all sales in Canada, so as to be permitted a larger entry into the richer markets of the United States."

This frank declaration of the Electrical Development Co.-Canadian both in incorporation and in membership-serves to indicate not only its own slight appreciation of its home market, but also the sense of injustice that would be induced generally in Canada by unjust discrimination against the right of importation of Canadian power.

Since writing the foregoing we have received Mr. McFarland's third emergency call, dated November 19, in which again he complicates the possibility of international arrangement by the following extraordinary plea:

"Now there is another opportunity. Because Canada. while planning to produce 415,000 horsepower in destroying Niagara, can herself use less than 50,000 horsepower, her power companies propose to sell it in the United States. Here is our opportunity. The Secretary of War controls absolutely the admission of this power. If he shuts it out, the water which would otherwise be harnessed for the power companies will thunder its way unfettered over the great cataract.

Inclosed are some Niagara preservation post cards. Get each one quickly into the hands of a man or woman who cares a single cent for Niagara, and let Secretary Taft thus see what the county thinks of the claims of the power companies. Ask him to admit no Niagara electrical power from Canada.”

If this plea for the total exclusion of Canadian power were to prevail, the following results would happen :

The companies which have invested large sums of money in the establishment of their works would find their investments unprofitable, except to the extent that they could find consumers of power in Canada. Can anyone be fatuous enough to suppose that thereupon the companies would not seek to protect their Canadian investments by Canadian development, welcomed and assisted by the Canadian authorities? Such establishment and development in Canada, of course, would involve such concessions in the cost of Canadian power as would afford sufficient inducement to Canadian users. But with sufficient concessions, the cost of Canadian power could be brought so low that no railroad in the Province of Ontario conld afford to forego the use of electricity from Niagara. Such operation would supply a market for Canadian power vastly in excess of any figures yet suggested. The Canadian Niagara Co. already has its line to Fort Erie, opposite Buffalo, and already contemplates considerable development in that vicinity and elsewhere, which ultimately may make it indifferent whether or not Canadian power shall then be transmissible into the United States.

Thus, in the end, the volume of water taken from the Niagara River would be not less than the amount which would have been taken had the Canadian power been admitted into the United States; while the United States and in particular the State of New York would lose, through the establishment in Canada of industries which otherwise, would have been established in the United States.

Speaking for myself alone, and not for anyone else, I do not hesitate to express the belief that the Niagara Falls Power Co., having a New York charter right for a second tunnel in the city of Niagara Falls, could view with comparative equanimity a positive prohibition of the admission of any power from the Canadian side. Nothing could tend more directly or more effectively to make a reality of the Niagara monopoly which Mr. McFarland has regarded as potential. (First emergency call, section 9.)

The revealed purpose to coerce Canada into a treaty by laying an embargo upon power importation into the United States of course would affect Canadian development. (See Capt. Kutz, p. 14, sec. 29.)

Thus again we are led to doubt that the author of Mr. McFarland's emergency calls had formed an intelligent purpose as to the practicability of an international treaty limiting the Canadian rights.

CONCLUSION.

Upon these considerations, as well as upon those presented last summer, we ask the favorable action of the Secretary of War upon the application and the supplemental application heretofore submitted by the Niagara Falls Power Co. and the Canadian Niagara Co. for a permit to transmit Niagara power from Canada into the United States, the exact form of the permit to be submitted after decision of the principle.

FRANCIS LYNDE STETSON,

For the Niagara Falls Power Co. and the Canadian Niagara Co.

APPENDIX A.

THE PRIORITY OF THE CANADIAN NIAGARA CO.

The Canadian Niagara Co. is and always has been recognized by the Queen Victoria Niagara Falls Park Commissioners as the "pioneer company." (19th Rept., pp. 12-13; 18th Rept., p. 5.)

The first contract between this company and the commissioners was made April 7, 1892 (16th Rept., p. 14); the modifying contract July 15, 1899. (14th Rept., p. 11.)

