Senator WHEELER. Yes; but isn't that substantially what you are doing?

Mr. MERRILL. That is, so far as the operating power companiesare concerned. But then there are these other groups that are engaged in manufacturing equipment.

Senator WHEELER. I see.

Mr. MERRILL. They are interested to the extent that as power development is made in foreign countries and the industrial level. raised, and the producing power of the people raised, those countries. will become a readier market. It is a perfectly natural thing, you understand.

Senator WHEELER. I don't think anybody is questioning that. Senator KEAN. Isn't this the situation in Italy-that there is no coal?

Mr. MERRILL. That is right.

Senator KEAN. And therefore they are trying in every way to develop their electrical power to take the place of coal that they heretofore have had to import, and they are trying to develop, under the Government, their electrical railways, which is also true, isn't that it?

Mr. MERRILL. Yes.

The CHAIRMAN. Mr. Merrill, the purpose of having you down here to-day is because of some previous testimony the committee had with respect primarily to the delay in the Federal Power Commission securing a prompt settlement of and the auditing of accounts of the power companies who had received permits from the Federal PowerCommission, and the delay in securing the necessary valuations. It appears that Mr. Bonner said something about it, and through his testimony there is some suspicion that the work was purposely allowed to fall behind in order to provide a basis for demands upon Congress for increased appropriations. Have you anything to say in that connection?

Mr. MERRILL. Yes, sir; I have something decidedly to say in that connection. That is not correct. I think I had better, if you will allow me the time, Mr. Chairman, review the situation from the beginning of the Federal Power Commission.

The CHAIRMAN. All right. You may proceed.

Mr. MERRILL. The commission, as you know, was created in 1920. It was composed of three Cabinet officers, with provision for an engineer to be detailed from the War Department, and for an executive secretary. The law also carried a provision that the work of the commission in so far as practicable should be performed through the technical, clerical, and other personnel of the departments-that is, the War Department, the Interior Department, and the Agricultural Department-which were represented on the commission.

The commission did not understand, or I should say that the members of the Cabinet did not understand when this bill was before the Congress, that it meant other than what it said. I think that was true of the Members of the House and Senate who sponsored the passage of the bill, the understanding being that in so far as it could reasonably be done, the commission should work through the departments; and that outside of that it should have authority to employ the necessary personnel. However, in order to clear the situation up without doubt, one of the first things that was done after I became

executive secretary of the Federal Power Commission was to submit the matter to the Comptroller General of the United States, and the Comptroller General ruled that the language "in so far as practicable' meant that

Senator WHEELER (interposing). In so far as what?

Mr. MERRILL. "Practicable," meant that the commission must use exclusively the personnel of the three departments, and that it was within the discretion of the heads of the departments to determine in any instance whether they would use their personnel to perform work for the commission or to do their own work which they were instructed by Congress to do and for which they had been given the appropriations.

Senator PINE. Let me ask you right there, when you became executive secretary.

Mr. MERRILL. At the organization of the commission, July 1, 1920. Senator WHEELER. In other words, you were informed that it was optional with them as to whether or not a department should require them to do the work in their own department prior to their assuming any duties with the Federal Power Commission.

Mr. MERRILL. No; it was optional with the heads of the departments to say to what extent they would take up the work of the Federal Power Commission, the commission having no authority to go elsewhere for assistance.

Senator WHEELER. All right.

Mr. MERRILL. So, as a temporary measure, arrangements were made with the three departments for a detail of personnel to the commission. I do not now recall the number. I could not tell you that without going to the records of the Federal Power Commission. But my recollection is that approximately 20 people were detailed to the Federal Power Commission, distributed among the three departments. The members of the commission, and at that time Secretary Baker was the chairman, during the half year following the organization of the commission, made a request upon Congress for an amendment to the act that would allow the commission to employ its own personnel.

I should like to quote, if I may, from the statement in that respect made by Secretary Baker as chairman of the Federal Power Commission, in a letter addressed to the then existing Joint Committee on Water Power.

