Administrator, Rural Electrification Administration; and Frank R. McNinch, Chairman, Federal Power Commission.

Although the committee avails itself as much as possible of information available from the several Government agencies, it, nevertheless, requires a competent staff of its own to perform necessary research and work out details of the problem as directed by the committee.

OIL CONSERVATION POLICY OF THE FEDERAL GOVERNMENT

Five States-Kansas, Louisiana, New Mexico, Oklahoma, and Texas-producing 73 percent of the national oil output, have adopted the policy of regulating oil production so as to prevent waste. Each State determines for itself the amount of oil which currently may be produced therein without waste.

Under the act approved February 22, 1935, generally known as the Connally hot-oil law, the Federal Government, through the Department of the Interior, supports the State policy of oil and gas conservation by providing that petroleum, or the products thereof, produced in excess of the amounts permitted by State law is contraband and may not be moved in interstate or foreign commerce.

During the fiscal year ended June 30, 1936, the Department issued 5,968 certificates of clearance involving 222,034,000 barrels of petroleum at an over-all cost of about one-tenth of a cent a barrel. The administration of the law is so essentially a field activity that, of the 78 persons employed, 60 are in the field and only 18 in Washington. The current appropriation for the administration of the act is $300,000 The act has been upheld uniformly in the Federal courts and no issue thereunder has been presented to the Supreme Court of the United States. The prosecution of cases rests with the Department of Justice which prosecutes civil and criminal proceedings under the act. Out of 248 cases in the courts, the Government has been successful in 231 and unsuccessful in 2, with 15 pending.

The Connally law expires by limitation on June 16, 1937, but a bill to make it permanent has now passed the Senate and is pending in the House. Only one Federal Tender Board, that for east Texas, has been established but, if the law is extended, it is very probable that a new Federal Tender Board will have to be established for the Corpus Christi area, and it is anticipated that an appropriation of $500,000 will be required for the fiscal year ending June 30, 1938.

INDIAN REORGANIZATION FROGRAM

Collectively, the various elements of the Indian Reorganization. Act, approved June 18, 1934, aim to bring about a social and economic rehabilitation of these wards of the Nation and to end certain disastrous policies and abuses which had developed in Indian administration. In broad outline, the act aims to put a stop to the further alienation of Indian lands to white ownership which has been proceeding since 1887 at an accelerating rate. It reverses the traditional policy of destroying Indian self-government and instead establishes a system of home rule which, we hope, will ultimately put an end to the Indians' dependency on the arbitrary regulation of the Indian Bureau. It lays down a broad program designed to arrest the steady pauperization of Indians by providing them with land and access to an adequate

system of rural credit. For the first time, it makes proper provision for the advanced education and training of Indians.

Eight of the 19 sections of the Indian Reorganization Act deal with "the land question." Over the period from 1887 to 1934, Indian lands decreased from 138,000,000 acres to 52,000,000 acres. Half of that which remained in 1934 was almost valueless, semi-aird desert. The Indian Reorganization Act prohibits the further breaking up of Indian tribal lands into allotments in severalty, thus bringing to an end the policy which has been responsible for huge losses in Indian acreage as well as the Indians' non-use of their own lands through leasing system.

Coupled closely with the land sections is that which authorizes the establishment of a revolving loan fund of $10,000,000, of which, to date, Congress has authorized $3,480,000. The pending appropriation act for 1938 recommends an additional $1,730,000. Prior to the passage of the act, Indians were unable to secure credit through the pledging of their allotments on account of their trust status. The Government provided credit for Indians at a rate of less than $1 per capita per year.

ASSISTANCE OF BUREAU OF MINES TO MINERAL INDUSTRIES

The forward-looking policy of the Bureau of Mines, aimed to aid adjustment of the mineral industries to changing conditions, has received the support of the Department and of Congress. Flush production, especially of gold, silver, copper, lead, and zinc, resulting from discovery and exploitation of rich deposits, is a thing of the past, and the increasing necessity of utilizing lower-grade ores compels technologic improvement and lower costs, which is one of the main objectives of the research work of the Bureau of Mines. More direct service than formerly is now given to small operators in testing their ores to determine suitable treatment processes.

