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83has stated in his opening remarks, that I do not represent the State of Colorado or any of the other States. By his use of the word "volunteer" it might appear that I do not officially represent the city of Denver, but I wish to state that I do appear here under instructions from the mayor, city attorney, and water commissioner of the city of Denver.Mr. CARPENTER. Of course, I realize that Mr. Bannister represents the city of Denver. I know that to be the fact.The CHAIRMAN. I have just received a letter from the Secretary of the Treasury with reference to the bill, and will read it to the committee.(The letter referred to is as follows:)TREASURY DEPARTMENT, Washington, March 18, 1926.DEAR MR. CHAIRMAN: I have your letter of March 6 requesting my advice on the financial plan proposed by H. R. 9826. This bill contemplates the sale by the United States of $125,000,000 of 15-50 year 4 per cent bonds and the use of the proceeds to pay for the cost of construction of a dam on the Colorado River and an irrigation canal to the Imperial and Coachella Valleys. I am not familiar with the engineering features involved, nor with the earning prospects of the project, and I accordingly express no opinion thereon.Proceeds from the sale of our bonds are not governmental revenues. The payment for the project by the sale of bonds has exactly the same effect on our governmental accounts as the payment of the same expenditure out of any governmental revenue, and the fact that it is a dam and might have earnings in the future does not differentiate it from an expenditure for a battleship, a public building, or to pay employees. In each case the expenditure would appear as an expenditure in the Treasury statement, and if the sum of this expenditure and all other expenditures during the fiscal year was less than the revenue for that year from all sources, there would be a surplus. If this sum was in excess of the revenue there would be a deficit. With our large Government indebtedness outstanding, the effect of a surplus is to require less borrowing at the next quarterly refunding period, and the effect of a deficit is to require more borrowing. In other words, if there were no provisions at all in the bill for the floating of the loan and the general revenues of the Treasury were insufficient to pay for the project, the Treasury would be obliged to sell additional securities from which to obtain the cash to cover the cost of governmental operation in excess of Government revenues.The proposal for the bond issue, therefore, simplifies in no way the fiscal problem involved. As a matter of fact, the limitation in the bill as to rate of interest and maturity, and the power of the Secretary of the Interior to control some of the terms of the proposed issue would hamper the Treasury in meeting a money market which might exist at the time the securities had to be hold and to some extent would increase the cost of money to the Government. If the project is adopted by Congress, it would be, in my opinion, better fiscal policy to authorize the Secretary of the Treasury to pay for the project out of the general fund, or out of the proceeds of bonds authorized generally to be sold to replenish the general fund, and then earmark the earnings from the project to the payment of interest and principal on an amount of public debt equivalent to that created for this purpose. This policy would permit the Treasury to take care of our debt structure as a whole and in the manner most effective at the time.If we eliminate the question of paying for the project out of the bond issue, which as I have said is no aid from a Treasury standpoint, then the question for the determination of Congress is, should the United States spend $125,000,000 in the construction of a power and irrigation project? I believe that, in general, sound public policy in America, as elsewhere, is to encourage private initiative and not to have the Government ownership or operation of projects which can be handled by private capital under proper governmental regulations. The governmental operation of railroads in this country was our largest experiment on this line and a comparison of public and private operation in that field justifies my faith in private enterprise. Canadian and European experience is the same. To get the Government out of business,

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