The Federal water power act * * * specifies in detail the duties to be performed by the commission which it creates. It requires an investigation in the case of every application to determine whether the project proposed is best adapted to a comprehensive scheme of development of the water resources of the region, not only for power development but also for such related uses as irrigation, navigation, flood control, and water supply. It requires the approval by the commission of all project works proposed to be constructed. * * * It requires that there shall be sufficient inspection and supervision of the project works to assure their adequate maintenance and efficient operation. * * * It requires the establishment by the commission of a system if public utility accounting to be made applicable to all licensees, with provision for determining and reporting cost of projects. * * * It requires the determination of the value of the power available at Government dams and an investigation concerning the advisability of the development of such power by the United States.

I am now quoting here and there from the letter, you will understand:

Closely associated with the proceeding are the responsibilities of the commission with respect to accounting methods. The act requires the establishment of a system of accounting applicable to all licensees. This system must be adapted in so far as practicable to the accounting methods of the several States. Its establishment on correct principles and its adequate administration will determine in considerable degree the amounts which will be placed on the property investment account of licensees, and in their depreciation and amortization reserves, all of which are determinative of the the amounts which the United States, or any other public agency, will be required to pay for the properties in event of recapture at the termination of the license period.

The CHAIRMAN. What is the date of that letter?

Mr. MERRILL. December 31, 1920.

The CHAIRMAN. And to what individual was it addressed? Mr. MERRILL. It was addressed to Mr. Esch, the chairman of the Joint Committee on Water Power, House of Representatives. You recall, I presume, that in the handling of water-power legislation at that time a joint committee had been formed of representatives from the Committee on Interstate and Foreign Commerce, the Committee on Public Lands, and the Committee on Agriculture.

The CHAIRMAN. What was the exact recommendation made by Secretary Baker as chairman of the Water Power Commission at that time?

Mr. MERRILL. The report from which I read accompanied a draft of legislation requesting an amendment of the act which would authorize the employment of personnel by the Federal Power Commission to do this work.

The CHAIRMAN. And up to this time no legislation has been enacted along that line?

Mr. MERRILL. No; and this was within six months after the passage of the act, and after the decision of the Comptroller of the Treasury.

The CHAIRMAN. I mean that since that time the Congress has passed no legislation to remedy that situation?

Mr. MERRILL. There have been amendments put in the appropriation bills for the commission that have made it possible as of the 1st of last July to employ its own personnel, but not before that time.

The CHAIRMAN. That was the first step taken by the Congress? Mr. MERRILL. Yes, sir.

The CHAIRMAN. And yet at each appropriation period of the year your body made a request for the same thing, did it?

Mr. MERRILL. In connection with these appropriations?

The CHAIRMAN. Yes.

Mr. MERRILL. No. We are not permitted to do that.

The CHAIRMAN. Then you mean that you have to make your representations to the Bureau of the Budget?

Mr. MERRILL. Yes, sir; and the Budget Bureau invariably turned down the requests of the Federal Power Commission.

The CHAIRMAN. So that the Congress never got a true picture in all these years of what the Federal Power Commission needed?

Mr. MERRILL. The status of the work was explained every year in the hearings before the Appropriations Committees. It was explained in every annual report of the Federal Power Commission.

The CHAIRMAN. But during all the time since that first communication from Secretary Baker, as chairman of the Federal Power Commission, have you made any efforts to get help from the departments to do this accounting and auditing work?

Mr. MERRILL. I did. I continuously made those efforts.

The CHAIRMAN. And have those departments turned down your requests?

Mr. MERRILL. They have turned down my requests except to the extent in which they complied with them with the personnel that we actually had.

Senator WHEELER. What was the reason that the departments gave as to why they turned down your requests?

Mr. MERRILL. The reason was this: That the Congress had appropriated to the several departments certain amounts for the departments to perform their own work. There is a provision of law I think that forbids the use of an appropriation for any other purpose than that for which it is made. Of course, presumably at least, that provision of the statute law did not affect the Cabinet members. in so far as they complied with the requirements of the decision of the Comptroller General in respect of the Federal water power act.

