the questions which are before you. Let me, therefore, briefly summarize certain of the points.

THE SITUATION OF THE NIAGARA FALLS Power Co.

This company has certain vested property rights by virtue of (1) its riparian ownership, (2) its grants by the next lower riparian owner, the hydraulic company, and (3) patents and grants from the State of New York, which State is riparian owner below, both it and the hydraulic company, and which State also holds whatever sovereign interests there are of use or control in the waters of Niagara River upon the American side, subject only to the sovereign right of the Federal Government to prevent unreasonable interference with navigation. These property rights, as defined by the law and as described in the various grants referred to, include the right to take from the Niagara River above the Falls a quantity of water sufficient to make 200,000 horsepower and to discharge the same below the Falls by means of a tunnel passing by and through the lands of the two lower owners; that is, of the hydraulic company and of the lands of the State of New York used for a park. These rights were acquired previous to the year 1900, and a plant had been constructed and put in operation, requiring them, as it now does, at least 10,000 cubic feet per second of water to operate the same on an economical basis, although that quantity is not sufficient for its maximum capacity. It was thus operating that plant for years before the passage of the Burton Act in 1906, but since the passage of that act has drawn only 8,600 cubic feet per second, submitting temporarily to the terms of that act until the treaty should be made, as contemplated by that act, adjusting between the two countries the matter of diversion. It claims to operate by virtue of its riparian rights, although permits under the Burton Act have been accepted and complied with, relying upon the faith that its rights and equities would be recognized in the final adjustment of the matter under the terms of the treaty. The Treaty of 1909 recognized the injustice of the restrictions of the Burton Act, as neither expedient nor necessary to preserve scenic grandeur, and as unjust and inequitable to this company, and fixed the limits of diversion at a quantity which would allow this company 1,400 cubic feet per second more and the hydraulic company 3,000 cubic feet per second more and thus allow each company to operate at its normal economical capacity of 10,000 cubic feet per second for this company and 9,500 for the hydraulic company. No other power plants exist on this side and none could be constructed for the purpose of utilizing the 4,400 cubic feet per second increase provided in the treaty over the 15,600 fixed by the Burton Act as the total diversion on this side, the additional quantity being too small to warrant the expense of any new plant.

It has been assumed and stated in newspaper articles, in statements by representatives of the civic association, and even by a Senator of this Congress (in a statement made in public while these hearings were in progress), that this company is asking for an unreasonable increase in the amount of diversions allowed on this side with the intention of further installations in order to utilize such increase, and

that its position here is one of a further "attack" upon the scenic grandeur of the Falls. You gentlemen who have heard the facts here know this is not true. The treaty fixes the total limits of diversion upon this side so as to forbid any further installations than had been made prior to the Burton Act. Although this company claims the legal right to double its installation and to operate the same, it asks here only that the treaty limits be observed, and that thereby it may be enabled to operate economically its installation which had been installed and put in operation before the question of scenic grandeur was ever thought of in Congress. This company originally installed with particular respect for scenic grandeur and protected the landscape and scenic beauty of the Falls, although at great expense and loss of head. The undisputed facts presented here show that the extra amount of diversion up to the treaty limits will not affect scenic grandeur nor any public interest.

SITUATION OF THE CANADIAN NIAGARA POWER CO.

Before the Burton Act was thought of, this company had installed and had in operation a plant upon the Canadian side taking its water from the pool below the upper crest, so that it could not possibly have any effect upon navigation. It also constructed with regard to scenic beauty. It acquired its riparian rights solely from the Canadian Government, and as consideration therefor agreed to reserve one-half of its developed power for use in Canada when required. This company, as the other two Canadian investors, were intended to be protected by the treaty of 1909, so far as consistent with the public interests involved in the question of senic grandeur, and therefore that treaty made the total limit of diversion upon the Canadian side 36,000 cubic feet per second, which was no more than sufficient to supply the demand of the three installations already made and projected upon that side by those three companies. The limits of total diversion upon both sides having been fixed by the treaty, the excuse for prohibition of importation to the American side ceased to exist; and therefore the treaty contained no such prohibition. This was a concession to, or rather proper adjustment with Great Britain in behalf of Canada to protect not only the public interests of Canada but the interests of Canadian investors. It was an adjustment also acquiesced in by this country in making the treaty, because it was recognized to be for the public interest of this country, where industrial development had created a demand which would absorb all the power developed upon this side and all the power that could be imported from Canada. This company, therefore, with the other Canadian companies, join with the distributing companies upon the American side, to demand that the question of importation be left as the treaty left it-without any prohibition or restriction.

THE EQUITABLE POSITION OF BOTH THE AMERICAN AND CANADIAN POWER COMPANIES.

Certain facts have been demonstrated at this hearing:

(1) That the total diversions allowed by the treaty can have no appreciable effect upon navigation or upon the integrity of the boundary line nor injure military defense-that therefore there is no ground for Federal interference, the right to which is limited to preventing an unreasonable interference with navigation:

(2) That, although the protection of scenic grandeur is not within the proper scope of Federal legislation (for if it belongs to any sovereign power, in this case it belongs only to the State of New York), nevertheless the total diversions allowed by the treaty will not have any appreciable effect upon the scenic grandeur of the Falls, and in any event the extra 4,400 feet allowed by the treaty on the American side can have no effect; and that, with artificial diversions so limited, the danger to scenic grandeur lies wholly in the effect of natural causes, like erosion, which dangers, together with any speculative injury by diversion, can be averted by artificial means;

(3) That the total diversion allowed on the Canadian side will surely and quickly be made and that over that matter Congress can have no control, and that any restriction or prohibition upon impor tation to this side is objectionable for the following reasons:

