(3) Driven by underlying economic and financial forces, concentration of control of water-powers in private hands has proceeded very rapidly. It is doubtful if anything can arrest this process, and a swift advance to a far higher degree of concentration is entirely possible.
(4) Any chance, then, of restraint by competition is rapidly disappearing, certainly over given sections, and public regulation is therefore an imminent necessity.
The extent of such regulation will depend mainly on constitutional limitations. A State, roughly speaking, can at any time exercise a high degree of control over power companies as quasi-public servants. The jurisdiction of the Federal Government covers a wider range geographically, but involves some difficult constitutional questions. Over water-powers on the public lands it has full control. I concede no merit to doubts as to the Government's unlimited jurisdiction there.
As to powers on navigable streams not in the public domain, there is an undetermined constitutional question. It is well settled that no power dam can be maintained on a navigable stream without the consent of the Federal Government. Nearly everyone admits that the Government may impose upon such grants any desired time limitation, and may thus require readjustment of terms at any desired period. But some hold that the Federal Government, in exercising its arbitrary power as grantor, may also impose any further conditions it chooses upon such grant, as, for example, that the grantees shall pay a rental for the power acquired. Others hold that the Federal Government can only impose such conditions as are directly connected with the Federal power over interstate commerce, such as navigation. Even this view would apparently at least permit a rental charge, if applied to navigation improvement. Personally, I am strongly inclined to the former and broader view that any conditions whatsoever may be imposed (applause), both on general principles and on well-established legislative precedents. In numerous bridge and dam acts Congress has used the broad power and imposed conditions in no way related to interstate commerce. In the California Debris Commission Act, operative since 1893, Congress imposed a straight charge on placer miners for the privilege of emptying their refuse into the streams.
The scope of the Federal jurisdiction is of first importance, because the water-power problem is, in the main, a National one. Much of the power is transmitted across State lines, or is used by interstate carriers. The bulk of the capital that is developing our most important powers comes from interests outside the States where the powers are located, and from the brief survey I have already given of the interrelationships existing between public-service companies it is obvious that State lines and State jurisdiction have no practical relation whatsoever to the sweep of these forces (applause). The hydro-electric industry has been largely nationalized by those who are foremost in it.
The Nation and the State will have to use their full powers to meet the water-power situation. The most effective time to use them is before, not after, private rights accrue. The one certain method is for the State or the Federal Government, to retain its interest, or impose its conditions, at the inception, as a part of the grant. Then public control and private rights go together, as they must if we are to safeguard the public interest in water power. (Applause)
Let there be no unnecessary hampering of hydro-electric development, but let the public be in on the ground floor at the start: for at the start the public must grant the power and for all time the public will be the party chiefly interested in its use. (Applause)
As President Taft very justly said yesterday, when a man talks to you about conservation, you have the right to ask him to specify what steps he desires to take. I am going to specify.
(1) The status quo of all water-power still controlled by the Nation or State should be maintained until we know what we have, and can act intelligently thereon.
(2) No water-power grant should be made except for a fixed period, with at least the reserved right to readjust terms at the end thereof. That period, however, should be long enough to permit adequate financing and complete development.