The best statement possible of the attitude of the Federal Power Commission is contained in the report made by the commission to the Budget Bureau. The commission had, as I have said, annually reported to the Congress what the situation was. It has annually requested Congress that the situation be cured. It had prepared legislation, and in the Congress of 1926 or 1927, and I do not remember which, a bill which would have authorized the employment of personnel, passed the Senate but was pigeonholed in the Committee on Interstate and Foreign Commerce of the House of Representatives at the close of the session. At the next session the commission prepared another bill, or in the next Congress-I forget which-the general attitude which was taken by the Budget Bureau will be shown by this report which I have here, of date January 28, 1926. This report was sent to the Budget Bureau, over the signatures of the three members of the Federal Power Commission, who after explaining the status of the work

Senator DILL (interposing). Do I understand you to say that there was no increase in the number of employees during the period 1921

to 1926?

Mr. MERRILL. There was an increase, but by a very small number; originally 20 to 23 I think; and I believe there were 33 at the time I left the commission on the 1st of last July.

Senator DILL. I asked you if from 1921 to 1926, when this report was made to the Bureau of the Budget, there had been any additions made to your staff?

Mr. MERRILL. There had been a few additions made, from time to time.

Senator DILL. But those really did not amount to any substantial increase in the number of your employees?

Mr. MERRILL. They did not. Now, the letter to the Bureau of the Budget states:

In his decision of July 9, 1920, the Comptroller of the Treasury said: "If the personnel of the three departments concerned is not adequate to perform properly the regular work of said departments and also the work of the

commission, it is for the three secretaries, who are also the members of the commission, to determine what work shall be accomplished and what work shall be unperformed."

The commission then proceeds:

As heads of the three departments the secretaries have deemed it their primary duty to employ the appropriations of their departments in the performance of the work for which such appropriations were made, believing that if Congress wishes the commission to perform its functions it should provide the means by which it may be done.

Senator WHEELER. There is no question in your mind, is there, that unless you do provide a means in the commission that you will have difficulty in getting the necessary work done of the Federal Power Commission?

Mr. MERRILL. My experience of nine years with the Federal Power Commission makes it absolutely certain that that is true. Senator WHEELER. That is what I mean, and it seems to me that is only natural.

Mr. MERRILL. Yes, sir; and it is ridiculous to think otherwise. Senator WHEELER. Yes, sir; it is perfectly ridiculous to think otherwise. For where money is appropriated by Congress for specific work in a department, that work must come first, and the work of the Federal Power Commission, unless there is a direct appropriation for it, and personnel assigned to it, is going to become secondary. Mr. MERRILL. Yes, sir.

The CHAIRMAN. Mr. Bonner is a friend of yours, is he not?
Mr. MERRILL. He is.

The CHAIRMAN. How does it come that he makes the charge that the delay referred to was intentional?

Mr. MERRILL. That is something that I can not answer, Mr. ChairI mean, I am not able to answer that.

man.

The CHAIRMAN. It seems to be a sort of reflection upon your administration, does it not?

Mr. MERRILL. I do not know whether it was intended for that or not.

The CHAIRMAN. Well, it is, whether it was so intended or not.
Mr. MERRILL. It would appear to be.

Senator WHEELER. How long was Mr. King in the commission?
Mr. MERRILL. Mr. King was there from the beginning.

Senator WHEELER. Did you ever find that Mr. King, during your time in the Federal Power Commission, neglected the duties of his office for the reason that he wanted to get larger appropriations for his particular work?

Mr. MERRILL. Absolutely not.

Senator WHEELER. What kind of man did you find King to be? Mr. MERRILL. I found Mr. King to be an extremely reliable man. I depended upon Mr. King as much as anybody in the commission. But I would have to make this criticism, probably, of Mr. King, that in my judgment he was inclined to go too much into detail, and in that way some of the work got delayed. But that was a difference of opinion, and perhaps a difference of temperament, if you will call it that. Mr. King's work was able, it was disinterested, and while I could not agree with him in all the details, yet essentially we were in agreement.

Senator WHEELER. Essentially you were in agreement?