Tennessee, and that the Governor of Tennessee and the Representatives from Tennessee cooperated in trying to put the plant to use for the same purposes that the Military Affairs Committee are seeking here to provide for, and neither the gentle man from Tennessee nor any member of the Alabama delegation undertook to ask that tax and toll rights be given the State of Alabama, such as this amendment seeks to give to Tennessee. When the question of the location of this plant was being considered there was a strong effort to locate it in Tennessee, and there was no insistence then that burdens should be imposed on the Federal Government such as the pending amendment seeks to impose now.

The declared purpose of the national defense act served notice on all when the site was selected that the plant would be used to manufacture nitrates in time of war and fertilizer in time of peace. [Applause.]

The CHAIRMAN. The time of the gentleman has expired, and the question is on the amendment offered by the gentleman from Tennessee [Mr. GARRETT].

The question was taken; and on a division (demanded by Mr. GARRETT of Tennessee) there were 46 ayes and 125 noes. So the amendment was rejected.

Mr. HOCH. Mr. Chairman, I offer the following perfecting amendment, which I send to the desk and, ask to have read. The Clerk read as follows:

Amendment offered by Mr. HOCH: Page 16, line 12, after the word 64 power strike out the period, insert a semicolon and add the following: " Provided, That in any contract of sale of power by the corporation, the purchaser from the corporation shall agree that any resale of such power to the ultimate consumer shall be at a price that is reasonable, just, and fair, as determined by the Federal Power Commission."

Mr. HOCH. Mr. Chairman, neither the committee bill nor the substitute proposed by the gentleman from New York [Mr. SNELL], if I read them correctly, provides for any regulation of rates as far as the ultimate consumer is concerned. Gentlemen who were here at the time we considered the Ford proposal recall that one of the principal objections to that proposal was that it lodged in no one regulation of the power rates. I think it is very doubtful whether control over rates, if we say nothing about regulation in the bill, could be exercised by the State commissions. It would be contended that since this is a Federal corporation engaged in interstate commerce the State commissions would have no power over the regulation of rates. Certainly there should be somewhere in the bill clear provision for the protection of the ultimate consumer, and even if the State commissions were held to have the power to regulate rates, do we desire to put into the hands of the service commission of Alabama, for instance, the regulation of rates on power developed and sold by this Federal corporation? I do not think we should do that.

Mr. CLARKE. Mr. Chairman, will the gentleman yield?
Mr. HOCH. Yes.

Mr. CLARKE. Does the gentleman not think that it would be just as fair for the Government, if it is going to regulate the rates for the sale of electricity, to also regulate the rates at which the fertilizer manufactured by the Government should be sold to the ultimate consumer, the farmer?

Mr. HOCH. I do not want to be diverted from the proposition I am discussing.

Mr. CLARKE. That is not a diversion. It is a fair question for the farmer to ask, is it not?

Mr. HOCH. When we get to that proposition, if the gentleman has a provision to that effect, I shall be glad to consider it. But I want to discuss for a moment or two the one proposition before us. This bill provides for the sale of power at the plant, or over transmission lines which the corporation may build, but there is nothing in the bill, if I read it correctly, which provides that the purchaser of that power from the corporation shall be subjected to any sort of regulation of the rate when he comes to sell the power to the ultimate or private consumer. Mr. HUDSON. Mr. Chairman, will the gentleman yield? Mr. HOCH. Yes.

Mr. HUDSON. Suppose the gentleman's amendment was adopted and the Federal commission established a rate. Within each State there is public utility commission that establishes the rate on which the current is sold on plants within the State. The Federal Power Commission might establish a rate that undersells and cuts under every institution within the State. Mr. HOCH. I think if the Federal Government creates a corporation and sells power, if it is done in the discharge of a Federal function, then the Federal Government should control the rate at which the power is sold to the consumer.

Mr. HUDSON. Under those conditions they could undersell the companies within the States who operate under a ruling of the State utility commissions.

Mr. HOCH. Of course, any exercise of this power would be subject to review by the courts, as to whether there was any confiscation or anything of that sort, but certainly the gentleman does not want this power to be sold without any regulation either by the Federal or a State commission of the rate at which it is sold. I have talked this over with several members of the committee, and I trust the committee will be willing to accept the amendment in order that we may assure the public that there will be a regulation of the rates as far as the ultimate consumer is concerned.

