24. The principal facts with reference to the three big Canadian companies are tabulated as follows: 1 The major portion of this amount has been expended in the construction of transmission lines intended for delivery of power to the United States distributing companies. * This does not include any expenditures by the Nicholl Syndicate. 25. If these companies were limited in their output to the capacity of the generating machinery now actually installed and ordered, their investment in power plant, exclusive of franchises per horsepower developed, would be approximately as follows: Ontario Power Co___. Electrical Development Co Canadian Niagara. Power Co.. -- $89.00 125.00 97.00 If permitted to develop to the limit of their approved plans the investments in power plant per horsepower developed (nominal capacity) would be: Ontario Power Co... Electrical Development Co.. $68,00 62.00 60.00 These figures must be considered as only approximately correct, owing to the different methods of cost distribution used by the several companies. The aim has been to take the actual cost of the power plants, exclusive of rights, rentals, and franchises. Regardless of their absolute accuracy, or even their relative accuracy as between the three companies, they serve to show the extent to which the companies by their expenditures and contracts have committed themselves, and also the approximate losses which they will sustain if they are limited to the production of an amount of power less than their projected capacity. All three of these power developments were undertaken in good faith several years ago and long before the agitation in Congress which led to the passage of the present law, and there is no evidence that any of their subsequent transactions were made with the object of securing rights which they had not always intended to claim. 26. The total capacity of the generating machinery installed and ordered for the three plants is 171,000 horsepower. The probable demand in the near future from Canadian markets will not exceed 40,000 horsepower, leaving 131,000 horsepower for sale in the United States. The granting of permits for this amount would permit the utilization to its full capacity of all machinery now installed or ordered, but would not permit any further development and would not afford a reasonable return on the moneys now invested unless the prices to the consumers were measurably increased. In order that such relief as is now possible may be afforded, it is recommended that permits be granted for 157.000 horsepower, the maximum amount under the first limitation, Jess 2,500 horsepower reserved for the International Railway Co. 27. The conditions surrounding the development of the Canadian power coinpanies differ so materially that an exact statement of their relative rights to the American market is not possible. The Niagara, Lockport & Ontario Power Co., the distributing agent in the United States for the Ontario Power Co., has expended a large sum in opening up a new market. The Electrical Development Co. started primarily to develop the Canadian market, and its plans for the American market have not yet been fully matured, while the plant of Canadian Niagara Power Co. is virtually an addition to that of the Niagara Falls Power Co. Considering alone the investments in power plant, there is no apparent reason why any distinction should be made between the power companies in the amount of power which they should be permitted to send into the United States. While the projected development of the Ontario Power Co. is considerably greater than that of the other two companies, this apparent advantage is balanced by the fact that the other two companies are more fully committed by expenditures already made to the complete development. If the relative investments of the three transmission companies associated with them for distribution in the United States are alone considered, the claims of the Niagara, Lockport & Ontario Co. are unquestionably superior to those of the other transmission companies. As the object of the law is to restrict. directly or indirectly, the amount of water diverted, it has been suggested that some weight should attach to the fact that the Ontario Power Co. makes greater use of the water that it diverts than either of the other companies. Each of the companies, however, fully utilizes the head incident to its geographical location, and any distinction in the matter of permits based on relative natural advantages would appear to be unjust. 28. The Electrical Development Co. had for its primary object the furnishing of power to various points in Canada, as is indicated by the construction of its Toronto line, yet the demand for electrical power in Canada within the economical radius is so limited as to make it unreasonable to suppose that this company had given no thought to the marketing of a part of its power in the United States. The Electrical Development Co. is planning to sell between 30,000 and 40,000 horsepower in Canada, which is probably from 20,000 to 25,000 horsepower in excess of what either of the other two companies will sell in Canada, a fact which should receive consideration in fixing the amount to be transmitted to the United States. On the other hand, any greater discrimination against the Electrical Development Co., which is owned almost wholly by Canadian capitalists (the other two companies being owned almost wholly by Americans), may give rise to a feeling of resentment on the part of the people of Canada and tend to retard the negotiation of a treaty between the two countries concerning the preservation of Niagara Falls. 