The Bureau is conducting many technical studies in anticipation of low-cost power that soon will be available to many western mining areas as a byproduct of Government irrigation and flood-control projects. For example, it has undertaken the investigation of electrometallurgical processes for reduction of ores available within the power radius of the various projects. These include ores of manganese, chromium, magnesium, antimony, potash, tungsten, and various refractory materials hitherto not utilized. Equipment already available at the Bureau's Reno station was used for preliminary work pending completion of an electrometallurgical station at Boulder City, provided with large-scale equipment and cheap power from Boulder Dam. Promising results already have been obtained, particularly with reference to manganese, one of the more important strategic metals hitherto unavailable domestically, at a reasonable cost, in sufficient quantity to meet national requirements. Other domestically deficient strategic materials now being investigated by the Bureau include the ores of chromium, manganese, tungsten, and antimony. These studies may well stimulate expansion of the western mineral industries with resulting creation of employment and augmentation of the national wealth.

The Bureau's efforts in promoting health and safety of workers in the mineral industries is bringing about better working and living

ning of the hearings owing to his illness. I am glad to observe tha he has fully recovered and I know his statement will be of benefit and interest to the members of the committee.

Secretary ICKES. Thank you, Mr. Chairman.

Of

Gentlemen, I appreciate this opportunity to address you. course, my statement will necessarily be a general one, and it would have been made at your first hearing if I had not been in bed.

Mr. JOHNSON. I suggest that the Secretary's statement appear in the record at the beginning of our hearings.

The CHAIRMAN. Yes; that will be done. We will be glad to hear your statement, Mr. Secretary.

GENERAL STATEMENT

Secretary ICKES. I hope that the next time I appear before your committee in connection with the annual appropriations the department will carry the new designation proposed by the President namely, the Department of Conservation. The proposed title would be more indicative of our activities. There is not a single Government agency that now has the function of promoting the conservation of our natural resources, although six of the seven bureaus of the Department of the Interior and three divisions under the Secretary are engaged directly in such work. In my opinion, the mere designation of a Department of Conservation would assist materially in the preservation and wise use of our natural resources by establishing a unified national conservation policy which is so greatly needed in this epoch if we are to avoid the mistakes of the past. Conservation would be given an entity heretofore lacking in our scheme of Government. A consciousness of conservation would be created in the minds of legislative and executive officials alike. There would be placed on the officers of the new department a definite responsibility that does not now exist anywhere in the Government. Even though some conservation agencies were continued in other branches of the Government, a department of conservation would exert a desirable influence. During my 4 years as Secretary of the Interior it has been my endeavor to strengthen the Department in all of its public relationships with a view to dealing equitably and conscientiously with citizens who come before it. The benefits of this policy have been reflected in numerous ways. In establishing the grazing service, I arranged for local autonomy in the management of the range. In the program of rehabilitating the Virgin Islands, the native population has been given a chance to participate to an unprecedented extent through the activities of the Virgin Island Co. in the growing of sugarcane and the manufacture of rum. As a result, the islands will be self-supporting in a very few years. The Division of Investigations has been reorganized within the present fiscal year and the consolidation with the investigative work of the Public Works Administration has been abolished. The American Indians have been given an opportunity to participate in the managen.ent of their own affairs. Every aggrieved employee of the Department's staff of more than 40,000 has the right of appeal directly to the Secretary of the Interior. I regret to announce the death of Dr. William A. White, the late superintendent of St. Elizabeths Hospital, who has appeared before your committee for many years. Dr. White was a great physician,

NECESSITY OF COMPLETING GRAND COULEE DAM PROJECT

Mr. LEAVY. Mr. Secretary, I want to ask you particularly in reference to Grand Coulee Dam. Now, there are three great western projects that are under way and not completed, at least two of which are long range in their nature; that is, the Grand Coulee project and the Central Valley project in California. The third one that I refer to is Boulder Dam, which is now rapidly nearing a stage of completion, at least to a point where it will begin to yield returns to the Govern

ment.

Unless further legislative action is taken by Congress, Grand Coulee has a $63,000,000 limit fixed upon it. In this budget you ask for $7,250,000, which will bring that sum up to $63,000,000 when that is spent under existing contract obligations. If nothing more is done you will have there only a foundation for a giant dam, is that not right? Secretary ICKES. That is substantially correct. It will be more than a foundation, but it will be what we call a low dam.

