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change of energy, interconnection of facilities, and determination of the uses to be made of the facilities in such districts.

Ohio has its own method of regulating public utilities. It is a combination of State and municipal jurisdictions. It might not satisfy the rule-of-thumb philosophers that now infest the city of Washington, but it is our system. We have lived and prospered under it, and our courts have ruled upon it. Our great power plants, some costing as high as $30,000,000, have been built by capital furnished by, and engineering skill secured through, the great holding companies with which Ohio has made contacts. We are quite willing that the United States Government should regulate these holding companies, but we protest against their destruction.

We believe Ohio has a vested interest in them. With regard to its internal affairs, all Ohio asks of Washington is the sovereign privilege of being let alone.

The CHAIRMAN. Did your people in Ohio come to the Federal Government and ask for any money from the Federal Government for relief?

Mr. CHANDLER. We did because all the other States did.
The CHAIRMAN. Is that the only reason?

Mr. CHANDLER. We could finance all of our relief in the great State of Ohio, through local and State agencies, if the Federal Government had left the thing alone and left it to the States.

The CHAIRMAN. But you did not do it.

Mr. CHANDLER. Because the others were getting theirs. Why not get ours?

The CHAIRMAN. But you did not do it prior to the time the Federal Government took charge, did you?

Mr. CHANDLER. No person ever went hungry in the State of Ohio, or unclothed.

We want no regional districts superimposed upon us and no army of Federal agents invading our borders.

The CHAIRMAN. I heard the same story from New York City and from Philadelphia, that they did not want any help from the Federal Government; and then I saw them come before the committees of Congress and demand and insist that the Federal Government should help those great financial centers.

Mr. CHANDLER. Of course that is the "pass the buck" philosophy which is destroying this country, and it has been unwisely fostered.

The CHAIRMAN. You thing it should be stopped now?

Mr. CHANDLER. I think it should as soon as possible. We are getting off the subject, and my time is being taken up.

The CHAIRMAN. You think that the Government should stop sending any relief into Ohio?

Mr. CHANDLER. At the earliest possible moment. I think there should be a gradual unloading of Federal responsibility upon the States.

The CHAIRMAN. Do you think they should stop it today in Ohio?

Mr. CHANDLER. Cir, no. It cannot be done. We have got into a situation that you cannot change immediately.

The CHAIRMAN. But you are perfectly able in the State of Ohio to take care of all your unemployed there and to take care of all those that are now on relief. I am sure that the administration would be happy to know that there are some States of the Union that are willing and able to do it right now.

Mr. CHANDLER. Why, Mr. Chairman, you know very well that when all the other States are getting theirs, Ohio is not going to say, "We don't want any.” That is too unreasonable to be asked.

The CHAIRMAN. And the only reason you want it now is because other States are getting it?

Mr. CHANDLER. It is because the vicious system was established.

The CHAIRMAN. You think it was a vicious system to establish, for the Federal Government to step in and provide funds to feed and clothe the unemployed throughout the country?

Mr. CHANDLER. We think that if it had been done as it was done in the corresponding panic of the seventies, which was just as bad as this one, where we came out through the operation of economic laws and under our own power, we would be moving forward and would be about 2 years further advanced in prosperity.

The CHAIRMAN. So you think the Government is wrong?
Mr. CHANDLER. I think it was a great error.

The CHAIRMAN. You think it was a great error to appropriate money to help feed the unemployed in the State of Ohio?

Mr. CHANDLER. I think it was unnecessary if they had imposed the responsibility where it belonged-upon local government and local responsibility. That is a part of this great picture of centralization. You have got five billion dollars of it now coming.

A few days ago, the citizens of Ohio noticed a review of a book just written by another professor, coming this time not from Columbia, but from Harvard University. His name is W. Y. Elliott and he enjoys the title of Professor of Government in the alma mater of our President. According to the newspapers Professor Elliott would set up in lieu of the 48 States the 10 following “regional commonwealtbs":

(1) New England and New York; (2) New Jersey, Pennsylvania, Delaware, and West Virginia; (3 and 4) the Middle West; (5) the South Atlantic Seaboard; (6) Kentucky, Tennessee, Arkansas, Alabama, and Georgia; (7) Mississippi, Louisiana, Texas, and Oklahoma; (9) a group of Western Prairie States; and (10) the Pacific coast. “The New Deal suffers”, says Professor Elliott "from being forced to do sleight-of-hand tricks with the old deck”

The "old deck" is the 48 States.
Professor Elliott adds that-

To recognize these sectional areas as the primary bases of a new Federal system would infuse new vigor into the source of all democratic government.

