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This agreement effective as of

1924. UNIVERSITY OF MINNESOTA. Per A. J. LOBB, Comptroller and Secretary to Board of Regents.

STATE COMMITTEE ON RELATION OF ELECTRICITY TO AGRICULTURE. Per J. F. REED, Chairman of Committee.

NORTHERN STATES POWER Co., Per Chas. F. STUART, Assistant to the Vice President and General Manager.

MEMORANDUM OF AGREEMENT WITH THE DIVISION OF AGRICULTURAL ENGINEER

ING, DEPARTMENT OF AGRICULTURE, UNIVERSITY OF MINNESOTA We, the Malleable Iron Range Co., of Beaver Dam, Wis., have loaned one No. 237 Monarch electric range, right-hand oven with switch and pilot lamp, to the division of agricultural engineering, University of Minnesota, upon the following conditions:

The goods thus loaned are to be used by the university in experimental work on project no. 17, entitled "The Utilization of Electricity in Agriculture.” The title to such goods remains in the name of the above-named company during the period of this loan.

The responsibility for damage to the goods and for loss in case of fire or otherwise shall be in the hands of the above-named company until such goods are installed in the university, and then the responsiblity for loss or damage shall be in the hands of the university. The university assumes to financial responsibility for supervision after June 30, 1930.

The above-mentioned company agrees to loan this equipment for a period of 3 years from the date of this agreement. At that time the equipment will be purchased by the farmer at a price of $123, or such equipment will be returned to the company. The retail price of this equipment is approximately $246. The university assumes no responsibility for the sale of such equipment.

The above-mentioned company shall have access to this equipment at all times, and shall have access to all the data secured from the use of this equipment, and it further agrees not to publish or in any way make public any of these data, or to publish any opinions of the user, unless such data or opinions are released for publication by the university,

Nothing in this contract will prevent the rural consumer from paying for this equipment at any time during the 3 years. Dated January 10, 1927.

MALLEABLE IRON RANGE Co.,
By H. T. BURROW,

SECRETARY UNIVERSITY OF MINNESOTA,
By E. A. STEWART

STATE OF Iowa,

County of Dubuque, 88:
E. A. Stewart, being first duly sworn on oath, deposes and says:

1. At the time I wrote the report entitled'"Electricity in Rural Districts Served by the Hydro Electric Power Commission of the Province of Ontario, Canada", I was associate professor of agricultural engineering, department of agriculture, University of Minnesota, having been elected to this position September 10, 1920, prior to that time being assistant professor of agricultural physics at the Kansas State Agricultural College, Manhattan, Kans., from September 1, 1918 to September 10, 1920.

2. Immediately upon my arrival in Minnesota on September 20, 1920, I wrote to various power companies in this part of the United States for rates and conditions under which they would give electric service to farms. I continued this study of rates and conditions and gave a discussion of my findings at the meeting of the American Society of Agricultural Engineers held in St. Louis in December 1922. In the early part of 1923 I held various conferences with farmers and representatives of the Farm Bureau Federation and of the State legislature with reference to rural electric service. As a result of these various conferences and my study, I presented a paper in June 1923, at the meeting of the North Central Electric Association held in Minneapolis in which I deplored the conditions then. existing under which rural electric service was given and stated very definitely the conditions under which we had determined that rural electric service should be given so as to make it satisfactory.

3. Thereafter, due to activities, both national and in our own State, a meeting of those interested in rural electrification was held in St. Paul on September 26, 1923 at which John F. Reed, president of the Minnesota Farm Bureau Federation, acted as chairman of this conference; there were in attendance, 4 representatives of the University of Minnesota, 2 farmers, 1 being a Senator and the other a representative of the State legislature, representatives of the farm papers in the Northwest, and one representative of the North States Power Co. As a result of this meeting, a State committee was formed known as the “Minnesota Committee on the Relation of Electricity to Agriculture”, with John F. Reed, chairman, and the other members of the committee as follows W. C. Coffey, dean and director of the agricultural experimental station, University of Minnesota; Herman Schmechel, State senator and farmer; Isaac Emerson, State representative and farmer; W. J. Bryan, farmer at Red Wing; Charles F. Stuart, Northern States Power Co., as treasurer, and C. S. Kennedy, manager, Ottertail Power Co.; this affiant was appointed as secretary to the committee. At the next meeting of this committee W. S. Heald, Minnesota Power & Light Co., was elected as a member of the committee. The committee was formed for the purpose of giving counsel and advice and to secure outside cooperation and coordination necessary for the University of Minnesota to have in carrying on the research and investigations on the relation of electricity to agriculture.

