limited that to 8,600. They submitted to that only as a temporary submission, until the thing should be adjusted, and we want to claim our right to have the use of 10,000 cubic feet. We don't expect you to fix that in detail, but expect that to whatever body you leave that to we may show our equities that that body may have the power at least to consider them. In the same way, the hydraulic company needs 3,000 more in order to develop full capacity by operating at what will be a normal point of economy, and I say for them that they ought to have their 3,000. STATEMENT OF MR. PHILIP B. BARTON-Resumed. Mr. HARRISON. When was the Cataract Co. organized? Mr. HARRISON. About 1898? What was the organized capital at that time? Mr. BARTON. It was in 1895 or 1896 it began business, I think. Mr. BARTON. The present capitalization is $2,000,000 stock and something under a million dollars and a half in bonds. Mr. HARRISON. What was the original capitalization of that company? Mr. BARTON. Authorized, you mean? Mr. HARRISON. No, sir; paid in. Mr. BARTON. I can't give you that. Mr. HARRISON. I understood you to say this morning that a majority of the stock is owned by the Niagara Falls Co. Mr. BARTON. That is true. Mr. HARRISON. How much did that cost? Mr. BARTON. Niagara Falls Power Co.? Mr. HARRISON. Yes. Mr. BARTON. That stock was given to the Niagara Falls Power Co. as part of a consideration for the power contract and for the franchise in the city of Buffalo, the Niagara Falls Power Co. had obtained. Mr. HARRISON. In other words, the Niagara Falls Power Co. paid nothing in cash or nothing in property except that it gave up the right to enter the city of Buffalo to distribute their power there. Mr. BARTON. That partly is true. Their franchise in Buffalo also is a concession in price. Mr. DIFENDERFER. It was a present, in other words. Mr. BARTON. No; it wasn't a present. There is a very substantial consideration in the power contract, the very low price at which power was sold to the company was part consideration. Mr. DIFENDERFER. That was the consideration at that time, a concession, was it? Mr. BARTON. It was. Mr. DIFENDERFER. At about how much would you approximate the value of that concession? Mr. BARTON. Well, under present conditions the Cataract Co. is paying 6 per cent dividends. The Niagara Falls Power Co. is getting about $60,000 for its share of those dividends, $60,000 a year, and at the present rate power is delivered, about 65,000 horsepower, it would be about $1 a horsepower. Mr. DIFENDERFER. Per year? Mr. BARTON. Per year. Mr. HARRISON. Is this company, the Niagara Falls Co., is that the company that Morgan is interested in? Mr. BARTON. I am not sure that Mr. Morgan personally is, but the J. P. Morgan Co. is a large shareholder of the company. The CHAIRMAN. Congressman Smith desires to be heard. STATEMENT OF CHARLES B. SMITH. Mr. SMITH. I desire to ask, Mr. Chairman, if Mr. Kenefick wishes to say anything. I will read, with the committee's consent, two letters which I received from Buffalo, which tend to show the attitude of the people. of that city. The first one is from Mr. Frank C. Ferguson, a leading lawyer of the city, who wanted to come before the committee but was unable to do so because he had to appear before the Interstate Commerce Commission. This is what he says: Hon. CHARLES BENNETT SMITH, Washington, D. C. FERGUSON & MAGAVERN, Buffalo, N. Y., January 20, 1912. DEAR SIR: I am glad that you are taking such a great interest in the two Niagara Falls power questions, the question of the production of electrical power on this side of the line, and the question of the importation of Canadian power. I hope that these things may be made plain to the committee, notwithstanding the fact that the great public does not find it so easy to go, or send its agents, to Washington, and get their views directly before the authorities, as to the power companies. 1. That while electrical power is produced by the use of the Niagara Falls current at a low cost to the producers, the public, on this side of the international boundary line at least, have never received any benefit from that decreased cost of production. On the contrary, it has always had to pay exceedingly high rates. Indeed, the city of Buffalo particularly is worse off to-day than as though no electrical power at the Falls had ever been developed. In anticipation of cheap Niagara Falls power, it advertised itself far and wide as the electrical city. Owing to the fact that it has always had to pay exces sive rates for power, it could not and did not "make good" in its claim, and the reaction that followed when the outside world found out the facts has harmed it greatly. You know this as well as I do, but people living 500 miles from Buffalo do not generally know it. I wish that the committee could have one of its hearings at Buffalo, in order that it might find out what the local sentiment in this matter really is. 2. Any sentiment in western New York that any of the power companies should be given the right to use any more water than they now have the legal right to use, is strictly confined to the power companies themselves, their agents and servants. All of the rest of the public believe either that no additional water should be used for the development of electrical power, or that the additional 4,400 cubic feet of water which the treaty allows to be taken, should be turned over to the State of New York. Leaving out of account