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five-year period of operation Under tills act. one-hnlf of the net profits from the sale of electric power may be paid Into the Treasury of the I mi.-'i States and covered into the general funds, but the same shall be ear-marked as \lu .•!•• Shoals receipts. After the expiration of the first 10 years of operation under this act all of the net profits from the sale of electric power shall be paid Into the Treasury of the United States and covered Into the general funds, but the same shall be earmarked as Muscle Shoals receipts.
"(e) The board shall commence the manufacture of concentrated for tilizers at Muscle Shoals by the employment of existing facilities, using the cyanamide process by modernizing the existing plant, but shall have power to employ also any other process or processes that In its judg ment shall appear wise and profitable for the fixation of atmospheric nitrogen, aud shall construct and operate a plant or plants at Muscle Shoals for the production of phosphoric acid and/or of potash to be combined with nitrates und nitrogenous products in the manufacture of a complete fertilizer.
"(f) For the first five-year period of the operation under the authority of this act. the board may donate not exceeding 5 per cent of the total product of the plant or plants operated by it to be fnirly anil equitably distributed through the agency of county demonstration agents, agricultural colleges, or otherwise a.s the board may direct for experimentation, education, and introduction of the use of said fertilizers in cooperation with practical farmers so as to obtain information as to the vnlue, effect, and best methods of use of said fertilizers. If at the end of any fiscal year during the first five-year period there shall be on hand, unsold, more than 25 per cent of the product of the plant or plants operating by authority of this act, then tile board shall have power. If unanimously approved by all of the members of the bonrd in writing, to donnte an additional 10 per cent of the total annual product of snid plant or plants from such unsold surplus to bo fairly anil equitably distributed through the agency of county demonstration agents, agricultural colleges, or otherwise as the board may direct.
"(g) The board shall have the power and authority to buy one or more ingredients of commercial fertilizers and to mix the same with any other ingredient or ingredients manufactured by the corporation.
"Sec. 9. In order to enable the corporation to exercise the powers vested in it by this act—
"(a) The exclusive use. possession, anil control of the United States nitrate plant Nos. 1 and 2, located, respectively, at Sheffield. Ala., and Muscle Shoals, Ala., together with all real estate and buildings connected therewith, all tools and machinery, equipment, accessories, and materials belonging thereto, and nil laboratories and plants used as auxiliaries thereto; the fixed-nitrogen research laboratory, the Waco limestone quarry, in Alabama, and dam No. 2, located at Muscle Shoals, its power house, and all hydroelectric and operating appurtenances (except the locks), and all machinery, lands, and buildings lu connection therewith, and all appurtenances thereof are hereby intrusted to the corporation for the purposes of this act.
"(b) The President of the United States is authorized to provide for the transfer to the corporation of the use, possession, and control of such other real and/or personal property of the United States as he may from time to time deem necessary and proper for the purposes of the corporation as heroin stated.
"PRINCIPAL OFFICE AND VENUE
"Sec. 10. (a) The corporation shall maintain its principal office In the immediate vicinity of Muscle Shoals, Ala. The corporation shall be held to be an Inhabitant and resident of the northern judicial district of Alabama within the meaning of the laws of the United States relating to venue of civil suits.
"(b) The corporation shall at all times maintain complete and accurate books of accounts.
"DEPORTS AND AUDITS
"Ssc. 11. (a) The board shall file with the President and with the Congress, in December of each year, a financial statement und a complete report as to the business of the corporation covering the preceding fiscal year. This report shall include the total numl>er of employees and the names, salaries, and duties of those receiving compensation at the rate of more than $2,500 a year.
"(b) The board shall require a careful and scrutinizing audit and accounting by a reputable firm of certified public accountants during each governmental fiscal year of operation under this act, and said audit shall be open to inspection to the public at all times and copies thereof shall be filed in the principal office of the Muscle Shoals corporation at Muscle Shoals in the State of Alabama. Once during each fiscal year the President of the United States shall have power, and it shall be his duty, upon the written request of at least two members of the board, to appoint a firm of certified public accountants of his own choice and selection which shall have free and open access to all books, accounts, plants, warehouses, offices, and all other places, and records, belonging to or under the control of or used by the corporation in connection with the business authorized by this act. And the expenses of such audit so directed by the President shall be puid by the board aud charged uu part of the operating expenses of the corporation.
"tTSH OF PROPERTY DURING WAR
"Sec. 12. The Government of the United States hereby reserves the right, in case of war, or national emergency declared by Congress, to take possession of all or any part of the property described or referred to In this act for the purpose of manufacturing explosives or for other war purposes: but If this right is exercised by the Government it shall pay the reasonable and fair damages that may be suffered by any party who>-e contract for the purchase of electric power or fertilizers or fertilizer ingredients is thereby violated.
"EQUITABLE DISTRIBUTION OF POWER
"Sec. 13. The board is hereby empowered and authorized to sell the surplus electric power not used in fertilizer or munitions operations and not used for operation of any locks at the dams or uny hydraulic lift and other navigation works to States, counties, municipalities, corporations, partnerships, or individuals, and to carry out said authority the bourd is authorized to enter into contracts for such sale for a term not exceeding 10 years.
