Dr. MEAD. About 1,200,000 is probably the best estimate. The Grand Coulee development will be, when built, the largest single-power installation in this country, if not in the world.

Mr. ZIONCHECK. How many million acre-feet of water will the reservoir of the Grand Coulee hold, if the high dam is built?

Dr. MEAD. It is between 5 million and 7 million.

Mr. ZIONCHECK. But there will be no trouble in keeping that at a level because of the large flow of the Columbia River.

Dr. MEAD. Last year when I was there, in July, the Columbia River was flowing more than all the rest of the rivers in the arid region put together. That does not happen every year, but it does show how that river holds up in a dry season. Normal floods passing the dam site approximate 500,000 cubic feet a second, and that means a million acre-feet a day, going down that river.

Mr. ZIONCHECK. Approximately how many miles is it from the Grand Coulee to the Boulder Dam project? Do you have a rough estimate?

Dr. MEAD. One is close to the northern boundary of the United States, and the other is about 200 miles from the southern boundary. That is 1,000 miles, or more.

Mr. ZIONCHECK. But they are not so far apart but what there could be tie-lines between the two?

Dr. MEAD. Nothing would be gained by that. They are too far apart.

AREA THAT CAN BE SERVED BY BOULDER DAM

Mr. ZIONCHECK. What is the practical area that a project like Boulder Dam can serve? What radius? Is it 350 miles, or can it serve a 500-mile radius, if necessary?

Dr. MEAD. Today I would say that 350 miles is an economical radius, but improvements are being made all the time in transmission. The current from Boulder Dam will be carried with less cost and less loss than any current that has been transmitted an equal distance heretofore.

OWYHEE POWER PLANT NOT FEASIBLE

Mr. ZIONCHECK. As to this project in Oregon, the Owyhee, how much of a power plant have you there?

Dr. MEAD. None.

Mr. ZIONCHECK. You cannot have a power plant?

Dr. MEAD. No. You could have a power plant for seasonal power only, and it is a question of whether it would pay. The reservoir would be filled and emptied every year, so that you cannot generate any power while you are filling it, and you can only run it when you are emptying it, so that it will not pay.

Mr. WHITE. I would like to hear something more of the pressing matters under consideration in the Bureau of Reclamation, as to the things that require immediate attention, such as the failing water supply and the means that may be proposed to augment it, things like that.

Dr. MEAD. Let us take your own State.

Mr. WHITE. The things that the Bureau of Irrigation and Reclamation have under consideration now would be interesting to us, and that is what I want to get.

Dr. MEAD. We will just start on the southern border, and go north.

We built Boulder Dam to use the Colorado River in the United States, and we have started the All-American Canal to carry the water into the Imperial Valley. We ought to go ahead with that just as fast as we can and get it completed, because international problems are involved in the saving of that water supply for the United States.

GENERAL STATEMENT ON DEVELOPMENT OF RECLAMATION

Mr. ZIONCHECK. For the purpose of the record, I will say that I personally have not even a bowing acquaintance with reclamation and irrigation, and I was wondering if you could not make a very short statement as to the origin or the institution of the Department of Reclamation, the manner in which they obtained their first funds, the source of construction funds, the manner of repayment, the moratorium that was passed in 1932, the manner in which that has to be repaid, the amount of interest, and the manner in which the moratorium or the deferred payments are to be taken care of subsequently to the 40-year period which most of these projects call for by way of repayment to the construction fund.

The amount of the present construction fund, I understand, is about $10,000,000. Why do you not repay the Government of the United States something on that $20,000,000 originally loaned from this construction fund? In other words, what I want is a general statement, followed with a little economic statement about the condition of the farmer and the price of crops, and how it relates to the testimony that you gave in 1934, as to the inability of the farmers to pay the construction costs because of the prices that they received for alfalfa hay and various other crops that did not bring them even the cost of production, if you have those figures.

What I want is just a general statement, for the benefit of the record. Dr. MEAD. Well, Congressman White, is it all right, if I digress? Mr. WHITE. Certainly. I am just an auditor.

Mr. ZIONCHECK. The point is this, Mr. White, that tomorrow we expect to go on the geologic phase of it, and we have to kind of keep moving along.

As to the matters that you have in mind, if they have not been properly answered, I suggest that you see Dr. Mead and have them put in the record.

Mr. WHITE. I am not a member of the committee.

Mr. ZIONCHECK. But I think that you have that privilege.

Mr. WHITE. I imagine that the things that I would ask for are already available, by studying the record.

Dr. MEAD. Yes.

We have a story of how reclamation developed. It was prepared for a conference in Hawaii several years ago, and I will say that any of you that want it can get that. I think that we have enough copies to pass around.

Mr. ZIONCHECK. But I do think, for the record, that some of the new Members of the House would be interested in your going into that, for they are about as green as I am about it.

Dr. MEAD. Well, reclamation had its beginning in the act passed in 1902. The theory of that was that the revenue from the sale of public lands would be made available to put water onto desert land, making it possible for people to make homes there and so add to the taxable wealth of the country and to the income that the Government received from lands. To enable that to be done, the revenues from public lands were made available for the first works, and those works were to be paid for, without interest, in 10 years.

At that time it was not generally understood what it takes to change a sage brush desert into a farm. That is a 10-year job in itself, and the amount of money that had to be spent in clearing off the brush and building fences and everything made it simply impossible to make these payments so that time has been successively extended from the 10 years originally fixed until it is now 40 years. The 40 years has been made necessary because we are building so much more costly works, works that involve storage. Under the present act construction costs are to be paid for in 40 years, without interest.

Payments up to the time of the depression were moderately well looked after. In 1928 we collected 97 percent of all moneys owing to the Government.

Mr. ZIONCHECK. On construction costs?

Dr. MEAD. Yes, sir.

Mr. ZIONCHECK. And you collected, besides that, the maintenance and operation costs, and on the water requirements, which are three distinct sources of income?

Dr. MEAD. Yes.

Subsequently there was added to the revenue from lands part of the revenue from minerals and oil leases, and then, as settlement went on, there came the revenue from irrigators, and after we began to build power plants that had commercial value, we began to collect the revenue from power, which has become quite a factor and is ultimately going to be very much greater than all of the payments from irrigation.

ORIGINAL AMOUNT OF FEDERAL LOAN TO RECLAMATION FUND

Mr. ZIONCHECK. Am I correct in my understanding that the original amount put into the reclamation fund was $20,000,000, to be repaid to the Government of the United States in the sum of $1,000,000 a year?

Dr. MEAD. Not originally. Originally all that came in were these revenues from land, and I think that it was in 1914, and Mr. Kubach will correct me if I am wrong, that the revenue was not sufficient to finance the construction work in progress. The 10-year payment plan was not working. The Bureau had contracted to do a lot of work, and there was not enough income to meet obligations. Congress loaned $20,000,000 to enable construction work to go on without interruption, and that was to be repaid, as you state, at the rate of a million dollars a year, and $10,000,000 of it has been repaid.

Mr. ZIONCHECK. How much is due now?

Mr. KUBACH. Payments are suspended at the present time.

Mr. ZIONCHECK. Payments are suspended, but you owe more than $10,000,000, because there must be an interest charge on that.

Mr. KUBACH. There is no interest payable on that loan, but in 1933 there was an additional $5,000,000 loan.

Mr. ZIONCHECK. And you have $10,000,000 now in the so-called "construction fund", have you not? And that is kept in the Treasury of the United States?

Dr. MEAD. Yes.

Mr. ZIONCKECK. And you owe the Treasury of the United States $15,000,000?

Dr. MEAD. Yes.

Mr. ZIONCKECK. Why do you want that $10,000,000 in the construction fund?

Mr. KUBACH. There is not that much in the construction fund. There is only about $4,000,000 in the reclamation fund at the present time.

Dr. MEAD. I want to say this, so far as making payments are concerned, that we have no objection to making the payments. I think that it would be a good thing.

