Colorado River Basin

that he says, but if there is to be any expression of views in that respect, or as to the attitude of the upper area, we would prefer to make it ourselves. While I have in my pocket the amendments that have been discussed, they have not been agreed to, and they are still in an embryonic state and subject to complete revision. will confer with the commissioners from these States as soon as I return to the West, and will ask that the record be kept open to the extent of receiving a written report from us.

The CHAIRMAN. About how soon do you think you will be able to submit it?

Mr. CARPENTER. Within a couple of weeks.

Mr. ALLGOOD. Is there any likelihood of Congress adjourning in about two weeks? I saw a statement in the paper about a very early adjournment.

Mr. SWING. I can assure Mr. Carpenter that we will expedite the matter as much as possible. I think it will be helpful to the committee to have this official statement from the commissioners. So far as I am concerned, I desire that Mr. Carpenter shall have that length of time in which to insert such statement in regard to the amendments that have been discussed as they may wish to submit.

Mr. CARPENTER. I might state, gentlemen, so that there may be no misinterpretation of the matter, that the State of Colorado has always maintained very cordial relations with the city of Denver, and, for that matter, with the other States in the South. At no time and at no place have we been inclined to attempt any measures of coercion upon Arizona, and, of course, we do not care to be coerced by Arizona. Our attitude has been that of trying to facilitate an early arrangement ween these lower States. Mr. Hop kins, of Wyoming, and myself made a journey through the Southwest for the particular purpose of ascertaining the sentiment in the Southwest in regard to this matter. We found no disposition of coercion on the part of California, on the part of Nevada, or on the part of any other State, We did find, however, a feeling of impatience because of the fear that Arizona might possibly remain dormant or passive so long that she would be put in the position of being coercive. That impression, fortunately, has all been removed by the attitude of Arizona in meeting the commissioners of Nevada and California and working toward a rapid solution of this question. the veter

Now, any amendment to the bill, or any bill that may be proposed for enactment at this session, should contain a feature or clause to the effect that the three-State arrangement may be included at the proper time.

Mr. LEATHERWOOD. Your report would contain the views of the upper basin water commissioners?

Mr. CARPENTER. Yes, sir; the report, I think, will cover the views of the four upper States.

Mr. SWING. The situation, of course, is one of great exigency, and as soon as Mr. Carpenter's report is in, I shall urge the committee to take up the consideration of the bill for amendment and report.

Mr. BANNISTER. There is one impression that may have been given that I wish to correct. It is perfectly true, as Mr. Carpenter,

has stated in his opening remarks, that I do not represent the State of Colorado or any of the other States. By his use of the word "volunteer" it might appear that I do not officially represent the city of Denver, but I wish to state that I do appear here under instructions from the mayor, city attorney, and water commissioner of the city of Denver."

Mr. CARPENTER. Of course, I realize that Mr. Bannister represents the city of Denver. I know that to be the fact.

The CHAIRMAN. I have just received a letter from the Secretary of the Treasury with reference to the bill, and will read it to the committee.

(The letter referred to is as follows:)

TREASURY DEPARTMENT, Washington, March 18, 1926.

DEAR MR. CHAIRMAN: I have your letter of March 6 requesting my advice on the financial plan proposed by H. R. 9826. This bill contemplates the sale by the United States of $125,000,000 of 15-50 year 4 per cent bonds and the use of the proceeds to pay for the cost of construction of a dam on the Colorado River and an irrigation canal to the Imperial and Cochella Valleys. I am not familiar with the engineering features involved, nor with the earning prospects of the project, and I accordingly express no opinion thereon. Proceeds from the sale of our bonds are not governmental revenues. The payment for the project by the sale of bonds has exactly the same effect on our governmental accounts as the payment of the same expenditure of any governmental revenue, and the fact that it is a dam and might have earnings in the future does not differentiate it from an expenditure for a battleship, a public building, or to pay employees. In each case the expenditure would appear as an expenditure in the Treasury statement, and if the sum of this expenditure and all other expenditures during the fiscal year was less than the revenue for that year from all sources, there would be a surplus. If this sum was in excess of the revenue there would be a deficit. With our large Government indebtedness outstanding, the effect of a surplus is to require less borrowing at the next quarterly refunding period, and the effect of a deficit is to require more borrowing. In other words, if there were no provisions at all in the bill for the floating of the loan and the general revenues of the Treasury were insufficient to pay for the project, the Treasury would be obliged to sell additional securities from which to obtain the cash to cover the cost of governmental operation in excess of Government revenues.

The proposal for the bond issue, therefore, simplifies in no way the fiscal problem involved. As a matter of fact, the limitation in the bill as to rate of interest and maturity, and the power of the Secretary of the Interior to control some of the terms of the proposed issue would hamper the Treasury in meeting a money market which might exist at the time the securities had to be hold and to some extent would increase the cost of money to the Government. If the project is adopted by Congress, it would be, in my opinion, better fiscal policy to authorize the Secretary of the Treasury to pay for the project out of the general fund, or out of the proceeds of bonds authorized generally to be sold to replenish the general fund, and then earmark the earnings from the project to the payment of interest and principal on an amount of public debt equivalent to that created for this purpose. This policy would permit the Treasury to take care of our debt structure as a whole and in the manner most effective at the time.

If we eliminate the question of paying for the project out of the bond issue, which as I have said is no aid from a Treasury standpoint, then the question for the determination of Congress is, should the United States spend $125,000,000 in the construction of a power and irrigation project? I believe that, in general, sound public policy in America, as elsewhere, is to encourage private initiative and not to have the Government ownership or operation of projects which can be handled by private capital under proper governmental regulations. The governmental operation of railroads in this country was our largest experiment on this line and a comparison of public and private operation in that field justifies my faith in private enterprise. Canadian and European experience is the same. To get the Government out of business,

whether it be in banks, utilities, or monopolies, has become one of the most essential steps to a permanent fiscal restoration of Europe, and I am loath to have the United States embark upon enterprises not strictly governmental in their nature. The fact that a government can furnish capital at lower rates of interest is illusory, if there be taken into account that the public project pays no tax and, therefore, does not bear its share of the cost of government. It seems to me that if the project is one which can pay its way, private capital can be found. If it can not pay its way, then we should consider whether all the taxpayers throughout the United States should be taxed for the benefit of a part of the country.

To these general principles, which I feel to be correct, there may arise exceptions. The Colorado River project involves the adjustment of the interests of seven States and a division of water between the United States and Mexico. In a project which involved a compact between different States and an international agreement, it is apparent that action must be had by the Federal Government if a satisfactory solution is to be obtained. It might be prácticable to solve the problem through the Federal Government and still have the project constructed and operated by private enterprise. Congress may, however, feel that full or partial Federal Government ownership would be more convenient and under the particular circumstances the present case be made an exception to the general rule of sound policy.

If my suggestion as to a more satisfactory way of financing the project meets the approval of the committee, I shall be glad to have prepared a draft of legislation along this line.

The period of amortization of the cost of the project over 50 years seems to me a little long.