rural systems, which are in the process of continuous growth and development. In general, one-half of the cost of construction of facilities is amortized over a period of five years, and the balance over a period of 20 years. This amortization may be effected by an increment to the wholesale rates at which the cooperative receives the power. or by means of a flat monthly charge. III. Mobile Diesel generating units have been developed by Rural Electrification Administration to a high state of perfection. These units, of 100kilowatt capacity, are mounted on trailers and can be readily moved over the highways or on flatcars to any point where embergency power is required. It is planned to establish these mobile Diesels in groups at strategic Rural Electrification Administration load centers all over the country, primarily for the purpose of having an emergency source of power available for our cooperatives. These units are available also to the War Department for use in case of need for power for emergency construction work, or because of break-down for any reason in electric power facilities serving essential defense projects. IV. Other services have been rendered by the Rural Electrification Administration engineering staff to the War Department in numerous instances involving surveying, designing, and planning transmission and distribution systems, although we were not participating in the actual financing or construction work involved. We have, for example, just been ordered to proceed with the financing and construction of a large substation and 25 miles of transmission line to serve the camp now building in Pulaski County, Mo. The essential materials for this project were immediately placed on order, and our best available construction engineers are ready on their way to expedite the work. Speedy consummation of the defense program challenges the maximum effort of every branch of Government that can offer relevant facilities. Rural Electrification Administration has something substantial to offer in making low-cost power available; and accordingly we stand ready to cooperate with the War Department in a coordinated and effective manner along lines the value of which has been demonstrated during recent months. Sincerely yours, HARRY SLATTERY, Administrator. SERVICE TO MILITARY BRANCHES Mr. SLATTERY. This statement showed where we could through the co-ops serve military stations and camps that would be built throughout the country. We quoted prices on power for many projects to the Quartermasters General, and we have a pretty good record of service to the War Department. In one particular and notable instance we served the Navy Department in an installation for the large camp of the Navy near Cape Hatteras; we built the original generating station there, and we are building additional stations, and the Navy Department has complimented us on that work. PRIORITIES FOR COPPER This small R. E. A. unit concerned with defense problems naturally began to follow up the problem of priorities. The first knowledge we had that there was a question of priorities was, I think, in May of last year, when we saw there was going to be application of the priority principle and I went to see the Reconstruction Finance Corporation. I saw the Chairman of the Corporation, and I was sent to Mr. Clayton and Mr. Henderson; and also I saw Mr. Hood. This was all prior to establishment of the priority system. Later on when it became evident there was going to be a question of granting priorities for production of items for civilian use in connection with the national defense program we, of course, began to file requests for certificates of priority for these particular naval and military projects that we had under way. Then came the problem of securing priorities for materials to construct lines for normal civilian uses; it was evident that they were going to set up such priorities; in fact, in the room that I visited there were tables and charts showing plans that were being made for such priorities. Later I went with Assistant Secretary Hill and Dr. Craig to see some of the officials in the Office of Price Administration. We saw Mr. Leon Henderson and his aides, and he later gave us an O. P. A. C. S. priority for civilian copper which I should like to put in the record; it is found in the Federal Register. This allocated to R. E. A. 4,500 tons of copper per month during each of the 6 months beginning with August 1941 and directed O. P. M. to execute the order. Mr. TARVER. That was of what date? Mr. SLATTERY. That order of O. P. A. C. S. is dated July 29, 1941; it appeared in the Federal Register of July 31, 1941, volume 6, No. 148, chapter XI, part 1332. In it the Office of Price Administration and Civilian Supply allotted R. E. A. 4,500 short tons of copper, 3,100 tons of steel, 140 short tons of zinc, and 32 short tons of aluminum. |