Press Conference

THE PRESIDENT: Good people, how are you? Glad to see you.

Q. You look all right. I thought you were sick.

THE PRESIDENT: I think we ought to get a chair for the Dean[Mr. Young]. Pull it up, it is right behind you. . . .

Q. We were interested, sir, in encountering Mr. Willkie as he went out.

THE PRESIDENT: We had a very, very interesting talk that lasted about an hour and twenty-five minutes.

Q. What about, sir?

THE PRESIDENT; About utilities in general. I should say that Mr. McNinch and he and I covered pretty nearly the whole field, talking on matters of general principle underlying the problem, with the objective and the hope that a very crying need in the country for additional power facilities can be met. The apparent need for expenditures in the coming year runs from a billion and a quarter dollars to a billion and a half. We are all agreed on the need of expanding facilities.

Q. For the power companies?

THE PRESIDENT: All the power in the United States.

And then I brought out some data which I have been getting recently which of course we all know about: that the use of power is going up practically every year—I am talking about power as a general thing—and the rather interesting fact that in the present set-up of power development in the United States, about ten percent is being generated by Government projects and the other ninety percent by private companies and municipalities. Is that right?

MR. MC NINCH: That is right.

THE PRESIDENT: Of course nearly all of that ninety percent is private.

On the basis of area—that is geography—somewhere around eighteen percent of the area of the country could be—not is, but could be—served from Government power plants as they have been already built or are laid down.

Q. Is that in addition to the ten percent?

THE PRESIDENT: Oh, no. It is a different thing. The ten percent, Russ [Young], is the amount of power now generated—the total amount is one hundred, and ten percent is now generated from Government plants, the other ninety percent from private plants. That is that thing; leave that to one side. Now, the area of the country, the geography, the total square miles of the United States, eighteen percent could be—not is, but could be—served from Government plants.

Q. Built and building?

THE PRESIDENT: Built and building.

Q. That is actually projected?

THE PRESIDENT: Yes.

Then a third thing, which is quite interesting, is that on a population basis in the United States about thirteen percent of the population of the United States could be served from Government plants.

Now, let us put it the other way around: That means that from eighty to ninety percent of the total area of the United States, the total population of the United States and the total number of kilowatt hours is being served by private utilities.

MR. MC NINCH: And cannot be by Federal.

THE PRESIDENT: And cannot be by Federal.

Q. Why do you say it cannot be? Supposing, eventually, you had regional plans for power production in those areas.

THE PRESIDENT: That would be a very simple question to put:What hydroelectric development could the Federal Government put in to serve St. Louis?

Q. You could use the Mississippi dams?

THE PRESIDENT: HOW much power comes from the Mississippi dams? They are three feet high.

Q. They could be used.

THE PRESIDENT: Oh, no.

Q. Cahokia is making it cheaper than Keokuk.

THE PRESIDENT: The total amount of firm power from the Mississippi dams would not run the White House.

MR. MC NINCH: Almost nothing.

Q. There are other areas, the Gasconade and Current which should be developed. I'm just asking—you said, "could not be." I am wondering if you went ahead with a tremendous power program.

THE PRESIDENT: I am not taking into consideration perfectly remote things like the St. Lawrence Waterway. We haven't even a treaty with Canada. I don't know.

Q. I wondered how far ahead you are looking?

THE PRESIDENT: I am talking about any present program.

Q. Any present program-it would still be between eighty and ninety percent?

THE PRESIDENT: And, incidentally, another reason why, in all human probability, it won't get beyond the ten to eighteen percent of Government by either area or population or bulk power, is the fact that if any more were developed by Government it would barely maintain that ratio with the new production of private power. Do you see? That is a very important factor because, taking a practical example, you can take any one of those new dams in the Tennessee Valley, and the chances are that the private power companies will be increasing their output in the same proportion if one of those new dams comes in.

Frank, have you got that paper of yours about the Tennessee Valley? I think it is rather interesting. [Mr. McNinch gave the President some papers.]