4. In various conferences with the members of the Minnesota committee on the relation of electricity to agriculture, the subject of rural electrification of Ontario has been discussed and it seemed desirable since we were the first State in the Union to carry on investigation of this character, for the committee to obtain all information possible on rural electrification. As a result of these conferences, it was suggested that this affiant make a study of rural electrification in the province of Ontario, Canada, and accordingly during my summer vacation in August 1925, I made a trip to Ontario during which I visted several rural communities in Ontario, several district offices of the Hydro Electric Power Commission of Ontario, and the central office of the Commission at Toronto, to secure data concerning rural electrification of Ontario. As a result of this study a report was given before a meeting of the Minnesota committee on the relation of electricity to agriculture and a written report was formulated, dated December 1, 1925. It was later deemed advisable by myself and members of the Minnesota committee that the report should be published.

5. Upon the advice of Dean Coffey of the University of Minnesota, I was asked to have my data checked by engineers of the Hydro Electric Power Com. mission of Ontario before the bulletin was published for general distribution. A preliminary report was set up and a few copies were printed, several of which were sent to R. T. Jeffery, engineer for the Hydro Electric Power Commission of Ontario for suggestions and corrections. Having received no reply from them within a reasonable time, and desiring to have the bulletin published, at the request of members of the committee, I made a second trip to Toronto, Canada, on March 11, 1926, to consult with the engineers. While there, I conferred with Mr. T. J. Caster, Mr. J. J. Jeffery, and other members of the staff of the hydro electric power commission, at which time copies of the preliminary report were discussed and analyzed. At these conferences corrections and additions were suggested by different engineers mentioned above; there were a total of 21 corrections, suggestions, and additions which were agreed to by myself and members of the engineering staff, to be changed in the bulletin, of which five only were corrections in engineering data; I agreed to make all of these changes as suggested, provided the engineers would give their approval for publication of the bulletin to Dean Coffey of the University of Minnesota. During the conferences in Toronto, this affiant was informed by Mr. Jeffery that while the engineering data, insofar as they could determine, was correct, that due to the policy which was involved it would be necessary for them to get in touch with Mr. McGrath before giving written approval for the publication of the bulletin; after having spent approximately 4 days in Toronto, upon my return to the university this affiant was informed that due to the fact that the investigation during the first trip had been carried on during my vacation period and that the investigation had not been officially approved by the university previous to making it, and also because the investigation had been sponsored by the State committee, that the bulletin was not to be published as a bulletin of the University of Minnesota, but rather as a bulletin under the auspices of the Minnesota Committee on the Relation of Electricity to Agriculture; however, this affiant proceeded to incorporate all the: 21 corrections, suggestions, and additions as suggested and agreed to by R. T. Jeffery and J. H. Caster, engineers, with the exception of no. 5 and no. 13 of memorandum dated March 16, 1926, which is in their possession, which two changes were not made for the reasons given below. Absolutely all corrections in facts as asked for by the hydro engineers were incorporated in the report before it was published.

Change no. 5 suggested changing the wording from "no more has been accomplished for the Ontario farmer than has been accomplished in the United States" to read “No more use has been made of electricity by the Ontario farmer than has been accomplished in the United States". This change was not made because the original statement referred to all the farmers while the suggested changed statement would refer to only those using electricity.

Change no. 13 was an addition to my report and not a correction. While I was at Toronto Mr. Jeffery suggested that I publish in my report the tables given on pages 160–163 of their seventeenth annual report for the year ending October 31, 1924. The reason that they desired to have these tables inserted in my report was to show the financial condition of the rural power lines at that time. The next day I pointed out to them several apparent discrepancies on interest charges on capital investment and a discrepancy between the total amount credited to the operation of rural power districts as given on page 163 and the amount which they gave me to include in a supplementary statement with these tables. After discussing these discrepancies and spending some time trying to trace out the apparent discrepancies they decided not to ask for the publication of these 2 pages. On the other hand, they asked me to include a statement which would take for granted the correctness of the data in these tables which statement is as follows:

“The operating report of the rural power districts in the Niagara system as given in the hydroelectric power company report for 1924, pages 161 to 163, indicates that the service charges and rates in effect in 1924 were sufficient to more than cover all operating and fixed costs, even had the bonus not been in effect. The interest charge on one-half of the capital invested in rural construction in the Niagara system was $42,676.90, and the sinking fund for the same was $12,687.34. The net surplus credited to the rural power districts for 1924 was $102,296.28. It can be seen that this surplus is far in excess of the amount that would have to have been collected to cover the interest and sinking fund charges on the other half of the investment, which is covered by the Government bonus. In fact, the amount received from the rural power districts would have given a surplus of $46,932.04, even though the bonus of 50 percent had not been made. The reduction in rates as given on page 19, were based upon the surpluses given in this table. The service charges in more than one-half of the districts have

been reduced below the standard charges because of these surpluses."

You will note in this statement that they give as a surplus credited to the rural power districts for 1924 as $102,296.28, while you will find on page 163 that this amount is given as $104,862.02. I was also informed by a letter from Mr. Jeffery, the information in which is given on page 30, stating that they set aside 2 percent for renewals and contingencies. The amount of $27,769.54 set aside for renewal charges as given on page 163 is only 1.7 percent of the total capital investment of $1,651,475.15 as given on page 162. I had learned also while at Toronto that they have changed from the 2 to a 272-percent basis. It therefore did not seem at all wise for me from the standpoint of having this report correct as well as from the standpoint of saving embarrassment to the hydro engineers for me to include the statement which they had requested as quoted above when such discrepancies as I have pointed out existed in the data which they had requested me to publish.

During my conference with the engineers of the commission, I understood Mr. McGrath was out of the city and would return within a day or so, and that immediately after his return there would be forwarded to the University of Minnesota an approval for publication of the report as corrected, and after my return from Toronto, about March 18, 1926, I waited to receive the approval of the commission of Ontario until March 23, 1926. On this date the bulletin went to press with all suggestions and corrections theretofore agreed upon except no. 13 and no. 5 as noted above, and on March 27 I received from Dean Coffey a letter, together with a preliminary copy of this bulletin sent him by Mr. Gaby, chief engineer of the hydro commission. This preliminary copy contains the suggestions, corrections and additions as agreed to by myself and the engineers of the commission while in Toronto and four additional suggestions which were not corrections in engineering data but were changes in wording of two of my conclusions and two other paragraphs in the body of the report. It was obviously impossible to incorporate these new additions since the report had already been printed.

After receipt from Dean Coffey of the letter and preliminary copy of the bulletin sent him by Mr. Gaby, on or about March 27 I wrote Mr. Gaby and explained to him that the additions and corrections contained in their copy of the preliminary report had already been inserted in the report as printed and also explained the reason for any omissions.

I never received any answer to this letter. I wrote again, this time to Mr. R. T. Jeffery, on April 15, 1926, as follows:

"I am sending you under separate cover a copy of the revised edition of my report on electrification in Ontario. I hope that this meets with the approval of your engineering department.

Thanking you for your kindness and the assistance that your department has given us, and hoping also that this report on rural electrification will be of assistance both to us and perhaps also to the farmers in Ontario, I remain,"

On April 24, 1926, I received the following reply:

“We beg to acknowledge receipt of your report on rural electrification in Ontario.

“We would be very pleased indeed to study this report and should occasion arise we will write you further regarding the same.

This was signed by both Mr. Gaby and Mr. Jeffery.

No further communication was received from them questioning the correctness of the report.

However, it is desired to call attention to the fact that subsequently I received from Mr. Caster of the Hydro Commission of Ontario, a copy of a letter written by the hydro commission of Ontario, to Miss Geraldine Weimar of Highland Park, Mich., in which he not only quoted engineering data from my report to give her information on the operations of the hydro commission on rural electrification up to 1924, but he also advised here to secure a copy of my report, stating that it contained "fairly complete information", and she was advised to draw her own conclusions from my report.

