Mr. FREEMAN. Yes, sir. Now, take that 50-cent charge. That would be $25,000 a year, which would be 5 per cent on half a million dollars, would it not? Now, that shows just what a small charge amounts to. I think that if anybody said that we should pay the United States Government half a million dollars for the right to build a dam, which would improve navigation in the Connecticut River, from Hartford to Springfield, that they would not think of it.

Mr. RAKER. What I was getting at is, you are able to show that your plant is paying $25,000 a year to the Government for your license to conduct business, and here was a going plant that was in existence before yours was established, and my point was whether or not the authorities in estimating your tax would not consider that amount which you would have to pay to the Government, instead of making you pay practically double taxes.

Mr. FREEMAN. Judge Raker, the State of Connecticut would say, in my opinion. "We own the bed of the river. We have given you your right, which is a substantial right, to build across the river; why should we give up anything when we don't know what the United States Government owns in the Connecticut River within the State of Connecticut?" It is an extreme State-rights view, perhaps, but that is what they would undoubtedly say.

Mr. RAKER. Aren't any of the franchises of the city railroads, the street car lines, the electric lines, for a fixed period now in Eastern States?

Mr. FREEMAN. No, sir: the cities do not grant in New England street railway franchises or local franchises. The State governments grant them.

Mr. RAKER. Now, as to the fair value in the recapture clause, supposing that the fair valuation for your property, for the money expended, was $3,000,000. Suppose that was the actual fair value for the money expended, you would get that when it was recaptured, wouldn't you? Assuming that you do that, you would not be able to issue bonds over and above $3.000.000, would you?

Mr. FREEMAN. No, sir.

Mr. RAKER. Then, irrespective of the amount that might be donated from any source and added to your property, those who invested in the bonds would be safeguarded, because you have only invested in the fair value of the property, and you would be sure to get back $3,000,000 at the end of 50 years, and wouldn't the bondholders be really in a better position, because there must be some addition to the property in the way of improvements that you would get in addition to what you would consider fair value, and therefore they would be at all times protected and willing to invest money in enterprises of this kind.

Mr. FREEMAN. Well, of course, if we got back the $3,000,000 which we put into our plant, yes. If net investment means that, yes.

Mr. RAKER. Can it be anything else in any investment? When a man invests actual money, $3,000,000, exclusive of any donations or anything that might be given to it, and the property is worth that and the Government recaptures it and pays the net value, which was the amount put in—$3,000,000—how can it be anything else but to get $3,000,000 back?

Mr. FREEMAN. If we get back the money we put in we will be perfectly satisfied.

Mr. RAKER. Don't you understand that really that is the purpose and object of this bill, to pay back the actual money invested?

Mr. FREEMAN. Yes, sir; that is the purpose and object. Frankly, I have not studied the term "net investment" and construed it with the provisions of the Interstate Commerce Commission sufficient to say that definitely. I think that is the object and purpose.

Mr. RAKER. If the bill does provide that, and does give the man the return of the amount of money actually invested-for instance, if they put in $3.000.000 and they are paid this $3,000,000 if the plant is recaptured that is perfectly fair, and you believe such legislation proper to enact?

Mr. FREEMAN. Yes, sir.

Mr. RAKER. And it will enhance development?

Mr. FREEMAN. Yes, sir.

Mr. RAKER. That is all.

The CHAIRMAN. Does any other member of the committee desire to ask Mr. Freeman any questions?

Mr. TAYLOR. Is there anything in Connecticut or in the East that you know of that could be brought up justly in the way of a monopoly of these companies or combination or conspiracy that could be referred to on the floor of the House by the ultraconservation antimonopolists, that might try to make us trouble in passing a fair bill? Mr. FREEMAN. No, sir; in Connecticut we have no combination. There are at least six companies in active, in fact, in fierce competition. Only one of those companies so far as I know-in fact, I know that only one of those companies belongs to any one of the owners of big water power. In Massachusetts it is the same thing, and in Rhode Island.

Mr. TAYLOR. And is that true throughout New England? Can you speak for them?

Mr. FREEMAN. Yes, sir; I don't think there is any monopoly in New England. I don't think there can be. There is too much water power undeveloped, and our own laws permit competition there. There is 4,000,000 horsepower there.

Mr. TAYLOR. All those States have public utility commissions regulating charges and rates, do they?

Mr. FREEMAN. Yes, sir; and we have very strict regulations there. The CHAIRMAN. The rates and charges, then, are all perpetual charges?

Mr. FREEMAN. Yes, sir.

Mr. LA FOLLETTE. Has the Government expended any amount of money on the improvement of the Connecticut River for navigation purposes to your recollection?

Mr. FREEMAN. Not above Hartford. It has made four surveys. Gen. Goethals made one survey, and Col. Payne made the last survey. Mr. LA FOLLETTE. It has spent some money from Hartford down? Mr. FREEMAN. Yes, sir.

Mr. LA FOLLETTE. In that case it invested its own money?

Mr. FREEMAN. Yes, sir.

Mr. LA FOLLETTE. And it didn't charge anybody for the use of it! Mr. FREEMAN. No, sir.

53983-18-PT 1-17

Mr. LA FOLLETTE. It is only where the other fellow puts in the money that the Government thinks it is necessary to charge something for the use of it; but where the Government invests its own it does not?

Mr. FREEMAN. No, sir.

Mr. LA FOLLETTE. Don't you think we ought to reverse it a little, especially in this time of need, and where the Government puts out money to improve the rivers and harbors charge a slight tax for the use of it, so as to get a fund for carrying on the war and dredging other rivers, etc.? [Laughter.]

Mr. FREEMAN. I haven't given that matter any thought whatsoI can not talk as an expert on that, Mr. La Follette.

ever.

Mr. Escн. My geography may be a little vague, but the Connecticut River rises in the White Mountain Forest Reserve, which the Government is establishing, does it not?

Mr. FREEMAN. Yes; I think it rises away up on the Canadian border line.

Mr. EscH. Under the provisions of this bill, as under the provisions of the Adamson bill, the charge to be paid upon your interlocking-dam project was proportional to the cost?

Mr. FREEMAN. Yes, sir.

Mr. Escн. Are there any other dams on the Connecticut River above you?

Mr. FREEMAN. At Holyoke there is a large dam. At Turners Falls there is a large dam, developing 35,000 horsepower. At South Vernon, Vt., there is a dam, developing 25,000 horse power, and I think farther up there are smaller dams.

Mr. ESCH. Then all those dams would have to participate in making good that charge?

Mr. FREEMAN. Yes, sir; and we would be very glad to make it. Mr. Escн. Do you believe that the White Mountain project will be beneficial to you in developing water power and stabilizing the flow?

Mr. FREEMAN. Yes, sir.

Mr. Escн. You are perfectly willing to pay such charge as the Government might allot to your project?

Mr. FREEMAN. Yes, sir.

Mr. TAYLOR. Has there been any effort made by the Forest Service to charge you people for the use of water that comes off of the forest reserves?

Mr. FREEMAN. I think not. I think the private companies have done quite a little in conserving water. On the Deerfield River project the Massachusetts Power Co. has built one lake that is 9 miles long and 2 miles wide, to conserve the spring floods; and they have another on hand about 11 miles long and 3 or 4 miles wide.

Mr. TAYLOR. But they are not charging you a royalty for the use of water that drains off of the forest reserve yet? [Laughter.] Mr. FREEMAN. No, sir.

Mr. RAKER. Just one question there. From the legal standpoint, from the knowledge you have gathered in your practice in regard to these various corporations, the provisions of this bill provide a penal clause for violation of the bill, and also authorizes the commission to make rules and regulations in the nature of penal clauses, for the

violation of which the violator is subject to fine and imprisonment. What do you think of those provisions in a bill of this kind, Mr. Freeman, under the law where the States control to regulate these corporations and these concerns as to practically all matters, as well as the Federal Government under this bill? What is your view of that matter?

Mr. FREEMAN. Well, personally, I am afraid of the joint jurisdiction. I do not like joint jurisdiction, because we may have a State commission ordering us to do one thing and the national commission ordering us to do another thing. It would be very hard to obey both at the same time where the orders are antagonistic.

Mr. RAKER. Can you see anything detrimental to the legislation by reason of penal provisions in it? Would there be any hampering of development or operation?

Mr. FREEMAN. I don't think so, because I think the chances of there being any antagonism between the two different commissions are very slight.

Mr. RAKER. That's all.

The CHAIRMAN. We are very much obliged to you, Mr. Freeman. We will hear Mr. Harris now.

STATEMENT OF MR. JOHN J. HARRIS, PRESIDENT OF THE BIG HORN CANYON IRRIGATION & POWER CO., HARDIN, MONT.

Mr. HARRIS. The Big Horn Canyon Irrigation & Power Co. is a company organized for the purpose of developing water power, irrigating lands, and the construction of a railroad, all located in a valley totaling about 800 square miles.

The CHAIRMAN. You are not on a navigable stream, then?

Mr. HARRIS. No; we are on the Big Horn River, a nonnavigable waterway.

This project was begun in 1912, after the United States Government, through its Reclamation Survey, had made investigations with regard to an irrigation project, proposing to dam up the mouth of Big Horn Canyon and raise the water to a sufficient height to irrigate a total of approximately 45,000 acres of land. The Reclamation Service, after its investigations, concluded that the project was not practicable; that the cost of the land would be probably about $45 an acre, a cost too high for the irrigation of that territory. In writing to Mr. Newell at that time, who was director of the Reclamation Service, I received a letter from him to the effect that the need for the irrigation project had long since passed. Then the idea occurred to me that taking irrigation and connecting it with the water power and the transportation that might be necessary through the valley, a distance of 68 miles from one end of it to the other, that it might be made a practical workable project. So with that object in view we went to work and filed on the water, under the laws of the State, for the two purposes, and incorporated for the three features under the laws of the State of Montana.

The first plan contemplated a height of dam totaling about 175 feet. The investigations which were made afterwards by surveys through the canyon showed us conclusively that the 175-foot dam would not be a practical proposition from a commercial viewpoint;

that the cost of the power that might be generated on that height of dam would be too high to be of any commercial value. Our investigations also showed that the higher the dam the cheaper the power in proportion to the amount to be developed, an extraordinary feature. It was shown that while a dam 480 feet high would seemingly cost about four times the height of a 200-foot dam, the power would be increased about seven times, and that is what decided the plans for the high dam, conditioned, however, that the side walls and foundations would be found to stand the pressure and the stress. Of course that was to be determined by test borings. Those have been made to a depth of 140 feet, and the foundation seems to be very good, probably as good as can be found anywhere in the country. The situation is that we were fortunate in that regard, because at times, as I understand, in connection with investigations of that kind, it is necessary to go to three or four points and test the foundation before you can ascertain that you have got a good site for a dam. However, we are satisfied with the location that has been selected, and the work of our engineers in the field has been ratified by, I may say, some of the most eminent men in America. I may say, Mr. Hugh L. Cooper, of New York, and Gen. Goethals have approved it. I have Gen. Goethals's report here.

I have made a note of some of the questions that were asked yesterday and to-day. One has reference to what benefit the United States Government may have from these water-power developments. Essentially it strikes me that every water power that is built, whether it is on navigable waters or on public lands, or anywhere else in the United States, contribute to the conservation of flood waters and increased navigation of streams. Now, in our case, for instance, a dam 480 feet high would give us a lake back of the dam 57 miles in length, with a shore line of over 200 miles, in a territory practically inaccessible, in a canyon the walls of which range from 1,000 to about 3,000 feet in height. The history of that canyon is that more men trying to get through there have died in the attempt than have gotten through alive, until our engineers went through there and worked for about a year procuring data, data which the Government did not have previous to that time. They have got it now.

The project is located-I will point it out on the map here—in the southeastern portion of Montana on the Big Horn River and partly in Wyoming indicating on map]. The total length of the irrigation feature, the railroad, the reservoir, and all is about 125 miles. We are in a position there where we can electrify about 1,500 miles of transcontinental railway with a transmission distance not to exceed 200 miles. We could carry the Milwaukee from its eastern terminus now 400 miles, the Northern Pacific about 350 or 400 miles, the Burlington about 500 miles, the Great Northern probably 200 to 250 miles within that transmission distance. So we are compelled to rely on the railroad proposition-contracting-getting contracts from the railroads. The situation is this: If a railroad contracted for the power to-day it could not be delivered until four years hence, so whatever plans are contemplated for that time would have to be arranged for to-day, showing the necessity for advance arrangement on projects of this character.

The Big Horn River has a drainage area of 21,000 square miles; about half the size of the State of Mississippi. The water that we