Take the Tennessee Power Company, starting in the year 1933—this is the sale, actual sale of power to ultimate consumers it was 2,271,000,000 in 1933.

Q. What is that, horsepower or kilowatt hours?

THE PRESIDENT: That is kilowatt hours. In 1934 it was 2,356,000,000; in 1935 it was 2,683,000,000; in 1936 it was 3,269,000,000; or an increase in the sales of the Tennessee Power Company of 44 percent in four years.

Q. Mr. President, wasn't some of that due to the general increase of business activity and production?

THE PRESIDENT: Sure, of course. And, as you know, that goes along.

Q. Has there been a similar increase in installed capacity?

THE PRESIDENT: Yes. In installed capacity they have gone from 3,021,000,000 —

MR. MC NINCH: That is generation.

THE PRESIDENT: This is generating energy, from 3,021,000,000 in 1933 to 4,072,000,000 in 1936.

I will give you the other figure. On revenue—this is in dollars-I might just as well make these round figures, unless you want it down to the dollars?

Q. No, sir.

THE PRESIDENT; In 1933, the Tennessee Power Company sold $54,000,000; in 1934, $56,000,000; in 1935, $60,000,000; in 1936, $67,000,000.

Q. Mr. President, has Government power entered as a competitive factor in there?

THE PRESIDENT: Surely.

Q. To what extent?

THE PRESIDENT: It started in 1933 when we took over the Wilson Dam.

Q. Has your increase been proportionately greater than the private power company? I suppose it would be.

THE PRESIDENT: Oh, surely, because we started from scratch; we started from zero.

Q. Can you tell us to what extent Government has affected this in dollars or revenue?

THE PRESIDENT: I don't know. In other words, you take this one company which, from the point of view of the utility companies, is the worst hit.

Q. Is this the Commonwealth g: Southern?

THE PRESIDENT: One of them, the Tennessee Power Company.

Q. I understood you to say a moment ago that eighteen percent would seem to be the total limit of government competition with the private plants.

THE PRESIDENT: That is the geographical area and thirteen percent on a population basis and ten to fifteen percent on kilowatts.

Q. Did you give those figures to Mr. Willkie?

THE PRESIDENT: Yes.

Q. What was his reaction? Amazement? Did he know about that?

THE PRESIDENT: No, I don't think he did. I did not give him those figures there because we do not get to them—I gave him population, geography and total kilowatts.

Q. The other conference about the building program, how did Mr. Willkie react to that, sir?

THE PRESIDENT: I suppose the easiest way is to put it this way: That there is this crying need for more power and that the difficulty, Mr. Willkie said, is in raising the junior money. I said, "Where?" Well, we picked an area many hundred miles removed from the Tennessee Valley, in other words, so far removed that Tennessee Valley power would not enter into it. It is an area in which there is no water power. I said, "What is to stop the company out in that area from going ahead and adding to its power generation? It needs to." "Well," he said, "the general feeling."

I said, "The Government isn't in that area in any shape, manner or form," and, quite frankly, the only answer I got was, "the general feeling."

I said, "The Government not only hasn't gone in and has no plans for going in, but how could it go in?"

"Well," he said, "the general feeling."

Well, that seems to be the difficulty.

Q. Meaning that the general feeling that the Government would go in would prohibit them from floating the junior securities?

THE PRESIDENT: Yes.

Q. Didn't he mean the general feeling of timidity and uncertainty on the part of the power people at this stage of it?

THE PRESIDENT: He said they couldn't sell the securities. I said,"Has any effort been made?" He said, "No."

Q. What did he say to that, when you asked him had any effort been made?

THE PRESIDENT: Well, he said, "It is impossible."

Q. Did you find yourselves in sharp disagreement on any of these important matters?

THE PRESIDENT: Not the major principles, no.

I asked various other leading questions which I cannot tell you about at the present time very well because—Oh, I mean they related- well, just as an example, would a utility recognize that common stock should be limited to the reasonable returns set out by the common law, seven or eight percent? That is a matter that is still open because the determination of that answer would solve a great many troubles.