Mr. REECE. Does not the gentleman feel that we could trust the regulating bodies of the various States to see that a reasonable and fair price is charged?

Mr. HOCH. I will answer the gentleman frankly. Without any disrespect to the great State of Alabama, I do not think the Federal Government, under the situation which has been outlined here with respect to the Alabama Power Co., should turn over to the commission of the State of Alabama the regulation of the rates for power developed and sold by this Federal corporation. [Applause.]

The CHAIRMAN. The time of the gentleman from Kansas has expired.

Mr. STEELE. Mr. Chairman, I move to strike out the last word. I am not rising in opposition to the bill, but I hold in my hand a telegram containing a copy of a resolution adopted by the Chamber of Commerce of Atlanta, Ga., which they desire to appear in the RECORD. I ask unanimous consent to read the resolution and to place it in the RECORD. The CHAIRMAN. Without objection, it is so ordered. Mr. STEELE. Mr. Chairman, the resolution is as follows [reading]:

ATLANTA, GA., May 8, 1928.

Hon. LESLIE J. STEELE,
House of Representatives, Washington, D. C.:
Following is copy of resolution adopted this date by board of direc-
tors of Atlanta Chamber of Commerce:

"Be it resolved, That Senate Joint Resolution 46 entitled 'A bill to provide for the national defense by the creation of a corporation for the operation of the Government properties at and near Muscle Shoals, in the State of Alabama, and for other purposes' should not be enacted into law for the following reasons: That said bill definitely commits the United States Government to the manufacture of fertilizer. That said bill is class legislation. That it tends to destroy the privately owned fertilizer business of the country by unfair means. It proposes to sell fertilizer at cost and in fixing the cost ignores the return to the Government on the $140,0000,000 spent up to this time in developing Muscle Shoals. It contemplates the free distribution under certain circumstances of 15 per cent of the fertilizer produced. It provides for further large expenditures by an initial capital upset of $10,000,000. It authorizes further large expenditures for acidphosphate plants of which there is already a surplus. It provides for the further expenditure of some $37,500 for a new dam. That said bill would not only entail a loss of revenue to the Government but would entail further large expenditures calculated to increase the tax burden. Said bill in effect is nothing more than a tremendously wasteful and expensive method of subsidizing the farming interest."

[Applause.]

ATLANTA CHAMBER OF COMMERCE.

The CHAIRMAN. The time of the gentleman from Georgia has expired.

Mr. COOPER of Wisconsin rose.

The CHAIRMAN. For what purpose does the gentleman from Wisconsin rise?

Mr. COOPER of Wisconsin. I want to say just a word on the amendment.

The CHAIRMAN. The Chair will first recognize the gentleman from Georgia [Mr. WRIGHT] in opposition to the amendment.

Mr. WRIGHT. Mr. Chairman and gentlemen of the committee, the amendment proposed by the gentleman from Kansas [Mr. HOCH] would place the regulatory power as to rates for the power generated at Muscle Shoals under the Federal Power Commission.

It seems to be pretty well conceded that this is the law of the case: If the corporation which is proposed to be created by the bill sells power at the switchboard to a city, municipality, county, or cerporation, there will be no regulatory power exercised over that either by the Federal Power Commission or any State commission.

Mr. HOCH. Mr. Chairman, will the gentleman yield?
Mr. WRIGHT. Yes.

Mr. HOCH. Since I took my seat I have been informed that power is being sold by the Government at 2 mills and being resold at 7 cents. What is the effect of the regulation we have by the State commission now?

Mr. WRIGHT. I will get to that.

I say it is conceded by the best authority that there will be no regulation either by the Federal Power Commission or the State commission, so far as the power sold by this corporation or by the Government at the switchboard is concerned, either to a State, county, municipality, or corporation. The moment that that current passes into the hands of a purchaser-and I do not care who the purchaser is-then it comes under the regulatory power of the State utilities commission.

Now, then, if the amendment of the gentleman from Kansas is adopted, you would have two regulatory powers over this same current. Suppose the Federal Water Power Commission says, "We will fix the price to the consumer at a certain rate." The State commission, there being no doubt about its right to fix rates, says, "We will fix it at another rate." Which one would control? It is admitted on every hand that the State commissions have the right to regulate the rates. It is conceded that the minute the power passes from the hands of the Government to a purchaser it is subject to the regulation of the State commissions.