Mr. LEAVY. Could it be utilized either for the generation of power or the reclamation of land?

Secretary ICKES. It would not be a good, efficient project. We need a high dam. In other words, to make a real project, to give both power and provide for the reclamation development that that section needs, and that is capable of being produced by a high dam. Mr. LEAVY. Then, in order to get a high dam, is it not economically essential that the work continue without interruption on that project?

Secretary ICKES. I do not think there is any doubt of that. My own judgment is that the Government ought to provide by proper legislation for a high dam, proceed to finance it, so that it will be a continuing work until it is completed.

Mr. LEAVY. Did not the act of Congress request a high dam and so provide?

Secretary ICKES. I am not sure. I am not clear on that point, Mr. Congressman.

Mr. LEAVY. I think it did.

Secretary ICKES. If so, then that is covered. Then it would only be a matter of the necessary appropriations to keep the work going. Mr. LEAVY. If you suspend that operation without carrying it to completion, Mr. Secretary, would it result in a great loss economically? Secretary ICKES. I would think so.

Mr. LEAVY. And is it your judgment that the project will be a self-liquidating project over a period of years?

Secretary ICKES. I have no doubt of that, and it will bring into cultivation virtually a new empire. There is in excess of 1,000,000 acres of land out there susceptible of being irrigated from Grand Coulee. That is tremendously fertile soil. The estimate is that 20 acres of land properly cultivated will support a family in comfort.

We are helping now in the drafting of a bill which will make it possible to acquire that land without paying the excessive prices that we usually have to pay if we go through condemnation proceedings for a reclamation project. If that land can be bought at its fair and reasonable market value, and if water can be turned on it, it will profoundly affect the civilization and the economy of the Northwest, and, therefore, of the United States. I think we ought to develop that

dam for both irrigation and power purposes. We should develop the latter, in order to pay for the former.

Mr. LEAVY. And the area immediately contiguous to that, Mr. Secretary, and your geological staff has made its findings and reports on it, and I know it to be a fact, is a highly mineralized area that would consume tremendous amounts of electric energy at a low cost if it were available.

Secretary ICKES. I think that is true.

Mr. LEAVY. And this project is susceptible of developing something like 21⁄2 million horsepower of electric energy.

Secretary ICKES. I do not carry such large figures in mind. I can remember how much money I was given as Public Works Administrator, but I cannot carry all of these other figures in mind.

Mr. LEAVY. And the cost of it, as reported by your engineer in charge, Mr. Banks, is a fraction over one mill per kilowatt-hour, that is, the cost of generation.

Secretary ICKES. Yes; I think it would be an exceedingly low cost. Mr. FITZPATRICK. To whom would you distribute that tremendous amount of electric energy?

Secretary ICKES. If we developed that irrigation district it would use a great deal, and if we develop the mineral lands, they would use a great deal. Here is something that should always be borne in mind: We talk about developing a great amount of electricity in what appears to be a remote region.

The General Electric Co. and other electric companies are developing means of carrying high voltage great distances with no appreciable loss, and I think that even we in this room, the oldest of us, will live to see the day when we can generate power on the Columbia River and transport it hundreds and perhaps even thousands of miles without appreciable loss.

I am not a statistician, but I heard figures yesterday showing that the use of electric power in this country doubles every 7 years, that is, the consumption of it. In certain areas it doubles now every 5 years I do not think we need to be afraid tht we can ever develop electric power in this country that will not have a market.

Mr. FITZPATRICK. That is what I wanted to bring out, because we are often asked that question.

The CHAIRMAN. They figure now on power being transported a thousand miles, practically. So, it is not a local matter any more. Secretary ICKES. No.

Mr. LEAVY. That is a long-range project that runs over a quarter of a century, practically, before completion?

Secretary ICKES. I do not know. I always like to do things faster than that myself, and it is necessary to do it as quickly as possible. There is considerable loss on the money invested if you are dilatory about finishing a thing. None of us would build a building that way. We would not put in the foundation and then wait for years without constructing the superstructure.

CENTRAL VALLEY PROJECT

Mr. LEAVY. You are familiar with the Central Valley project in California?

Secretary ICKES. In a way. They are both P. W. A. projects.