Q. Did you discuss the possible repeal of the death sentence?

THE PRESIDENT: No.

Q. Did he advance or indicate in any way how that general feeling could be changed?

THE PRESIDENT: He gave me, as he went out, a memorandum which I have not had the opportunity to read.

Q. That seems to be the general thought that he was expressing, what all writers and stockbrokers say, as to the general feeling. So I would think the natural thing would be for him to say that if you did this or that—

THE PRESIDENT: He did not get to that.

Q. Did he confine his definition of general feeling or his idea of general feeling to the utility problem itself?

THE PRESIDENT: Oh, yes; we only talked about that, that is all.

Q. Did you discover that Mr. Willkie or any of these utility people are at all reconciled to Government competition in the power field? Are they still feeling that the Government is their enemy when it comes to generating and selling power?

THE PRESIDENT: Well, Fred [Essary], I don't know how to answer that. I said, "Do you think the Government should sell no power from these plants?" He said, "Yes, they should sell."

Q. Don't they want to purchase at the switchboard so they can distribute? That is what they always asked for.

THE PRESIDENT: Yes, I suppose so. We did not talk about that.

Q. You did not talk?

THE PRESIDENT: No.

Q. That is what they have always said, "Give us the power at the switchboard and don't have any limitation over our means of distribution."

THE PRESIDENT: Yes.

Q. Could you say, from your general conversations with Mr: Willkie, and his reaction and your reaction, that some headway is being made with this problem?

THE PRESIDENT: I should say so, wouldn't you, Frank?

MR. MC NINCH: Yes.

THE PRESIDENT: Very distinctly.

Q. You put this proposition of dividends up to him?

THE PRESIDENT: I would not say that—We talked about that purely as theory. Nothing was put up by either side. We have been talking theory today and we shall continue to talk theory for some time to come. There is nothing concrete, no suggestions that the company do this or the Government do that.

Q. Where is the headway being made?

THE PRESIDENT: The fact that we are getting down to some of these fundamentals.

Q. You are agreed on certain factors?

THE PRESIDENT: I talked, for instance, of the famous case in the northeastern part of the country where a little private company had a little strip of territory, about twenty miles wide and forty or fifty miles long. They had their own private development, two or three villages, all local capital, and the total amount of money was $250,000. They just had one line that served these two or three villages and ran up the highway a bit. You could not even call it rural distribution. They were doing very nicely, making about 8 percent on their money right along, paying it out to themselves.

Finally, two of these big boys came in competing for the territory and the bidding started at half a million, threequarters of a million, a million, and finally they could not stand the gaff any longer and they took a 500 percent profit. They sold out for a million and a quarter. "Well," I said, "should that million and a quarter enter into the rate base of the purchasing company or should it be $250,000, which is what the whole thing had cost them?" He said, "No, certainly not. It should be $250,000."

Now, we are getting somewhere, when we begin talking like that.

Q. They can take that to court and get a million and a quarter.

THE PRESIDENT: We are getting somewhere, never mind.

Q. Did you discuss holding companies with him at all?

THE PRESIDENT: Barely scratched the surface.

Q. Going on with that example, you cited one exactly parallel in the Press Conference the other day.

THE PRESIDENT: Yes.

Q. And you said we are going back to the old English common law.

THE PRESIDENT: Yes.

Q. So, in effect, Mr. Willkie agreed with your theory of valuation?

THE PRESIDENT: Yes. Wouldn't you say so?

MR. MC NINCH; He proposed, he said he would be entirely agree-able to have all the write-ups discovered by the Federal Trade Commission and reported by them taken out of the capital structures generally.

Q. Was that the old common law way of figuring?

Q. That is a concession in itself.

Q. Would you remind repeating it?

MR. MC NINCH: He would be agreeable to adopting the Federal Trade Commission report and eliminating all the write-ups that it found in those systems.

THE PRESIDENT: When were those reports made?