the matter of the injury to the natural beauty of the Falls by the diversion of water, it would, of course, be to the manifest advantage of the public to have additional electrical power developed at the Falls, if the public could thereby get the power at a reasonably low rate, as it probably could if the present electrical power monopoly should be broken and the additional current or power development be turned over to the State of New York. The production and distribution of electrical power at the Falls at the present time is an absolute monopoly, and it would not interfere with that monopoly in the slightest degree to give to the present companies the right to take increased amount of current. As long as the development of Niagara power remains a monopoly in private hands I have no confidence in our ability to get electrical power at a fair rate through the public service commission. 3. Every restriction on the importation of Canadian power should be at once removed. Electrical power is a raw material" and should be "free." Electrical power has of itself no value. It is simply an instrument to produce value. 4. Subject to the paramount right of Congress over navigation and commerce, its treaty-making rights and its control over imports, the National Government has really no legal right to interfere with the State of New York in the matter of the development and sale of Niagara power. I hope that the hearings before the committee will not be concluded until the authorities of the State of New York shall be heard upon these two subjects—— of the production and importation of Niagara power and until the committee shall be well informed as to the real local sentiment in western New York. Yours, very truly, FRANK C. FERGUSON. That is from Mr. Ferguson. Another letter received this morning is from Charles M. Heald, president of the Mutual Transit Co., one of the leading transportation companies on the Great Lakes: Hon. CHARLES BENNETT SMITH, BUFFALO, N. Y., January 23, 1912. House of Representatives, Washington, D. C. MY DEAR SIR: I have just read a letter recently sent you by Mr. Frank C. Ferguson, of this city, bearing on the question of Niagara Falls power. I am heartily in accord with the position taken by Mr. Ferguson, and I feel absolutely safe in saying that in all probability 90 per cent of the citizens of Buffalo would concur if they had the opportunity to pass an opinion upon this question. While I am not aware, of course, as to what it costs to produce this electrical power, I am sure it is produced at a low cost, but, unfortunately, the users of it on this side of the international boundary line have never yet been able to secure the power at anything like the proper figure. To properly conserve this power for the interest of the people who have the right to it and that is the people at large-I feel the concession of any rights should be invested in the State of New York and not in private companies, as our experience with the latter up to this time has not been at all satisfactory. Electrical power is, as Mr. Ferguson expressed it, a raw material; it is of no value whatever until it is put into use or, in other words, "manufactured," and therefore, as raw material, it should be admitted to this country free. The State of New York, subject, of course, to Congressional and National Government control, should have vested in it the right to control; and through such control, if properly conducted, of course manufacturing industries generally would get the benefit of this cheap power, which they certainly are entitled to. I trust this matter will not be disposed of before all parties of any importance may have an opportunity to be heard before the committee, especially the New York State authorities. This question of the use and control of the Niagara Falls power is of vital interest to this section of the State, and I trust it will receive your earnest attention and support. Yours, very truly, CHARLES M. HEALD, President. I have also here a letter from Senator Burd, of Albany, which I will have placed in the minutes. COMMITTEE ON FOREIGN AFFAIRS, House of Representatives, Washington, D. C. GENTLEMEN: A matter of large importance to our whole State, and especially to the city of Buffalo and its environs, is now pending before your committee, I am informed. I refer to the further diversion of water above Niagara Falls for power purposes. If it had not been for the efforts of Hon. Charles B. Smith, now Congressman from the district in which I reside, I am certain our State, and especially our locality, would have lost the direct benefit coming from this additional water. 28405-12-20 He first, as editor of the Buffalo Courier, directed attention to the subject, and has since continued his efforts in this behalf. Our people will insist and our State will insist on these points: 1. The paramount and exclusive rights of the State in all pecuniary benefits coming from the water diversion; it is legally their property, subject to commerce clause. 2. There must be no more grants in perpetuity or without adequate compensation, payable to the State, and only granted by the State's permission. 3. The residuum of water at Niagara Falls should at once be granted the State. 4. The State, and I believe Congress, should insist on restrictions in the grant as regards prices, and uses, and should aim to approximate a maximum of power. 