protect the interests of the investor and of the public. This compensation should always be reasonable and should generally be small in the case of new and experimental enterprises. As a general principle, the revenues derived in this way should be devoted to waterway improvement, with special care for the river system and watershed of the stream from which the revenues are derived. It is increasingly clear that proper development and protection of stream flow for all purposes, including those of navigation, domestic use, irrigation, and power require that the stream and its branches from source to mouth should be regarded as essentially a unit. This, indeed, is one of the reasons why the Federal Government is the most appropriate agency, if not the only available agency, for the comprehensive development of our waterways. Logically, the revenues derived from water power may belong to the Nation for its general use, but it would seem that national and local interests can best be reconciled by devoting these revenues to local improvements so far as such improvements are necessary or wise. Such a use removes one of the principal objections to Federal control.

The water-power permits issued by the Federal Government should also expressly provide that the permittee, by the acceptance of the grant, agrees to comply with such reasonable regulations of his rates and service as may be prescribed by the State or the appropriate State agency delegated for this purpose. Such a provision as this may technically not be necessary in many cases, as the use of water power for local public utilities usually requires State or local consent to the occupation of public streets and highways for its effective distribution, which gives a basis for local regulation, but the insertion of this provision in the Federal permit will remove any possible doubt. It should be so worded as to indicate that the Federal Government, without parting with any power it may possess in this regard, has adopted the general policy of delegating the function of regulation in all cases not interstate in character to the State and local authorities so long as these authorities protect the public interest. Such a system as I have suggested will result in a certain degree of automatic control of water-power permits in the public interest, for when the period of readjustment of the compensation arrives the Federal Government will naturally inquire into the condition of the grant, and if the grantee has been furnishing good service at reasonable rates and making only reasonable profits there will, ordinarily, be no occasion for increasing the compensation. If, on the other hand, for any reason whatever the local authorities have been lax and the grantee has been permitted to make an unconscionable profit, the Federal Government can increase its compensation and secure for the public in this way its proper share. In the exercise of this right, as in all of the terms of the grant, the interests of the grantee should

not only be amply protected, but should be treated with liberality, so that the interest of the public may be promoted by the vigorous development of our water power. My purpose, however, is not to discuss the details of a water-power grant, but to point out that there is no necessary conflict between State and Nation in a rightly considered water-power policy and to urge the prompt adoption of such a policy and the passage of the necessary legislation.

REORGANIZATION OF GENERAL LAND OFFICE.

There is also a pressing need for some fundamental reorganization in the General Land Office itself. The mass of administrative work which that office is called upon to handle requires the very highest degree of efficiency in its organization and personnel. The present · system fails to take into consideration either the quantity of the work or the importance of the interests intrusted to its employees. This is especially true in the higher grades in the service, which now are clearly underpaid for work requiring the highest degree of technical skill and personal integrity. Men are paid comparatively small clerical salaries for work involving property interests of immense value and also matters of smaller financial importance but of the most serious consequence to individual claimants. These salaries should be increased so that they will at least approximate proper compensation for the character of work required. There is also another fundamental item which should be given immediate attention. The distribution of the public domain for actual settlement and development is properly and necessarily an administrative function. It can not be transferred to the courts for adjudication upon the facts arising in each individual case.

Questions of administration or of policy connected therewith must remain in the hands of the administrative force. At the same time in the interest of fair dealing toward the individual claimants their claims should not be finally passed upon solely by those who investigate and report upon charges of fraud or noncompliance with the statutes. To prevent this the General Land Office has sought to differentiate between the executive and the quasi-judicial functions which it exercises. This effort would be aided by sufficient appropriations to justify an increase of the membership and the pay of the Board of Law Review so that that board can be given the dignity and ability of a distinctively quasi-judicial tribunal with the jurisdiction and duty to determine the legal questions and issues of fact involved in contested claims under the administrative supervision of the Commissioner of the General Land Office. The right of appeal to the Secretary of the Interior should remain as at present, but the appropriations for the Office of the Assistant Attorney General for the Department should be increased to provide for a greater number of specially qualified assistants to be assigned to these appeals and to

original quasi-judicial proceedings before the Secretary. There should, of course, be preserved the existing right of recourse to the courts to obtain their construction of the law in cases where the issue involved is purely one of law and not of fact. If the quasi-judicial force of the Department and of the General Land Office is strengthened as suggested, I am sure that the conflicting interests of the claimants and of the Government will be more carefully and correctly considered and decided than is now possible. The business of the Department will be expedited and all those who have contested claims before the Department for adjudication will be better satisfied.

BUREAU OF NATIONAL PARKS.

There are twelve national parks, embracing over 4,500,000 acres, which have been set apart from time to time by Congress for the recreation of the people of the Nation. While public interest in, and use of, these reservations is steadily increasing, as shown by the growing number of visitors, adequate provision has not been made for their efficient administration and sufficient appropriations have not been made for their proper care and development. At present, each of these parks is a separate and distinct unit for administrative purposes. The only general supervision which is possible is that obtained by referring matters relating to the national parks to the same officials in the office of the Secretary of the Interior. Separate appropriations are made for each park and the employment of a common supervising and directing force is impossible. Many of the problems in park management are the same throughout all of the national parks and a great gain would be obtained and substantial economies could be effected if the national parks and reservations were grouped together under a single administrative bureau. Bills to create a bureau of national parks have heretofore been introduced in Congress, and in my judgment they should immediately receive careful consideration so that proper legislation for this purpose may be enacted. Adequate appropriation should also be made for the development of these pleasure grounds of the people, especially through the construction of roads and trails, and their proper care and maintenance. In several of the national parks there are large private holdings which should be acquired by the Government.

RETIREMENT.

I earnestly recommend the enactment of legislation authorizing the retirement of employees who, after long and faithful service, are disabled by age or infirmity from the efficient performance of their duties. The civil servants of the Government, like those in the military and naval service, are debarred from the chance of large 11355°- -INT 1911-VOL 1 -2

gains, the hope of which is a constant stimulus to men in private business. Moreover, those of technical or superior administrative ability are and must continue to be paid smaller salaries than they would command in private employment. It is therefore impossible for them to acquire financial independence or make due provision for old age, either by way of profits or by way of savings from their salaries. Considerations of humanity and justice might well be urged against the dismissal of employees who have given the years of their strength to faithful and efficient public service and against their assignment to the lower grades of menial or clerical duties as an alternative to dismissal. But I prefer to put the matter on other and more selfish grounds. The Government simply can not afford not to retire these employees with due and honorable provision for their old age, and this for two reasons.

In the first place, many able and energetic men serve the Government at salaries far below the commercial standard for like services. They choose to do so because the public service satisfies their best and highest ideals of personal integrity and professional achievement. Such men are continually forced out of the service by the necessity of making due provision for themselves and their families before old age comes upon them. If the Government would insure them against this peril it could continue to employ them at salaries far less than a private corporation would be compelled to pay. Every consideration of economy and sound business policy requires that their services should be retained on terms so favorable to the Government. The loss, taken in the mass, is irreparable, for the system operates as a survival of the unfittest by continually drawing off the more energetic and abler men, leaving a larger and larger proportion of the inefficient in the public service. In the second place, the Government is paying much if not most of the cost of a proper retirement system through the inevitable relative inefficiency of the present plan. Not only are superanuated employees dropped to and retained in the lower grades because of sympathy yielding to personal or political pressure, but in the higher grades, from which the rank and file of the service inevitably derives its spirit and tone, there is a tendency to retain men who have lost the alertness and enthusiasm essential to the highest efficiency of their own work, and still more essential for inspiring in and requiring of their subordinates such alertness and enthusiasm. Not only do they thus fail to make the positive contribution to the general efficiency of the service which is due from men in their position, but they have a negative effect in the same direction by blocking the avenues of promotion and legitimate ambition. The men below them not only fail to receive the proper stimulus of precept and example, but are at the same time deprived of the hope of promotion which ought to be the reward of efficient service.

This condition is now becoming apparent. It has been delayed by the fact that the widespread application of the principle of permanency in the public service goes back less than one generation, and by the further fact that the industrial and social problems of recent years have forced the Government into new fields of activity and thus compelled the organization of new bureaus and departments. These new administrative units have been largely recruited from young men who are still in the prime of life. Many of the older bureaus and departments have from similar causes largely increased their personnel, recruiting them chiefly from young men. This sudden expansion of governmental activity has postponed and mitigated the worst evils inherent in the present system; but sudden expansion can not continue indefinitely. We must face and provide for normal conditions of growth. Under such conditions general efficiency in the public service is impossible without due provision for the retirement of aged employees. This is attested by the experience and practice of foreign governments, which have long had a permanent civil service, and by that of large railroad and commercial corporations in our own country.

LOWER COLORADO RIVER.

On June 25, 1910, in a special message you invited the attention of Congress to the situation along the lower Colorado River as then understood. Conditions appeared to be such that unless prompt and vigorous steps were taken a very large loss in land values to the people of the Imperial Valley would result. The suggestion was made that a suitable sum be placed at your disposal to meet this emergency. By resolution approved June 25, 1910, Congress appropriated $1,000,000 for the purpose of protecting the lives and property interests of the citizens in the Imperial Valley. To the Secretary of the Interior was delegated the supervision of the work. A detailed investigation of the physical conditions on the ground was made by a member of the Mississippi River Commission, who was subsequently employed to supervise the work. The preliminary report submitted by him, after thorough consideration, was approved and immediate steps taken looking to the actual construction of the project in accordance with the approved plans which it was believed would result in returning the Colorado River to its old channel. Delays in the completion of the necessary arrangements with the Government of Mexico were encountered, and a successful consummation of the project was imperiled by the rapidly approaching flood season, which rendered the work hazardous. The situation was further complicated by the disturbed political conditions in Mexico, as the result of which labor conditions on the project were greatly demoralized.