By an interesting coincidence, on the same day in which this review of Professor Elliott's book was released, a Columbus, Ohio, paper carried the following story:

The passing of the Ohio relief administration as a unit and its supplantation by the establishment of Federal districts which will overlap State lines seems a possibility today in advices from Washington.

It is known that President Roosevelt is considering the advisability of establishing such districts for the administration of both work relief funds and the new $4,880,000,000 public works program.

Such a procedure might either supplant the State relief administration entirely or reduce its importance materially. *

The CHAIRMAN. You are opposed to spending money for public works, I assume?

Mr. CHANDLER. If your public works are not such as to make long commitments ahead, like T. V. A.-long commitments.

The CHAIRMAN. You are opposed to the Federal Government, I suppose, going in and widening and deepening the Ohio River?

Mr. CHANDLER. That has been an established policy of this country. There is no comparison between that and what they are doing down in the Tennessee Valley. They are charging the deepening of that river up against the power project and being able thereby, by a supposed system of bookkeeping, to sell "juice" at a great deal less than cost.

Another thing: Ohio is not quite sure of the regional impartiality of the Federal Government. In the great Philo and Avon power plants of our State, and probably in other plants, we can make our own electric energy by the use of our own coal as cheaply as, and probably cheaper than, it can be produced at Muscle Shoals, on any fair and comparable system of bookkeeping.

Last summer a Federal agent came into Ohio to organize campaign for soliciting industries to be transferred to Alabama. That this is Federal policy has been recently publicly denied by the President, but the fact remains that it was done.

David E. Lilienthal of the Tennessee Valley Authority in a recent speech before the Birmingham, Ala., Rotary Club, discussed the revision of freight rates, and the "abandonment of the Pittsburgh plus system of iron and steel pricing”, stating that the President is having this investigated through the Federal Trade Commission and the National Recovery Administration. Mr. Lilienthal also discussed the financing of the proposed new industries as "a matter to which we must necessarily give prime consideration."

The CHAIRMAN. I must leave, and I will ask Senator Donahey to take the chair.

(The chairman retired from the committee room, and Senator Donahey presided until the close of the session.)

Mr. CHANDLER. I wanted the chairman to hear it. I will read it to you, Senator Donahey. I think you want Ohio to propser.

Senator DONAHEY. That is correct. Mr. CHANDLER. Now, Senator, when the great industrial State of Ohio is taxed for a $500,000,000 Federal project for furnishing power at far less than cost for a rival industrial region situated about 300 miles away as the crow flies, we feel that Washington is hitting Ohio below the belt.

Industry is the lifeblood of Ohio and its factories are run by electric power. We prefer to keep our rates and regulations in our own hands.

Now we come to a matter which may not be of much interest, but it is the essence of the whole question—the fears of the fathers.

If some antiquarian in the Washington menage will dust off the Madison Papers, in which is recorded the proceedings of the Constitutional Convention that framed the Constitution, and the Federalist, in which Alexander Hamilton and James Madison defended it and urged it's adoption, he will learn what grave fears were entertained of centralized domination---they did not think of the district system then by the founders of the this Government, and may read with profit how Hamilton and Madison sought to allay those fears. Were Hamilton and Madison wrong and were these fears of the fathers justified?

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I will submit to you, and ask to have it made a part of the record, a brief upon the rights of the States prepared by E. A. Myers of Zanesville, Ohio, an attorney of high standing, who is chairman of the committee on Federal affairs of the Ohio Chamber of Commerce. But in conclusion, I want personally to read you an extract from letter No. XLVI of the Federalist written by James Madison seeking to allay the fears of the people, saying in part

I am sorry that Senator Wheeler is not here, because he comes from a very small State in point of population, and I think he should be jealous of the rights of the State; I should think he would be very jealous of them.

Senator DONAHEY. Proceed. He can read your statement in the record.

Mr. CHANDLER (reading):

The Federal and State Governments are in fact but different agents and trustees of the people, constituted with different powers, and designed for different purposes.

But ambitious encroachments of the Federal Government, on the authority of the State governments, would not excite the opposition of a single State, or of a few States only. They would be signals of general alarm. Every government would espouse the common cause. A correspondence would be opened. Plans of resistance would be concerted. One spirit would animate and conduct the whole. The same combinations, in short, would result from an apprehension of the Federal, as was produced by the dread of a foreign yoke; and unless the projected innovations should be voluntarily renounced, the same appeal to trial by force would be made in one case as was made in the other. But what degree of madness could ever drive the Federal Government to such an extremity.

And there is going to be a meeting in the Mayflower Hotel on Monday, when the chambers of commerce will act on this matter of Federal encroachment (reading further):

That the people and the States should, for a sufficient period of time, elect an uninterrupted succession of men all ready to betray both;

that the Governments and the peoples of the States should silently and patiently behold the gathering storm, and continue to supply the materials, until it should be prepared to burst upon their own heads, rnust appear to every one more like the incoherent dreams of a delirious jealousy, or the misjudged exaggerations of a counterfeit zeal, than like the sober apprehensions of genuine patriotism. Let us not insult the free and gallant citizens of America

with the supposition that they can ever reduce themselves to the necessity of making the experiment by a blind and tame submission to the long train of insidious measures which must precede and produce it.

That seemed to him to be preposterous, 150 years ago. I could name other measures in Congress today which are also insidious.

These fears which James Madison found to be so fantastic a century and a half ago are rapidly becoming prophetic. The Members of the lower House of Congress represent the people and are supposed to be chosen in proportion to population. They do not always redistrict according to population, but they make a stab at it. The Members of the Senate represent the States and are chosen by the States. They should be the jealous guardians of the rights of the States. The State of Ohio asks the Honorable Senators who constitute this committee and their colleagues in the upper House to think soberly before they superimpose these regional districts upon the States of this Union and further invade the rights of the Commonwealths they are sworn to protect.

Senator DONAHEY. Thank you, Mr. Chandler.

(The brief referred to and submitted by the witness is here printed in full at the end of the proceedings.)

*

*

Senator DONAHEY. The committee will take a recess until 2 o'clock this afternoon, when we will meet in the committee room in the Capitol.

(Whereupon, at 12:40 p. m., a recess was taken until 2 p. m.)

AFTER RECESS

The committee reconvened at 2 p. m. in its hearing room in the Capitol on the expiration of the recess.

The CHAIRMAN. The committee will resume. Governor Reed, some other Senators will be in later.

STATEMENT OF CLYDE M. REED, PARSONS, KANS. ; APPEARING

ON BEHALF OF TWO ORGANIZATIONS OF PUBLIC SECURITY INVESTORS, ONE IN PARSONS, KANS., AND THE OTHER A STATE-WIDE ORGANIZATION

Mr. REED. Mr. Chairman, my name is Clyde M. Reed. I live at Parsons, Kans. From 1920 to 1924 I was a member and chairman of the Kansas Public Service Commission. My appearance here is in behalf of public-utility investors of Kansas, including my home town of Parsons.

The circumstances under which I appear, briefly, are these: When the proposed legislation began to attract attention a number of Parsons citizens came to me because of my previous contact with this question and asked me for an expression of opinion. I inquired into the bill, read it over, and afterward a committee came back to talk with me about it. I asked the committee if they had complied with the request of public-utility companies to write letters to their Senators and Members of the House opposing the legislation. They all said they had.

My advice to them was that that was not an intelligent way to get at this question; that here was a question that ought to be given consideration by the Congress, and that it would be a much better way for them, there being about 1,000 investors in these various securities in

my town of Parsons, which is a town of about 15,000 peopple, and it being estimated that there are about 50,000 holders of these securities in Kansas, to have a committee or someone represent them at the hearings before the committees of Congress.

The estimated value of the total securities held in Kansas by these 50,000 people is around $25,000,000. That is an estimate only because there is no way that I know of, outside of the records of the publicutility companies, their own books, that would show that information.

As a result a small organization was formed in my home town of Parsons, entirely independent of any public-utility interest, the officers of that organization being substantial citizens of the town who held securities. Following the organization of that local citizens' committee a similar organization was formed in the State. I was asked to discuss the question with the officers of the State organization, and did so. They asked me if I would appear here for them and discuss this proposed legislation from their standpoint, and I told them yes. I am here without compensation, although they are paying my expenses, or at least I hope they are.

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