stitute to any one of the various lobbies that infest this Capitol. I never presented it to anyone until it became public property, and I did this purposely, because I expected some man would charge me with having had it written by some other person. I do not know my supposed friend Tom Martin, that my friend ALMON Spoke about the other day, but the gentleman does him an injustice if he says or suggests that he wrote my bill, because he never saw it, and I never saw him,

Mr. ALMON. I did not say he did. I said that would be my guess.

Mr. SNELL. Now, in regard to my amendments, the only criticisms I have heard so far in regard to my substitute that were legitimate criticisms were that it did not provide enough power to do what I want done. I think this is perhaps a reasonable criticism and I have offered a perfecting amendment that will provide whatever power is necessary in order to carry out the provisions of sections 9 and 10 of the bill. In my judg ment a large amount of the secondary power can be used for the provisions carried in this bill.

As to the question of interest charge, I have also stricken that out and made it without interest.

Another criticism that was raised by my friend from Michigan [Mr. JAMES]—and he raised it again here to-day-was that under the provisions of my substitute the Secretary of Agriculture would have to do the work of making these experiments and of manufacturing the nitrates or fertilizer, provided fertilizer was manufactured under my bill. I have amended the substitute to meet this criticism by providing "or any other designated agent." This means the President of the United States can designate the American Cyanamid Co., if he wants to, to make the experiments in the cyanamide plant at Muscle Shoals.

Mr. JAMES. Will the gentleman yield?
Mr. SNELL. For a short question; yes.
Mr. JAMES.

Page 2?

Mr. SNELL. man knows it.

Mr. JAMES.

Mr. SNELL.

Will the gentleman explain lines 4 and 5 on

I have not the time to do that, and the gentle

That is the gist of it.

Now, as a matter of fact, the only charge that has been made against my substitute has been that it is a power bill. Let me simply say, gentlemen, that if selling power and taking the revenue from such sale and using the revenue to perfect the manufacture of nitrates, in order that we may give the farmers of this country cheaper fertilizer, means a power bill, then my bill is a power bill, and that is all the power" there is in it, because it does not do a single thing

66

for any of them except that.

That company alone is in position to take the power and bid for it, and therefore will alone be in a position to fix the price.

Mr. SNELL. My bill provides for the Federal Government to lease the lines or build their own.

Mr. MCSWAIN. Who is going to administer the law? The Secretary of War and his representative and the Secretary of Agriculture and his representative and we know their psychology and what will be the outcome.

Mr. SNELL. The gentleman does not think the Secretary of War will be changed next year?

Mr. MCSWAIN. When it comes to administering this bill it will be done by some major or captain who will administer it in the name of the War Department.

Now, gentlemen, the issue is plain. Under the bill as it bas been amended by the efforts of the gentleman from South Carolina I am satisfied that it meets all of the requirements of the fertilizer companies, because they will get cheaper nitrogen. The farmer will get some benefit from the bill as amended. The fertilizer companies will be sure to go into competition with each other and give thereby the benefit to the farmer in the reduced price of nitrogen.

Furthermore, this bill, if we vote out the committee substitute, and if we vote down the Snell bill and send the bill to conference, it will be in conference, and any inconsistencies and conflicting provisions between the Norris bill can be ironed out and the bill as brought back by the conferees will settle, I hope, forever the question of Muscle Shoals, which has been agitating Congress for the past 10 years. So we are asking you to vote down the power proposition of my friend from New York and let us send this bill, which has been very badly mutilated but is still in the race, to conference when we may get something for the benefit of the farmers through the manufacture of nitrogen and nitrogen products. [Applause.]

So friends of the farmers will help vote down the Snell bill and support the committee bill as amended.

Mr. WELSH of Pennsylvania. Mr. Chairman, I offer the following amendment, which I send to the desk. The Clerk read as follows:

Amendment by Mr. WELSH of Pennsylvania: Page 17, line 5, after the word "States," add "and such fertilizers, after distribution among the several States, shall be subject to the tax that may be imposed by the several States upon fertilizers produced therein."

Mr. GARRETT of Texas. Mr. Chairman, I make the point of order against the gentleman's amendment. It is not germane to That is not in this bill at all. The gentleman seeks to deal the bill. It seeks to invoke the taxing power of the Government. with the power of the Federal Government to levy taxes, or with the States to do the same thing. I make the point of order that it is not germane.

The CHAIRMAN. The Chair sustains the point of order. Mr. LAGUARDIA. Mr. Chairman, I offer the following amendment, which I send to the desk.

Mr. JACOBSTEIN. Will the gentleman yield for a question? Mr. SNELL. I yield to the gentleman from New York. Mr. JACOBSTEIN. What might be behind the telegram that I have received this morning from the New York Farm Bureau Federation which says that unless the Snell bill is used to make fertilizer

Mr. SNELL. Oh, I know nothing about it. I have received 50 telegrams to-day and I know they are all propaganda, because my initials were wrong in every telegram. [Laughter.]

Mr. MCSWAIN. Mr. Chairman and gentlemen of the committee, the issue now is very sharply drawn. I say with all due respect to the gentleman from New York-and I do respect him sincerely-that the bill that he has introduced, knowing the situation as I have acquired knowledge of it in the committee for the last five years-and I am going to ask members of the committee who are acquainted with the situation whether I am correct in this or not-that the substitute offered by the gentleman from New York will function in actual practice under the powers delegated to the Secretary of War to lease power and under the power delegated to the Secretary of Agriculture to make so-called experiments in agriculture will be a complete frustration of the original aim of section 124 of the national defense act and will amount purely and simply to a power proposition. [Applause.] Not only that, but it will amount to the delivery of power into the hands of the Alabama Power Co. at its own sweet price.

The Clerk read as follows:

Amendment offered by Mr. LAGUARDIA: Page 16, line 12——

Mr. RAMSEYER (interrupting the reading). Mr. Chairman,

WAINWRIGHT], a member of the committee, has been demanding recognition.

The CHAIRMAN. The Chair can not recognize gentlemen simply because they are members of the committee. The Chair recognizes gentlemen who offer amendments and those who oppose amendments that have been offered. The Clerk will report. the amendment offered by the gentleman from New York. The Clerk read as follows:

Page 16, line 12, after the word "power" strike out the period, insert the following: "Provided, That preference shall be given to States, counties, and municipalities in the sale of such surplus power." The CHAIRMAN. The gentleman is recognized for one and one-half minutes.

Mr. LAGUARDIA. Mr. Chairman, this section provides for the distribution of surplus power to States, counties, municipalities, corporations, partnerships, and individuals. My amendment provides that preference should be given to the States, counties, and municipalities in accordance with the express wishes of the gentleman from New York and in accordance with the purpose of the bill. If this power is to be used in order to bring down the cost of power, unless we adopt this amendment, which is taken from the Norris bill, we will simply be producing power to turn over to the Alabama Power Co. This amendment should be adopted.

The CHAIRMAN. The time of the gentleman from New York has expired.

Mr. WAINWRIGHT rose.

The CHAIRMAN. The Chair recognizes the gentleman from New York [Mr. WAINWRIGHT] for one and one-half minutes.

Mr. WAINWRIGHT. Mr. Chairman, the way in which the committee bill has now been amended, leaves comparatively little to choose between it and the Snell substitute. They are both pure Government operation measures, both provide for Government operation of both the dam and the nitrate plants, but in my judgment of the two the committee bill offers the more effective medium for Government operation. It provides for the operation of the various plants through the medium of a Government corporation, which is preferable to delegating that responsibility to the Secretary of War and the Secretary of Agriculture as is provided in the substitute. The committee bill also provides for a fund to conduct the operation.

Mr. FROTHINGHAM. Mr. Chairman, will the gentleman yield?

Mr. WAINWRIGHT. I can not yield. It provides a working capital to conduct the operation whereas under the Snell bill both the Secretary of Agriculture and the Secretary of War would start without a cent at their disposal. If we are really now to turn to Government operation as the alternative to abandoning these plants, we must at least put this corporation in funds to conduct the business. If gentlemen are now willing to favor Government operation of these plants at Muscle Shoals, then the committee's bill, in my judgment, affords the better method. Much as I would like, if I consulted my personal preference, to support the plan offered by a gentleman for whom I have so high a regard as my distinguished colleague from New York, I can now find no sufficient reason for breaking away from my committee and supporting this Snell substitute.

The CHAIRMAN. The question is on the amendment offered by the gentleman from New York [Mr. LAGUARDIA]. The amendment was agreed to.

Mr. SNELL. Mr. Chairman, I now offer the amendment for a vote which I presented for information.

The CHAIRMAN. The Chair would suggest that there are several amendments to the committee amendment, which would probably be better disposed of in the first instance. The Chair recognizes the gentleman from Connecticut [Mr. MERRITT). Mr. MERRITT. Mr. Chairman, I offer the foilowing amendment, which I send to the desk.

The amendment was agreed to.

The CHAIRMAN. The question is on agreeing to the ammendment.

The amendment was agreed to.

The CHAIRMAN. The Clerk will report the next ammendment.

The Clerk read as follows:

Page 20, strike out all of lines 6, 7, 8, and 9.

The CHAIRMAN. The question is on agreeing to the arnendment.

The amendment was agreed to.

The CHAIRMAN. The Clerk will report the next amendment. The Clerk read as follows:

Page 23, line 3, after the words " power or," strike out "fertilizers or fertilizer and insert the words fixed nitrogen or its."

The CHAIRMAN. The question is on agreeing to the amendment.

The amendment was agreed to.

The CHAIRMAN. The Clerk will report the next amendment. The Clerk read as follows:

Page 23, line 7, after the words "used in," strike out the word fertilizer and insert the word "nitrates."

The CHAIRMAN. The question is on agreeing to the an end

ment.

Mr. WRIGHT. A division, Mr. Chairman.

The CHAIRMAN. The gentleman from Georgia demands a

division.

The committee divided; and there were-ayes 108, noes 86. So the amendment was agreed to.

The CHAIRMAN. The Clerk will report the next amendu ■ ent. The Clerk read as follows:

Page 27, lines 12 and 23, strike out the word "fertilizers" and insert in lieu thereof "fixed nitrogen."

The CHAIRMAN. The question is on agreeing to the amend

ment.

The amendment was agreed to.

the

ment.

The CHAIRMAN. There being no other amendments to ment to the Snell substitute.

present prices of fertilizers.

PLAN PROPOSED IS PRACTICAL

MUSCLE SHOALS IS A WAR PLANT

So it is manifest that Muscle Shoals is an indispensable asset of national defense, just as a navy yard in Charleston, just as an artillery camp at Fort Bragg, N. C., just as an infantry camp at Fort Benning, Ga., just as the arsenal at Rock Island, just as the airplane factory at Dayton, Ohio, and just like any other activity of either the Army or the Navy in the cause of national defense. As previously stated, the $700,000,000 a year that we are spending for the Army and the Navy, for sailors and soldiers, for battleships and cannon, for pistols and rifles, would be worse than thrown away without an ample and abundant supply of nitrates with which to discharge the cannon, to fire the rifle, and to construct the bomb weighing 2.000 pounds or more to be dropped from the airplane.

WHERE AGRICULTURE COMES IN

But it so happens that this same nitrogen, so essential and indispensable for war, is the most vital plant food and that which is most needed in the American soils and especially in the soils of the Atlantic States and the South Atlantic States, which have been longest in use. Nitrogen is the vital and valuable part in nitrate of soda. It is the valuable part in every form of compost, or cottonseed meal, or fish scrap, or packer trimmings. This nitrogen is necessary to produce the vegetation and the grain, which in turn feed and fatten the animal, which in turn supports and sustains the life of man. Fortunately, therefore, this element of nitrogen, which constitutes 80 per cent of the atmosphere we breathe, may be employed in times of peace to multiply the products of the soil and thereby multiply animal life. This inert nitrogen we breathe, when fixed in combination with other elements such as oxygen, calcium, and various chemical combinations, is what the farmer needs most to hasten and hurry his crops to maturity. There is no by-product of the navy yard that is useful to the farmer; there is no by-product of the Army arsenal that is useful to the farmer; there is no by-product of any other military activity useful to the farmer. But, fortunately, the by-product of keeping Muscle Shoals in first-class condition for the manufacture of nitrates for war is highly valuable to the farmer and can make him independent of the producers of Chilean nitrates and of the Government of Chile that has lived upon the product of the labors of the American farmer.

WILL THE FARMER GET ANY BENEFIT?

While the action of the House of Representatives prohibits the manufacture of a finished fertilizer at Muscle Shoals and confines the activities of the corporation organized by the bill to the fixation of nitrogen and to the production of other forms of nitrogen, yet the farmer is bound to get much benefit from the production in mass quantities of nitrates at Muscle Shoals. How and why? For illustration, if the corporation operates to its capacity the existing plant, it can fix at least 40,000 tons of nitrogen per year, and perhaps 50,000 tons. This nitrogen can be sold and will be sold at less than one-half of what the fertilizer manufacturers are now paying for the nitrogen they import from Chile.

Since they can obtain this essential and highly valuable ingredient of fertilizers from Muscle Shoals at less than one-half of the present prices they are now paying for nitrogen, they must and will give the farmer the benefit of this reduced cost of producing finished fertilizers. There will be competition among the various manufacturers, bidding for the farmer's trade, and in this way the farmer will benefit. But if the fertilizer manufacturers should fail to permit this reduction in the costs of nitrogen to be reflected in the prices of the finished fertilizers, the farmers have it within their power to compel the fertilizer, manufacturers to come to terms. The farmers can cooperate and combine their requirements and buy carload lots of nitrogen at Muscle Shoals. In the same way they can buy carload lots of phosphoric acid and of kainit containing potash, and the cooperative association can rig up a rather inexpensive mixing plant, and combine these three ingredients in the right proportions and distribute them among the cooperative associations. Furthermore, other States can follow the example of South Carolina and authorize some State officer just as South Carolina has authorized the warehouse commissioner to buy fertilizers or fertilizer ingredients and sell them to the farmers at actual cost. Thus the States can come in, and using the cheap nitrogen purchased at Muscle

Mr. Speaker, I have been amazed at some of the propaganda literature which has been put out by the National Fertilizer Association. This literature tries to make the impression that the proposal contained in the substitute of the House Military Affairs Committee, and known as the Morin bill, is radical and novel and unexpected, and therefore constitutes a harmful surprise to the fertilizer industry. Let us look at the facts. The Norris bill is in several respects more far-reaching and more destructive of the fertilizer industry than the Morin bill. Just why the fertilizer manufacturers did not raise a howl of protest against the Norris bill when it was in the Senate and after it passed the Senate, while it was before the Committee on Military Affairs, is difficult for me to understand. The Norris bill authorized the construction and operation of fertilizer factories not only at Muscle Shoals, "but anywhere in the United States." Thus, the number was unlimited and might be placed anywhere in the United States. The Norris bill did not confine activities at Muscle Shoals to mere experimentation, but authorized the "production of fertilizers in the largest quantities practicable and shall be disposed of at the lowest prices practicable." Furthermore, under the Norris bill all the money derived from the sale of power would constitute a special fund to be used for "the developing, manufacturing, and introducing of improved fertilizers and fertilizer practices for the purpose of reducing the cost of production and of increasing the efficiency of such fertilizers on American soils." This was a dedication of the proceeds of the sale of power for all time to come. Contrast that with the Morin bill.

Under the Morin bill the proceeds of power are to be used only during the first five years, which will manifestly be the experimental period when the cost of production per unit will be higher. Thereafter, for the next five-year period, one-half of the proceeds of power sale only shall be used in reducing the cost of producing fertilizers, and thereafter the fertilizer business shall not only be absolutely self-sustaining, but shall pay a profit upon the capital stock employed of 4 per cent. The Norris bill does not contemplate any dividend upon the $10,000,000 capital stock which it authorized. Thus under the Norris bill the manufacture of fertilizer might become and could become a nation-wide activity. There could be a Government factory for the manufacture of finished fertilizers under the Norris bill in every State in the Union and in different parts of the same State. However much power might be produced and sold and however much revenue might be derived from the sale of power at Muscle Shoals, the same would be employed for all time to come in cheapening the costs of producing fertilizer. This provision in the Norris bill would be a perpetual and unlimited subsidy. For my part I believe that fertilizers after the experimental period is past should be upon a self-sustaining basis. The evidence before the special commission appointed by the President in 1925 was that it would take a campaign of education lasting from three to five years to instruct and educate the farmers in the proper and profitable use of concentrated fertilizers. Therefore the period of five years fixed in the Morin bill for the distribution of 5 per cent of the product is reasonable and the amount authorized to be donated is reasonable in the cause of education.

FEDERAL CORPORATION USUAL AND REASONABLE

five

Mr. Speaker, the effort has been made to produce the impression that the proposal of a corporation governed by directors, as contained in the Morin bill, is radical and revolu tionary. The very contrary is the case. The fact is that on April 19, 1920, Secretary of War Newton D. Baker appeared before the Military Affairs Committee in support of H. R. 10329, which was a bill contemplating the creation of a poration almost identical with the proposal in the Morin bill. That bill will be found at page 831 of part 4 of the Muscle Shoals hearings printed in 1927. Furthermore, the commision, appointed by the President of the United States on March 26, 1925, in its report recommended virtually the same thing.

cor

The majority of the commission, including John C. McKenzie, formerly an honored member of the House of Representat i ves, and former chairman of the Committee on Military Affairs and living in the State of Illinois; former Senator Nathanie1 B. Dial, from South Carolina; and Mr. R. F. Bower, of Virginia, recommended that if no satisfactory private lease of the prop erty could be negotiated, that a Government owned and trolled corporation be set up and the commission outlined in its report the structure of such corporation, and the Committee on Military Affairs followed that suggestion very closely in framing the Morin bill. Furthermore, Federal corporation to exercise Federal powers are too common to cause any surprise

to, or account for to, the Government either in cash or by way of reduction in the price of the fertilizer manufactured, the profits from the sale of power which would have been used in the manufacture of fertilizer in case there had been no discontinuance in the manufacture thereof; that the manufacture of fertilizer may be discontinued only when there shall be such excess accumulation of fertilizer stocks as shall be in excess of the reasonable or prospective demands for such fertilizer, and such manufacture shall be resumed upon reduction to a reasonable degree of such accumulated stock of fertilizer.

FERTILIZERS ORIGINALLY CONTEMPLATED

Again, Mr. Speaker, a diligent and energetic effort has been made by the National Fertilizer Association to make the impression that the determination of the Committee on Military Affairs, as contained in the Morin bill, to manufacture fertilizers at Muscle Shoals, was an unexpected proposal and a great surprise to the fertilizer industry. There can be no just reason for any such contention. In the first place, as previously shown, the Norris bill, which had passed the Senate by more than a 3 to 1 vote, was a more broad fertilizer proposition than the Morin bill.

In the next place, in the act of June 3, 1916, known as the national defense act, in section 124 the word "fertilizers" was expressly used twice. The common and usual understanding of "fertilizers" is not a single element of plant food, but two or more elements mixed and finished in proper proportions and ready for use by the farmer. Again, on April 24, 1922, the Committee on Military Affairs made its report, which became a part of the public records of the country, and section 2 of that report provided that whoever might "use the property at Muscle Shoals" should be "obligated in the strictest terms to the manufacture and sale to the public of fertilizers in time of peace."

This report was signed by such men as Hon. FRANK L. GREENE, now Senator from Vermont; Hon. JOHN F. MILLER, still a Representative from the State of Washington; Hon. Richard Wayne Parker, then a Member of Congress from New Jersey: the Hon. PERCY E. QUIN, from Mississippi; and the Hon. WILLIAM C. WRIGHT, from Georgia.

Then, on March 26, 1925, the President of the United States appointed a commission to investigate Muscle Shoals, and that commission, consisting of five men, included the Hon. John C. McKenzie, formerly a Member of Congress from Illinois; and the Hon. N. B. Dial, formerly a Senator from South Carolina. That commission appointed by the President made its report, dated November 14, 1925, and the concluding paragraph of that report is as follows:

It is with great reluctance that we turn toward Government operation, being well advised of all of the infirmities inherent in such an undertaking. The great investment of the Government at Muscle Shoals, however, the importance of its continued maintenance as a part of our national defense, the crying need of agriculture for more and

5. That any bid must contain a provision for the forfeiture of the power rights and fertilizer provisions if there is any failure to produce nitrates in the amount of at least 40,000 tons per year, provided that such forfeiture as may not be due to the neglect, misconduct, or fault of the lessee, shall not include the loss of the reasonable value of the property at the time of the forfeiture, but the lessee shall be reimbursed by the Government for the reasonable value of such property then and there belonging to the lessee and essential to the operation of the plants.

Furthermore, when the Henry Ford proposal was before the Congress, surely every man, woman, and child in the United States heard that proposal discussed, and the main and essential feature thereof was that Henry Ford proposed to manufacture "cheap fertilizers" at Muscle Shoals, and proposed to carry on experiments to see if the electric furnace and electrochemistry could not do for the "fertilizer business" what they have done for industry, and especially for the automobile industry; that is, to see if it would not be possible to produce in vast and unprecedented quantities plant food in concentrated form that could be shipped to great distances with slight freight costs and at very low prices, so that agriculture might receive the benefit and assistance of modern science.

The Ford offer bill passed the House of Representatives and went to the Senate, and, while the same never passed the Senate, the Senate did pass a bill which provided for the manufacture of fertilizers. Furthermore, the Hon. Oscar Underwood, then a Member of the Senate, was the author of a bill that contemplated the manufacture in mass quantities of "fertilizers" at the lowest possible costs.

RESULT OF REVIEW

Therefore, Mr. Speaker, this brief review of the history of the legislation relating to Muscle Shoals must show that from the very beginning the plan and purpose was to manufacture “fertilers," and that plan was kept constantly before the country by the Ford offer bill of 1922 and by the recommendations of the President's commission in 1925 and by every other step that has been taken by Congress looking to the disposal of Muscle Shoals property. Therefore it can not be fairly and justly claimed that there was any surprise in the proposal of the Morin bill to manufacture fertilizers. If the fertilizer manufacturers did not appear before the House Military Affairs Committee and demand hearings with respect to the Norris bill, how could it be expected or anticipated that they would desire

all compel us to disregard our prejudices, for we are convinced that to permit longer this great investment to stand idle when it can be of such great service to our people would be little less than a public calamity.

This commission of the President in 1925 plainly advised the public, including the National Fertilizer Association, that the Government might any day turn to the manufacture of "fertilizers to supply the "crying need of agriculture for more and cheaper fertilizers."

Again, a committee consisting of seven members of the Military Affairs Committee was appointed to hear and consider proposals for the lease of the Muscle Shoals property in 1927, and that committee made a report on March 3, 1927, which was approved by the full committee, and reported to the House and printed in the CONGRESSIONAL RECORD, and became a part of the records of the Nation. That report contained the following paragraphs:

1. That the property shall at all times be subject to the absolute right and control of the Government for the production of nitrates or other ammunition components of munitions of war and that nitrate plant No. 2 must be kept available therefor by the purchasers, lessees, or users of the property.

2. That the purchasers, lessees, or users of the property shall be obligated in the strictest terms to the manufacture and sale to the public of fertilizers in time of peace.

3. That any proposal for the purchase, lease, or use of the Muscle Shoals property of the United States Government must be for the entire property except the so-called Gorgas plan and the transmission line therefrom.

4. In the consideration of any offers for Muscle Shoals that it be a prerequisite that such offer contain a stipulation that the lessee,

must understand that the Morin bill is technically and in a parliamentary sense, as well as in a broad and logical sense, a mere amendment to the Norris bill. The Norris bill proposed to use the power at Muscle Shoals to "manufacture fertilizers," either directly by the operation of the machinery at Muscle Shoals or indirectly by the use of the money derived from the sale of power at Muscle Shoals to establish "fertilizer factories in any part of the United States." When that bill came before the House committee it was either to be turned down in toto or to be amended in part or to be amended by a substitute.

The committee decided to set up a practical, businesslike corporation with restrictions and limitations that should have made the Norris bill far more acceptable to the House of Representatives. The committee bill, known as the Morin bill, took the operation of the Muscle Shoals property and the various other fertilizer factories that it contemplated out of the hands of the Secretary of Agriculture, who is a mere Cabinet officer, perhaps with no business experience, and certainly too busy with politics and general administration to pay any proper attention to the Muscle Shoals property. The Morin bill placed the administration in the hands of five competent business men, constituting a continuing board of directors, who would be paid on a per diem basis and not on a yearly salary basis. Furthermore, the Morin bill confined the activities for the manufacture of fertilizers to Muscle Shoals alone and cut out all reference to fertilizer plants elsewhere in the United States. Furthermore, the Morin bill did not approve that part of the Norris bill which contemplated the dedication of the net proceeds from the sale of power at Muscle Shoals to the subsidizing of fertilizers forever. On the contrary, the Morin bill provided that such subsidy should be continued during the period of starting up and ex