Mr. RANKIN. Mr. Chairman, will the gentleman yield | right there?

Mr. RANKIN. Suppose that is the case. The Alabama commission can fix one rate and the Mississippi commission can fix another rate. Would not that cause the State of Mississippi to have more or less trouble?

Mr. WRIGHT. The Alabama commission would fix rates on the power used in Alabama and the Mississippi commission on power used in Mississippi. It would handicap the sale of power if two authorities have the right to regulate the rate. The people of Mississippi would not know what they are getting if the Federal Water Power Commission had authority to fix rates and the Mississippi commission authority to fix rates on the same power.

Mr. RANKIN. If in Alabama you turn the power over to the Alabama Power Commission or the railroad commission or the public service commission, and in Mississippi to the Mississippi commission, Tennessee to the Tennessee commission, would you not have that many commissions competing with each other?

Mr. WRIGHT. No. If it were used in Mississippi, Mississippi would control the rates, and if used in Alabama, Alabama would control the rates. The purpose of this amendment would be to substitute Federal regulation for State regulation, thereby creating a conflict of authority which would embarrass the whole situation.

Mr. ALMON. Can the State of Alabama sell it at any rate? Mr. COOPER of Wisconsin. Mr. Chairman, I move to strike out the last word.

The CHAIRMAN. The gentleman from Wisconsin is recognized.

Mr. COOPER of Wisconsin. Mr. Chairman, the amendment of the gentleman from Kansas [Mr. Hocn] is, in my judgment, of the utmost importance, and ought to be adopted by the committee, for otherwise there would not be any protection whatever to the ultimate consumer of the power generated by this plant and controlled by the authority set up in this bill. The Senate bill, when it came to the House, contained a provision to which I invite your attention, a provision that amply protects the ultimate consumer. It is on page 6 of the original Senate bill, beginning on line 13; and with your permission,

Mr. Chairman, I will read it. I read:

And provided further, That any surplus power not so sold as above provided to States, counties, municipalities, or other said organizations, before the Secretary of War shall sell the same to any person or corporation engaged in the distribution and resale of electricity for profit, he shall require said person or corporation to agree that any resale of such electric power by said person or corporation shall be sold to the ultimate consumer of such electric power at a price that shall not exceed an amount fixed as reasonable, just, and fair by the Federal Power Commission..

Why, Mr. Chairman, there are plants in this country where between the water and the ultimate consumer are three corporations, each making a profit. That is absolutely wrong. And, knowing that fact, are you going to vote down an amendment so just and proper and well safeguarded as is the amendment proposed by the gentleman from Kansas?

If the United States Government is to sell to corporations which are to resell for profit, how much profit are they to make? Are they to gauge their rates by those of the private corporations that have three opportunities for profit between the water and the ultimate consumer? Are you going to do nothing to safeguard the consumer? I trust that the pending amendment, so just and fair and so founded in reason, and which, in substance, was in the bill when it came to the House, will be adopted. [Applause.]

Mr. UNDERHILL. If there is one man in this House who has shown the qualifications of a statesman of the old school, of the Jeffersonian school, of the Jacksonian school, it has been the gentleman from Tennessee, who has addressed you this afternoon, and stood for the fundamental principles laid down by the forefathers. [Applause.]

But just to get rid of this proposition many of you are willing to adopt something which is worse than the disease. Let me read to you from a speech made by one of your colleagues, Hon. Joun McDUFFIE, of Alabama, before the Alabama Bar Association :

There is a growing demand throughout the Nation for more bureaucratic control and more Federal supervision over the very person and conduct of the citizen himself. Even here in the Southland, where so much precious blood was spilled to preserve the integrity of State and local government, there are those who would all too quickly surrender to the Federal Government duties and responsibility which should be performed by the State and local communities.

There speaks the statesman once again, not the local representative, looking at this from the standpoint of how many votes it means to him or what advantage it means to his own immediate locality, but to what is to come in the aftermath of the surrender of the most precious possession of every State of the Union-its sovereignty and control of its natural resources. I want to read to you one other article from the Liberal Socialist Forum, of New York. Here are seven issues, but I shall read only four of them:

Public ownership, development, and distribution at cost of all natural resources, such as coal and wood, iron, steel, and other metals, cement, oil, gas, electricity, water supply, and water power.

