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there, that now have a living and income from the power developments, or are they just going to go in there and wipe them out?

Mr. Hyatt. Well, I cannot conceive of them doing that. sir.

Mr. Carter. Mr. Chairman, may I say a word? We have in California two large power companies, the Pacific Gas & Electric CV and the Southern California Edison Co. They have, in the past— I have no definite word from them, but there has been rumors thai they were opposing the Central Valley project. Within the pas few weeks, I have received communications from the presidents 'if each one of those organizations, saying that, due to the upward trend of business, there was going to be ample market for this power within a reasonable time, and each one of them endorsing the project.

Mr. Scrtjgham. Proceed with your statement, Mr. Hyatt.

Mr. Hyatt. I have about concluded, Mr. Chairman. This project is sound, and we would be delighted to have, it analyzed on ant basis. It will repay every cent that is invested; it will rehabilitate these farmers who own their land. It is purely a rescue project. and is not for the development of new land. It does not run counter to the Department of Agriculture's national farm program. The National Farm Bureau Federation has endorsed it. It is a sound. feasible proposition to build it, and if it is not built there will be a very great loss, not only in California but it will be reflected over all the Nation, because the purchases from that valley are very larjn*. As I said, agriculture alone is over $300,000,000 a year, at the presem time.

I first covered the point that it is not for new lands. We do ti'H even consider that it is very much competitive with the crops of the Middle West and the East. The crops are specialty crops, such as asparagus and oranges and raisins and fruits. They raise sugar beets and a little cotton and a little rice, but they are very small crops, competitively and otherwise:

I consider that this project will pay big dividends and increase the returns of all kinds.

The Government will participate, of course, in the way of interes; upon the invested capital. The Government is participating in other enterprises on a much more liberal basis.

Farm relief in an arid State means water. That is more important to the farmer than getting a farm loan.

The people are there right now. The land is irrigated right now. This is a sound, economic proposition, and can be so analyzed. an<i has been so analyzed repeatedly, and the answer is always the same.

Many Federal agencies have investigated it, and have reached the same conclusion.

I would like to stress that economic end of it. It is a huge, complex proposition that covers 500 miles and more than 20. counties, transferring water from one section of the State to another, generating a large amount of electric power. It will change the condition? for a great many people, and its very nature and long history hurt caused widespread discussion and some opposition. A State election was held, and enmities were created during that time. Their objections were sincere. This is all pretty much out of the way now and everybody is pretty much in agreement.

But for 17 years this project lias been hammered on the anvil of tperienee and has been pulled and hanled consistently by the advoites and opponents from all standpoints—from necessity, engineeri<r. finance, economy, legal, and political—and the determined oppotion overlooked no point, and it is inconceivable that any objection as been missed: and in this process all of the disputes have been rought out and the enmities, as far as possible, have been practically ipecl out.

We find that even the power companies are in agreement that the ork is necessary and should be pressed to the earliest possible >mpletion.

I thank you. gentlemen.

Mr. Scrugham. We thank you. Mr. Hyatt. Any further questions?

Mr. Rich. I want to ask Mr. Lea a question.

You represent the congressional delegation of California in this glit?

Mr. Lea. I was selected to play the part I have played here today; es.

Mr. Rich. Do you want this subcommittee to adhere to the Budget stimate of $15,000,000?

Mr. Lea. Yes; that is all we ask.

Mr. Rich. Well. now. I mean it is the desire of your delegation to uive us adhere to the Budget estimate?

Mr. Lea. Yes.

Mr. Rich. Well, we have a lot of requests for other things in the Budget, that are in the Budget estimate, especially for vocational 'diication. Now, if we are to adhere to the vocational education polices laid down 1>3T the Budget, how are we to satisfy your delegation uid give the full amount to this project?

Mr. Lea. T presume the problem of the subcommittee is to balance he equities. If you cannot give money to everything, the subcommittee, of course, has to decide that question as to relative merits.

Mr. Rich. Then you would advise us to try to hold to the Budget estimate regardless of all of the various things that come up under this subdivision of the Interior Department?

Mr. Lea. We do not ask for anything in excess of the Budget. We assume that the Budget has been carefully surveyed as to the relative merits of this project, and this sum was warranted, and it had both the approval of the Budget; and, of course, I take that as being the approval of the President.

Mr. Lambertson. How much was in the Budget for the Central Valley project?

Mr. Lea. $15,000,000 approved by the Budget, and we ask for nothing in excess of that amount.

In connection with that question, a member of the subcommittee, raised the question a while ago about the possibility of this improvement being used for the benefit of bankers, or those who might tacome purchasers on account of the farmers being crowded out through foreclosure, or otherwise. I would call attention to the fact, which the committee is probably familiar with, that for several years, it has been the policy of the reclamation service to make contracts or to cover cases where the small ownership could procure the benefit of contracts for water; the general idea being to confine it to those

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tracts of land that would be sufficient to maintain one family. Id. the department has taken a very decided position against permittk; the Reclamation Service to use for speculative purposes and not i.. the benefit of settlers.

The suggestion of your committee was a very proper one. W> were not very experienced in the early days in our State reclamitk-i. but I think we can rely upon the Reclamation Service in handih; this, to prevent any such undesirable thing happening.

I would like to call upon Mr. Chester H. Gray, representing ti» American Farm Bureau Federation.

Mr. O'neal. I do not see how the Reclamation Service could stopI suppose these farmers have a right to borrow, individually—hf it could stop any loan agency from evicting them.

Mr. Lea. They do, of course.

Mr. O'neal. They have the power to stop that? I thought yr-. said the Reclamation agency could keep that from occurring (

Mr. Lea. When they make a contract for water supply, it can \* on certain conditions for certain purposes.

Mr. O'neal. How about the payments in the future? What s there to prevent those present farmers from being evicted for fair ure to pay their installments?

Mr. Lea. Well, of course, today, most of those farmers who fail ;< pay would be subject to eviction, but the benefit of this water supply could be confined to small acreages.

STATEMENT OF CHESTER H. GRAY, REPRESENTING AMERICA! FARM BUREAU FEDERATION

Mr. Gray. Mr. Chairman, my name is Chester H. Gray. I aa the Washington representative of the American Farm Bureau Federation, which is one of the several national farm groups.

Before I speak particularly of the Central Valley project, it miglii be helpful for me to state that the reclamation or irrigation policy of the Farm Bureau, for a number of years, has been to give sipport to the needs of the farmers, settlers, occupiers, that are «r. present existing districts, whether it be a Government district or private irrigation district.

We believe that one of the biggest needs that the fanners have Lb irrigation districts is, as another witness stated, water.

Unfortunately, in that speculative period which existed in former years—this is true in irrigation as in many other farming activitiesthere was a tendency to have an expansion of certain irrigatioc districts, and it went beyond the natural water supply.

This is not intended to criticize those who organized the distrKK nor the farmers who came to the districts to make their homes, permanently. The development that happened when the active cleaning and leveling and preparing for crops exceeded somewhat th? available water supply.

So the first principle of the Farm Bureau program in regard m reclamation and irrigation is, that where those conditions obtain: and if and when it develops from a deficiency in the water supply in subsequent years, below that which was estimated at the time the project was created; we are willing to give our strength as* "arm Bureau, a national organization, to get those farmers more rater. There are many reservoirs over the country, up on the mountain sides, to catch the melting snows, that we have advocated o be built at Federal expense, on the amortization plan, which ventually, would return to the Federal Treasury the cost thereof. Mr. Rich. May I ask you a question right there' Mr. Gray. Yes.

Mr. Rich. What is there to prohibit the Bureau of Reclamation, n forming these irrigation projects, to go out and develop more :iinl than there is water available, and put it into cultivation? rVhat do you do in that kind of case?

Mr. Gray. The principal work that we are doing along that line, Congressman Rich, is educational: just simply to let the people tnow that, in that district, there is no more water, and that there s only so much which will cover, in the average annual conditions, Jo many acres of productive land.

I do not know that there is anything that can be definitely and arbitrarily done to prevent overexpansion, other than what the LJureau of Reclamation now is doing.

That speculative era is very largely over. We now seek to prevent selling land to settlers and going into contractual relations with them beyond the water supply which is available. In the past that has been done. It is not being done now nearly so much as it was done in the past. And for those farmers and families who get, may I say, unfortunately stuck with the situation which they are not responsible for, except in minor part, the Farm Bureau favors the Federal Government building reservoirs up on the hillside and catching the melting snow and river water and sending it down to those families. The money goes back into the Federal Treasury through the payments over a period of years, which usually runs about 40, under the amortization plan.

That is one feature we are working upon. Another feature that we have very strongly in our Farm Bureau program, to aid the farmers that are in these districts, properly, to be able to pay back into the reclamation fund that which they are contractually obligated to pay, is that as the waterpower is developed in bringing the water from the heights down to the land where it is used, the power, and the profits made therefrom, whatever it is, whether it is sold to the utilities or whether it is operated cooperatively by the districts, should redound to the farmers on the district.

It takes no great scrutiny of the history of the reclamation districts to know that those projects, which, years ago, were wise enough to retain to themselves the revenue from the power, generally speaking, are in a happier economical condition than are others.

When we now lend our strength in the Farm Bureau to securing Federal appropriations for more reservoirs we like to see the power adjunct to those reservoirs and the profit therefrom go to the districts.

Mr. Rich. You are not advocatig that the farmers of these districts take four-fifths of the power developed for their personal use in this project, do you?

Mr. Gray. 1 do not know what the percentage of distribution would lie. It would differ in the different economic conditions. What I mean to state is that, whatever the power sells for, whether it is distributed by the district, itself, mutually, or whether it is sold to others for distribution, the revenues should go for the benefit of the district and the citizens thereon.

Mr. Rich. The engineer said that four-fifths of the power wouM be for sale. Do you recommend that four-fifths of the power thai is developed in this project go to the benefit of these farmers also!

Mr. Gray. If there is a percentage whatever it is that comes as a profit, that, I would say, ought to redound to the district: so it will hasten the amortization payment and make more sure that the Federal Government gets its payments back.

In justification of that statement, let me state, further, that we are very willing, in the Farm Bureau, to help those settlers that harf been cruelly hit in the last several years of the depression, and haw not been able to keep up their amortization payments: and we joir. our strength on Capitol Hill with that of others and have secured in successive years moratoriums for the settler, so their payments t< the reclamation fund were delayed but not forgiven.

Now, if those settlers could have had some additional profit from the sale of the power, it might not have been so cruelly necessary to have secured, by congressional action, those successive moratoria. But we had to do it; and by so doing delayed the final moratorium plan,, because we did not forgive these payments; we merely temporarily suspended them and added them to the end of the amortization period. The farmers will have to pay them eventually: but it makes the 40-year period, which was originally designed, let me say, 46 years, during which the farmers will pay to the Fedent! reclamation fund that which they contracted to pay.

We have been willing to extend these benefits to the farmers. We are still willing to extend the moratorium whenever necessary, to the farmers on reclamation districts, if they cannot meet the'payments.

Mr. Rich. At what interest rate?

Mr. Gray. Whatever the rule is in the Bureau of Reclamation. That is our yardstick. It has differed in different years.

Mr. Rich. Are you trying to have the rule in the Bureau of Reclamation changed?

Mr. Gray. Not now; no.

Mr. Rich. Have you tried to have it changed?

Mr. Gray. No.

Mr. Fitzpatrick. What is the rule now?

Mr. Gray. We have taken the amortization schedule of the Bureau as worked out as being accurate enough and applicable enough for the situation.

Mr. Fitzpatrick. What is the interest rate of the Bureau?

Mr. Gray. Some of the Congressmen will have to answer that. I think they differ somewhat under different conditions.

Mr. Scrugham. Mr. Page can give that, I think.

Mr. Gray. I think you should ask that from.Commissioner Page.

Mr. Fitzpatrick. How far is this $15,000,000 recommended by the Budget going toward completing the entire project?

Mr. Gray.' The Central Valley project?

Mr. Fitzpatrick. Yes.

Mr. Gray. It will lack as much as $15,000,000 divided into approximately $170,000,000, which the whole project is estimated to

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