(a) The entire diversion upon the Canadian side will surely be made within a short time, and a prohibition of importation will not help scenic grandeur or any other public interest;

(b) The American market is ready and is now demanding all the power that can be imported beside all that can be developed on this side. The demand is increasing faster than the power can be fur nished, even with free importation. With importation prohibited, industrial development stops upon this side and progress upon the Canadian side. That one of the two countries which first gets hold of the power will keep it;

(c) The cutting off of the supply which would exist otherwise than for prohibition or restriction tends to increase the price;

(d) The prohibition can not be sustained on the ground that it is a tariff regulation, for it is not a general prohibition, but a special and local one;

(e) It is repugnant to the spirit and terms of the treaty of 1909 by which each country agreed with the other that each might have the privilege of a certain limited diversion, with the American market in mind, and Canadian investments were made on the strength of the right to import, and the limit of that right was impliedly fixed by the treaty. A prohibition by Congress is simply saying to the Canadians that we have given them the right to divert 36,000 on their side, but we will attempt to control the amount of that diversion, temporarily at least, by a provision repugnant to the treaty and at the same time control the diversion upon this side as we see fit.

(4) It has further been shown that as the diversion of the extra 4.400 cubic feet per second allowed by the treaty on this side can not affect scenic grandeur or any public interest, the treaty amount should

be observed; that, however, is too small an amount to make any new power plant feasible. The navigation, sanitary, and power project suggested by Mr. Bowen is not only illegal and impracticable, but is entirely useless as a sanitary measure, as stated by Dr. McLaughlin, of the United States Health Bureau. More than that, it is not only chimerical but is proposed by a company that has obtained no real estate rights whatever and involves a $35,000,000 proposition based upon $100,000 capital, which capital has been paid in just enough to make a few maps and pay promoters. The 4,400 feet increase must of necessity go to the present plants, and of right should go to them in such quantities as to allow normal economical operation of their plants, as the same were installed before diversions were attempted to be limited.

(5) The vested legal rights of the Niagara Falls Power Co. (and I assume it is the same with the Hydraulic Co.) are urged here, not for the purpose of getting specific legislation allotting the extra power to them directly, but for the purpose that their rights and equities may not be ignored to the extent that the proposed act shall prevent those rights and equities being taken into consideration in the future by some official person or body to whom the authority of allotment of this power shall be delegated. It might be unwise for Congress to attempt to say that these companies should have the extra water, or in what proportions. It would be still more unwise to make any provisions so that these two companies, or either of them, should be shut off from the extra power, or that one company should be preferred to the other. That should be left to the good judgment of the person or commission authorized to make the allotment, with the opportunity for hearing to these companies and to any other interests that might appear, whether such authority be the Secretary of War or a New York commission or the State itself. Consequently, the amount limited to be permitted to any one company should not be less than 10,000 cubic feet as a total. The present limitation of 8,600 to any one company would mean that some of the extra 4,400 cubic feet could not be allotted to any company; for the present permits to these companies are, respectively, 8,600 and 6,500, while their normal economical capacities are, respectively, 10,000 and 9,500, and the 4,400 is not sufficient to warrant any new plant by any new company, and much less would a lesser quantity warrant such new construction.

(6) While it would be hypocritical for either the Niagara Co. or the Hydraulic Co. to claim that they would not really like to have the entire 4,400 feet, it would be unfair to either company to include any provision in the act which would of necessity result in giving to the other company the entire 4,400 feet. Such would be the effect of a provision giving it to the company which operates at the highest head, and therefore with the most efficiency, because that would exclude the Niagara Co., whose equities are particularly strong upon this point. The Niagara Co. constructed at a loss of some 50-foot head for the very purpose of preserving scenic beauty and set its works far up the river, using a long canal by which some head was necessarily lost. This was done under the advice of the best engineers and landscape artists. The Niagara Co. would ask of the 4,400

feet only 1,400 and would willing leave the other 3,000 to the Hydraulic Co. It would be absurd and unjust that legislation, enacted to protect scenic grandeur, should penalize a company which had shown the most regard for that interest and in doing so had sacrificed in efficiency, by providing that its very sacrifice for that public interest should be made the ground of discriminating against it and in favor of another company whose works, in appearance and in location, had been installed comparatively with a disregard for scenic grandeur.

THE QUESTION OF RATES.

It appeared conclusively that the State of New York, through its public service commission has full power and authority to regulate rates to consumers, and that there is no need of any exercise of such power in this matter by Congress, even if it had authority. Such attempted exercise by Congress would be an interference with the right of New York. This applies both (1) to rates for power produced on the American side and (2) rates for power imported from the Canadian side.

AS TO RATES FOR POWER PRODUCED ON THE AMERICAN SIDE.

These rates, being for power produced and distributed on the American side and in the State of New York, are manifestly within the sole jurisdiction of that State. As a general rule the producing company sells in bulk to a distributing company, as, for instance, the Niagara Falls Power Co. delivering to the Cataract Power & Conduit Co. at the city limits of Buffalo at a certain price at that point, which includes the transmission from the producing plant to the city limits. With the rate thus fixed at the city limits, the public can have no concern if the ultimate cost to the consumer charged by the distributing company is a fair rate. The price at the city limits is $16 per horsepower per annum, and the cost of such transmission alone, including a fair return on the necessary transmission line and apparatus, is about $6.50 per horsepower (see statement of Mr. Barton). This makes the charge figured at the bus-bars of the producing company about $9.50 per horsepower, which is approximately the same as that paid by the Canadian Hydro-Electric Commission to the Canadian producers. The prices paid by consumers in the city of Buffalo are shown by the following schedule of rates, which are published by the Cataract Power & Conduit Co., and which are uniformly adhered to: