The CHAIRMAN. Gentlemen, it is apparent we are not going to finish to-day. The members want to be in the House on the radio bill, and they are almost all gone; so that we will adjourn the hearing until 10.30 o'clock Monday morning. Mr. Hill, will you want this. witness here Monday morning? Mr. HILL. I have a few more questions I want to ask. The CHAIRMAN. Very well; we will ask you gentlemen to come back Monday morning. (Thereupon, at 12.15 o'clock p. m., the committee adjourned until Monday, March 12, 1928, at 10.30 o'clock a. m.) The committee met at 10.30 o'clock a. m., Hon. John M. Morin (chairman) presiding. The CHAIRMAN. The committee will be in order. Mr. Hughes, I believe you desire to ask Doctor Woods some questions. Mr. HUGHES. Doctor Woods, it was stated last week by Doctor Cottrell that private industry had assured him of a willingness to engage in the business of producing fertilizer materials by the new methods as soon as they could see a market to justify commercial production. Do you think that under the Morin bill the farmer will be shown by actual manufacture and use on the farm that he can make more profit with concentrated fertilizer and that private industry will meet the situation? STATEMENTS OF DR. A. F. WOODS, DIRECTOR OF SCIENTIFIC WORK, DEPARTMENT OF AGRICULTURE, AND DR. F. G. COTTRELL, CHIEF OF FERTILIZER AND FIXED NITROGEN INVESTIGATIONS, BUREAU OF CHEMISTRY AND SOILS, DEPARTMENT OF AGRICULTURE-Continued Doctor WOODS. Yes; we think that is the probable development. Mr. HUGHES. Is it not because of the business hazard involved in going into a new business that private industry has not gone into making large amounts of concentrated fertilizer, and would it not be the purpose of the department to try to remove these hazards by showing that it can be made and by creating the market among the farmers? Doctor WOODS. Exactly; that would be the purpose of the department. That is, in our opinion, the reason why private capital has not gone into it. Mr. HUGHES. Do you not think that production of fertilizer under the theory of the Morin bill should be in sufficiently large quantities to determine whether the farmer can hope for substantial price reductions through these new methods before turning the Muscle Shoals properties over to private lessees? Doctor WOODS. That would depend upon some conditions that would have to be determined. We feel that it would be necessary to carry the project to a point where we could demonstrate not only through the manufacture in competition with other sources of nitro gen, but that private capital could be encouraged to go into it, and that we could get the farmers to use it in large enough quantities so there would be no question about that type of fertilizer having a ready market. If we found we could do that best by manufacturing it for a time ourselves, we probably would do it that way. If we found we could get private capital to do it for us cheaper than we could do it, we probably would make contracts with some private organizations to make a fertilizer, our main purpose being to get the farmers to use it and to determine its practicability under different conditions. In other words, our plan would be to utilize all available sources to get the quickest supply of the fertilizer at the lowest possible cost into the hands of the farmers. Mr. HUGHES. Do you know of any offer to lease Muscle Shoals and make fertilizer on a guaranty that the price will be reduced? Doctor Woods. I know of no offer that gives such a guaranty. Mr. HUGHES. Do you know of any offer having been made to make fertilizer at Muscle Shoals without having it backed up with the value of the power as a kind of subsidy? Doctor Woods. Personally, I do not. Mr. HUGHES. Under section 5 of the Morin bill which authorizes the Secretary of Agriculture to engage the services of corporations experienced in the production of fertilizer and of other similar products, could not the Secretary, if satisfactory arrangements could be made, engage the Cyanamid Co. to operate plant No. 2 in the manufacture of fertilizer ingredients on a large scale and demonstrate that it could be done economically? Doctor WOODS. I so understand it. Mr. HUGHES. That is your idea? Doctor WOODS. Yes. Mr. HUGHES. Could not the Secretary contract for the erection of a synthetic plant sufficiently large, say 10,000 tons of nitrogen, and also contract for its experimental operation by insuring against loss and thus ascertain that it can be made and used by the farmer at a profit so that the market will be created to justify private industry go ahead? Doctor WOODS. I understand that is contained in the bill. Mr. HUGHES. I asked him this question: Could not the Secretary contract for the erection of a synthetic plant sufficiently large, say 10,000 tons of nitrogen, and also contract for its experimental operation by insuring against loss and thus ascertain that it can be made and used by the farmer at a profit so that the market will be created to justify private industry to go ahead? Mr. JAMES. I did not understand what kind of a plant you referred to. Mr. HUGHES. A synthetic plant. Doctor Woods. I do not think he could in a cyanamide plant because that is controlled by patents. Mr. SPEAKS. Would not the same condition apply to any process? Doctor Woods. To any process. Mr. SPEAKS. In other words, you would want the Government to go to the expense of developing a profitable method that would be profitable to capital and to the farmer and then turn this over to private interests to exploit both the farmer and the Government? Mr. JAMES. How much would a plant of that kind cost? Mr. HUGHES. I do not know; but it seems to me it might be done for very much less expense than some other plant that is being talked