Clause 11 of the modifying contract (p. 17) provides that if from any cause the supply of water at the point of intake should be diminished the company should have no claim or right of action against the commissioners "nor give to the company any right of action against other licensees or grantees of the commissioners in respect of any diminution not substantially interfering with the supply necessary for the company." The subordinating effect of this clause has been forced upon the recognition of each of the junior lessees. A substantial interference would result from the proposed diminution of our available supply. Under this contract the Canadian Niagara Co. began its work May 31, 1901 (16th Rept., pp. 5-11) before either of the other companies had even acquired a right to their present works, and long before such works were begun.

The Ontario Power Co. entered into its first contract with the commissionersthat concerning the waters of the Welland River-April 11, 1900 (14th Rept., p. 25; 16th Rept., p. 3; 19th Rept., p. 11), and its second contract-that concerning the Niagara River and its present and only constructed works-August 15, 1901. (16th Report, p. 19.)

The rights of the Ontario Co. were expressly subordinated to those of the Canadian Niagara Co. by clauses 7 and 8 of the second Ontario contract, which were as follows (16th Rept., p. 21):

"7. Provided, That the works on the premises delineated on the plan hereto annexed shall not interfere with or deprive the Canadian Niagara Power Co. of the right to construct, operate, and maintain the underground tunnel leading the waters of the Niagara River from the power houses and wheel pits which they are about to erect and develop in pursuance of the several agreements entered into between the Commissioners of the Queen Victoria Niagara Falls Park (herein styled the commissioners), bearing date 7th April, 1892; 15th July, 1899; and 19th June, 1901.

"8. And the company shall indemnify the commissioners from all claims or demands by any person or persons whomsoever, whether arising by reason of the exercise by the company of the powers, rights, or authorities or any of them conferred by the hereinbefore recited acts of the Parliament of Canada or either of them, or by reason of anything done by the company in the exercise thereof affecting any property, rights, or privileges heretofore by the commissioners granted to or conferred upon any person or persons whomsoever, or enjoyed, used, and exercised by any such person or persons under the commissioners; it being the intention of this agreement that should the company in the exercise of the aforesaid powers, rights, and authorities so affect any such property, right, or privileges granted by or enjoyed under the commissioners, the company shall fully indemnify the commissioners in respect thereof."

The Ontario Co. did no work upon its present plant prior to December 31, 1901 (16th Rept., p. 4), but began such work shortly after the delivery of the third agreement dated June 28, 1902, which was not validated until August 7, 1902 (17th Rept., p. 12), after the Canadian Niagara Co. had spent and incurred more than $1,500,000 upon its entire plans for the full development of 100,000 electric horsepower. (17th Rept., p. 50.)

The Electrical Development Co. (Toronto & Niagara Power Co.) through its promoting syndicate made its first agreement with the commissioners January 29, 1903 (17th Rept., p. 30), long after the vesting of the rights of and after the beginning of actual work by each of the other two companies, whose priority, as in the Ontario contract also, was expressly recognized by the commissioners. (17th Rept., pp. 12-13.)

The rights of this Toronto syndicate were expressly subordinated to those of the Ontario Co. (17th Rept., p. 32, clause 5) and of all prior grantees, in cluding, of course, the Canadian Niagara Co. (17th Rept., p. 37, clause 17: see also 17th Rept., p. 41, clause 5); and the syndicate was required to deposit $25,000 as a guaranty against injury to works of the Canadian Niagara Co. or of the International Railway, by diversion or diminution of the current. (19th

Rept., pp. 16-19; 20th Rept., p. 16.) The prior rights of these earlier grantees were also expressly recognized in a further agreement dated 9th January, 1905, between the Electrical Development Co. and the commissioners (19th Rept., p. 30, clause 3), which, however, failed of legislative ratification.

In their memorandum of argument, submitted in December, 1902, before the Canadian commissioners (17th Rept., pp. 51, 52), Sir Christopher Robinson and Mr. Macrae, the counsel for the Toronto company, made the following statement:

"If the Canadian Niagara Power Co. can demonstrate that the taking of water in the manner proposed by the applicants will cause physical injury of a substantial kind to their licensed works, the Government would be justified in refusing the applicants permission; but the burden of establishing this injury rests upon that company."

This necessary admission as to the immunity of the physical structures of the Canadian Niagara Co. from injury through the establishment of the works of the Toronto company, by necessary implication concedes also the immunity of the Canadian Co. in the operation of its works, from depreciation or diminution of its granted rights in order to enable the Toronto company to operate its junior works to their full extent.

In other words, the undoubted right of the Toronto company under its agreement of January 29, 1903, to use the Canadian reservation waters therein granted, is a right to take such waters only to the extent that they are available after the prior grants of the commissioners shall have been fully satisfied. This priority of right entitles the prior licensees to preferential consideration, according to their priorities, whenever and wherever conflict in respect thereof may arise among the several licensees. Certainly it should not be overlooked in the present discussion, which is to be concluded upon a full recognition of all the equities of all the parties.

FRANCIS LYNDE STETSON,

For the Niagara Falls Power Co. and the Canadian Niagara Co.

APPENDIX B.

Mr. A. C. DOUGLASS,

Niagara Falls, N. Y.

AMERICAN CIVIC ASSOCIATION,

OFFICE OF THE PRESIDENT, Harrisburg, Pa., December 1, 1906.

DEAR SIR: I have never made to anyone, consciously, a misleading statement. I recognize your entire honesty of purpose also. And I therefore, as I told you,. proposed to obtain the details as to the statement I made in regard to the reduction of the crest line of Niagara Falls.

Hon. Charles M. Dow, of Jamestown, N. Y., chairman of the New York State Reservation at Niagara, has replied to me by wire, referring to pages 168 and 169 in the report of the hearings before the Committee on Rivers and Harbors, giving his statement in my presence, and, I think, in yours, on April 21 last. in regard to this matter.

If you will look this up you will see he made a clear-cut and definite statement, which fully supported my statement. When you made your explanation on July 12 last, I did not understand in any sense that it refuted Mr. Dow's statement, but I did understand you to say that the amount of water that was cut off by the change in the crest line was of a character similar to that then falling from the precipice near the Goat Island shore, and I called the Secretary of War's attention to this at the time, as you may remember.

The letter printed in Mr. Stetson's brief is, of course, conclusive evidence of the fact that this was not done for the interest of any power company. I could not know of this evidence, naturally, four months in advance of its presentation. I will not use the statement again in the same form.

I am glad to note that you have been made mayor of Niagara Falls. We differ in this matter, but I see no reason for calling names.

Yours, truly,

J. HORACE MCFARLAND, President.

P. S.-I should be glad if you would call this statement to the attention of Mr. Stetson, whose address in New York I do not know.

J. HORACE MCFARLAND, Esq. :

DECEMBER 5, 1906.

DEAR SIR: I have received through Mayor-elect Douglas, of Niagara Falls, your letter to him of December 1, which you requested him to bring to my attention and in which you undertake to modify the statement which you have published to thousands of people, that the Canadians already had cut off 500 feet of the Horseshoe Falls to accommodate a power company," and, again, "to give a better chance to one of the power companies."

I observe that you regard as conclusive Chairman Langmuir's letter and statement that this work was done for the purposes of and under the express order of the Canadian commission itself and not "to accommodate a power company."

You say that naturally you could not know of this evidence four months in advance of its presentation. But will you allow me to suggest that the fact as stated by me was true, even though this particular evidence of the fact did. not exist; and that by my direction and in the presence of the general manager of our company this fact was brought to your attention directly upon July 12? When you undertook to doubt the truth of the statement of the power companies, which, as you now recognize, was perfectly true, it was, I most respectfully submit, your duty to exhaust all sources of information before undertaking to advise the American public of that which not only was absolutely untrue, but was grossly unjust to our companies.

In apparent justification of your original error you refer to the statement of Chairman Dow before the Committee on Rivers and Harbors on April 21, as published upon pages 168-169 of the report of the hearings before that committee; and you add, "If you will look this up you will see he made a clearcut and definite statement which fully supported my statement."

In answer to this invitation, I have referred to Mr. Dow's cited testimony, and I do not find that either fully or otherwise does it support your statement that this work was done "to accommodate a power company' or "to give a better chance to one of the power companies." Mr. Dow does state that the filling in was done by the power companies, but he does not state, nor does he undertake to state, why the power companies did the filling in. The sting of your charge was not that "the filling in had been done by the power companies," which is true, and which is all that Mr. Dow said, but it was in the allegation that the filling in was done by the power companies "for their own purposes," which is untrue and which very tardily you recognize as untrue under the compulsion of Chairman Langmuir's letter, that the filling in was done for the benefit of the Canadian Park by the orders of the Canadian commissioners and not for the benefit of any power company.

