as to the amount of water that was actually being diverted. Once it was in their control, they would not have to exercise continual supervision.

Mr. GARNER. But if Congress should adopt your suggestion and reserve in the War Department the right to investigate the question of whether or not the public-service commission was giving you a reasonable rate, they would have considerable to do, I imagine, to ascertain those facts and see whether or not you were giving a reasonable rate. It might take a good deal of machinery. It seems now that it has taken $35,000 worth of machinery to ascertain the facts in the city of Buffalo alone.

Mr. DIFENDERFER. Then they have not ascertained it?

Mr. GARNER. If the United States Government can supervise the importation of the power and have something to say about the price of it, and also supervise the taking of the water on this side, and in connection with that look into the question of reasonable rates, it seems to me that the people to get the benefit of this supervision ought to contribute to the amount of that expense.

Mr. SMITH. I do not see how it would be possible, however, to provide a means of getting that compensation.

Mr. GARNER. Well, we would put a little tariff on the power that comes in and make possibly a condition-I have not investigated the law-but we might make some condition on taking the water from the American side.

Mr. SMITH. I am in favor of placing every restriction and price limitation that the Constitution will permit.

Mr. DIFENDERFER. You are not in favor of a tariff?

Mr. SMITH. I would not be.

Mr. HARRISON. Have you got a law in the State of New York, if you know, that prevents and prohibits one competing corporation from owning stock in another competing corporation?

Mr. SMITH. I do not believe there is such a law. I never heard of it.

Mr. DIFENDERFER. There is a Federal law to that effect, is there not?

The CHAIRMAN. Judge Fennewick, do you desire to say something to the committee?

STATEMENT OF DANIEL J. FENNEWICK, OF BUFFALO, N. Y.

Mr. FENNEWICK. I am the local attorney for the Cataract Power Co. of Buffalo. I understood from newspaper accounts that reached Buffalo that some statements were made by counsel as to the power situation in Buffalo.

Perhaps I ought to state for the purpose of clarification that long before the Niagara Falls Power Co. erected its plant at Niagara Falls there was a lighting company in Buffalo; that it had three or four or five steam plants where it generated electricity and supplied the city of Buffalo and the inhabitants of that city with electricity. So that that company was in existence long before the Niagara Falls Power Co.

Now, when the Niagara Falls Power Co. completed its plant, the question arose as to whether the power could be successfully transmitted to Buffalo. That problem was solved, and the Niagara Falls

Power Co. decided to transmit the power to Buffalo, but before erecting its transmission lines it declined to undertake the problem of distributing power in the city of Buffalo. Of course in all of these cities you have got to have a franchise from the common council, and you have got to submit to certain regulations. It is needless to say that in the distribution of power in a large city like Buffalo, with most of the streets paved, where you are required to put a certain amount of your wires underground, that there is a large financial problem involved.

The Niagara Falls Power Co., as I understand it, was unwilling to take upon itself the entire burden of distributing the power in Buffalo, and certain gentlemen in Buffalo got together-some five or six-got a tentative contract with the power company, and then they got in engineers to see whether it would be a successful financial proposition; and the report of their engineers was adverse, and they were anxious to give up their contract with the power company. At this stage some of the men who were interested in the Buffalo General Electric Co., who did not control it, but who were stockholders in it, decided that they would take that contract off the hands of these men if they were willing to give it up. Those men gave it up, and these other men entered into the contract with the Niagara Falls Power Co., and that was the inception of the Cataract Power & Conduit Co.

I want to call your attention to the fact that five or six men-strong men-in Buffalo, after making a thorough investigation of the situation, abandoned the project and got out of their contract, fearing that it would not be successful financially.

These other men took up the proposition and put through the Cataract Power & Conduit Co.

Mr. DIFENDERFER. So successfully, Judge, that they were enabled to give half of their stock back to the Niagara Power Co.

Mr. FENNEWICK. You already have had it stated by one of the gentlemen here--I think, Mr. Barton-what the consideration was. Now, the Cataract Power & Conduit Co. sells power to the Buffalo General Electric Co. for all lighting purposes and for power in small blocks. I think the highest they sell for power is 75 horsepower, and the Buffalo General Electric Co. abandoned its steam plants

Now, I want to get it out of your minds at once that the Buffalo General Electric Co. is controlled either by the Cataract Power & Conduit Co. or by the Niagara Falls Power Co. I want to get it out of your minds that the Buffalo Electric Co. is controlled by any 10 men or any 20 men.

