of $3,000,000 under the original estimate. The estimates for the Fontana, South Fork of the Holston, and Watauga projects provide for continuation of these jobs, approved in the third supplementary program. The estimates for the Watts Bar Steam Plant include part of the cost of the fourth 60,000 kw unit, and those for the Sheffield Steam Plant provide for completion of the installation of an additional 40,000 kw unit, both provided for in the third supplementary program.

The estimates for investigations for future unified system projects are for continuation of activities which have heretofore enabled rapid and efficient expansion of construction to meet emergency power needs.

The item "Transmission and other electric plant" includes provision for necessary expansion of facilities for delivery of power to the Authority's customers; for interconnection of the existing system with facilities purchased from other utilities, with new projects being built to supply defense power, and with other utilities from which power for defense needs is being purchased or interchanged; and for the rehabilitation of purchased properties. The 1943 estimate of $25,076,000 includes $5,070,000 for construction of switchyards to serve the new generating capacity to be under construction in that year, $19,324,000 for expansion of the transmission system, and $682,000 for prorated departmental and general administration. The $19,324,000 includes $10,464,000 for construction of transmission facilities required for national defense and $8,860,000 for additions to provide for system reinforcement and load growth other than those required directly by large industrial customers with defense contracts. It is contemplated that the proceeds of bond issues will be entirely obligated in 1942, and none of the work to be done in 1943 will be financed from this source.

The estimates for 1943 include $215,000 for the provision of facilities to be transferred, in return for mortgage liens, to municipalities and cooperatives for extensions to their systems, and for repayments on such liens already outstanding of $162,000.

Power inventories will have to be increased by $66,000 in 1943, principally to provide the coal supply for the additional steam units, scheduled to go on the line in that year.

Supporting Statement No. 2 indicates that in 1943 the surplus before depreciation from navigation, flood-control, and power operations will reach $19,892,000, an amount nearly four times the net expense of all other operations of the Authority.

The estimate for 1943 for navigation and flood-control operations includes $110,000 for the study and development of river transportation and $8,000 representing the cost of power furnished to the Corps of Engineers, United States Army, for the operation of the locks at the various main river dams.

The estimated net income from power operations in 1943 will provide approximately as great a return on the investment in power facilities financed from appropriations as the 5 percent earned in 1941, after providing for depreciation and the allocated portion of common expense. The Authority's sales of power are at the point of exhausting the dependable supply, and the additional generating facilities scheduled for installation in 1942 and 1943 will all be needed to meet the expected demands of the area.

The estimated total revenues show an increase of 75 percent in 1943 over 1941. In order to guard against a dry year, allowances for unrealized revenues and increased production expenses of $2,000,000 are included in both 1942 and 1943.

It will be noted that although there will be several additional projects in operation in 1943, the estimate for common expense in that year is only 8 percent higher than in 1942.

FERTILIZER PROGRAM

The increase in the estimates for asset accounts under the fertilizer program for 1943 over 1942 is more than accounted for by inclusion of $3,000,000 to start construction of a Gulf coast plant to manufacture calcium metaphosphate.

The first item under these accounts provides for purchases of phosphate-bearing land and mining rights therein as tracts are discovered which warrant acquisition. During 1942 and 1943 it is planned to purchase reserves to replace sales made in 1940 to the Monsanto Chemical Co.

The item "Plant and equipment" includes provision for a fused-rock furnace, a potassium metaphosphate furnace, completion of a washing and agglomerating plant, a flotation plant, and miscellaneous improvements in 1943, in addition to the new Gulf coast plant.

The increase in fertilizer inventories in 1943 of $316,000 is occasioned by the increase in plant capacity arising from the scheduled completion of a new calcium metaphosphate furnace in 1942 and by the necessity of stocking larger reserves of raw materials to insure continuous operation of the plant.

The increase in the net expense of fertilizer operations in 1943 is accounted for by the continued expansion of the test-demonstration program on a Nation-wide basis and by a small expansion of the small-scale research activities which have formed the basis for the past development of this program. This expansion will enable some initial studies to be made on nitrogen compound fertilizers.

The 1943 estimates for "Experimental large-scale production" will provide for the production of approximately 37,000 tons of phosphatic materials for the Authority's test-demonstration program. The remaining capacity, sufficient to produce 106,000 tons of superphosphate, will be reserved for the manufacture of fertilizers for the Agricultural Adjustment Administration and Great Britain or for the production of elemental phosphorus for the War Department. The estimated net credit of $441,000 in 1943 will be more than sufficient to absorb the depreciation on fertilizer plant in service in that year.

The Authority's test demonstrations, conducted in experiment stations and under practical farming condi tions, become the basis for improved farm-management programs and soil-conservation practices. The increase in the estimate for these activities in 1943 is accounted for by an increase in the amount for fertilizer of $33,000 and an increase in other expenses of $65,000, to be used principally for extension of cooperation with the States participating in the program.

"Controlled soil and fertilizer investigations" comprise a series of studies of the characteristics of new forms of fertilizers and their effects on plant life and animal nutrition. These investigations are accompanied by extensive fertilizer tests on varying types of farms, directed by per sonnel of the land-grant colleges. Use of the more highly concentrated calcium metaphosphate is increasing as the use of triple superphosphate decreases. It is anticipated that these test demonstrations will be initiated in eight new States in 1942 and several additional States in 1943. Of the estimate of $545,000 for test demonstrations in that year, about four-fifths is for reimbursement of the expense of cooperating institutions.

Soil inventory mapping had been completed by the end of 1941 in 41 counties covering 13,352,320 acres. Of the estimate of $111,000 for this item in 1943, $86,000 is for reimbursement of the expenses of the Bureau of Plant Industry and the land-grant colleges.

"Transportation studies relating to fertilizer distribution" comprise, for the most part, investigations of the most economical routing of fertilizers.

RELATED PROPERTY OPERATIONS PROGRAM

This program covers activities on its lands which are not directly related to the Authority's major objectives. Estimates for the assets used in this program are contained in the "General assets" section of the Budget.

The increase of $17,315 in the estimates for "Reservoir area operations" in 1943 is primarily accounted for by the increased expense of agricultural readjustment around reservoirs as the Cherokee, Watts Bar, and new Hiwassee projects are placed in operation. The estimate for development of recreational facilities for 1943 of $115,900 will provide such items as boat docks, swimming areas, and picnic and vacation parks where the greatest demand has arisen on recently completed reservoirs.

As is shown on Supporting Statement No. 5, the Authority expects to realize a small net income from the operation of recreational facilities in 1942 and 1943. The greater part of this income will be realized from operations in the Norris area. Under "Reforestation and erosion control on reservoir lands" some 37,000 acres have been reforested to date and plans are made for the protection, management, and development of the 300,000 acres on the margins of the

lakes which are in forest.

"Fish and game readjustment investigations" are directed toward the restocking of the lakes with fish which are suited to the new environment and the rehabilitation of native game resources interfered with by the impoundment of the reservoirs.

Operation of villages at completed projects will result, it is estimated, in 1943 in a net income before depreciation of $40,699, more than double the net income for 1942. The largest part of this increase will, it is anticipated, be derived from the villages in the Muscle Shoals area. The estimates totaling $24,160 for maintenance of national defense properties provide for continuing routine repairs of Nitrate Plant No. 1 and the unused portion of Plant No. 2.

DEVELOPMENT ACTIVITIES PROGRAM

Through contributing to the improvement of the general economy of the region by the discovery and development of new uses for basic resources and methods for increasing income, this program has already proved its importance as a backlog to the area's ability to aid in national defense. The total estimate for 1943 is the same as the estimate for 1942.

Of the estimate of $250,000 for general mapping, shown as the first item on Supporting Statement No. 6, $242,000 is for the continuation of topographic mapping of the eastern section of the valley on a scale of 1:24,000. This work is performed in cooperation with the Geological Survey. By the end of 1943, aerial photographs will have been made of 22,100 square miles, and reproduced maps will be available for 11,500 square miles.

The increase of $58,000 in the estimates for 1943 for valley-wide forestry development and erosion control is accounted for by developments directed toward reducing the impact of post-emergency problems, and by increased

The

activities in the denuded Ocoee No. 3 watershed. greater part of the estimate of $125,000 for forestry resources surveys and management planning is to provide for forest-products utilization research, intended to be a basis on which new industries may be developed.

Forestry activities on private lands have so far resulted in the planting of about 90,000,000 trees. The increase in the estimate for this work in 1943 will enable the Authority to aid in the improvement of methods of management of the 6,000,000 acres of farm wood lots in the area. These activities also include erosion control in the badly Ocoee No. 3 project, and cooperation with other agencies in eroded Copper Basin, which is part of the watershed of the educational work in the field of forest protection.

crediting the cost of trees used on the Authority's land. The estimate for nursery operation is a net figure, after The two nurseries operated by the Authority have an annual productive capacity of 25,000,000 trees.

Under "Tree and tree crop research" 1,237 demonstrations have been started in 51 counties, designed to acquaint the public with improved plant materials, methods, and techniques.

The estimates for development of mineral resources reflect a concentration of effort on materials most important to national defense, such as olivine as a source of magnesium, alumina from clays, vermiculite, chromite, alumina plant will be in operation in 1943, but pilotand manganese. It is hoped that a commercial scale plant operations and research should be continued in any event in order to perfect refinements in the process. The increase for other mineral research in 1943 is largely explained by the fact that in that year the investigations on certain other minerals should reach the pilot-plant stage. The estimate for research with the Bureau of Mines provides for cooperation at the Norris ceramic laboratory, transferred to the Bureau by the Authority.

The public health activities which comprise a part of this program contribute to the solution of the major health problems of the area and are conducted in close cooperation with other Federal, State, local, and private agencies.

health work and public health studies is to provide for The larger portion of the estimate for cooperative cooperation with State health departments in maintaining adequate measures in areas contiguous to the major unified system projects to safeguard the health of employees and to prevent exaggeration of local problems. The increase in 1943 is accounted for by the greater number of these projects.

Medical malariology and biological studies develop means for improving the practices used to combat malaria both in this area and elsewhere. Stream sanitation studies. have assumed greater importance as the industrial development of the region is accelerated.

"Cooperative agricultural industries development" consists of the introduction of improved processing and marketing methods for crops which contribute the most to increased farm income and soil conservation. The processes being developed should serve to assist in the alleviation of post-emergency problems.

The Authority's interest in cooperative research, the first item in this section, arises from the many relationships between cooperative organizations and various phases of its programs. To the next item, "Development of new processes and markets for farm products,' the Authority has assigned 10 employees, but 60 other persons are engaged in this work as members of the staffs of cooperating institutions. By 1943 the Authority's quick-freezing process will have reached the commercial

stage, and income from it will offset any expense incurred. In that year emphasis will be given to vegetable-oil seed and livestock products.

Rural electrification education becomes increasingly important as power is made available to an ever-increasing number of farms in the area. The effectiveness of the The effectiveness of the last of the activities in this group, "Development of farm equipment," has been demonstrated by the installation the installation by farmers, at their own expense, of equipment developed by the Authority, such as sweetpotato curing houses, walk-in refrigerators, irrigation systems, and hay driers.

The 1943 estimates for general activities for the development of the valley provide for continuation of studies and research concerned with the broad aspects of the proper use, conservation, and development of the region's resources, emphasizing the promotion of the general welfare of the area. The first of these activities listed on Supporting Statement No. 6, "Transportation and industrial economic studies," includes investigation of the industry of the area and its potential growth, particularly as related to water transportation and the utilization of electric power.

The second activity for which an estimate is presented for 1943 consists of cooperation with the Coordinator of Defense Housing, seeking to reconcile the emergency construction of dwellings with the long-range development of the area so that these dwellings will have the maximum permanent utility. Studies of local government emphasize investigations of changes in financial status and other problems resulting from the programs of the Authority, as well as the opportunities arising from them.

During the current year, community planning assistance will be rendered to 18 communities affected by the Authority's construction activities, and 5 other areas affected by other defense activities. Under the last item in this group, covering defense contract assistance, the Authority keeps posted as to the productive potentialities of plants in the area and aids in disseminating information on products not now made there.

GENERAL ASSET ACCOUNTS

The estimates for general asset accounts, Supporting Statement No. 7, total $2,975,000 for 1943. Of this total, $2,199,000 is for related property plant and equipment, and most of this amount is for service facilities urgently needed in the Muscle Shoals area. These facilities include road and railroad improvements, laboratories and other facilities for the chemical plant, and new warehouses, shops, docks, and a garage. The great

expansion in operations occurring in this area has created serious congestion with respect to the makeshift service facilities now in existence, most of which were built over 20 years ago.

The road improvements are needed to handle traffic increases brought about by the defense activities in the area, to permit present roads near the munitions plant to be closed, and to replace a deteriorated overpass at the entrance to Reservation No. 2. A new main artery should be built to serve the chemical plant, garage, and

harbor.

The principal railroad improvements would consist of new yards and other new trackage and adjustments to the present system. A new chemical building providing 90,000 square feet of space is needed for offices and laboratories to house increased personnel and to accommodate those being crowded out of space which is being given over to production.

Warehouses, shops, and docks are planned for erection on the shores of Fleet Harbor to provide facilities for power, reservoir, and property operations. The new garage is designed to replace an old structure which is now in an unsafe condition.

The estimates for Norris and other properties provide for minor and routine equipment replacements and plant alterations.

By 1943 additions to general equipment to serve the greatly enlarged construction activities will have been completed and funds will be required only for the purchase of replacements of worn-out units. A small reduction is anticipated in general inventories in 1943.

The 1942 estimate for the continuing fund and unallotted balance includes the $1,000,000 reserved for emergencies under section 26 of the Tennessee Valley Authority Act.

MAJOR DEFENSE SERVICES FOR OTHER FEDERAL AGENCIES

The Authority is constructing a synthetic ammonia plant and rehabilitating the ammonium nitrate section of Nitrate Plant No. 2 for the War Department. This work is estimated to cost $9,425,000. In 1943 these facilities are scheduled to produce 108,000 tons of ammonium nitrate at an estimated cost of $5,616,000.

The Authority has also constructed in the Muscle Shoals area 250 defense houses for the Federal Works Agency at a cost of $875,000, and the Authority will operate this housing for that agency. In addition, design and site acquisition services have been furnished other defense housing projects.