I am sending a copy of this communication to Mr. Charles M. Dow, and also appending the same to the revision of my brief before the Secretary of War. I am, faithfully, yours,

FRANCIS LYNDE STETSON.

APPENDIX C.

NEW YORK, December 1, 1906.

W. J. BARDEN,

Captain, Corps of Engineers, Washington, D. C.

MY DEAR SIR: I beg to acknowledge the receipt of your favor of November 28, transmitting the Supplemental Report of Capt. Kutz.

I have only to express my appreciation of the reasonableness of Capt. Kutz's additional conclusions, which I am happy to accept with the following modifications:

(1) As stated at the hearing before the Secretary of War, I am willing, without prejudice to our reserved right and claim of priority, and as a modus vivendi, pending a treaty negotiation, to consent to the equal division between the three companies of the 157,500 horsepower for which in his first report Capt. Kutz recommended that transmission permits might now issue.

This concession is made without any doubt as to the justice of the report of Capt. Kutz; but because our present Canadian installation would not enable us now to develop or to transmit the full amount of 60,000 horsepower. So soon as we shall have completed our Canadian power house as now proposed, to the full extent of 121,000 horsepower, we shall upon the ground of our priority expect to be permitted to transmit that full amount irrespective of any claim of any other company.

(2) While upon the hearing I concurred that permits for power transmission, as well as for power diversion, should be preferably in terms of cubic feet of water rather than in terms of horsepower, I did not intend, nor do I intend, to concede that the Ontario Power Co. has any ground upon which it can claim special consideration; nor did or do I intend to concede that upon any ground the Ontario Power Co. is entitled to take any water until after the full demand of the Canadian Niagara Co. has been met.

(3) As already stated in my earlier brief I ask that at all times the Canadian Niagara Co. shall be authorized to supplement and to make good from its works the draft, which under the permit of the Secretary of War the Niagara Falls Power Co. shall be authorized to make on the American side to the extent that, for any cause, such authorized draft shall fall short of the amount authorized. As these two companies are substantially one, their combined draft should be considered as one; and so long as such combined draft does not exceed the aggregate authorized by the law, it would seem to be equitable that if necessary water might be taken from the Canadian Falls to the relief of the American Falls.

(4) I desire to renew the prayer contained in my earlier brief, that consideration be given at present to our application for additional power, and this for the reason there indicated, that such permission is necessary in order to enable us to proceed with the completion of our power house, for which the wheel pit already has been dug. In this particular our position is analogous to that described by the felicitous figure used on Monday by the Secretary of War. We are in the position of the man who has built his house to the second story, and thereby is involved in the necessary expense and consequence of a roof to cover it.

For the protection of this right to complete our power house to the full extent of 121,000 horsepower, we rely primarily upon our prior right to take all of the power necessary for our purposes, even though our juniors go dry, and, secondarily, if, notwithstanding our plea, our claim to priority be rejected, then upon a consideration of our equities in respect of the additional power to be granted. (5) I ask that after decision the form of permits be settled on notice. This communication I submit to the Secretary of War in printed copies as constituting my reply upon the entire subject, including Capt. Kutz's report. Your obedient servant,

FRANCIS LYNDE STETSON,

For Canadian Niagara Co. and Niagara Falls Power Co. Postscript, December 3, 1906. In paragraph 5 of this report Capt. Kutz ob serves that the Niagara Falls Power Co. now is limited to the production of 76,000 horsepower (which as hereafter considered is electric horsepower not including hydraulic service), which falls short of its 102,000-horsepower requirements as stated in paragraph 4, and thus throws a load of 26,000 horsepower on the plant of the Canadian Niagara Co."

These figures may be explained as follows:

The amount of 102,000 horsepower represents the aggregate of the maximum use of power, both electric and hydraulic, supplied by the Niagara Falls Power Co.

To this amount of maximum use the 8,600 cubic feet of water permitted would be barely adequate, and would allow only 76,000 electric horsepower available for sale, as follows: