mate interests of the sheep and cattle men. At present the range itself is being destroyed, and both sheep and cattle men are coming more and more to the conviction that their own interests will be better subserved by a leasing law. In fact, the enlarged application of the leasing principle to the public domain generally will, in my judgment, more effectively promote development and protect the public interest than the present system. Certainly coal, oil, gas, asphalt, nitrate, and phosphate lands can be more appropriately developed by leasehold than by the present system of classification and sale of the fee which prevails with respect to coal. Many of the Western States have recognized and are acting upon this principle. These applications of the leasing system are stated more in detail in connection with affairs in Alaska, but principles which are economically sound in Alaska should be economically sound elsewhere, due allowance being made for the different stages of development.

Our mining laws should be thoroughly revised, and particularly the use of the power of attorney should be abolished or greatly curtailed and safeguarded. At present there is no limitation whatever upon the number of claims which can be entered by a single man as attorney for others. I find among those who are personally and financially interested in mining development an increasing conviction that this should no longer be permitted. The advocacy of a definite limitation to the number of claims which can be entered by any one person as attorney for others is almost universal, and many believe that the entire power of attorney principle should be eliminated from the law. The surveying regulations relating to mining claims should be greatly simplified and should then be strictly enforced. I renew the recommendation made by my predecessor that notice of mining locations should be recorded in the local land offices. I also recommend earnestly the abolition of the law of the apex. It should not be allowed to gain any further foothold in the public domain and it should be abolished now before it has been extended any further in Alaska. It is unsound in principle and leads to constant and expensive litigation. The comprehensive application of the proposed repeal to the public lands outside of Alaska has been opposed in some quarters upon the ground that the greater portion of the mineral areas in these lands have already been entered, but I see no reason, however, why this should deter us from abolishing the law of the apex without prejudice to the existing rights which have been acquired under it.

The general mining laws should be amended by the addition of a provision requiring final entry and payment to be made upon all mineral and mill-site locations within a fixed period after date of location of the claims, exclusive of the time covered by bona fide pending adverse claims or protests. This will be in harmony with other laws relating to the acquisition of the title to public lands which

almost without exception, provide that after the performance of certain acts by claimants they must, within a prescribed period, apply for patent and make the payments required by law for the lands sought. If mineral locators were required within a specified time to come forward with their applications for patent, the burden would be upon them to show the validity of their claims, by limitation many invalid claims would lapse, and where the claims are bona fide it would tend to incite the owners to a more diligent development thereof and a more careful compliance with the terms of the law.

The present law making deposits of mineral oils in the public domain subject to location and entry under the placer mining laws (act of Feb. 11, 1897; 29 Stat., 526) is unsatisfactory, from the standpoint of both the individual and the Government. It does not afford protection to the bona fide explorer while he is engaged in the expensive operation of discovering and exploiting the deposits, which in most instances lie far beneath the surface. When oil is discovered there is no adequate return to the Government and no legislative provision insuring legitimate development and preventing monopoly. I therefore suggest that the present law should be repealed and a law enacted providing for the leasing of such deposits, the law to contain provision for the protection of prospectors during an exploration period preliminary to the leasing of the lands after the discovery of oil therein. I also recommend the enactment of legislation to permit the disposition of the surface of lands containing, or believed to contain, deposits of oil, under appropriate agricultural land laws, reserving to the United States for future disposition the deposits of oil therein.

The withdrawal act of June 25, 1910, contains a very serious defect in the peculiar wording of the first portion of section 2 of the act, reading as follows:

That all lands withdrawn under the provisions of this act shall at all times be open to exploration, discovery, occupation, and purchase under the mining laws of the United States, so far as the same apply to minerals other than coal, oil, gas, and phosphates.

The purpose of this provision is said to be the continuation of the right to mine the metalliferous minerals on withdrawn lands. Instead of saying this, however, the act permits the mining of all minerals "other than coal, oil, gas, and phosphates." This leaves no adequate protection for withdrawals of land valuable as potash or nitrates, which should be held by the Nation for the future use of its agricultural interests. Attempts have even been made to secure title to withdrawn lands for the mining of sand and gravel. While these entries have been rejected, more difficult questions arise in connection with claims for the mining of stone and gypsum. Such entries open the way to serious abuse, especially when attempted on land

withdrawn for important public purposes like water-power sites or storage reservoirs. It is of real and pressing importance that the language quoted from section 2 of the withdrawal act of 1910 should be amended to read as follows:

That all lands withdrawn under the provisions of this act shall at all times be open to exploration, discovery, occupation, and purchase under the mining laws of the United States, so far as the same apply to metalliferous minerals: Provided, That the rights of any person, etc.

WATER-POWER LAWS.