MR. MC NINCH: They were completed in 1935. I believe they went over a period of three or four or five years. The suggestion was made by me that they did cover a considerable percentage of the industry but not all. They did not examine the whole industry but they did examine the larger set-ups. They covered 68 or 70 percent of the total investment.

Q. How much water would be squeezed out of those you did know? Did you ever compute that?

MR. MC NINCH: Yes. I will get it in a moment.

Q. How did this New York report happen to reach you? Was there some provision that it should be delivered to the President?

THE PRESIDENT: Yes.

Q. It was made on the State authorization?

THE PRESIDENT: Yes.

Q. And delivered to the President?

THE PRESIDENT: And made to me because it is, of course, of definite interest to those five groups that I sent it to, the three Committees on the Hill and the Federal Power Commission and the National Resources Committee.

Q. And it is also made to the Governor of the State of New York, I presume?

THE PRESIDENT: Yes.

Q. How did it happen to be released just now, at this time?

THE PRESIDENT: Because Frank Walsh brought it in yesterday. I did not know when he was coming.

Q. That won't complicate this attempt to get together?

THE PRESIDENT: Oh, no. In fact, it ought to help because there we have figures one way and figures another way. It ought to be extremely helpful. The public is entitled to both figures, as I said in my letter transmitting it, and these figures deserve at least as wide publication as the previous set of figures. . . .

Q. Have you any assurance that Mr. Willkie is speaking for the entire industry?

THE PRESIDENT: Not for a minute.

Q. Because I cannot imagine the Associated Gas 8c Electric.

THE PRESIDENT: Not for a minute.

Q. Have you anything on housing?

THE PRESIDENT: In just a minute. I want to read this telegram that came in. Harry J. Bauer was here in Washington last week—

MR. MC NINCH: The day before the date of that telegram.

THE PRESIDENT: —and I expected to see him, but being laid up with a bad tooth I could not see him. I think he has gone back to Los Angeles but I expect to see him the next time.

Q. Who is he?

MR. MC NINCH: President of the Southern California Edison Company.

THE PRESIDENT: He sent this telegram to Chairman McNinch, which I think is rather interesting. If you want copies I see no reason why you should not have copies. (Reading) "Will you please express to the President my sincere appreciation of the honor of being invited to attend the conference of the utility executives to be held at the White House today and also my regret that it is impossible for me to be present. Should you feel that my ideas would be of any interest to the President, will you please advise the President that our company has lived successfully for many years in competition with the yardstick afforded by the municipally operated plants in our territory—that we have successfully met this competition by progressive measures such as basing our rates on historic cost rather than on reproduction cost and that of making rates as low as possible rather than merely reasonable, thus avoiding the necessity for rate regulation by the Railroad Commission of the State of California—that we have been and are continually reducing rates voluntarily, our first consideration always being that of our consumers, that as a result of this policy our company has not had a general rate hearing before the Railroad Commission since 1922—that our general policy concerning rates can be stated as follows: 'Rates should be as low as possible, thereby anticipating, one, competition, two, regulation, three, the economic necessity of the consumer, and, fourth, the reasonable expectations of the consumer. Our company has greatly benefited by the President's policy, particularly with reference to low cost of money, and, secondly, by the greater interest in the use of electricity which national publicity has created in the minds of the consumers. I am sending this message to you rather than directly to the President so that such attention will be given it as you think it deserves."

Q. You answered a question that you doubted whether you could do this before you got away. Have you any idea as to when you will be able to get away?

THE PRESIDENT: As soon as they stop treating my bad tooth because I don't want to take the dentist with me. This is a guess on my part but it will be either Saturday night or Sunday night, but entirely subject to the treatment.

Q. In my capacity, I have a question to ask for a young lady reporter, Miss Craig. She asked me to ask you which tooth it was and have you lost your beautiful smile as a result of it and what became of the tooth. (Laughter)

Q. Is it a tooth or a cave?

THE PRESIDENT: Well, on the first, the location: It is in Number 3 hole, aft, on the starboard side. (Laughter)

Q. How about the beautiful smile?

THE PRESIDENT: Oh, judge for yourself, sweetness.