5. I have introduced, and had passed in the legislature, different resolutions covering some or all the above; and I am certain our people will not condone any waste of their remaining patrimony along this line. Respectfully, GEO. B. BURD. I have also a petition from the people of Niagara Falls, N, Y. I believe about 50 residents of that city signed a petition in favor of having the rights to control the water turned over to the State of New York: Whereas the rates charged for electric lighting and for power at Niagara are unreasonably high, considering the world's greatest power development is within our gates; and Whereas we have been unable to get relief from the public service commission of New York State: Resolved, That we urge upon the Committee on Foreign Affairs the incorporation of a provision in the proposed law which shall give full authority to the Federal or to the State authority, or to both, to grant to the city of Niagara Falls such diversion of waters as the city may require for public uses, and that copies of the foregoing shall be forwarded to Representative James S. Simmons and to Representative Charles Bennett Smith. E. L. Brown, president Third Street Business Men's Association; I have also some official records of the public service commission which I would like to place in the record. They indicate a close affiliation among the power and transmission companies operating at Niagara Falls. On the general question of this legislation I believe the first proposition that would be considered by the committee is that of the preservation of the scenic beauty of Niagara Falls. Gen. Bixby has been before the committee. He has given the results of investigations made by the War Department on water diversions along Niagara River. I believe the committee may safely rely on the recommendations of the War Department in that particu lar. You have a representative here for Mr. McFarland and have his views, which are entitled to consideration and respect. To my mind, however, the investigation of the War Department has been thorough, and I believe the conclusion reached by its engineers ought to be final. We next come to the efficiency of production at Niagara Falls. A statement was made by Mr. Sawyer, one of the first speakers, that we have practically a power famine in and around Buffalo. That is quite true, but I would like to call the attention of the committee to this fact, that the Niagara Falls Power Co., according to the best information obtainable, is producing about 10 horsepower for every cubic foot of water diverted, and the hydraulic company, which takes its water from nearly the same level in the river, produces 20 horsepower. I believe that new legislation decided upon by this committee should contain an emphatic efficiency clause so that the Niagara Falls Power Co. would be compelled to produce more power per cubic foot of water or relinquish its rights to a company which will produce power at a higher standard of efficiency. Mr. GARNER. Where would you have placed that power? Would you have Congress provide in the bill the degree of efficiency that should be maintained by the power company, or would you leave that to the War Department or to some other department of the Government? Mr. SMITH. I have prepared a provision on that point, and I would like to read it to you here. Mr. Smith read as follows: SEC. 2. That the Secretary of War is hereby authorized to grant to the State of New York revocable permits for the diversion of water in the United States, from said Niagara River, above the Falls, to an aggregate amount not exceeding a daily diversion at the rate of 20,000 cubic feet of water per second: Provided, That whenever the Secretary of War shall determine that the diversions of water herein authorized, in connection with the amount of water diverted on the Canadian side of the river, above the Falls, interfere with the navigable capacity of said river, or its proper volume as a boundary stream, or the scenic grandeur of Niagara Falls, or that the water diverted for the development of electrical power are not being utilized to their full or proper standard of efficiency, he may revoke said permits, after giving notice of not less than one year to the State of New York, the President, and the Congress of the United States of his intention to make such revocation. Mr. HARRISON. That only applies to power diverted on this side. Mr. SMITH. Yes. Mr. HARRISON. Does that apply to power brought over from Canada? Mr. SMITH. I have that question covered in another section, which reads as follows: SEC. 3. That the Secretary of War is hereby authorized to grant permits for the transmission of electrical power from the Dominion of Canada into the United States; and the said Secretary may specify the persons, companies, or corporations by whom the same shall be transmitted, and the persons, companies, or corporations to whom the same shall be delivered: Provided, That no permit for such transmission or delivery of power shall be given by the Secretary of War without the full approval of the State or States into which said power is to be transmitted or delivered and that the persons, companies, or corporations receiving such permits for transmission or delivery shall be governed and regulated as to rates and otherwise as the State or States may determine. Mr. GARNER. Let me make a suggestion there-the word "State" is rather broad. Hadn't you better make that the Government, the governor of the State? The word State might contemplate the legislature. |