such funds at that time was the Federal Government and its public works funds. And he got the money he needed for that Skagit development on very good terms and for the expansion of that project and program on the Skagit River was financed through the usual channels, but through financial groups that were not entirely identified with what has at times been called the money trust in this country. By a more independent group of financial houses and it became the basis for a very successful series of projects on the Skagit River, very remarkable projects.

I think at one time there was the Pujo Committee investigation of what was called the money trust which would agree to essentially a monopoly which would be able to dictate terms, terms under which even municipalities, even agencies set up by municipalities would do their financing, but there has always been down to date, at least, a group of financiers, certain houses that have not completely identified themselves with this monopoly of credits in the country and it has always been possible to find financing from projects that are entirely bankable because of the absolute assurance that such low cost power will always find a market.

There have been groups that have maintained their independence of the tendency to centralize control of new money in this country and those sources have been interested in stepping in and financing such undertakings as this project of the State of New York would be. May I add one thing to that, Mr. Chairman? Senator CARROLL. Certainly.

Mr. OLDS. I would like to say this, it would certainly be posing an issue as to which was bigger, more powerful, the financial group to which people have to turn for the financing of such projects or the Federal Government? If, on what is essentially a difference in ideology, a State like New York could not go and get its funds from the money market of America because of a difference of opinions as to the preference provision of this marketing Federal power.

Senator CARROLL. Well, I believe that they testified they can get the money, but in order to get the money the basis of the strength of the bond issue-this is my interpretation of their testimony, not their statement-is that if they have these firm contracts that are known, that is the revenue can be reasonably anticipated, that it is vital to the marketability of these bonds.

Now, of course, there is no obligation to any property in New York State, there is no property, no obligation on the authority itself. The obligation is the revenue that comes from these contracts, from the sale of power under these contracts, and I think the point that at least Mr. Moses impressed me with, was that by having these contracts they would be able to explain to the financial analysts who look into the bonds to see what is in back of the bonds before the investment is made

Mr. OLDS. But in terms of even the full acceptance of the preference provision, there is always a complete market for the power; there is never a moment when that power will not be sold. The power will be sold under contracts so far as it is sold to private power companies with a provision that on, we will say, 5 years' notice, a certain amount of that power and where it is power that is going to be made available to municipal and cooperative systems, the increment in their need is

not of such a magnitude that it means that it is suddenly all withdrawn. from the company, but with 5 years' notice any power company in the State of New York and to all intents and purposes any power company in the United States, can make its plans to replace that power.

Today with the very rapid progress in technology, steam-plant technology, the coming atomic power technology, they are not going to have the slightest problem as far as their systems are concerned in planning over a 5-year period to allow a portion of the power that they are taking to be shifted to public bodies and cooperatives. There is going to be no risk involved at all.

Senator CARROLL. That is why I suggested that perhaps the States themselves, through accredited agencies, have to set up some mechanism, an agency to negotiate contracts unless it is to be done by each individual co-op throughout all Pennsylvania or through its accredited agency, because it would seem to me that would run into hundreds of contracts, where, if the State of Pennsylvania had a contracting agency with some financial responsibility and the same thing would be true in Ohio, that is why this is a novel situation.

Mr. OLDS. That is correct, Senator, in this sense: What you have to do if you get away from a regional system which can be set up by the Federal Government, you create a situation where you have to have a certain amount of interstate cooperation to make possible the effective carrying out of marketing policy where you have essentially an interstate resource being handled by one State.

Senator CARROLL. That is why I think Chairman Moses, I got the impression, while he sort of brushed it off, that in these various co-ops adjoining New York, why I think he talked about their financial, I do not think he used this word, but whether they were financially responsible, but there was a series of small groups and organizations trying to negotiate with them, but he had heard nothing from the States, and I put the question to him. I said, when he talked about the 150mile marketing area, I said, "Have you given that information to any State?" No; they had not, and no State had asked them for it.

Mr. ROBINSON. Mr. Chairman, I heard Chairman Moses' reference to the doubtful financial capabilities of the cooperatives. I might say that I do not know of any cooperative that ever reneged or defaulted on any of its obligations to a power supplier. I would further state that in the State of Pennsylvania there is an existing generation and transmission cooperative in existence and that, if the State of Pennsylvania did not provide an agency to pick up this power at the border, these cooperatives could very easily borrow money through their generation and transmission cooperative from REA to construct such a facility to get the power to them, especially in view of the fact that this could be relatively low-cost power which would make such transmission feasible.

Senator CARROLL. Are these companies, and I do not want to inject anything new into these hearings, but are these companies financially responsible in the sense that they have revenue money that can stand in back of a contract? Can they contract for a whole group?

Mr. ROBINSON. Well, they do it all the time, sir. These generation and transmission cooperatives, perhaps I should explain, are a group of distribution cooperatives that organize among themselves what we call a GT co-op, which is an entirely separate instrumentality, incorporated separately under the laws of whatever State it is located in.

Now, there are a number of these in existence. In the Southwest we have 6 or 7 major GT cooperatives with generating plants and transmission facilities. In some areas they have the only transmission facilities in the area. They are exchanging power with the Southwestern Power Administration on a major scale and there is no State law providing for the pickup by any State agency of this power.

There is in Missouri the Central Electric Power Cooperative, the Northwest Electric Power Cooperative, and what we call the KAMO Electric Cooperative. All of these have heavy transmission lines, 154 kilovolts as I recall. That is bigger than any transmission line I have been able to find on a Federal Power Commission map in the State of New York.

Senator CARROLL. I think Moses meant he was giving the business, he is a man of wide experience.

Mr. ROBINSON. Yes, sir; but not in power marketing.

Senator CARROLL. I had never met him before this meeting, but I have heard of him for years. He is able to market this block of power here, market this block of power there, he has firm commitments and, therefore, is able to say-not he, himself-but in a prospectus that is given us, we have these firm contracts, these bonds are safe, you will get your money, these people are not interested generally speaking but the interest that comes from that money, this is a business transaction. Now, the question is, they have got a block of power out here, we will say it is according to their own testimony 275 thousand kilowatts. I thought it was 150 thousand. They have got this area, but how do they firm it up into a contract? Do they do it with each little municipality? With each little co-op? With each co-op way off in the State of Pennsylvania, way off in the State of Ohio? Who draws it in where they can have a firm contract? Where they can show that this is a part of your security under this bond? We will have contracts, we will get money. It seems to me these are the questions. We are in the financial field. Now we are talking about the practical things from their viewpoint on the marketability of the bonds.

I agree with you. I think there is a great demand for electricity but it is one of the things that seems to me and the committee, we ought to be able to answer. That is why I have talked about some State agency

that can function.

We, in the West, when we go out to have a multiple-purpose project, we set up a conservation district and in that conservation district the farmers pledge their land, the small towns pledge their property to the repayment of these projects, and here there is no pledge except contracts. Contracts based upon the delivery of power.

We in the West, when we go into these things, we pledge, as I say, our property, the revenue. In this case we come back again to just one question: this is the sale of power.

Now, the next thing we want to do is to project the preference clause. We show them an expanding market. But how to translate this into firm contracts so when you are talking to people who are interested in money, hiring their money, that is what they are doing, and they want to know how it is coming back to them, and I think this is the point that Moses was trying to put out.

There may have been other motives, I am just saying that this one, and this is the question on financing. It would be a good thing

for the committee to know and myself, I am not concerned, because I feel, you have convinced me that there is a great demand, a great market. The real question in my mind is even under the preference clause that you want-you people have been speaking for

Mr. ROBINSON. Let us say

Senator CARROLL. May I finish, please. Even though you get this preference clause, there is a real question in my mind as you get what you want even with the New York Authority because their treatment of the people in New York from the testimony I hear, the small municipalities, and small co-ops, have not been participating, have been given an opportunity to participate under the St. Lawrence project.

Now, you go ahead.

Mr. ROBINSON. I am sorry to have interrupted you, sir.

Senator CARROLL. That is all right.

Mr. ROBINSON. But let us say that initially the New York Power Authority could not make a single contract with a co-op in Pennsylvania or Ohio because of the fact that no State agency had been established and perhaps, let us assume further, that there was no cooperative agency able to pick up power for the co-ops. The Chairman-all he would do would be to sell this power to the power companies or to whoever else wanted it on a 3- or 5-year withdrawable basis. Then the burden would be on the other States and on the co-ops to organize some entity to pick this power up.

At the time they did organize such an entity and signed a contract with the Authority, then the Authority would notify whoever had initially purchased the power, that in 5 years we will withdraw a certain block of power to satisfy these other customers. It would merely be the substitution of one man's dollar for that of another at the time the transfer is made. There would be no interruption of revenue and the power would all be sold all the time.

Senator CARROLL. I think that is true; but it would seem to me that the adjoining States would be derelict not to protect a certain amount of power coming into them now, have some sort of an understanding, seem to wait, one of its co-ops way off in Pennsylvania trying to negotiate with the New York State Authority, they ought to have a little bit more power and they better assert that power.

Mr. ROBINSON. I think that is true. I think they would, Senator. Senator CARROLL. That is my hope. That is why I suggested here in the earlier part, my principal interest, well, this is an American water, adjoining States ought to participate and that is why I began asking questions about the agencies that would be set up to cope with this Authority that we are attempting to set up by this legislation.

Well, you all have been very helpful to me and I hope there is enough in the record, not to confuse other members of the committee. And I appreciate your coming on Saturday to give us the benefit of your experience and your advice.

Does anyone else desire to testify, say anything?

Mr. ROBINSON. We appreciate your coming on Saturday, too, Senator.

Senator CARROLL. Well, I am very happy to have been here. It has been very educational to me and I am always willing to learn about these things.

Is there anything from any staff member of the committee? Do any of you have anything to say at this time?

(There was no response.)

Senator CARROLL. We have a number of communications with regard to these bills that have been received by the committee and they will be incorporated in the record at this point. (The documents referred to are as follows:)

Hon. ROBERT S. KERR,

CHAMBER OF COMMERCE, Washington, D. C., April 12, 1957.

Chairman, Subcommittee on Rivers and Harbors, Senate Committee on Public Works, Washington, D. C.

DEAR SENATOR KERR: The Chamber of Commerce of the United States wishes to register its opposition to certain features of S. 1037 and S. 512.

The national chamber has informed Congress previously of its opposition to any legislation to permit the development of additional power at Niagara, either by the Federal Government or the State of New York. Rather, we have supported bills for power development by the taxpaying electric companies who, for more than 50 years, have operated powerplants at Niagara and were willing and able to proceed with the new development. Unfortunately, no such bills are pending in this session.

S. 1037 would permit an agreement between the Niagara Mohawk Power Corp. and the power authority of the State of New York. This agreement would permit the corporation to exchange its present water rights for power from the State Authority.

But section 3 (d), (e), and (f) of S. 1037 provide for preference in the purchase of power. The chamber is opposed to all types of preference clauses, and we strongly oppose these provisions. Investor-owned electric companies, taxpayer-financed Government power agencies, and cooperatives make identical use of hydropower from water resources. They render practically identical services to the public. One class of customers should not be given preference over another class. The power should be sold to those best able to distribute it to all classes of customers without preference.

Section 3 (d) of S. 1037 provides that defense agencies of the United States be given preference to purchase power. Section 16 of the Federal Power Act of 1920 provides that when, in the opinion of the President of the United States, the safety of the United States demands it, the United States may seize and operate any project or any part thereof for the duration of the emergency. This seems to us to give the Federal Government ample access to the power in times of emergency, and obviates the need for defense agencies of the United States to have a preference to purchase the power in times of peace. We therefore oppose section 3 (d).

Section 3 (e) of S. 1037 provides that a reasonable amount of power shall be made available within the project's economic market area in neighboring States to be distributed according to their laws. The State power authority should not be compelled by any Federal directive to make available any Niagara power to another State. We therefore oppose section 3 (e).

Section 3 (f) of S. 1037 provides that a reasonable amount of the power available both in the State of New York and in neighboring States be allocated for the present and reasonably foreseeable future needs of rural electric cooperatives and municipalities in the project's economic market area. The customers of rural electric cooperatives and of municipal electric distribution systems are no different in any respect from the customers of the taxpaying electric utility companies. It is difficult to see any reason why one class of citizens should be given preference in the distribution of electric power over another class. We therefore strongly oppose section 3 (f).

S. 1037, if it should be approved, should also be amended to require that the Federal Power Commission shall include among the conditions of the license to the State power authority, that the authority in distributing Niagara power shall, as far as possible, through transmission contracts, make use of the transmission facilities of local private and public utilities and shall not build duplicating transmission lines.