1126 



AMERICAN FORESTRY 



"Theory You waterpower people can't have any more per- 

 petual permits to build and operate dams on navigable streams, 

 nor can you have any more fee titles to public lands which 

 involve waterpower sites. 



"Practice All right ; we gave up expecting such things long 

 ago and have planned accordingly in our calculations for the 

 future. We had supposed the policy was all settled ; why do you 

 keep on making speeches about it? 



"Theory Waterpowers must be developed under a permit or 

 some form of term grant running, say fifty years, after which 

 the people must have the right to take over the property. 



"Practice Are you going to pay us for the property when you 

 take it over? 



"Theory Certainly, we shall pay the fair value. 



"Practice Good scheme we're all agreed. 



"Theory But we are going to pay you only for the fair 

 value of the property, and for no blue-sky stuff, like capitalized 

 value of the permit and the Government lands occupied, good- 

 will, profits that you expect to get from contracts, nor anything 

 that is not actually put into the property as a hard-cash invest- 

 ment or its equivalent. 



"Practice .All right again don't want to be paid for any blue- 

 sky stuff. 



"Theory .And we want you to make prompt developinent of 

 the properties under permit and not to hold them unused for 

 speculative purposes. 



"Practice Of course, we agree; and even if we didn't, the fact 

 would still remain that money is too scarce and too valuable to 

 throw around and leave idle in such a manner, even for specu- 

 lative purposes. 



"Theory There shall be no artificial manipulation of things, 

 nor any jockeying to the end that the consumers' rates shall be 

 raised or that service be deficient or discriminatory. 



"Practice No ; such things shall not be. Under modern prac- 

 tice the power business must be conducted on the large-volume 

 and small-profit plan, which necessitates low rates and equal 

 service. But even if this were not so, public regulation through 

 commissions now established in nearly every State of the Union 

 will prevent high rates and discriminatory service. 



"Theory Your consumers' rates should be as low as com- 

 mensurate with a reasonable return to the capital actually 

 invested, irrespective of stock issued. 



"Practice Certainly ; just a reasonable return on the actual 

 cash value of the property. The stock issued has nothing to do 

 with the case, and is to be disregarded entirely, no matter 

 whether it be represented by actual face value in the plant, or 

 be watered to a million times that amount. This 'reasonable 

 return on a fair value' idea, regardless of stocks or bonds, is 

 universally an established principle in public utility regulation. 

 A reasonable return has been well defined as the lowest return 

 that will induce investors to purchase the securities of any par- 

 ticular investment. A larger return is unreasonable, and a 

 smaller return will fail to get the investment capital. The only 

 complaint that we have is that some of you people have selected 

 public-land and navigable-stream power plants as subjects for 

 strict regulation by the Federal Government, but do not propose 

 to exercise such regulation over plants tha< happen to be located 

 on private lands. Regulation is a great and necessary institu- 

 tion; it should be exercised indiscriminately and not concen- 

 trated on projects that happen to be located on sites either owned 

 or controlled by the Federal Government. Private-land plants 

 and Government-land plants should operate under exactly the 

 same burdens and same laws." 



Space cannot be taken here to quote the remainder of 

 these questions and answers nor those of "Practice" 

 later addressed to "Theory" but their study will be a 

 good investment of time by those interested. The effect 

 of this treatise is to enforce the lesson that the Govern- 

 ment and those desiring to put money into waterpower 



development are so nearly in actual accord that it would 

 seem to be a comparatively easy task for a clear-headed 

 business-like congressional committee to be able in the 

 coming session of Congress to devise and recommend 

 legislation fairly covering the situation. Nothing better 

 emphasizes this than Mr. Pierce's words under his head- 

 ing, "Who Pays for Unfair and Restrictive Legislation?" 

 when he says : 



"Who pays? No one but the consuming public. Well-mean- 

 ing speakers and writers blessed with patriotic regard for the 

 public welfare have thoughtlessly advocated many things, the 

 effect of which would be to impede the progress of the water- 

 power developer, restrict his operations or prevent his exercis- 

 ing skill, enterprise or other goodly quality in the interest of 

 his business. It will not be practicable to enumerate and 

 discuss all such instances here, but everyone familiar with this 

 subject will recall one or more. Those who propose such things 

 do not need to take the word of anyone; let them get right 

 down to fundamentals, use some good old-fashioned arithmetic, 

 and they may prove to their own satisfaction that the con- 

 suming public pays and pays right well." 



"The Waterpower Business and Its Risks" are well 

 discussed by Mr. Pierce in a succeeding chapter, and in 

 discussing the viewpoint of the banker financing a water- 

 power project, Mr. Pierce says 



"He must look beyond the fact of a paper oflfered as security 

 for a loan. He must be satisfied that the maker of that security 

 is able to sustain the obligations entered upon. He notes the 

 waterpower hazards above discussed and he rightfully demands 

 that if his clients must sustain these hazards they must, on the 

 other hand, have a good title, a fair chance for an assured return 

 of principal and reasonable interest and that the terms and con- 

 ditions written into the franchise shall be definite and without 

 unnecessary financial peril that the occupation of the land is a 

 matter of right and not of grace." 



The chapter on "Waterpower Ownership and Control" 

 and its intelligent discussion of the charges of oppressive 

 monopoly and that on "Waterpower Legislation" are 

 illuminating and of great interest and the author's final 

 "Conclusion" is an admirable summary of the situation 

 as it exists today. What could be said more plainly and 

 in good, plain, common-people's English than the fol- 

 lowing the concluding paragraphs of Mr. Pierce's 

 treatise: 



"Confidence in waterpower investments cannot be restored by 

 mudslinging speeches and writings. We cannot hasten the day 

 of waterpower development by calling each other fools or 

 rogues, or by inciting class against class or by promoting preju- 

 dices. The man who is skillful enough to build and operate a 

 waterpower and the man who is brave enough to finance it are 

 surely deserving of reward, and they are not, by such acts, neces- 

 sarily made over into thieves and oppressors as some would 

 have us believe. On the other hand, the man who stands fast 

 for a fair and righteous deal to the public is not a charlatan and 

 a seeker for cheap notoriety, as others would have us believe. 



"As has already been remarked, all parties are very close 

 together. Some of the remaining differences are mere matters 

 of terminology. Instead of 'bawling out' a proposal merely 

 because it is advanced by a waterpower man, would it not be 

 better to get beneath the surface and judge it upon its merits? 

 Instead of scoffing at another propo.sal merely because a 'con- 

 servationist,' without waterpower experience, expresses it, let 

 us see whether it does not have that estimable advantage of per- 

 spective. We want waterpower development as soon as possible, 

 and it makes not a shade of difference who, in the controversy 