Mr. HARRISON. It is controlled by the Niagara Power Co.

Mr. FENNEWICK. Absolutely not.

Mr. HARRISON. Is not that what Mr. Barton said?

Mr. FENNEWICK. Oh, no; he said the Cataract Power Co. is controlled by the Niagara Falls Power Co., but not the Buffalo General Electric Co.

Mr. SMITH. Is there not a pretty close alliance between the Cataract Power & Lighting Co.?

Mr. FENNEWICK. What do you mean?

Mr. SMITH. Are in the same offices?

Mr. FENNEWICK. No; they are in the same building.

Mr. SMITH. Isn't one of the officers of the Cataract Co. also an officer of lighting company ?

Mr. FENNEWICK. Yes; that is true.

Mr. HARRISON. What officer is that, president?

Mr. FENNEWICK. No, manager.

Mr. DIFENDERFER. He is the manager?

Mr. FENNEWICK. Yes.

Mr. DIFENDERFER. For both?

Mr. FENNEWICK. Yes, sir. In that respect, but they do not compete. What I want to say to you is that there is no control, no stock control, either by the Niagara Falls Power Co. or the Cataract Co. of the Buffalo General Electric Co., and there is no group of stockholders of those companies who control the Buffalo General Electric Co.

Mr. DIFENDERFER. Then the J. P. Morgan interests are quite evident in the Cataract Co., are they not?

Mr. FENNEWICK. I understood that they are large stockholders in the Niagara Falls Co.

Mr. DIFENDERFER. In the Cataract Co.?

Mr. FENNEWICK. No; I understand not.

Mr. HARRISON. Can you give us the names of the directors of the Buffalo Electric Co. ?

Mr. FENNEWICK. I can submit them to you.

Mr. HARRISON. You can give us some of the names, I suppose? Mr. FENNEWICK. Yes, sir.

Mr. HARRISON. That you remember?

Mr. FENNEWICK. William C. Warren, Charles R. Huntley, Walter C. Cook, Mr. Barrick, Mr. Andrew Langdon.

I can not name them all.

Mr. HARRISON. You have not named any of the directors in the Niagara Falls Co. that are directors in the Electric Co.?

Mr. FENNEWICK. I do not believe there are any. Henry W. Burt is another, and Pomeroy is a director of the Niagara Falls Power Co. Mr. HARRISON. What?

Mr. FENNEWICK. He is the only one director of the Buffalo General Electric Co.

Mr. DIFENDERFER. Are any of those men you named interested in the Cataract Co.?

Mr. FENNEWICK. I think Mr. Huntley is interested in the Cataract Co., but I think that is all.

Mr. HARRISON. The general manager is interested in both?

Mr. FENNEWICK. Yes, sir.

Mr. HARRISON. Who is that, Mr. Huntley?

Mr. FENNEWICK. That is Mr. Huntley.

Mr. GARNER. As I understand it, when the Niagara Falls Power Co. decided to build up to Buffalo, they went up to the city line? Mr. FENNEWICK. Yes, sir.

Mr. GARNER. They were a local company doing business in Buffalo, and generating electricity by steam?

Mr. FENNEWICK. One company, the Buffalo General Electric Co. Mr. GARNER. The Niagara Co., as it were, said: "Gentlemen, we are up here with some cheap power. We come up here to furnish these people with electricity. Now if you give us the controlling stock in your company we will sell power to the company and let you continue business; otherwise we will come in and compete with you."

Mr. FENNEWICK. That was not quite the situation.

Mr. GARNER. It appears that way to me. At least I simply give you my idea that the Niagara Falls Power Co. said, "We have got some cheaper power, and we will sell it to you on satisfactory terms; otherwise we propose to come in—”

Mr. FENNEWICK. They could not come in without getting a franchise from the city. They had to get a franchise that would permit them to come into Buffalo.

Mr. GARNER. I understand, but is it not to be presumed that the city of Buffalo would let a company come in with cheaper power? Mr. FENNEWICK. Making that assumption; yes.

Mr. GARNER. I do not assume that the city of Buffalo would refuse their people cheaper power.

Mr. FENNEWICK. You are also assuming that the Niagara Falls Power Co. wanted to undertake the distribution of power in Buffalo, which they did not.

Mr. GARNER. I will assume, then, that they did not want to distribute their power in the city of Buffalo.

Mr. FENNEWICK. That is, they did not want to undertake the financial responsibility involved.

Mr. GARNER. But they did make such an arrangement after they got control of the stock of the company that did distribute, and therefore do distribute in the city of Buffalo.

Mr. FENNEWICK. They assumed the responsibility of getting up to the city line, but said to the other gentlemen: "The question of distribution is for you to determine yourselves whether under a franchise it would be a paying business."

Mr. GARNER. They succeeded in convincing the gentlemen who were then distributing electricity in the city of Buffalo to the extent of getting a contract granted with them and a controlling interest in their company.

Mr. FENNEWICK. Hardly granted. They gave them a very good contract, a very favorable contract.

Mr. GARNER. It appears to me like a great big fellow walking up to the city of Buffalo and saying, "Gentlemen, you are at my mercy." Mr. FENNEWICK. I think when you begin to talk about three profits here, there are no three profits in the business. Let us assume that the Niagara Falls Power Co. are in the business of distributing power and light in the city of Buffalo; would not it have to have the same plant as the Cataract Co. has and the Buffalo General Electric Co. have now? It would have to have practically the same investment, and certainly when you talk about three profits there are no three profits. Mr. GARNER. I agree with that; if I had been a stockholder in the city of Buffalo at the time this power came through the gates, I would have made the best terms possible. I am not criticizing the Niagara Falls Power Co., but I am saying that the situation was such that the Niagara Falls Power Co. was able to make its own terms with the company that could not compete with them in the matter of cheap power.

Mr. FENNEWICK. I can not quarrel with your deductions, of course. I want to go a little bit further in reference to extortionate rates. I think it is safe to say that there is no large city in the United States that gets its electric lighting as cheap as the city of Buffalo, and I want Congressman Smith to name me some large city that does.

Mr. CURLEY. The Edison Co. deliver a power in Boston, have reduced their kilowatt from 18 cents per kilowatt to a recent reduction put in operation last week of 10 cents a total reduction of 50 per cent. What reduction has been made in the last five years by the operating companies in Buffalo?

Mr. FENNEWICK. I think I can say to you that our highest maximum rate is 9 cents for lighting, and I believe that the statistics of our company will show that the average rate we get on all of our distribution of power, as well of day power as of night power, is somewhere between 2 and 3 cents a kilowatt-hour.

Mr. CURLEY. That maximum rate has that been reduced at any time in the last five years?

Mr. FENNEWICK. I can not say, but that only applies to very small installations of light. I know it has been reduced, as far as the municipality is concerned, to 6 cents.

Mr. CURLEY. What did the municipality pay previous to that? Mr. FENNEWICK. Nine cents on small installations. The municipality pays for the power it gets at the pumping station $25 a horsepower.

Now, I want to say further to you gentlemen, a good deal has been said about the lack of power and the unwillingness of the publicservice commission. We have got a public-service commission in the second district in the State of New York that I believe is as high class a commission as was ever appointed by Governor, now Justice, Hughes. The man at the head of it was appointed chairman by Mr. Hughes, and he is still chairman, and it is a high-class commission. Now, we have had that commission in this district since 1907. At any time if the cost of electrical power was such a great burden as it has been represented here, do not you think that 100 users of power, or 100 users of light, would have taken advantage of the law and made a complaint?

Now, they did not do it, although the subject has been advertised by such gentlemen as Mr. Ferguson, who is the writer of one of the letters read by Mr. Smith, who is a lawyer, and who has a lawsuit pending against the Cataract Power & Conduit Co., and that possibly may explain his interest in the situation. Here we have had this commission in force since 1907, and with all this talk of extortionate. prices we have not had 100 consumers who would back up the move

ment.

Mr. CLINE. There must be some friction there or there would not have been $35,000 set aside at Buffalo to investigate that?

Mr. FENNEWICK. You know, Congressman, that undoubtedly you will have complaints, and we are perfectly willing to have those complaints investigated. That is matter that is made a political issue.

Mr. CLINE. Under your theory, if 100 men had made a petition it would not have been necessary to set aside $35,000 to get a hearing, would it, unless the people of Buffalo had judged it to be an aggravated case?

Mr. FENNEWICK. It was made a sort of a political issue by the candidates a couple of years ago, and now, to carry out that pledge made in the campaign, the complaint is at the present time made by the mayor. The complaint can either be presented by 100 consumer's or by the mayor.