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In the case of powers upon navigable streams, it is appropriate that the proceeds should be used for the improvements of navigation. The price of hydro-electric power to the consumer is determined not by the cost of production but by what the traffic will bear, and the latter is fixed by the cost of competitive steam power. The public therefore cannot get its full share of the advantage of power development except by a Government charge, collected, so to speak, at the water wheel, as set forth fully and conclusively in the reports of the Commissioner of Corporations. For the same reason this charge will not be paid by the consumer but out of the profits of the corporation.

(g) On condition of development of the whole capacity of the power site as rapidly as the granting officer may from time to time require, giving due consideration to market conditions and demands, and of continuous operation, subject also to market conditions, in order to prevent waste of power before and after development.

(h) With the right of the public to approve or disapprove issues of capital stock in order to prevent overcapitalization, to prescribe uniform methods of accounting, and to inspect all books and records of the grantee, for only so can public officials and the public learn the facts.

(i) With the right reserved to the Government to regulate rates and service to the consumer, should the business be or become interstate or should the state or local authority fail to do so. (j) On condition that the public may, after a fixed period, take over the works covered by the franchise at their appraised physical value at the time, not including consequential damages or the value of the franchise. While all Government water power franchises now granted provide for termination of the franchise from the beginning at the will of the Government without compensation, that provision is an unfair burden upon the grantee, tends to increase the cost to the consumer, and should be removed. (k) On condition that the franchise may be terminated if at any time the works constructed under it are owned, controlled, or operated by an unlawful trust, or in restraint of trade. The General Dam Act (June 23, 1910) under which all franchises on navigable streams are or should be granted, does not, as interpreted, require adequate compensation to the Federal Government for the use of water power, does not provide for the renewal of franchises or for taking over the improvements at the discretion of the Government at the end of fifty years, and neither prohibits speculation in franchises nor requires prompt and complete development. It should be amended in accordance with the foregoing. While the effort to secure the passage of sound and needed

water power legislation has not yet succeeded, the passage of bad legislation has become increasingly difficult. This statement is true in spite of the fact that the indefensible Coosa River Bill passed both House and Senate at the end of the last administration, and was only prevented from becoming a law by the wise and patriotic veto of the President. The recent introduction in Congress of water power bills by Senator Burton and by Mr. Lever of South Carolina, both of which bills clearly recognize that the public interest in water power should come first, is a further satisfactory evidence of progress in the right direction.




In the compilation and checking of the foregoing figures the following were some of the authorities consulted: U. S. Bureau of Corporation Reports on Waterpower Development, 1909, 1912. U. S. Bureau of Census Reports, 1908, 1911, on Manufacturing and Commercial Power. National Waterway Commission Reports, 1912. Hearings before Senate and House Committees, 1911, 1912 and 1913. Moody's Manual, 1913; Moody's Public Utilities, July 1, 1913; Poor's Manual, 1913; Poor's Industrials and Utilities, 1913; Manual of Statistics, 1913; McGrew's Electrical Guide; Hutton's Investors' Manual; Director's Guide, 1913. Reports of Missouri Waterway Commission; Minnesota Waterway Commission; Conservation Commission of California; Water Power and Drainage Commission of Wisconsin; Conservation Commission of New York; Michigan Public Domain Commission. Papers on water power in Alabama, Georgia, Montana, Washington, U. S. Geological Survey; Sen. Doc. 370, Water Powers of Idaho; Water Powers of South Carolina by A. Kohn. Journal of Electricity; Electrical Age; Proceedings of American Institute of Electrical Engineers; Electrical World; General Electric Review ; Stone and Webster's Journal; Electrical Record; Water Power Chronicle; Electrical Review.

MR. R. HoRAK, of New York—Mr. Chairman, I would like to ask some one who knows whether there was no provision inserted in all those three reports which protects the Government in case of the grantee not complying with the contract of his grant, and whether the Government would be placed in the position of taking over that plant, to protect the Government in that event from being compelled to buy that plant? Should there not be a proviso in there which would make it so they would lose their money which they had invested in case they did not come up to the terms of the contract? CHAIRMAN FISHER—I assume that was intended to be implied by both reports. In event the grantee failed to live up to those essential provisions with regard to development and other matters which are specifically recommended, I assume that matter is covered by both reports. I will ask Dr. Swain if there is anything about a provision that the grant shall be revoked in the event the grantee fails to live up to its terms? MR. R. HoRAK, of New York—And ask this also-that the Government should not be compelled to pay what they have invested. DR. GEORGE F. Swain—That matter was discussed very fully in the committee, Mr. Chairman, and if I remember correctly, the opinion of the committee was this, that not necessarily should the grant be revoked, because its conditions were not lived up to in all cases, because an officer might commit some small breach of the conditions for which he should be punished personally. Both reports intended to safeguard the public interests in that respect. CHAIRMAN FISHER—That is to say—you have left one branch of it not quite definitely understood—is it intended that, for failure to comply with any substantial condition of the grant, there should be a forfeiture? DR. GEORGE F. Swain—I think that is covered in the report. CHAIRMAN FISHER—If there is no other member of the committee present who has any other view, we will proceed. MR. M. O. LEIGHTON, of Washington—It is covered in terms in the majority report, Mr. Chairman. CHAIRMAN FISHER—The Chair will recognize Senator Shafroth, of Colorado.


By Hon. John F. Shafroth, United States Senator from Colorado.

SENATOR SHAFROTH-Mr. Chairman and ladies and gentlemen of the Conservation Congress: I regret very much that there has been a limitation placed upon the question to be considered, but I will try to confine myself to it as best I can.

There is probably a difference between the situation of water powers upon the Public Domain and water powers in the old states, and a different set of principles perhaps may apply to the same.

I live in Colorado, a mountainous state, a state where there is a great deal of water power. It is estimated that we have from 1,000,000 to 2,117,000 horsepower which can be generated from our streams, and I believe that it is probably two or three times that amount, because we have one river called the Grande River, which now has one plant which generates 20,000 horsepower, and that plant can be duplicated nearly every five miles of that stream for a distance of more than 100 miles. At other points, at a distance of probably ten miles apart, the water power can be used over and over again. We have no large streams in Colorado. We have not a navigable stream in the state. Consequently some of the talk that may be made with relation to navigable streams cannot apply to the streams in the state of Colorado, though it may apply to the streams of that broad domain to the west of Colorado, which takes in more than one-third of the area of the entire United States.

As to those lands and as to the waters upon the same, we believe we have distinct rights which no person upon earth can fail to recognize. (Applause.) In the first place, when that country was first being settled, we found that the United States Congress passed a law, and I want to read you that law to see whether or not there are not substantial rights that cannot be controlled by the Feberal Government itself. That was the Act of July 26, 1866, and it provides:

“Whenever, by priority or appropriation, rights to the use of water for mining, agricultural, manufacturing or other purposes, have vested and accrued, and the same are recognized and acknowledged by the local customs, laws and the decisions of courts, the possessors and owners of such vested rights shall be maintained and protected in the same, and the right of way for the construction of ditches and canals for the purposes therein specified is acknowledged and confirmed. But whenever any person in the construction of any ditch or canal injures or damages any settler on the Public Domain, the party committing such injury or damage shall be liable to the party injured for such injury or damage.”

Under that law, the people in the state of Colorado filed rights of water upon the construction of ditches for irrigation purposes and for power purposes over the Public Domain. They were never interfered with. When they did that they became subject to state laws, which state laws provide a minimum charge and a maximum charge by which these corporations shall be controlled. It is provided there that when water is used and appropriated, the company that appropriates it has not a right to hold up the individual at its will, but that any dispute as to the charges that may be made must come before the county commissioners of the county in which such ditches or canals are located, and that after hearing the testimony upon each side, they shall fix the rate which the corporation can charge to the consumer. We have felt safe in that right and safe against monopoly and monopolistic control. (Applause.) Thát is the situation with respect to rights of way. We find further that there was also an Act of Congress, passed on July 9, 1870, in which it was provided: “All patents granted or pre-emptions or homesteads allowed shall be subject to any vested and asserted water rights or rights to ditches and reservoirs used in connection with such water rights as may have been acquired under or recognized by the preceding section.” We find, further than that, that there what is called an enabling Act, admitting the state into the Union, and which forms a contract between the National Government and the state. We find that there is certain language contained within that enabling Act passed by Congress which gave the state certain rights. There is no claim, as I understand it, upon the part of any person that as to any unnavigable stream in the east the Government has the right over the state to control either dams for the construction of water power or rights of way, in the way of ditches or channels or pipe-lines for the purpose of developing that power. No claim of that kind is made, as I understand it, by any person, but the assertion is made with relation to navigable streams and that therefore the Government can control the navigable streams. I want to say to you that I have never been impressed with the idea that down here in Washington you can control local affairs in Colorado as well as we can in our own state. (Applause.) I want to say to you that so far as controlling water powers or anything else two thousand miles from where they are located, in my judgment it cannot well be done. I have simply to illustrate by several Acts of Congress that have convinced me that Congress is not as safe a body in which to vest this power as in the states themselves. We find on the statute books, passed by Congress, fortythree railroad grants made for nothing to railroad companies, that involved a donation from the Government of 155,000,000 acres of land, a territory equal to all of New England, New York, New Jersey, Pennsylvania, Delaware, Virginia and West Virginia combined. Yet they talk to us and say that we may be controlled by monopolistic influences, that we might permit looseness and grants given to corporations where they would not be given by the United States Congress (Applause.)

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