streams, both navigable waters and those tributary thereto; the flow of the streams; dams thereon; surplus water control; soil conservation, fertilization, and cultivation, and reclamation of public lands would all pass to Federal control and domination.

The several States now have agencies doing this very work which this bill would seek to lodge with the Federal agencies.

Use of our water resources for hydroelectric power purposes would be taken over by the regional power authorities of the Federal Government and our private utilities-water and power-would be destroyed through Government competition.

The regional power authorities therein created are but Government agencies intended to enter into the business of providing power through hydroelectric plants in competition with private enterprise. That such is the case is demonstrated by the action of the Tennessee Valley Authority and the Columbia River Administrator. The question of rates and services lies entirely within the control of the Federal agencies and might well mean that a local community desiring to establish a water system or sewage-control plant of its own would have to apply to and obtain the approval of Congress before it could do so.

The bills constitute an unnecessary and wholly unwarranted invasion of the rights of the several States and destroy that State sovereignty which is the bulwark and foundation of our great Republic.

The bills present, in the language of one of the sponsors, "the greatest issue that has been laid before the Congress of the United States in your day and mine, insofar as it affects the average individual citizens now living, or who are to live in the country for the next one hundred years and perhaps for centuries to come.'

It will be but a few years when the several State governments, should these bills pass, will be but empty forms, completely devoid of the usual powers of sovereignty and but wavering, faltering ghosts of the governmental structure which the founders of the Republic brought forth and which has served us so well.

State lines will be but delineations on the map, to make voting districts wherein taxes will be levied and collected for forwarding to the National Treasury; State governments and those who function thereunder will be but the empty vestments of a departed system of government.

There will be no States' rights if these bills pass.

Point 3. Your taxes will finance my improvements to your detriment.

These bills actually provide the machinery whereby the people of a community in one State may be forced to provide part of the cost of a project for the development of a competing community in another State even though such development in fact deprives such other community of the natural advantages of its own geographical location.

A most serious phase of this legislation is found in the fact that under our system of competitive economy, not only our people as individuals in business and our large industries are each in constant competitive strife, using every known business strategy to gain an advantage for their particular products, but communities in one section of the country are actively striving to attract industries, advertising their advantages as against those of other municipalities.

31119-38-pt. 2- -8

Mr. Chairman, I would like to ask permission to leave with the committee an ad in yesterday's New York Times which I happened to pick up, giving Jersey City's reason why people should like to locate there, as an illustration of the point.

Under existing conditions each community has the free use of its natural advantages with the right to develop them to any extent it may desire subject only to the limitation imposed by the burden of taxation. These advantages are developed through local taxation and pride. Complete automony exists and the money raised by taxation of the residents and property owners is used in that particular community. It is not used to develop a competing community with the resulting dwarfing of its own advantages.

Under the bills sub judice it is not only possible but very probably that a regional planning director would conceive the idea that one certain community should be developed and in carrying out the plan, deprive another community of its just due. To be specific: Let us take a port whose water-front lands are within the boundaries of two States-the port of New York, of Philadelphia, or any water-front communities whose State lines are separated by divisional waters. The director determines to improve the facilities of "A" community, in competition with "B." Both are enterprising communities in different States.

Both are taxed for local improvement and both through their respective residents contribute to the support of the Federal Gov

ernment.

Both should be and are under existing laws on an equal competitive footing within the limitations of their own control.

Both should have comparable and equal treatment and protection from the Federal Government to whose support they contribute according to their due.

Neither should have preferential treatment.

Neither should be compelled, directly or indirectly, to pay the expense of projects designed for the development of the facilities of its competitor.

Not alone would taxpayers of one community be compelled to assist in the payment of such costs under these bills, but a further result would follow when the preferred community had been assisted by funds contributed in taxes in part at least by the subservient community. This preferential community would prosper in the use of its added and more modern facilities, paid for from loans and grants from the Federal Government provided in part by tax levies on its less favored competitor; business would leave the unfavored town, property values would go down, business would be retarded if not ruined, and the growth completely dwarfed.

There is and can be no justification for any legislation that will make such a miscarriage of justice possible. These bills do just that and more. No one can tell how much further they will permit nequalities and inequities to be perpetuated. The scope of such possibilities is unlimited.

These bills are inimical to the best interest of the country and should be defeated.

These bills violate the principle of State rights and should be defeated.

These bills would be a long step toward centralizing the control of all natural and other resources of the country in the Federal Government and greatly advance the time when State government will be but an empty form,

These bills spell the ruin of private enterprise and the loss of countless millions invested by private citizens in the obligations of private utilities.

These bills are not mere planning measures; they are effective steps toward Government control and operation of all utilities and natural

resources.

These bills complete the initial step of putting the Federal Government actively in competition with private business.

These bills concentrate vast powers in one man and smack of a corporate form of government.

These bills will change the course of our entire political, social, cultural, and competitive economy in an undesirable manner. The bills should be defeated.

Mr. DONDERO. I should like to ask Mr. Smith a question, Mr. Chairman.

The CHAIRMAN. Yes.

Mr. DONDERO. I was interested in that part of your statement that had to do with State compacts. You understand that under this bill, if enacted into law, that Congress in advance grants consent to the States to enter into State compacts.

Mr. SMITH. I would not want to answer that.

Mr. DONDERO. I call attention to section 7 on page 16 of the bill, which reads that

The consent of Congress, subject to the provisions of this section, is hereby given the several States to enter into agreements and compacts between or among any two or more States.

And

Any such agreement or compact shall not become effective or binding upon the States party thereto unless and until it shall have been submitted to and approved by the President.