Q. What was the other—who got the tooth?

THE PRESIDENT: I think I will probably make that announcement at the Gridiron Dinner.

Q. Getting back to housing, have you come to any decision on annual wage for labor?

THE PRESIDENT: No.

Q. Apparently the prices of materials have gone down of their own accord, if the recession continues—

THE PRESIDENT: In some lines, not all.

Q. Are they still going up?

THE PRESIDENT: The last advice I had was that lumber has taken a very definite drop. Cement, about which there has been a great deal of complaint about price maintenance, not by agreement but by hypnosis, that hasn't gone down. Steel hasn't gone down. There is competition in lumber and that has gone down.

Q. On this question of recession—have you—put it this way: Do your Government advices coincide with the New York Times index which seems to be rather alarming?

THE PRESIDENT: I don't know. I have not had any of the consolidated indices we get now.

Q. I was wondering whether the statistical bureau is supplying you.

THE PRESIDENT: It still is—the Central Statistical Bureau—but I haven't seen anything for about three weeks.

Q. Does the type of wage and hour bills for which the labor leaders are asking conform with your ideas?

THE PRESIDENT: I don't know. On the question of the wages and hours and the crop bills, I have been very much amused, sitting here with nothing very much to do in the morning except to read the paper, to see all the various stories about this being an Administration proposal and that being the President's proposal, and this being thrown out and that being accepted, et cetera. The only thing I can obviously say is what I said last Spring, that I would send a message outlining objectives. I sent two, one in the Spring on wages and hours and one the other day on wages and hours. The easiest answer is to tell you to read the messages. One of you may decide that X bill does not conform and that Y bill does conform, but it is just your guess. It may be good and it may not be.

Q. In your leisure hours last night, did you listen to Arthur Vandenberg?

THE PRESIDENT: No. Was he on the air?

Q. Yes, he was on the air.

MR. EARLY: He is in the Star tonight, boss.

Q. He quoted you as saying, when you were at Charleston, two years ago, that prosperity came because you had planned it that way, and he pointed out that you said the other day that business can do more than the Administration can on securing it. He said you were right the first time. In other words, that the policies of government had brought this along.

THE PRESIDENT: I cannot comment in answer to Arthur, obviously. As long as you do not tie this in in any way with Arthur, that was perfectly true in Charleston in 1935. The things we had done, which at that time were largely a monetary and pump-priming policy for two years and a half, had brought the expected result, perfectly definitely. That, of course, has absolutely nothing to do with the present situation because the monetary medicine that was given worked and there was no more monetary medicine given.

On the pump-priming, we have gradually come to an end or, rather, a great diminution of pump-priming.

Then, of course, there was the third factor, an important factor. The time was just after the NRA decision. Wages and hours were all right, especially wages. There was also the getting together of industry every month around a table, industry by industry, where they went over the old-fashioned law of supply and demand: "Is there too much of a surplus at the present time? Should we slow up?"

That was knocked into a cocked hat.

Subsequently, in January, 2936, came the other factor, which was the knocking out of Triple A, which was working on the general control of unwieldy surpluses. Today we 'are suffering, in the cotton industry, from a condition which would not have been nearly as bad if the Triple A had been in effect this past growing season.

Q. Anything to be said on the international situation? Anything ahead that can be foreseen?

THE PRESIDENT: I don't think so, Fred [Essary]. I haven't seen today's dispatches.

Q. They seem to have recessed in Brussels subject to call of the Chair.

THE PRESIDENT: I think the only thing you can do would be to intimate that efforts made at seeking ways towards peace will, of course, continue at every possible opportunity. That is the policy of the Government—to seek every possible means towards peace, both in relation to existing situations and future dangers—to keep on trying. If you don't succeed at first, keep right on trying. Well, I hope to be over on Friday.

Q. Have you any plans for Thanksgiving?

THE PRESIDENT: Just a family dinner, that is all.