WATER POWER 191 



In order that this principle might apply in case 

 of public purchase, the act provides licenses with 

 fixed terms not exceeding fifty years, at termination 

 of which the United States shall have the right to 

 take any project over at original investment, plus 

 severance damages, less any depreciation and amor- 

 tization, reserves which may have been built up after 

 crediting the owners with a fair return on the in- 

 vestment. When the license period expires, the 

 United States may take over the property of the li- 

 censee for its own use, permit it to be taken by 

 another, or issue a new license to the old licensee. 



"The federal policy assumes," Mr. Merrill con- 

 tinues, "that our water powers will be developed 

 primarily by private capital for public service, and 

 the history of public-service operations shows that 

 regulation of such services is necessary for public 

 protection. It recognizes, however, that there is an- 

 other side to the question of regulation which must 

 not be overlooked or ignored. Regulation will not, 

 of itself, produce development. Nothing will do that 

 but the hope of reward. It is essential, therefore, 

 that supervision and regulation shall not take away 

 the reasonable certainty of a reasonable return ; that 

 there shall always be the incentive to invest in the 

 business all the capital that the expanding needs of 

 the industry require." 



The act was immediately and extraordinarily 

 successful. Two years after passage, Mr. Merrill 

 announced that 364 applications for permits or li- 



