PUBLIC SERVICE COMMISSIONS

In my first message to the Legislature of 1919 I asked for a radical change in the structure of the Commission in the First District. This suggestion met with your approval, and I am convinced that the functioning of the Commission in the First District has been materially simplified and that the result has in every way justified your action.

I am in receipt of the first detailed and comprehensive report, dealing with the question of rapid transit railway construction, so written as to be understandable by every citizen in the State.

I renew my suggestion of last year, that you enact legislation giving to both Commissions sufficient power to enforce their orders. As I said in my first message of last year, I will not enumerate the weak spots in detail, but would again refer you to that part of the report of the Joint Legislative Committee appointed to investigate the Public Service Commissions, which was transmitted to your Honorable Bodies on the tenth of March, 1915.

It has also been brought to my attention that rates are fixed by public service corporations under provisions of the statute by the filing of schedules. These rates may at any time be increased by the filing of other schedules without the consent of the Public Service Commission, except in those few cases where the rates have been previously fixed by order of the Public Service Commission after contest and hearing.

It was held by the Court of Appeals in the case of the People ex rel. New York Central Railroad Company v. Public Service Commission, 215 N. Y. 241, that where a schedule fixing a higher rate was filed the rate was presumably reasonable, and the burden of proof was upon the persons or communities who questioned the rate to show its unreasonableness.

During the pendency of this case, and after the decision by the Appellate Division, the Public Service Commissions Law was amended as to common carriers only so that where the rate was increased by the filing of a schedule by a corporation of this class, and a contest was made, the burden of proof was upon the corporation increasing the rate to establish the reasonableness of the

rate.

This amendment was made by chapter 240 of the Laws of 1914, which also provided that the Commission might suspend the enforcement of the higher rate pending a hearing. This amendment, however, applied only to common carriers, so that the statute is still in its original condition as to other public service corporations including telegraph and telephone companies, gas and electric companies, and others.

The result is that such public service corporation can increase its rate by filing a tariff to that effect on thirty days' notice, and can collect the higher rate until, after a hearing, a complaining party has proved that the higher rate is unreasonable, and pending such hearing the Commission has no power to suspend the rate, and although it may finally be determined to be unjust and unreasonable, no repayment of the unreasonable excess collected can be enforced.

This question becomes a very practical one under the present conditions, where the telephone company has raised its rates throughout the State, and it will be entirely within its power to prolong the hearings by introduction of pertinent evidence for a very substantial time, during which period it will be able to collect the higher rates, and will be able to retain such collections even though it is ultimately determined that the rates are unjust and excessive.

The Public Service Commission has for a number of years suggested an amendment to the statute placing all public service corporations on the same footing as common carriers have stood since the amendment of 1914.

In all justice to the public such an amendment should be adopted.

MUNICIPAL OWNERSHIP.

Every city in this State, through the Conference of Mayors, has petitioned the Legislature to enact laws empowering municipalities to acquire, own, operate and control their public utilities.

Transportation, light, heat and power are vital to the life and health of great municipalities. History must have taught the unprejudiced mind that these facilities should be under the control of the people who directly use them. I am strongly of the opinion that we have reached the point where the State might well confer this power upon the municipalities, and I urge upon your Honorable Bodies, legislation to bring it about.

CONSERVATION OF OUR UNDEVELOPED WATER POWERS

Another year has passed and added further to our history the folly of permitting our great natural water resources to go undeveloped. We are continuing to drag coal into the State for the purpose of generating electrical energy that could be brought into being by harnessing our great natural resources, and we sit by and permit this energy to run to waste.

During a recent trip on the State Canal it was brought to my attention that the private owners of water power were taking from it the energy required to turn the wheels of private industry along its banks on the one side, while that which is the property of all the people of the State on the other side was being allowed to run

to waste.

There are three classes of people interested in water power development. The first class is the old time reactionary individual who believes in private ownership and private development, with a very small if any return to the State. The second class is made up of the men who believe in development by the State, with long leases to private individuals. The third class is composed of men who believe in ownership, development and operation by the State. If the people themselves are to get the full benefit of the development of their water power resources, it will have to be done in conformity with the ideas held by the third class. In every spot in this State where by our past policy we have permitted private

development, nobody has benefited but the individuals who have been lucky enough to secure the rights.

I again urge upon your Honorable Bodies the adoption of a definite policy upon this important question.

WATER STORAGE

I have always advocated and again call the attention of your Honorable Bodies to the necessity of legislation for the better regulation and control of the rivers of the State by the construction of storage reservoirs. This year I appointed the first commission created under the new amendment to the Conservation Law in relation to river regulation districts, in appointing the commissioners for the Black River regulating district. In some parts of our State, notably in the northern section, the flow of the rivers and streams is most uneven and the surplus waters run to waste. This should be regulated, to the end that the industries situated along these streams be furnished with a steady source of power, thus enabling them to furnish continuous and profitable employment to our citizens.

BARGE CANAL AND TERMINALS

In the competition of the nations for world trade, reduced cost of transportation is an essential factor. There is no cheaper form of transportation than that provided by waterways. The Barge Canal can, if fully equipped and completed, become our most valued asset for securing much of the new shipping business awaiting intelligent use of waterways and terminals by a State enterprising and alive to the possibilities of our merchant marine.

The Barge Canal, as a water link connecting the great West and North through the Great Lakes, with New York harbor, can be made an important artery for a thriving trans-shipping business to European markets. Thus it would conserve and develop the commercial supremacy of the State.

In this period of business readjustment and world reconstruction, delay in developing the Barge Canal would constitute a serious neglect of our responsibility.

The State of New York has spent millions of dollars in the construction of the Barge Canal. The money derived from the sale of bonds voted for the construction of the Barge Canal is substantially exhausted. In round numbers, there is about $2,000,000 of bond moneys unexpended, but all of that sum is obligated by outstanding contracts for construction. So that it is a fair statement, I believe, that there are no bond moneys available for further work in connection with the Barge Canal. In addition to this, there are a large number of claims for lands appropriated for canal purposes and for damages caused by the construction of the canal and for damages claimed by contractors, arising out of various construction contracts, that are unprovided for. It is estimated, figuring upon a 30 per cent basis in other words, figuring that the awards upon these various claims will amount to 30 per cent of the amount of the claims filed- that it will require $10,

000,000 to meet these claims. These claims are a legitimate part of the cost of the construction of the Barge Canal, and will necessarily have to be provided for. It is possible that some moneys may be derived from the sale of the so-called abandoned canal lands, and some other incidental sources. It is estimated that this sum may possibly reach $2,000,000. This money can, if your Honorable Bodies so determine, be made available for the purpose of meeting some of these obligations.

All of the money available from authorized bond issues for the purpose of constructing terminals along the Barge Canal is exhausted, or is now obligated upon contracts already entered into. It is estimated that it will require about $7,000,000 to complete the system of terminals already planned, but for which contracts have not been let. This, of course, includes sums that it will be necessary to pay for lands appropriated for terminal purposes. So that it seems to be fair to say that it will require from $15,000,000 to $20,000,000 to complete the Barge Canal and the terminals already planned. Added to this should be a sum sufficient to build and equip the terminals with grain elevators in accordance with plans to be submitted by the Superintendent of Public Works. I add grain elevators for the following reasons:

The terminals that have been planned and provided for, or are under construction, are adequate to the requirements of all canal commerce, except grain.

Since the very inception of canals in New York State, grain has been the bulwark of canal commerce and the commodity sustaining the operations of canal carriers. Over 50 per cent of the normal eastbound canal tonnage is grain and if the State is to be success- ' ful in its efforts to encourage the formation of canal transportation companies, equipped to render a service of the greatest value to the shippers of the State, such companies must be assured that grain cargoes may always be obtained on the eastbound movement. Under present conditions, such assurance is impossible. There are more than twenty grain elevators at Buffalo, owned and operated by railroads and private interests. These elevators could, if they would, load over 1,000,000 bushels of grain to canal barges. per day. At New York, however, there are but two elevators equipped to handle grain arriving at New York by canal. These two elevators are owned and operated by railroad lines competing with the canal for the grain traffic from Buffalo. They will not furnish elevation or storage for canal-borne grain, but even if they would. their unloading capacity is but one-quarter of the loading capacity of Buffalo elevators. Practically, therefore, there are no elevator facilities in New York to accommodate the canal grain traffic. As a result of this condition, barges arriving in New York harbor with grain cargoes are compelled to lie from one to four or more weeks awaiting the arrival of ocean vessels. The demurrage charges that accrue make the cost of transportation to the shipper excessive and prohibitive and the loss of use of the barge by the carrier increases cost of operation. Prompt discharge

of barges at New York would insure the greatest utilization of barge equipment. Barges would be able to make a greater number of trips per season, thereby appreciably enhancing their earning capacity and permitting operators to maintain the lowest possible bases of rates. Low rates and efficient service would serve to attract the traffic to the canal in large volume.

Grain elevators, therefore, should be constructed and operated in New York harbor by the State as a part of the general terminal scheme.

Oswego

The Canadian government is now engaged in the improvement of the Welland Canal. The completion of this improvement will permit passage of deep draft lake vessels into Lake Ontario. It is the belief of Canadian authorities that many of the vessels now bringing grain to Buffalo will pass into Lake Ontario when the Welland Canal has been enlarged, discharging their cargoes at the Canadian ports of Kingston and Prescott for furtherance by barge to Montreal for export. There is danger that much of the grain commerce exporting through American ports would be diverted to Montreal by this improved route. New York should have a competing port on Lake Ontario and the Port of Oswego offers excellent facilities. The erection and operation of a grain elevator by the State at Oswego furnishes the argument necessary to influence the improvement of Oswego harbor by the Federal government. With such facilities on Lake Ontario, the grain ccmmerce that might pass Buffalo still would be attracted to the domestic route. Estimates made indicate that grain may be transported by lake and Barge Canal to tidewater through Oswego cheaper than through Buffalo, and there is no question but that modern elevator facilities at Oswego would be a big factor in conserving and developing the canal grain commerce.

Buffalo

Despite the large number of elevators at Buffalo, the volume of grain traffic shipped from that port of recent years has declined in a marked degree. To some extent, the admitted inadequacy of barge equipment, also the situation in New York harbor, has contributed to the decrease in tonnage. There has been available for the business, nevertheless, far more boats than were utilized and the New York facilities, while inadequate, might have accommodated many fold the grain tonnage arriving at that port by canal. There seems to exist some influence that works against the greatest development of canal grain commerce out of Buffalo and this influence must be counteracted if the waterway is to participate to the extent of its capacity in the grain trade.

Whatever may be the cause, either antagonism, discrimination or excessive charges, there is no influence that would prevail against the greatest development of canal grain commerce if the State acquired, either by construction or purchase, and operated an elevator handling canal grain at Buffalo. If antagonistic interests are withholding grain traffic from the canal, a State elevator would