My expenses on these two trips, amounting to $388.07, were paid by the Minne sota Committee on the Relation of Electricity to Agriculture, through checks drawn by Charles F. Stuart, treasurer of said committee, on funds of said committee held in the Metropolitan National Bank, Minneapolis, Minn. Further affiant sayeth not.

E. A. STEWART. Subscribed and sworn to before me, a notary public, this 31st day of May 1931.

HELEN D. SMITH, Notary Public, Dubuque, Iowa.

STATEMENT OF FRED N. OLIVER, COUNSEL, NATIONAL ASSOCIA

TION OF MUTUAL SAVINGS BANKS, WASHINGTON, D. C. Mr. OLIVER. Mr. Chairman, my name is Fred N. Oliver, and I appear for the mutual savings banks in the capacity of counsel for the National Association of Mutual Savings Banks.

For your information, there are 560 such institutions in various States, located within 18 States, the majority, however, being in the New England States, New York, New Jersey, Pennsylvania, Delaware, and Maryland, with a few scattered institutions in some of the Western States. For instance, in Minneapolis we have the Farmers and Mechanics Bank, which is a mutual bank; and in Cleveland we have the Society for Savings, which is a mutual bank; and in Senator Moore's State we have, I think, 23 mutual institutions, such as the Howard at Newark and the Trenton Savings Society at Trenton.

I think it might be well to explain exactly the type of our institutions. They are entirely nonprofit institutions. The entire assets of each mutual bank are owned by the stockholders, and every cent of profit inures to the benefit of the stockholders. They are operated as a rule by directors who serve without compensation; and I think those of you who have been in mutual bank States recall that there are numerous decisions interpreting the type of these institutions, saying, in substance, that they are quasipublic in character and are operated for the benefit of the public at large.

The depositors in mutual institutions are essentially the small savers of the country, people who are accumulating money for old age or for some special purpose. As a matter of fact, in most States where mutuals operate, the deposits are limited to $5,000, and the average deposit in mutuals throughout the country as a whole is approximately $700.

Mutual institutions are pretty closely regulated by law as to the type of their investments. In most States we are limited to mortgages, to underlying obligations of railroads, of operating public utilities, of municipalities, States, and governments. Those investments must meet certain tests which are prescribed by statute; and the theory of the investment is that the investment shall be made for safety and stability as distinguished from a speculative or high yield investir ent. I think, as to railroads, it can be safely said, as an illustration, that the mutual banks and the large life companies have surnished the great reservoir of private capital for the low-interest underlying obligations, and the mutuals have been going into the utility field of late years in the same manner.

It may be interesting to know, as illustrating the precautions which have been taken in making these investments, that the mutual banks have enjoyed a very long record for safety and stability. In New York State, for instance, where we have 137 mutuals, there have been only three failures with losses to depositors since 1844. There has been no failure in that State with a loss to depositors since 1911.

In Connecticut, with 75 mutuals, there has been only one slight loss to depositors since 1911, a period of 24 years. A corresponding record is enjoyed by the mutuals in other States.

The mutuals have 14,000,000 depositors. They have deposits of approximately $10,000,000,000, which is almost 25 percent of the total bank deposits of the country. Their assets are approximately $11,000,000,000. Of those assets we have approximately $700,000,000 invested in the bonds of operating public utilities, most of which are electric light and power companies. In other words, we have approximately 6 percent of our assets in utility bonds, and those assets, mind you, are the assets of our depositors in their entirety. Translating it into terms of the effect on the individual depositor, it would mean that about $45, on the average, of the depositors' money is invested in operating public utility bonds.

Senator SHIPSTEAD. Are they junior bonds?
Mr. OLIVER. They are ordinarily underlying obligations, sir.
Senator SHIPSTEAD. Are they investing in holding company bonds?
Mr. OLIVER. No, sir.
Senator SHIPSTEAD. And no stock?
Mr. OLIVER. No, sir.
Senator SHIJSTEAD. You do not buy stock in any companies?

Mr. OLIVER. There are one or two States where the banks are permitted to buy certain types of stock, under certain investment restrictions; but taking our investments in the whole, utilities as an

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