29. The applications for permits made by the transmission companies are as follows: Horsepower. Niagara, Lockport & Ontario Co., from the Ontario Power Co90,000 Electrical Transmission Co., from the Electrical Development Co---62, 500 Niagara Falls Power Co., from the Canadian Niagara Power Co---____ 121, 500 The application of the Niagara, Lockport & Ontario Co. is based upon the desire to secure a reasonable return on the investment already made, but considering the date named in its contract with the Ontario Power Co. for the delivery of the second block of 60,000 horsepower, i. e., January 1, 1911, and having in mind the fact that any production of power in excess of 66,000 horsepower means the construction by the Ontario Power Co. of a second conduit and a consequent expenditure of $3,250,000, it is believed that a present limitation to 60,000 horsepower will not work undue hardship. 30. The application of the Electrical Transmission Co. contemplates the marketing of one-half of the total output of the Electric Development Co. Considering the situation of the latter company in the Canadian market and the limited extent to which the Electrical Transmission Co. has committed itself by its expenditures, a present limitation to 37,500 horsepower does not appear to be inequitable. 31. The plant of the Canadian Niagara Power Co. is intended to supplement that of the Niagara Falls Power Co., and a fair estimte of the rapidity with which its power will be marketed is found in the rate of growth in the past of the Niagara Falls Power Co. This has amounted to about 20 per cent in recent years, with a present output of both companies amounting to 85,000 horsepower. Assuming that the same rate of growth will continue, though in all probability it will be reduced owing to power which the other companies expect to market in this territory, it will be two or three years before the full capacity of the Canadian plant as now installed will be utilized. For these reasons a present limitation to 60,000 horsepower will not, in my judgment, seriously interfere with its normal development. 32. If permits are granted for these amounts the Ontario Power Co. would be justified in installing a seventh unit as a spare, the Canadian Niagara Power Co. would be justified in installing two more units, one as a spare, making the nominal capacity of its plant 66,000 horsepower. The Electrical Development Co. would be justified in installing three more units, one of them a spare, making the nominal capacity of its plant 75,000 horsepower, half of which, the proportion asked for, it would be permitted to transmit to the United States. If each installs these units the relative investment in power plant, exclusive of franchise, per horsepower developed (nominal capacity) would be: 33. Based upon what precedes, it is recommended that permits for the transmission of power to the United States be issued as follows: Niagara, Lockport & Ontario Co., from the Ontario Power Co----- Horsepower. 60,000 37,500 60,000 157, 500 In order that the various companies may proceed with this limited development, it is further recommended that permits for such amounts as may be authorized be issued without delay. 34. As to the question of granting transmission permits for amounts additional to the first 160,000 horsepower, it is believed to be the intent of the law to delay the issue of such permits until it is known what appreciable effect, if any, will be produced on the Falls by the diversion of the amount of water that will be used under the first limitation. If this interpretation of the law is correct, the granting of such permits will be a matter for the future, as it will be fully a year before the companies will be in a position to develop 160,000 horsepower, in addition to the amounts sold in Canada. 35. The information contained in this partial report was obtained from the parties interested and its important features verified by a personal inspection of the works and a general examination of the books and records of the various companies. These inspections and examinations were made July 20 to July 28, 1906, and descriptions of the power plants of the Ontario Power Co. (Appendix B), Electrical Development Co. (Appendix E), and the Canadian Niagara Power Co. (Appendix G), and of the transmission lines of the Ontario Transmission Co. (Appendix C), Niagara Lockport & Ontario Power Co. (Appendix D), and the Toronto & Niagara Power Co. (Appendix F), in greater detail than in the body of the report, are appended hereto. They were prepared by Mr. Earl Wheeler, E. E., who, with Mr. F. D. C. Faust, a representative of the Department of Justice, assisted in the examination. A photographic copy of a map of Niagara Falls, taken from a monograph prepared in 1904 by the Canadian Society of Civil Engineers, is also appended. 36. The preparation of that part of the report which concerns the diversion of water on the American side has been delayed by the nonreceipt of certain information, and will be submitted later. Very respectfully, Brig. Gen. A. MACKENZIE, Chief of Engineers, U. S. A. CHARLES W. KUTZ, Captain, Corps of Engineers. The CHAIRMAN. Is there any other gentleman present who desires to be heard briefly? Hearing no response, this committee will stand adjourned. Thereupon, at 4 o'clock p. m., the committee adjourned until Tuesday, January 23, 1912, at 10 o'clock a. m. COMMITTEE ON FOREIGN AFFAIRS, The committee met at 10 o'clock a. m., Hon. William Sulzer (chairman) presiding. The CHAIRMAN. The committee will hear this morning, Hon. Thomas Carmody, attorney general of the State of New York. Gen. Carmody, you may proceed. STATEMENT OF HON. THOMAS CARMODY, ATTORNEY GENERAL OF THE STATE OF NEW YORK, ALBANY, N. Y. Mr. CARMODY. Mr. Chairman, I wish to thank you and the committee for the courtesy extended the State of New York in granting this hearing, so that the State could be represented, and to especially assure the committee of the grateful appreciation of this favor by the governor, who is particularly interested in the whole conservation proposition. Our rights in this matter involved in the bill now before this committee, are somewhat intensified by the contemporary interest which the State of New York is taking in the conservation proposition. I need not tell you, I am sure, that for the purpose of formulating a policy, and for the purpose of asserting the rights of the State in hydraulic matters, the last legislature passed an act constituting what is called a conservation commission, with more particular reference to the administering of the surplus waters impounded by reason of the construction of the barge canal, and the impounding of waters in the streams and tributaries, for the purpose of feeding the barge canal. The proposition involved in the bill and in the administration of the powers under it, is at present somewhat crude in the minds of the officials of the State, but we do stand upon this proposition, and it is one that it seems to me is not fully recognized by the bill pending before this committee. I have been shown two bills, one introduced by Mr. Smith, and the other by Mr. Simmons, both of which seem to proceed upon the right claimed in the National Government to control and distribute the water power in Niagara River. I contend that that is an assertion of a power that the Government does not have. The Government has only such powers as the Constitution gives it, and in respect to navigable streams-and this includes border streams-that right is limited to the control of those streams for purposes of commerce and navigation, and for military defense, neither of which purpose is asserted, and neither of which is furthered by the bills before this committee, or by any legislation which Congress has passed, bearing upon the Niagara Falls proposition. Now, it will not take me very long to state the position of the State of New York, and it will not take me very long to furnish to this committee the authorities upon which the State rests in basing its contention for what it will ask for when we are through. The State claims to be the owner of the soil to the center of Niagara River, and consequently the owner of the water that passes over the American side of the Niagara River, subject only to the right of the National Government to control the waters of that river for the purposes of navigation and for military defense. The right which the State owns in this river is no different, according to the decisions of the courts, from its right in rivers that are entirely within its borders, that are navigable, and the legal status of that right is so clearly established by the decisions of our courts that it is unnecessary to more than refer to them for the purpose of establishing its correctness. Now, the treaty between this country and Canada, under which this bill is apparently drawn, undertakes to exercise some national power, the extent of which I can not understand. I think we all understand that the Governments, the parties to that treaty, have the right to state their relative positions so far as the use and occupation of that river is concerned, for the purposes of navigation and for military defense. That is alleged to be the purpose of the treaty, and there is nothing in the treaty that undertakes to carry out that power, which is the only power that our Government has to deal with that scheme. I am not assailing this treaty; I am just coming in a moment to what Congress is now asked to do under it. The treaty states that it is passed for the purpose of settling disputes between the owners or claimants on either side of the Niagara River. Now, whatever the ownership of property on either side of the Niagara River may be, it rests, under the laws of the State, in either the State or some riparian owner, and is not a subject of national supervision or control. Now, the Burton Act, so called, undertakes to carry out specifically the powers that were intended to be conveyed by the treaty, by providing that we may take from the Niagara River a certain quantity of water-15,600 cubic feet per second. We say that that is a subject upon which the National Government has no right to legislate, except to go far enough to say that there has been released to the State of New York a certain quantity of water from our supervision and right of control for purposes of navigation and military defense; that when the Government has gone that far it has discharged its power and exercised the only governmental function which it possesses, the only power which it has over the waters of Niagara River, and under that bill you have stopped where we ask you to stop in whatever legislation you recommend, namely, that when it is specified as to how much water may be taken from the river on the American side, thereby releasing the control of the National Government to that point; then that must go to the party that owns it under the laws of our State and Nation, namely, the State of New York. Mr. GARNER. General, let us suppose that some Member of the House should disagree with you as to the power or control over this water. What is your idea about the policy of the Federal Government stepping in and undertaking to say to a State how and under what conditions it shall regulate hydraulic power. Mr. CARMODY. I say that is objectionable from two standpoints. In the first place it is the assertion of a power that does not exist, and it is undertaking to administer a policy that belongs to the State. It is made the right of the State in two respects, first, State ownership of said power, and, second, the right to administer that in trust for the common people. The CHAIRMAN. That is fundamental. |