Abolition of patents. Inventors to be rewarded by having the Government pay them either a salary for inventing or a lump sum for each invention.

Establishment of municipal stores to furnish food, clothing, and other commodities.

Including fertilizers

at cost to residents.

Employment by the town, city, or State of all residents who desire it, at some productive or otherwise useful work, for not less than $4 nor more than eight hours a day.

TEMPORARY MEASURES FOR IMMEDIATE REFIEF

First. Seizure by the Government of the entire food supply. Second. A world-wide 4-hour day, at 50 cents an hour, in order to provide employment for all without overproduction.

Third. A general moratorium, including a proclamation giving each

family rent-free possession for 10 years of its present place of resi

dence.

Every one of these fundamental principles of the Socialist Party are embodied in this bill-every one of them.

The CHAIRMAN. The time of the gentleman from Massachusetts has expired.

Mr. UNDERHILL. Mr. Chairman, may I have two additional minutes?

The CHAIRMAN. The gentleman from Massachusetts asks unanimous consent to proceed for two additional minutes. Is there objection?

Mr. GARRETT of Texas. Mr. Chairman, reserving the right to object, and I shall not object, I want to ask the gentleman this question: Did the gentleman apply the same doctrine that he has announced with reference to the Muscle Shoals project to the Cape Cod Canal? [Laughter and applause.]

Mr. UNDERHILL. Oh, I expected that, Mr. Chairman. The fundamental principle of government is the protection of its people, and the Cape Cod Canal is, in the last analysis, for the protection of the lives and property of the people and did not take away any one of the rights of my own State, or I would have voted against it.

The CHAIRMAN. Is there objection to the request of the gentleman from Massachusetts? There was no objection. Mr. UNDERHILL.

Mr. Chairman, just one more word. Let me read you one paragraph from the bill:

Any person who shall receive any compensation, rebate, or reward or shall enter into any conspiracy, collusion, or agreement, express or

implied, with intent to defraud the corporation or to defeat its purposes, shall, on conviction thereof, be fined not more than $25,000 or imprisoned not more than 15 years, or both.

This is not for Soviet Russia. It is for the United States and its people; it is a proposition submitted to us by the Military Affairs Committee of the United States House of Representatives, which is supposed to protect us. Russia never has exceeded in any idea of economics the idea which they have presented to us in intolerance, in injustice, in interference with ambition. In the stifling of initiative in the development of one of the greatest sections of this country, which has a wonderful future before it if you keep the wasting hand of government out of it and let private individuals, private initiative, private

ambition, and the States themselves take care of the future. [Applause.]

Mr. DAVENPORT. Mr. Chairman, I ask unanimous consent to proceed for five minutes.

The CHAIRMAN. The gentleman from New York asks unanimous consent to proceed for five minutes on the amendment. Is there objection?

There was no objection.

Mr. DAVENPORT. Mr. Chairman and gentlemen, it seems to me we should not deceive ourselves about what we should do by adopting the proposed amendment of the gentleman from Kansas [Mr. HоCH]. I am in entire sympathy with the at

Mr. RANKIN. Mr. Chairman, the people I have the honor to represent are vitally interested in the distribution of the surplus power at Muscle Shoals, and I sincerely hope the Hoch amendment will be adopted. [Applause.]

You may talk all you please about the State commissions regulating the sale of this power, but I am here to tell you that unless this provision is written into the law, giving the who retail this power, it simply means that the people in the Federal Government the right to curtail the profits of those Tennessee and Tombigbee Rivers Valleys are going to have to pay just as high prices for this power as they are paying today. [Applause.]

This is no theory. I live within about 60 miles of Muscle Shoals. I know of one town within 20 miles of me whose citizens went to one of these power companies and asked what they would bring power and distribute it in their town for. I am informed that the reply was 16 cents a kilowatt, whereas they are buying this power from the Federal Government at Muscle Shoals at about mills a kilowatt.

Mr. ABERNETHY. Who gets the profit?

Mr. RANKIN. The power companies, and the power com

regulated by three or four State power commissions or State public-utility commissions scattered over that section of the country. How can the public-utility commission of a State regulate the sale of interstate power?

We have in the Federal water power act the provision of actual prudent investment as a basis of valuation for rate making. Recent decisions of the courts make that "actual prudent investment" provision of no importance, even if the Federal Power Commission or a State commission should try to follow it. The principle laid down in these decisions is an entirely different principle, a principle of valuation in terms of reproduction cost and of going-concern value. And this means considerably higher rates than would result from the use of the actual prudent investment basis which the regulatory commissions have sought to follow.

Therefore if we are going to control power rates in this project for the benefit of the people of the Southeastern section of our country, it seems to me that we need more than Federal Power Commission or State commission protection. We should provide in this bill that in the contract which the Government or the Government corporation may make with the producer of power, the principle of actual prudent investment shall appear as a term of the contract. Unless we do this, neither by the use of the Federal Power Commission nor the State commissions have we done much, in view of the recent decisions of the courts, to protect the consumers in the Southeastern section of this country. [Applause.]

It seems to me this is a vital defect in this bill and one which has not been considered in connection with any of the other Muscle Shoals bills either, and I am informed that the pro

ponents of the Senate bill, which this House bill amends, would gladly have incorporated a more certain form of contract control, if the need of it had been brought to their attention in time.

Mr. HOCH. Will the gentleman yield?
Mr. DAVENPORT. Yes.

Mr. HOCH. Assuming the validity of all the gentleman says, and I agree with him as to the importance of the matter, what has that to do with this particular amendment? Certainly we would be better off to have the power of regulation lodged in the Federal Power Commission than we would be to have no power of regulation lodged in any body under the terms of this bill.

Mr. DAVENPORT. We might be slightly better off, but we would not be as well off as we would be if we took the time to apply sound reason and experience to the feature of control over rate-making in this bill.

Mr. HOCH. In other words, the gentleman wants to go further, and I would probably go with him, but why should we refuse to go this far simply because we can not go further?

Mr. DAVENPORT. I would say to the gentleman from Kansas that in view of the importance of this matter the best thing this committee could do would be to rise and take time to settle the problem right." [Applause.]

The CHAIRMAN. The time of the gentleman from New York has expired.

This extra power is going to mean a great deal to the people of that country. It is going to mean a new day, if it is given to us at something like what it costs to produce it and to transmit it.

I sincerely trust the membership of this House will vote for the Hoch amendment, in order that our people throughout that country, who have the right to the use of this power, may not be held up on the price of it in the years to come. [Applause.] The CHAIRMAN. The question is on the amendment of the gentleman from Kansas [Mr. HосH].

The question was taken; and on a division (demanded by Mr. BANKHEAD) there were 145 ayes and 35 noes. So the amendment was agreed to.

Mr. MORIN. Mr. Chairman, I move that all debate on the amendment and all amendments thereto close in one hour.

The CHAIRMAN. The gentleman from Pennsylvania moves to close debate on the committee amendment and all amendments thereto in one hour.

Mr. TILSON. Will the gentleman yield?
Mr. MORIN. I yield.

Mr. TILSON. Will the gentleman couple with his motion a statement that if this motion is carried he will then move to rise? If the motion is carried, it limits debate to one hour, so that we can easily finish the bill in one day. There has been no disposition on the part of anybody to obstruct the progress of the bill so that I am sure the matter can be disposed of readily in one day.

Mr. ALMON. Will the gentleman yield? Under the Rules of the House, Calendar Wednesday is dispensed with 14 days

prior to adjournment. Suppose Congress should adjourn?

Mr. TILSON. It would take a majority vote to pass the resolution to adjourn.

Mr. ALMON. Within 14 days of the time set for adjournment you will not have Calendar Wednesday.

Mr. SNELL. Let me say that we will give you a rule to have an extra day. We are not going to do anything to prevent a vote on this bill.

Mr. BYRNS. Mr. Chairman, I want to ask the gentleman from Connecticut a question. I understood the gentleman from Pennsylvania to move that all debate on the pending amendment and amendments thereto close in an hour. I submit that the proposition of the gentleman from Connecticut to rise after that will not amount to anything because the bill will have been concluded at that time.

Mr. TILSON. If we now vote to close debate in one hour, when we go into committee again there will be one hour's debate pending.

Mr. BYRNS. I thought the gentleman's proposition was to have one hour debate to-night.

Mr. MORIN. My motion is, Mr. Chairman, that all debate on the committee amendment and all amendments thereto and the substitute amendments close in one hour.

Mr. GARRETT of Tennessee. If that motion prevails will it be the purpose of the gentleman to move that the committee rise?