The present laws relating to water power are hopelessly inadequate. The protection of the public interest is supposed to be accomplished by the statutory provision that permits for the development of water power shall be revocable at any time at the will of the administrative officials. This is thoroughly unsound both in principle and in practice. Many of those who would be willing to invest capital in the legitimate development of water power, but who wish to have the security which legitimate development rightfully demands, are unwilling to risk their investment on a tenure revocable at discretion. The result is that such capital as is invested in water-power development under Federal permit claims to be entitled to extraordinary returns on account of the extraordinary risk theoretically involved. At the same time the investors having once spent their money, proceed largely, if not entirely, upon the assumption that there is, in fact, no such risk as the revocable nature of the permit would imply. They assume, and properly assume, that the Government not only would not confiscate the investment, but that it will treat the investor fairly in any future readjustment of the terms of its grant. The result of the whole matter is that we have far less development than would be possible under a proper system and the development which we do have proceeds under what seems a legitimate excuse for exacting a larger return than should be necessary. It requires no elaborate argument to demonstrate that the substitution of water power for coal consumption is a clear public gain. Coal can be burned but once and in the process the greater portion of its potential energy is wasted by the imperfect methods and machinery now employed. The supply of falling water is perpetually renewed by natural forces and is wasted chiefly by nonuse.

The whole subject of water-power development and control should, in my judgment, receive the immediate consideration of Congress, and constructive legislation should be adopted without further delay. The limited powers of the Federal Government restrict its interest in this subject to power sites of two kinds-those upon the public domain and those on navigable streams. Some doubts have been expressed as to the authority of Congress to con

trol the latter effectively. I do not think that these doubts are justified. I believe the Federal Government has adequate constitutional power to control water-power development both in navigable streams and upon the public domain and to exact compensation and to impose proper conditions in either case. It is also apparent that the Federal Government can act more effectively than the States in many cases, and that this will be increasingly true as long-distance transmission and the yoking together of distant sources of water power not only justify but require the extension of Federal regulation over hydro-electric enterprises as agencies of interstate commerce. Many of our most important streams are interstate and some international in character. The States themselves have called and are calling upon the Federal Government to improve and to protect these streams. When such protection and improvement develops water power or adds to the value of water power already existing, there can be no sufficient reason adduced why the cost of the protection and the improvement should not be repaid in whole or in part out of the values thus created, nor can there be any adequate reason why the Federal Government should pay the cost of this improvement merely to turn over the revenues to the States to be used for other purposes than water development. Both on navigable streams and on the public domain the Federal Government will be more and more called upon to make expenditures for the protection of the watersheds and of the streams themselves. This expense should not be borne wholly by the general taxpayers if the expenditure produces special local benefits of the kind described. On the other hand, the development of water power, especially where it is sold in the form of electrical energy for lighting, heating, traction, and general power purposes, gives to the community where it is consumed a very necessary and important interest in the prices at which the electric energy is sold and in the character of the service. The regulation of both prices and service should, ás a general rule, be committed to the State and to its agencies delegated for that purpose. The locality in which the water power is developed also has, on its part, a legitimate interest in the application of any rental which may be exacted for such development.

It is frequently said that power-site rentals must, in the last analysis, increase the price of power paid by consumers and thus be drawn from the local community. Two reasons why it is not true, even of a public utility, are suggested. In the first place there are frequently two localities-the producing and the consuming one-which are not identical. Electricity generated at a point in the national forests of the Sierras might be consumed either in San Francisco or Los Angeles. The rentals now paid for this development by the hydro-electric companies go in part to the sup

port of schools and roads in the counties where the forests lie and in part to the Federal Treasury as a partial offset to the expense of maintaining the national forest. It is substantially true to say that the water-power revenue is expended in the mountains where the power is developed. Should this benefit be taken entirely from the mountain communities and bestowed upon the cities in the form of cheaper electric power? This conflict between the interests of the producing and consuming communities is destined to increase as better knowledge and improved apparatus give a longer and longer radius of high-tension electric transmission.

But even if the interests of the producing and consuming communities were identical, a reduction or abolition of water-power rentals could not, as a general rule, result in lower prices for electric energy. This is due to the fact that electricity is generated not only by water power, but also, and still more extensively, by steam power. There are very few communities where water power is, even approximately, the sole generating agent. The public can not, as a practical matter, fix one price for electricity generated by water power and another price in the same locality for the same commodity generated by steam. To do this where hydro-electric energy can not supply the whole demand would give a great and unjust advantage to an arbitrarily chosen and favored class of consumers. Now, steam is generally the more costly producing agent and therefore the price of electricity generated by water power is, in any locality, normally fixed by and but little lower than the price of electricity generated by steam power. Public regulation may reduce these two prices. together, but the minimum limit of such reduction must be that price at which a well-equipped and well-managed steam plant could earn a proper return. This minimum limit is generally well above a fair return on the actual cost of water-power development. The difference goes to the hydro-electric corporation, unless retained for the public by rentals or taxes paid into the public treasury and expended for public purposes.

No correct or permanent solution of the water-power question can be reached until the interests of the State and of the Nation have been reconciled and coordinated, and this can now be done. The Federal Government should not part with any of its constitutional powers. Their exercise is certain in the future to become essential to the protection of the public interest. At the same time, it should not interfere with the State or local control except as the public interest may demand. Permission for the development of water power on navigable streams and from nonnavigable streams on the public domain should be granted by the Federal Government only on the payment to it of rentals which should be readjusted at periodic intervals of no longer than a decade under general provisions which will