POWER DEVELOPMENT AND DISTRIBUTION OF REVENUES

Mr. ZIONCKECK. Now, Doctor, in reference to power, it is my understanding that when the first projects were put in, the question of power never came up. The projects were primarily there for irrigation purposes, and if any power was put in, it was merely to operate the dams and the canals and spillways, and things of that nature. Contracts were entered into with the people owning land as to the payment for water and their repayment for the operation and maintenance costs, and construction costs, an indefinite contract for no definite period of years, and subsequently to that time, some of these projects have built powerhouses themselves and they are now selling the power for commercial purposes, and the profits which they make from the sale of light and power are paying the construction costs and even the water rentals in some instances. Is that right? Dr. MEAD. There is only one project that has done its own power development, and that is Salt River.

Mr. ZIONCHECK. That is in Arizona?

Dr. MEAD. Yes; but the Government has built a number of power plants where the revenue goes to the irrigators, and the revenues are paying a very considerable part of the irrigation payments.

Mr. ZIONCHECK. In your opinion, is there any way that these contracts can be altered, so that the profits or revenue from power and light that are sold for commercial purposes will go to the Government Government rather than to the landowners there?

Dr. MEAD. I do not know. I think that there are some of them where there ought to be a change, because I think there is a great element of economic unfairness in it.

Mr. ZIONCHECK. It is unfair to the owners of the land in other projects?

Dr. MEAD. That is right.

Mr. ZIONCHECK. Would you mind, for the purpose of the record, setting out those particular projects and the particular status of them in relation to power and light which they have been using and selling? Dr. MEAD. I would rather explain that to you off of the record, because it is controversial, and I can only give you my belief.

Mr. ZIONCHECK. Could you prepare that for the committee, and not put it in the record, so that we could go into the matter?

Dr. MEAD. The question of power development and distribution of revenues is covered fully in the hearings on H. R. 9124, Seventy-third Congress, second session.

MORATORIUM FOR WATER USERS

Mr. ZIONCHECK. Now, Dr. Mead, will you explain the moratorium, and the amount or repayments, and something about the adjustment contracts on that particular phase, as well as the economic conditions of the farmers that are under the irrigation contracts, their ability to repay now in relationship to, probably, say 1934 or 1933?

Could you do that in a very general way?

Dr. MEAD. Yes. There had been action in connection with particular projects for relief in some cases, and there had been this extension of the period of payment from 10 years as originally fixed to 20 years, and then to 40 years, but in 1931 prices had become so low that it was impossible for farmers on these projects to meet their payments, and so there was a moratorium; they were released from any construction payments at the time, and those payments were extended over to the end of the payment period; they were extended in some cases 36 to 39 years, and that is a very generous provision. It does not have any relation to commercial transactions, because they pay no interest on that extended period, and it runs into several million dollars.

Mr. ZIONCHECK. Do they not pay interest on all of the deferred payments?

Dr. MEAD. No, sir; they only pay interest for 3 years

Mr. KUBACH. For the period of deferment, 3 percent. Interest is added from the date the charges were originally due.

Mr. ZIONCHECK. Three percent interest?

Dr. MEAD. Yes. For the period of deferment, about 3 years is all that they pay, and for the rest of the time, for the 36 years of actual deferment, there is no interest paid. The interest is paid at the same time as the deferred principal.

Mr. ZIONCHECK. Is this moratorium still in effect?

Dr. MEAD. No. The moratorium expires with the 1934 charges. If it is not continued, they do not pay now, immediately; they pay, some of them, in December 1935. They have another crop year in which to make money to make the payments, and in some instances they do not pay until July 1936; they have a year and a half

On the question of whether the moratorium should be continued: It was granted because of economic conditions. This year has been a great improvement, on those projects especially that had ample water supply. In the past year, there has been a very general drought in the West, but on irrigation projects the owners not only have been able to grow crops and have had higher prices, but I think that the indications are that 1935 promises to be another good year, so that it becomes a question that, if payments could ever be resumed at all, so far as conditions are concerned, they could be now.

Mr. WHITE. That is in the districts where they have an ample water supply?

Dr. MEAD. Yes.

Mr. WHITE. Could legislation be drafted so as to fit that situation, to relieve those in the drought areas?