"Sue. 14. It is hereby declared to be the policy of the Government to distribute the surplus electric power generated at Muscle Shoals equitably among the States within transmission distance of Muscle Shoals.
"Sbc. 15. In order to place the corporation upon a fair basis for making such contracts and for receiving bids for the sale of such electric power, it is hereby expressly authorized, from appropriations made by Congress to construct, louse, or authorize the construction of transmission lines within transmission distance in any direction from said Dam No. 2 and said steam plant: Provided, That if any State, county, municipality, or other public or cooperative organizations whether incorporated or unincorporated, not organized or doing business for profit but for the purpose of supplying electricity to its own citizens or members, or any two or more of such municipalities or organizations, shall construct or agree to construct a transmission line to Muscle Shoals, the corporation is hereby authorized to contract with such State, county, municipality, or othor organization, or two or more of them, for the sale of electricity for a term not exceeding 15 years; and in any such case the board shall give to such State, county, municipality, or other organization ample time to fully comply with any local law now In existence or hereafter enacted providing for the necessary legal authority for such State, county, municipality, or other organizations to contract with the board for such electric power.
"additional Units To Stkam Plant And Dam
"Src. 16. When the board shall deem It advisable and profitable, it shall, from funds that may be appropriated for carrying out such purpose, complete the steam-power plant at nitrate plant No. 2 by adding other power units and install in Darn No. 2 the additional generating machinery so that the operation of the steam plant when the water in the river Ib low may he combined with the power generated at Dam No. 2 when the water is high so as to produce the maximum of primary power.
"COVE CREEK DAM
"Sic. 17. The Secretary of War is hereby authorized, with appropriations hereafter to be made available by the Congress, to construct, either directly or by contract to the lowest responsible bidder, after due advertisement, a dam In and across Clinch Elver in the State of Tennessee, which has by long usage become known and designated as the Cove Creek Dam, according to tile latest aud most approved designs of the Chief of Engineers, Including its power house and hydroelectric installations and equipment for the generation of at least 200,000 horsepower, in order that the waters of the said Clinch niver may be impounded and stored above said dam for the purpose of equalizing and regulating the flow of the Clinch River and the Tennessee River below, so that an increased amount of primary power may be developed at Dam No. 2 and at any and all other dams below the said Cove Creek Dam. The Federal Power Commisison is hereby authorized, directed, and required to compel contribution by any person, firm, or corporation that it may hereafter permit, authorize, and empower to build a dam or dams in the said Clinch River and in the Tennessee River below the said reservoir and impounding dam herein called Cove Creek Dam In accordance with the provisions of the Federal water power act [ (June 10. 1P20, Stats. 107T, ch. 285, see. 41) and U. S. C., title 16, ch. 12].
"Skc. 18. In order to enable and empower the Secretary of War to carry out the authority hereby conferred, In the most economical and efficient manner, he Is hereby authorized and empowered in the exercise of the powers of national defense In aid of navigation, and in the control of the flood waters of the Tennessee and Mississippi Rivers, constituting channels of interstate commerce, to exercise the right of eminent domain aud to condemn all lauds, easements, rights of way, and other area necessary in order to obtain a site for said Cove Creek Dam. and the flowage rights for the reservoir of water above said dam und to negotiate and conclude eontrarls witli States, counties, municipalities, and all State agencies and with railroads, railroad corporations, common carriers, and all public utility commissions and any other person, firm, or corporation, for the relocation of railroad tracks, highways, highway bridges, mills, ferries, eloctriclight plants, aud any aud all other properties, enterprlsos, and projects whose removal may be necessary in order to carry out the provisions of this act. When Bald Cove Creek Dam and transportation facilities and power house shall have been completed, the possession, use, and control thereof shall be Intrusted to the corporation for use and operation in connection with the general Muscle Shoals project and to promote flood control and navigation in the Tennessee Elver, and in the Clinch River.
"Sec. 10. The corporation as an Instrumentality and agency of the Government of the United States for the purpose of executing its conBltutional powers, shall have access to the Talent Office of the United States for the purpose of studying, ascertaining, and copying all methods, formulae, and scientific information (not including access pending applications for patents) necessary to enable the corporation to use and employ the most efficacious and economical process for the production of commercial fertilizers, or any essential ingredient thereof, and any patentee whose patent rights may have been thus in any way copied, used, or employed, by the exercise of this authority by the corporation, shall have as the exclusive remedy a cause of action for any damages claimed to be instituted and prosecuted against the United States in the Court of Claims for the recovery of reasonable compensation, in accordance with the provisions of the act of June 25, 1910, as amended by the act of July 1, 1918 (title 35, sec. 68, U. S. C.), recoverable on a royalty basis In proportion to the entire volume of commercial fertilizers or essential ingredients manufactured by the corporation by the use and employment of such patent rights, and if said patent rights shall have contributed in a fractional part to the production of the entire volume, said compensation shall be proportionately allowed, and it shall bo competent for the corporation to contract with any patentee ill advance upon said basis, or to settle fur any claim for such amount as to said corporation shall appear to "be reasonable, fair, and Just. The Commissioner of Patents shall furnish to the corporation, at its request and without payment of fees, copies of documents on flic in his office.
"Sbc. 20. (a) All general penal statutes relating to the larceny, embezzlement, conversion, or to the improper handling, retention, use, or disposal of public moneys or property of the United States, shall apply to the moneys and property of the corporation and to moneys and properties of the United States intrusted to the corporation.
"(b) Any person who, with intent to defraud the corporation, or to deceive any director or officer of the corporation or any officer or employee of the United States (1) makes any false entry in any book of the corporation, or (2) makes any false report or statement for the corporation, shall, upon conviction thereof, be fined not more than $10.000 or imprisoned not more than five years, or both.
"(c) Any person who shall receive any compensation, rebate, or reward, or shall enter into any conspiracy, collusion, or agreement, express or implied, with intent to defraud the corporation or to defeat its purposes, shall, on conviction thereof, be fined not more than $25,000 or imprisoned not more than 15 years, or both.
"Sec. 21. That nil appropriations necessary to carry out the provisions of this act are hereby authorized.
"Sec. 22. That all acts or parts of acts in conflict herewith arc hereby repealed.
"Sec. 23. That this act shall take effect immediately.
"Sec. 24. The right to alter, amend, or repeal this act is hereby expressly declared and reserved."
Mr. SNELL. Mr. Chairman. I offer the following (substitute for the committee amendment which I send to the desk.
The CHAIRMAN. The gentleman from New York offers a substitute for the committee amendment, which the Clerk will report:
The Clerk read as follows:
Mr. Sxf.ll offers as a substitute for the committee amendment the following:
"That it Is hereby declared to be the policy of the Congress In regard to the properties at Muscle Shoals Ala.—
"(1) To utilize the power facilities of such properties so as to produce the highest practicable annual revenue to the United States.
"(2) To use said annual revenues, or such part thereof as may be considered desirable, for the development of methods of nitrogen fixation in the Interest of national defense and for the production and distribution of concentrated fertilizers and the promotion of their use.
"Skc. 2. The President, acting through the Secretary of War and the Chief of Engineers, Is hereby authorized to enter into a contract or contracts for the sale of power from Dam No. 2 and from the steam plant at nitrate plant No. 2 In the vicinity of Muscle Shoals, Ala., In accordance with the policies outlined above and under the conditions set forth in the following sections for a period not exceeding five years.
"Sec. 3. The facilities and equipment used for the generation and delivery of such power shall be operated and maintained under the
direction of the Secretary of War and' the supervision of the ChW of Engineers, the cost of such operation and maintenance to be paid from revenues derived from the sale of power.
"Sbc. •*. Contract or contract* may be entered Into for the s»k> of firm primary power to the prime opacity of the two plants above mentioned except for a contlnaoiw output of 15,000 kilowatts, which shall be reserved for the Secretary of Agriculture for the manufacture of fertilizer under the conditions set forth hereafter. If at any time the Secretary of Agriculture determines that all or part of tb« primary power Bo reserved is no longer required, such power may be sold under the same condition! as those applying to the sale of other primary power. Contracts may be entered Into for the sale of secondary power in such amounts as may be available. Including the power reserved for the Secretary of Agriculture but not used.
"Sec. 5. Power shall be metered at the generated voltage and shall be delivered at that voltage or at 110.000 or 154.000 volts at the option of the contractor. Delivery shall lie made at the switch yard of one of the generating plants. Bight of way over Government-own*)! property for the construction of lines for the transmission of power purchased under contract shall be granted free of charge during U* term of such contract. The location of such transmission lines sbiU be designated by the Secretary of War, upon the recommendation of the Chief of Engineers. In order that the President may be in a position to consider all bids for the sale of power, authority is hereby exprrwiy granted for the construction or lease of transmission lines in any dilution from said dam and steam plant either from appropriations mao> by Congress or from funds secured from the sale of power.
"Sec. 0. The rates to be charged for power shall be such aa to produce the largest reasonable net return on the money Invested In th* power properties which shall be considered as $49.000,000 for tb<plants with their existing capacities, to wit. $37,000,000 of Dam No.:! and $12,000.000 for the steam plant. For the purpose of computing the net return the power reserved for use by the Secretary of Agriculture shall be considered to have a value equal to the average contract price for other primary power.
"Sbc. 7. Contractors purchasing power under this act shall guarantee to the satisfaction of the Secretary of War to pay each year for the entire amount of primary power contracted for whether used or not, and the daily, weekly, monthly, and yearly load factors as agreed upon and set fortli in the contracts shall be maintained so that the powr during the low flow periods may be equitably distributed among the various contractors.
"SKC. 8. If the President shall deem It advisable and profitable, tit Is authorized at his discretion to direct the Secretary of War to complete or enlarge the steam plant at nitrate plant No. 2 by adding othrr power units and to install at Dam No. 2 any or all of the additional generating units contemplated by the original design. Any funds heretofore or hereafter appropriated for work in connection with th* purposes of this act, or funds derived from the sale of power, may b>1 applied to such additional Installation.
"Sec. I). The President, through the Secretary of Agriculture, b hereby authorized, within the limits of appropriations made by Congress, to construct, maintain, and operate, on the site of nitrate plant No. 1. an experimental and/or production plant or plants for the development of methods of nitragen fixation and for the manufacture of fertilizer or fertilizer products In such quantities as he may deem advisable. For this purpose nitrate plant No. 1, including the steam power plant and all bulldlnps. equipment, and dwellings In connection therewith, which he may desire, shall be transferred to the Secretary of Agriculture, who Is hereby authorized to make such alterations, repairs, and additions as may be necessary to carry out the provisions of this act, subject to the proviso contained in seetlon 12.
"Sbc. 10. Subject to the instructions of the President, the Secretary of Agriculture Is hereby authorized and directed to commence the manufacture of cyanamlde by the use of one unit of nitrate plant Xo. '2 as soon as practicable, and to construct and operate such facilities as may be necessary to demonstrate the adaptability of this method of nitrogen fixation for fertilizer purposes. Mils plant shall be operated at the capacity of one unit for a period sufficient to determine whether or not fertilizer can be manufactured by this process at a cost favorably comparable with other processes, and whether a market can Iv established for its use. If the cyanamide process proves to be successful, and production costs are no higher tlwn those for other forms ef fertilizers, the President, at his discretion, and as the market demands, may direct the Secretary of Agriculture to increase the production from nitrate plant No. 2 to the full capacity of such plant or any suitable fraction thereof.
"Sec. 11. The Secretary of Agriculture Is hereby authorized to dispose of the fertilizer or fertilizer products manufactured at any of the plants hereinbefore mentioned. During the term of experimental operation the price of such products shall, if practicable, be so regulated so as to afford a return covering the cost of production, including a reasonable rate of interest on the investment in plant and equipment, but In any event such as to insure their prompt disposal and nse. Accurate records shall be kept so that the actual cost of producing fertilizer commercially under the methods followed may be determine* at the conclusion of experimental operation. If production be continued as provided for In this act, the product shall be sold at rates sufficient to cover the entire cost of production, Including Interest at 4 per cent on the fair value to the facilities used.
"Sec. 12. Facilities and equipment at nitrate plant No. 1 or nitrate plant No. 2 not required by the Secretary of Agriculture In carrying out the provisions of this act may be disposed of by the Secretary of War, with the approval of the President, by the sale or lease or both: Provided, That the plant for producing nitric acid from ammonia and for combining nitric acid and nmmoiila for the production of ammonium nitrate shall, in the interests of national defense, be kept Intact and shall be maintained In efficient operating condition by the Secretary of Agriculture until such time as the Secretary of War shall certify that they arc no longer needed for the production of munitions of war.
"Sec. 13. Revenue received from the sale of power and from the sale of fertilizer under this act, over and above the cost of operation, maintenance, and new construction herein authorized, and funds derived from the disposal of facilities, as provided for in section 12, shall be deposited in the Treasury of the United States.
"Sec. 14. All contracts or other agreements made under the provisions of this act shall he made subject to termination In the event of emergency, when in the opinion of the President national welfare or safety requires.''
Mr. GARRETT of Tennessee. Mr. Chairman, I offer the following perfecting amendment to the committee amendment, which I send to the desk.
The CHAIRMAN. The gentleman from Tennessee offers a perfecting amendment to the committee amendment, which the Clerk will report.
The Clerk read as follows:
1'age 8, line 20, after the figures "1928," Insert: "And the corporation herein created shall be subject to nil the laws of the States In which it operates in the same manner and to the same extent as would a private corporation engaged in such enterprises, and when the Cove Creek Dam and power plant hereinafter provided for shall have been constructed by the United States Government the laws of the State of Tennessee and the regulations of the constituted authorities of Tennessee shall apply In full force and effect to the sale, lease, distribution, or other disposition of the power produced and the water released for power-developing purposes at all down-stream plants or projects, to the Imposition of taxes and tolls on all the properties, and to the regulation and control of all rates and charges: Prortdcd, That the provisions of this section shall not apply to navigation locks nor the operations concerned therewith."
Mr. McSWAIN. Mr. Chairman, I make the point of order to the amendment offered by the gentleman from Tennessee [Mr. Garbett].
Mr GARRETT of Tennessee. Upon what ground?
Mr. McSWAIN. I am willing to reserve the point of order.
Mr. GARRRTT of Tennessee. No; I suggest that the gentleman make the point of order.
Mr. McSWAIN. Mr. Chairman, I make the point of order that it is not germane in that there is nothing in the bill or in any section of the bill which undertakes In any way to confer any power of taxation upon any State authorities over Federal property, or any power to regulate Federal property by State authority. If a State has any such right, we can not destroy it by legislative act, and if it has not any such right, we can not confer it by legislative act. There is nothing in the resolution that in any way has any reference to the power of the State or of any State in the Federal Union, over the exercise of any Federal activities. For the purposes of this motion we must assume that we are exercising a Federal power, and only a Federal power, in the interest of national defense. The war power has existed always, in peace and in war; we are also exercising the right conferred by the Constitution to control interstate commerce, from which the right to regulate navigation and flood control is derived. That being so, Mr. Chairman, an effort on the part of any Member of the House to restrict or limit the Federal power by conferring upon the State the exercise of the power of taxation, would be in the very teeth of the fundamental principle of our dual system of Government, which rests on the proposition that the power to tax or regulate involves the power to destroy.
If we can tax Cove Creek Dam, then the State of Alabama cau tax Muscle Shoals property; and if the State of Alabama can tax the Wilson Dam and the nitrate plants at Muscle Shoals, then the State of Alabama can tax every Federal courthouse and every Federal post office within that State. Various other States of the Nation can tax every navy yard and every arsenal; can tax every Federal project that is established for the exercise of Federal power, if that be so.
Mr. BYKNS. Mr. Chairman, will the gentleman yield V
Mr. McSWAIN. Yes.
Mr. BYRN8. This committee amendment creates a corporation to carry out the purposes of the act. It also pro rides for the construction of a dam at Cove Creek. Is it not within the province of Congress, and is not it perfectly germane to the purposes of the bill, to the very letter of the bill, to prescribe the conditions and circumstances under which Cove Creek Dam shall be built, and the limitatlous on the Federal Government after the dam shall have been built? In other words, the amendment offered by the gentleman from Tennessee [Mr. Gakrett] simply provides the conditions under which the dam is to be built. I can not see that it is not germane, as the gentleman argues.
Mr. McSWAIN. I think that I can show that it is not. There is nothing in the bill itself by implication or otherwise that in any way recognizes any right of any State.
Mr. GARRETT of Tennessee. Mr. Chairman, will the gentleman yield?
Mr. McSWAIN. Yes.
Mr. GARRETT of Tennessee. In other words, the contention of the gentleman from South Carolina is that when a committee of this House brings in a bill deliberately designed to take away from a State every right that it has, it is not in order to propose an amendment to preserve the rights of the State..
Mr. McSWAIN. I will answer the gentleman by" saying that whenever a committee proposes the exercise of Federal power and Federal power only, it is not germane to the bill to say that the State in which that power Is sought to be exercised shall have joint control over that Federal project.
How can two authorities control the Cove Creek Dam? Suppose the State of Tennessee says the water ought to go down the 1st of June, and the Federal Government says, "Oh, no; the water should go down on the 1st of May." It is proposed there to exercise joint control over the power of the Federal Government. I am as much in favor of State rights as anybody. I was raised in that school.
Mr. GARRETT of Tennessee. It is evident that the gentleman lias not read the amendment. It does not propose a joint control. It proposes an exclusive State control after a certain period.
Mr. McSWAIN. Of course the gentleman will be recognized by the Chair on the point of order.
Mr. GARRETT of Tennessee. I hope the gentleman is not offended.
Mr. McSWAIN. No; I am not offended. I do not get offended by lots of things. The question is, " Shall the Federal Government permit a proposition by amendment here to divide the control with the State, because the power to tax is the power to destroy?" If the State of Tennessee can control the exerci.se of a Federal power, so can the State of Alabama and the State of Virginia rind every other State.
Mr. MONTAGUE. Mr. Chairman, will the gentleman yield?
Mr. McSWAIN. Yes.
Mr. MONTAGUE. The gentleman speaks of exercising a Federal power. I understood the gentleman to speak a moment ago of the incouipetcucy of the State of Tennessee to tax any property or activity that belonged to the Federal Government.
Mr. McSWAIN. Yes; under the Constitution.
Mr. MONTAGUE. If the Federal Government undertakes to do a private business and puts up a plant in the exercise of that undertaking, would the gentleman from South Carolina contend that this is the exercise of a Federal power?
Mr. McSWAIN. The gentleman from South Carolina would not. The gentleman from Virginia begs the question here. Here we are exercising three great Federal powers; the power of national defense, just as in the case of the navy yards: the power over Intel-state commerce, which is the basis of flood control, for without the interstate-commerce clause in the Constitution every proposition for flood control would fall; and we are further exercising the power to control and promote interstate commerce through our navigable rivers.
Now those are Federal powers, and the Supreme Court of the United States has held in a number of cases that the power incidentally generated under a navigation power project is the property of the United States Government. It is an absolute power that the Federal Government has, and that power, according to the proposition of the gentleman from Virginia, would apply to the power being generated at Muscle Shoals to-day, just as much as it does to a number of provisions enacted in time of war and in time of peace.
Mr. MONTAGUE. Suppose you exercised the power you have under the Constitution. You have auxiliary power, such as a steam plant and other things, to regulate and take care of the spasmodic power hi the river. You have this private property in Teneessee and in Alabama. Is that beyond the range of the taxing power of those States?
Mr. McSWAIN. The Federal Government can establish n steam plant in connection with an arsenal or in connection with a navy yard. You can not limit the power of the Government in that respect. It has as much right to have a steam engine or a steain plant in Tennessee or In Alabama as it has to have one right here in Washington in the navy yard.
Mr. MONTAGUE. Of course, that is different from the exercise of power to manufacture fertilizers or to operate a private enterprise.
Mr. McSWAIN. The gentleman's inquiry goes to the merits of the question, and not to the legal question pending before the Chair as to the germaneness of the amendment.
Mr. GARRETT of Tennessee. Mr. Chairman, the gentleman from South Carolina is very ingenious in stating that the gentleman from Virginia [Mr. Montague] was talking to the merits while purporting to discuss the germaneness of the amendment.
The CHAIRMAN. The Chair is of the opinion that the amendment offered by the gentleman from Tennessee [Mr. GauBktt] is germane.
In section 17 of the bill, the Cove Creek Dam section, the Secretary of War is authorized to go ahead with certain developments there for the purposes set forth In the bill. The Garrett'amendment refers to the corporation that is created in the bill and limits the right that the corporation will have in the State of Tennessee with reference to the dam. Section 18 of the bill goes on to say:
In order to enable and empower the Secretary of War to carry out the authority hereby conferred in the most economical and efficient manner, he Is hereby authorized and empowered in the exercise of the powers of national defense in aid of navigation and in the control of the flood waters of the Tennessee and Mississippi Rivers, constituting channels of interstate commerce, to exercise the right of eminent domain and to condemn all lands, easements, rights of way, and other area necessary in order to obtain a site for said Cove Creek Dam—
And so forth. In other words, the committee amendment to the Senate bill creates a corporation and confers certain rights and powers upon that corporation. It is the purpose and intent of the amendment proposed by the gentleman from Tennessee [Mr. Gabbktt] to limit those rights and powers under certain conditions and circumstances. The Chair is of opinion that the amendment is germane and overrules the point of order.
Mr. GARRETT of Tennessee. Mr. Chairman, for the first time in nil the history of the country it is deliberately proposed that the Federal Government shall go into business for business' sake. There is no use in our deceiving ourselves concerning this matter. This bill is not to promote navigation. No one would ever have dreamed of it as a navigation proposition. This bill is deliberately designed to put the Federal Government into two avenues of business, namely, the manufacture of fertilizer and the development and sale of power, and in order to do it the Committee on Military Affairs has deliberately determined to take from the State in which the greatest water-power possibilities exist the control over the water powers that are on the particular stream that this Cove Creek dum will affect.
It has deliberately done so. I can not understand why gentlemen who believe, or think they believe, in any sort of State rights—now, please, do not construe that word in the old-time terms—should not favor this amendment. The State of Tennessee, under all the decisions of the courts, owns in trust flowage rights on navigable, and particularly on nonnaviga'ile streams, that may be possible of being made navigable. It is a property right in the State, held In trust for the people of the State. You are destroying them all iu this bill—utterly destroying them.
Of course, we are all tired of Muscle Shoals. We have been hearing of it and worrying with it. It is a nightmare to me, and has been for years, and the danger is that because we nre all so tired of it we are going to be swept away from the sound principles which this House ordinarily would observe and vote for anything in the world that is presented.
This amendment is designed to protect not only the rights of Tennessee, but, if iny Alabama friends care to look at it and analyze it. the rights of Alabama.
The CHAIRMAN. The time of the gentleman from Tennessee has expired.
Mr. BYRNS. Mr. Chairman, I ask unanimous consent that the gentleman may proceed for five additional minutes.
The CHAIRMAN. The gentleman from Tennessee asks unanimous consent that the gentleman from Tennessee [Mr. Gakbettt] may proceed for five additional minutes. Is there objection?
There was no objection.
Mr. STEVENSON. Will the gentleman yield?
Mr. GAKRETT of Tennessee. Yes.
Mr. STEVENSON. I want to ask the gentleman whether he has considered the proposition of attaching a proviso to his amendment to the effect that the properties used by this corporation, permission to tax which would be given by this amendment if it were adopted, should not be taxed in"« discriminative way? In other words, that they should be only taxed on an equality with other like properties in the State. The gentleman has in mind, no doubt, the fact that an instrumentality of the Government, the national banks, could not he taxed until an act was passed permitting that, and we have had fight after flght to maintain the doctrine that while those corporations could be taxed by the States they should not be taxed at a greater rate than like property of other corporations.
Mr. GARRETT of Tennessee. My mind works slowly at times, but if the gentleman will examine the language of the amendment he will find It makes it purely subject to the laws of the State.
Mr. STEVENSON. I understand that. That was so as to the national banks, but it was provided that while the national banks, an Instrumentality of the Government, should be subject to the general taxing laws of the States it was further provided that they could not tax them at a higher rate than they taxed competing capital.
Mr. DAVIS. Will my colleague yield?
Mr. GARRETT of Tennessee. Yes.
Mr. DAVIS. I want to suggest to the gentleman from South Carolina that the constitution of the State of Tennessee forbids anything except uniform taxation, and under our constitution they could not tax this corporation any differently or any more than any other hydroelectric power corporation in the State of Tennessee.
Mr. STEVENSON. But the gentleman will realize—and this is a question that might have a good deal to do with this law— that without this enabling act the State of Tennessee could not tax the property of this corporation because it is a Federal instrumentality, and Congress iu giving the permission, as it has the right to do, to tax that property usually provides its own limitation.
Mr. GARRETT of Tennessee. If the gentleman will permit, I do not think Congress has the right to do what is provided in this bill but we are in this situation: We are here with a bill proposing to take everything away from us in the matter of natural resources. We are having to deal with it under the terms of the bill and we do not want to be remitted to the court We do not wish to make any concessions concerning the rights of our State but we do not wish to be remitted to the courts to determine those rights. This language violates what w« conceive to be our rights, and if the suggestion of the gentleman should be taken it would complicate our situation very much, or, at least I fear it would.
Mr. BROWNING. If the gentleman will permit, the amendment offered provides that:
The corporation herein created shall be subject to all the laws of th« States in which it operates in the same manner and to the same extent as would a private corporation engaged in such enterprises.
That is the beginning of it and I think that answers the gentleman.
The CHAIRMAN. The time of the gentleman from Tennessee has again expired.
Mr. LAGI'ARDIA. Mr. Chairman, I rise iu opposition to the amendment This amendment is tantamount to a motion t<> strike out the enacting clause. If this amendment Is carried, the project contemplated in the bill simply can not be carried out. Imagine submitting to the State regulatory power, as contemplated in the amendment offered by the gentleman from Tennessee, the Muscle Slioals plant and the development that is designed in the bill.
The gentleman from Tennessee says this is putting the Government into business, but this is not the first time the Government, by act of Congress, has been put into business.
We put the Government in business when we established the parcel post. Now, if it is sound, if it Is proper to tax the property at Muscle Shoals, ns contemplated In the amendment offered by the gentleman from Tennessee, then it is possible for any State to tax a warehouse or a mail wagon that is used exclusively for the carrying of parcel post.
Mr. HILL of Alabama. Will the gentleman yield?
Mr. LAGUARDIA. In just a moment. If the taxing of the dam in Tennessee is proper, then the taxing of the Roosevelt Dam in Arizona is proper. It is a matter of policy, if you please, contrary and novel to anything that has ever been presented iu reference to Federal activities.
Mr. GARRETT of Tennessee. Will the gentleman yield?
Mr. LAGUARDIA. Certainly.
Mr. GAKRETT of Tennessee. The gentleman surely distinguishes between the matter of sending packages by mail throughout the country or throughout the Nation and the control of physical properties lying within a State.
Mr. LAGUARDIA. All right then, how about the Shipping Board? How about the wharves and the docks and the warehouses .-''id the repair shops of the Shipping Board? That is a Government corporation.
Mr. GARRETT of Tennessee. None of those ships float in Tennessee.
Mr. LAGUARDIA. And that Is the only difference.
Mr. GARRETT of Tennessee. By no means. The gentleman, •with all his keen and incisive intellect fails" to distinguish between instrumentalities of foreign commerce sailing upon the seas and properties lying within the States. Let me say to the gentleman, and I have no doubt the gentleman is In entire accord with it although, of course,-! may be wrong, all that is asked in this amendment I have proposed is what the authorities of the State of New York obtained by concession from the Federal Power Commission here. You have In the State of New York absolute control over every water-power facility of New York.
Mr. LAGUARDIA. The same as any other State.
Mr. GARRETT of Tennessee. Precisely; and all that is asked in this amendment is recognition of the same principle that was recognized by the Water Power Commission dowii here as a result of a conference.
Mr. LAGUARDIA. Let us assume—
Mr. GARRETT of Tennessee. I know the gentleman from New York believes—at least I suppose he believes—in the Government running everything?
Mr. LAGUARDIA. Not everything.
Mr. GARRETT of Tennessee. I do not believe in that.
Mr. LAGUARDIA. I know the gentleman does not, hence the gentleman's amendment.
Mr. GARRETT of Tennessee. So there is a very marked fundamental difference between us.
Mr. LAGUARDIA. Exactly; hence the gentleman's amendment.
Mr. GARRETT of Tennessee. But the gentleman is using in an effort to sustain his own position precedents that are not precedents at all.
The CHAIRMAN. The time of the gentleman from New York has expired.
Mr. OLIVER of Alabama." Mr. Chairman, a fundamental question which underlies the consideration of this amendment should be called to your attention, and If there Is a recognition of tills fundamental right to which I refer In the Federal Government, then I do not understand that we would be doing violence at this- time to any State by refusing to adopt the pending amendment.
You will recall that in 1916 we passed the national defense act. The gentleman from Tennessee [Mr. Garrett] voted for that bill, as well as many other Members still here. In this bill Congress declared its purpose to establish at some place a plant that would provide nitrates for national defense in time of war and provided that in time of peace the plant so constructed for national defense should be used for the production of nitrates and other products needed for munitions of war and useful In the manufacture of fertilizers and other useful products. We spent millions of dollars toward the establishment of such a plant at Muscle Shoals. I think we recognize its importance, and we are now seeking to put that plant in operation, and that there may be no misunderstanding as to the purpose of the Military Affairs Committee in tins regard I invite your attention to the first section, where it is declared—
That for the purpose of maintaining and operating tbe properties now owned by the United States In the vicinity of Muscle Shoals, Ala., in the Interest of the national defense and for agricultural and industrial development and to aid navigation and the control of destructive flood waters In the Tennessee Kiver and Mississippi River Basins—
And so forth. Then on page 25 this language Is found: And for the purpose of equalizing and regulating the flow of the Clinch River and the Tennessee River below.
Then on page 26 these words appear:
In the exercise of the powers of national defense In aid of navigation and In the control of the flood waters of the Tennessee and Mississippi Rivera, constituting channels of Interstate commerce, to exercise the right of eminent domain—
And so on.
I submit there can be no question but what this bill seeks to exercise a sovereign right of the National Government, and in selecting a site for the construction of a dam to improve navigation and to serve other governmental purposes herein! declared, the Federal Government should not be required to assume the burdens imposed by the pending amendment.
If It should later appear that in the exercise of its powers this corporation is engaging in other than public business, it may be that Congress, by a general law, should and will define what contributions in the way of taxes and tolls the Federal Government shall make to the States wherein such business is carried on. You have done this in the District of Columbia and elsewhere, but you must do it by a law general in its application.
We in Alabama are willing that Congress shall deal with such questions under a general law applying to all States alike. Should you adopt this amendment, you would be subjecting the Federal Government to burdens such as the several States might see fit to impose—burdens assumed In one State might be very different from those assumed in another.
The CHAIRMAN. The time of the gentleman from Alabama has expired.
Mr. OLIVER of Alabama. May I have five minutes more?
The CHAIRMAN. • The gentleman from Alabama asks for five minutes more. Is there objection?
There was no objection.
Mr. OLIVER of Alabama. You should not by an amendment like this impose on the Federal Government burdens not only in reference to taxes but also in reference to water tolls, such as the several States may determine. In the protection of Government rights you must pass a general law whereby you make its burdens and the contributions uniform.
We in Alabama are willing that the right of a State to tax or otherwise impose burdens and limitations on the exercise of Federal powers be fixed by a general law passed by Congress, and not left to the legislatures of 48 States.
Mr. LINTHICUM. Will the gentleman yield?
Mr. OLIVER of Alabama. Yes.
Mr. LINTHICUM. Does the gentleman mean to say that the national defense act provided for the manufacture of fertilizer and nitrate?
Mr. OLIVER of Alabama. Has not the gentleman read it?
Mr. LINTHICUM. The manufacture of nitrates to be used in the production of fertilizer—did it undertake to authorize the Government to go into the fertilizer business?
Mr. OLIVER of Alabama. I think my friend was here when the national defense act was passed, and if he wiU refer to it he will find that so strong is the language that it required that the plant or plants authorized therein should be constructed and operated solely by the Government and not in conjunction with any industry carried on by private capital.
Mr. DOUGLAS of Arizona. Will the gentleman yield?
Mr. OLIVER of Alabama. I yield.
Mr. DOUGLAS of Arizona. Did the War Department make any reference to the necessity for the development of nitrate as an act necessary for national defense?
Mr. OLIVER of Alabama. I am not prepared to say what the War Department may have done in that respect further than that I understand they were extremely anxious that our Government should be prepared to make nitrates. If you will read the statement of General Pershlng, in which he called attention to the supreme needs of the Government for a plant to manufacture nitrates, you will not linger long in the field of doubt as to what should be the attitude of the War Department as to this development.
Mr. DOUGLAS of Arizona. Has the War Department ever made any recommendation as to the present manufacture of fertilizer as a necessity for national defense?
Mr. OLIVER of Alabama. I assume that was the declaration and policy of Congress, and Congress, long before the gentleman came, when the gentleman from Tennessee was cooperating with us, undertook to provide for the utilization of the Muscle Shoals plant in the manufacture of fertilizer for farmers. That has been the declared purpose of Congress since 1916. The War Department, I think, would be rather out of its sphere if it undertook to suggest what Congress should do fo» agriculture.
Mr. GARRETT of Tennessee. Will the gentleman yield?
Mr. OLIVER of Alabama. I yield.
Mr. GARRETT of Tennessee. The gentleman from Alabama will do me the justice to sny that I never cooperated with the gentleman on any proposition which affected the sovereign lights of Tennessee touching the water power in Tennessee.
Mr. OLIVER of Alabama. I will say that the gentleman cooperated in constructing a plant Just over the line from