Consent is given in advance under this bill, and the only person who would have to give his consent would be the President, no matter who it might be. Did you understand that that was in the bill?

Mr. SMITH. Mr. Congressman, let me put it this way: I can understand that pretty nearly anything can be done under this bill as it is written. I think that it is so broad that Congress is handing over its authority and that when this bill passes, so far as any State development is concerned, so far as any diminution is concerned, it is out. In other words, it just hands over to the Government of the United States, so far as it pertains to our streams, and anything relating to our streams-navigation, pollution, harbor development of any kind-in fact anything that you want to say, you are handing over to these regional directors.

Mr. DONDERO. I agree with you.

Mr. BEITER. Did I understand you to state that if this bill was enacted into law it would compete with private industry?

Mr. SMITH. I do not see how it could be otherwise.

Mr. BEITER. And that if a project were contemplated for one particular State that the cost would be borne by other States in the Union, or in that division?

Mr. SMITH. Yes, sir.

Mr. BEITER. You live in the State of New Jersey, I believe?
Mr. SMITH. Yes, sir.

Mr. BEITER. You are for the New Jersey Ship Canal, are you not? Mr. SMITH. Now, would you mind, if I did not answer that question. I will explain specifically why I do not want to answer it. We are charged, our board is charged, with the construction of that canal, or anything that has to do with that canal. Therefore, when questions come up which are not academic, which are real, we have to pass upon them as representing the State and the communities, and I want to keep my mind open so that I can listen to argument when we have to sit as a court on that matter.

Mr. BEITER. There has been a great deal of testimony here to the effect that the people of New Jersey are for the New Jersey Ship Canal.

Mr. SMITH. Well, I am in this position. I am acting as an official of the State charged with a duty and, therefore, I have got to be very careful in representing that duty to do as I say, at this time.

Mr. BEITER. But if the ship canal were constructed, it would compete with private industry; compete with the railroads, not necessarily with private industry, but with the railroads.

Mr. SMITH. I do not think so.

Mr. BEITER. It would take business away from the railroads.

Mr. SMITH. Not necessarily. It might add business to the railroads. Sometimes these canals are feeders to railroads. They are arteries of commerce.

Mr. BEITER. I will concede that, but the other States would be called upon to pay a part of that-the building and construction of that canal?

Mr. SMITH. But the other States would have the use of that waterway. The people of all of the States would have the use of that waterway.

Mr. BEITER. But

Mr. SMITH. Pardon me. I want to answer your question.

Mr. BEITER. Yes.

Mr. SMITH. The difference is this, between what this bill does, or makes possible to do, and what we are discussing now, which is an artery of commerce. The difference is this: You will take the moneys levied on the people, from the Federal Treasury, no matter where they come from, and you will construct a port which may favor, the facilities of the port, one State as against another. Take the States of New Jersey and New York, or any two States. Suppose this regional director says he thinks that all of the facilities should be on the New York side, and, therefore, the benefits from those facilities would go to New York. New York would not give away any of the money that they made as a result of increased revenue through increased values in land to pay the costs of running our State government.

As it is today, if New York itself wants to provide those facilities, for ships, as they do, they get the benefit of it. If New Jersey wants to tax its citizens to provide facilities, they get the benefits from it.

Now, let us go a step further. You construct a dam anywhere, I do not care where it is, in the Mountain States, and you provide water for irrigation purposes or for power.

We know in New Jersey that we can construct our powerhouses and feed them with coal and deliver the electricity at as low cost as you can with any hydroelectric plant.

Mr. BEITER. You do not agree, then, with Frank Walsh that you can provide hydroelectric power for one-half the price that you can steam power?

Mr. SMITH. Well, I am not an authority on that. All I can do is to take the word that has been given to me by engineers and they tell us that under the circumstances existing at tidewater that a plant fed by coal can produce electricity just as cheap as the hydroelectric plants.

Mr. BEITER. Yes; I agree with you there, that we can in a great many instances produce steam power cheaper than hydroelectric power.

Mr. SMITH. Anyway the point is this. You make a distinction, and by reason of certain resources, and you simply take away that for the benefit of another State, take the resources away which a State may possess, and transfer them some place else.

That is all right if the local people want to put up the money for that purpose, that is entirely all right. That is fine. They can go ahead and do it. But why should money be taken from one section to increase the wealth of or develop another section and deprive that section from which it was taken, at Federal expense, mind you. That is what we are talking about, Federal expense and cost. That does not seem right to me.

Mr. BEITER. Of course, we have got to consider the country as a whole. We cannot just divide the country into sections.

Mr. SMITH. You have no right to take money from me and from my locality and take it for the country as a whole. And, really, the effect of this is that you are taking money from one locality for another. The Government is doing that at the present time, but not as it does it here. It is doing it constantly. We are taking money through the Congress from one locality for another, but here you are doing the thing entirely with Congress passing upon the question. You do it now as a result of recommedations by committees such as this, and everybody has a right to act on it and to argue it.

Mr. BEITER. Yes; but anything that is recommended by these authorities must come to Congress and Congress has got to pass on it first.

Mr. SMITH. Would you mind if I say we are practical.

Mr. SEGER. Mr. Smith, you have been connected with many activities throughout the State of New Jersey and nationally, such as rivers and harbors improvements and conservation. I was not here at the beginning of the reading of that interesting statement. Does that reflect the sentiment of any particular one, any particular body? Mr. SMITH. It does.

Mr. SEGER. Who are you representing here today?

Mr. SMITH. I am representing the Governor of New Jersey here today; but I may say that the board of commerce and navigation which is directly charged under the law as you know in our State to protect our streams, rivers, canals, and what have you, passed resolu