This resolution would give the four States and the District of Columbia authority to negotiate and enter into a compact for the purpose of regulating, controlling, preventing, or rendering harmless the pollution of the waters of the Potomac drainage area by sewage and industrial and other wastes. Such a compact would become binding only when approved by the legislature of each of the States and by the Congress. The resolution differs from others heretofore considered by the Congress in that it would provide that a suitable person be appointed from the Treasury Department by the President to participate in negotiations as a representative of the United States.

The formation of interstate compacts, with the subsequent formation of interstate sanitary districts having a legal status, for the purpose of controlling and abating stream-pollution conditions, has been suggested as one means of bringing about improvement in the sanitary conditions of interstate streams. The effectiveness of this method of controlling pollution as yet has not been determined. However, it is the view of the Treasury Department that compacts or agreements among interested States offer a possible solution to the problem of pollution control and that the formation of such compacts should be encouraged.

It is also the view of the Department that since the Federal Government has a special interest in interstate streams, particularly those classed as navigable streams, it should participate in the negotiations leading to the formation of interstate compacts. It is assumed that the language "suitable person from the Department of the Treasury" is intended to mean an officer of the Public Health Service, experienced in stream-pollution matters and familiar with cooperative agreements among the States. If this is the intent, it is suggested that the United States Public Health Service be mentioned.

It is the recommendation of this Department that this resolution be enacted.
The proposed legislation is in accord with the program of the President.
Very truly yours,

Hon. ROYAL S. COPELAND,

JOSEPHINE ROCHE, Acting Secretary of the Treasury.

WAR DEPARTMENT, Washington, July 29, 1937.

Chairman, Committee on Commerce, United States Senate,

Washington, D. C.

DEAR SENATOR COPELAND: The Department is in receipt of your letter of June 11, 1937, referring for report Senate Joint Resolution 162, Seventy-fifth Congress, first session, the purpose of which is to permit the States of Maryland, Virginia, West Virginia, Pennsylvania, and the District of Columbia to enter into a compact or agreement respecting the creation of a Potomac Valley conservancy district for the prevention or abatement of harmful pollution of the waters thereof. Insofar as the interests committed to this Department are concerned, there is no objection to the favorable consideration by Congress of Senate Joint Resolution 162. This proposed report was submitted to the Bureau of the Budget, which reports that there would be no objection on the part of that office to its submission to Congress.

Sincerely yours,

Hon. ROYAL S. COPELAND,

MALIN CRAIG, Acting Secretary of War.

NATIONAL RESOURCES COMMITTEE,
Washington, August 9, 1937.

Chairman, Committee on Commerce, United States Senate. MY DEAR SENATOR COPELAND: This is to report on the merits of Senate Joint Resolution 162 and the propriety of its passage, as requested in your letter of June 11, 1937.

The bill would enable an interstate agreement for the creation of a Potomac Valley conservancy district for the abatement of pollution in the Potomac Valley. Although I have not had an opportunity to obtain the opinion of other members of the National Resources Committee, I am commenting on the resolution on the basis of reports issued by technical subcommittees.

The Potomac Basin pollution problems have been investigated by the water resources committee and by its subcommittee on water pollution. Both groups are agreed that interstate action in the area is highly desirable. The pollution problems in the basin are serious, and a joint solution is required. The States concerned have acted informally with some success in the past, and a formal arrangement for interstate cooperation now is needed. The conservancy district program would have additional importance in that it would provide a demonstration area for the study of pollution conditions and of methods of correcting water pollution. Such a demonstration area would be of importance to the entire United States.

I also have referred this bill for review to the National Park Service, and I am informed that the Service considers that such an interstate agreement would aid materially in the improvement of recreational facilities in the Potomac Basin. Thus, from the standpoint of both the National Resources Committee and of the Department of the Interior I endorse Senate Joint Resolution 162 and recommend favorable action by your committee.

This report has been submitted to the Bureau of the Budget for approval, and advice has been received from that Bureau that it is in accordance with the President's program.

Sincerely yours,

HAROLD L. ICKES, Chairman.

O

AMENDING THE FEDERAL CREDIT UNION ACT

AUGUST 17, 1937.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed

Mr. STEAGALL, from the Committee on Banking and Currency, submitted the following

REPORT

[To accompany S. 2675]

The Committee on Banking and Currency, to whom was referred the bill (S. 2675) to amend certain sections of the Federal Credit Union Act approved June 26, 1934 (Public, No. 467, 73d Cong.), having considered the same, report favorably thereon and recommend that the bill do pass.

STATEMENT

The bill makes several amendments to the Federal Credit Union Act which amendments have the approval of the Governor of the Farm Credit Administration who has supervision over Federal credit unions. The purposes of the bill are explained as follows:

(1) Section 1 amends section 6 of the Federal Credit Union Act by providing that the Governor of the Farm Credit Administration may establish a scale of examination fees based upon the cost of examination and the ability of credit unions to pay such fees. Under this provision newly organized credit unions and those whose assets are small could be charged a fee commensurate with their ability to pay. The larger credit unions are able to pay examination fees based upon the actual cost of examination; the smaller credit unions cannot pay such fees and in many cases to require them to pay fees based upon the actual cost of examination places them under heavy expense within a short time after they are organized and hinders their development.

(2) Section 2 of the bill provides for interlending between credit unions and empowers Federal credit unions to invest in shares or accounts of Federal savings and loan associations. Under the provisions of this section Federal credit unions would be given a somewhat larger field of investment and the borrowing needs of Federal credit unions could better be met by loans from other credit unions in addition to those now obtained from commercial banks.

(3) Section 3 of the bill amends section 16 of the Federal Credit Union Act by enlarging the powers of the Governor to give him the authority to study the problems of persons with small means in obtaining credit and the available methods and benefits of cooperative saving and lending. This section also gives him the necessary authority to make reports of the results of such studies and to disseminate the information obtained to the people in that group.

(4) Section 4 amends section 18 of the Federal Credit Union Act which deals with taxation of Federal credit unions. Under section 4 Federal credit unions would be exempt from taxation except taxation on real and tangible personal property. It permits the taxing of members upon shareholdings held in any Federal credit union but limits the tax to the rate imposed upon holdings in similar domestic organizations. This section also prohibits the placing of the burden of collecting the tax upon the credit unions themselves.

Experience with Federal credit unions since the passage of the original act indicates that the taxation of these organizations in a manner similar to the taxation of domestic banks places a disproportionate and excessive burden on the credit unions. Many States tax domestic banking corporations in relation to their share capital. In view of the fact that Federal credit unions may not accept deposits, their share capital represents a much greater proportion of their total resources than is the case in other financial institutions. As Federal credit unions are mutual or cooperative organizations operated entirely by and for their members, it appears appropriate that local taxation should be levied on the members rather than on the organization itself.

CHANGES IN EXISTING LAW

In compliance with paragraph 2a of rule XIII of the Rules of the House of Representatives, changes in the Federal Credit Union Act, approved June 26, 1934, made by the bill are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, existing law in which no change is proposed is shown in roman):

Section 6 of the Federal Credit Union Act, approved June 26, 1934 (U. S. C., 1934 ed., title 12, sec. 1756):

SEC. 6. Federal credit unions shall be under the supervision of the Governor and shall make such financial reports to him (at least annually) as he may require' Each Federal credit union shall be subject to examination by, and for this purpose shall make its books and records accessible to, any person designated by the Governor. The Governor shall fix a scale of examination fees [designed, as far as is practicable, so that in each case the fee to be paid shall equal the expense of such examination, which] to be paid by Federal credit unions, giving due consideration to the time and expense incident to such examinations, and to the ability of Federal credit unions to pay such fees, which fees shall be assessed against and paid by each Federal credit union promptly after the completion of any such Lexamination: Provided, however, That if a Federal credit union has assets of less than $25,000 the Governor may accept the audit report of a practicing public accountant in place of such examination and may relieve such Federal credit union of the obligation to pay the examination fee required by this section] examination. Examination fees collected under the provisions of this section shall be deposited to the credit of the special fund created by section 5 hereof, and shall be available for the purposes specified in said section 5.