about. Mr. JAMES. How much would such a 10,000-ton plant cost, Doctor? Doctor WOODS. Doctor Cottrell could answer that better than I can. Doctor COTTRELL. Do you mean 10,000 tons of total fertilizer? Just what did the 10,000 tons refer to? Mr. HUGHES. Ten thousand tons of nitrogen. Doctor COTTRELL. That would probably be somewhere in the neighborhood of between two and three million dollars for the ammonia plant, if it represented new construction, for synthetic ammonia. Mr. JAMES. Would that be an unfinished product? Doctor COTTRELL. In addition to that you would have to add something for whatever type of conversion you used, phosphate or sulphate, for the finishing of the material. Some of that might be gotten by using the equipment on the grounds there. Doctor WOODS. He means a new plant. Doctor COTTRELL. It would be hard to make an actual estimate, but I should think we might actually make fertilizer there with a capital expenditure of from say two to four million dollars, depending upon how much of the equipment on the ground we were able to use, and which particular form we decided to put the fertilizer up in. That is just a rough estimate. Mr. JAMES. There is only $2,000,000 provided for in the bill. Doctor COTTRELL. But the income from the water power would be coming in, according to the bill, but we would not be able to use that the first year; and the $2,000,000 specifically authorized in the bill is to get the thing started, and then we could go on with the further returns from the profits on the water power. It would take well into the second year to complete that equipment, probably. Mr. HUGHES. Doctor Woods, if private industry can be justified in going into the business, would it not be the purpose for the Government to get out of the business so far as its competition with the private business is concerned? After it got started, would it not be the idea of the Government to then get out of the business? Doctor Woods. To get out of it so far as could be done without endangering an adequate supply of fertilizer at the lowest, proper, reasonable cost to the farmers. That is, we probably would want to stay in sufficiently long to keep a line on the cost of production by changing processes so we could be an aid in keeping the cost of production down to the lowest possible level, from the standpoint of the farmer, which is our object. Mr. HUGHES. In your opinion, are the manufacturers of fertilizers now charging the farmers too much for the fertilizer, and could they not afford to sell it to them at a much lower price? Doctor WOODS. That question is difficult for me to answer, because I have not the facts. My personal judgment is, based on data that has been presented in the various reports of fertilizer associations, such as that of Mr. Brand, the executive secretary of the American Fertilizer Association, who was formerly chief of the Bureau of Agricultural Economics in the Department of Agriculture. We have every confidence in Mr. Brand's honesty and integrity. We know that the manufacturing costs now are down perhaps, by competitive conditions, to about as low as they can produce, considering the conditions that have to be met; and we also know that the fertilizer companies claim to be losing large amounts of money. I presume you have seen this index showing the reasonableness of fertilizer prices, published in the American Fertilizer Review! Mr. HUGHES. Yes. Doctor Woods. I will put that in the record, if you desire to have it. It is sent out by the National Fertilizer Association. Mr. HUGHES. I would like to have that put in the record. (The statement above referred to is on file with the committee.) Mr. HUGHES. There has been a good deal said here about the patents that these manufacturers of fertilizers have. Do you think that we ought to make any particular concession here on account of those patents, or do you not think that the Agricultural Department could work out a plan whereby they could get out as good a quality of fertilizer at as low a rate as these people who hold the patents! Doctor Woods. Some of the important patents are gotten out by the department as public-service patents, available to anybody. Mr. HUGHES. I know that. Doctor Woods. And any patent that is important would be just as available to one concern as another. I have no doubt they would be as available to the department as to any other organization that undertook to work in this field. Anybody who goes in has got to utilize whatever patents may be found to control the situation, and would have to make a contract with the owners of those patents. Mr. HUGHES. I am not speaking about the patents that are owned by the Government, but I am referring to these privately owned patents. Doctor Woods. The cyanamide patents are owned by the cyanamide company. If you went into cyanamide manufacture you would have to make arrangements with them. They control those patents, and it is probable that, so far as the cyanamide manufacture is concerned, those people can do better than anybody else, because they control the patents, or at least the later patents. Some of the earlier patents, I believe, have expired. In the synthetic ammonia field the situation is changing very rapidly, and undoubtedly new processes are being patented. As Doctor Cottrell said here on Saturday, we have not gone into that situation, and we do not know exactly what the patent phase is. But in our opinion, the Government or anybody else going into it would practically all be in the same position. We would have to deal with whoever controlled the patents. Mr. HUGHES. In your opinion, Doctor, would there be much economy in using hydroelectric power over and above other power than could be obtained locally for the manufacture of fertilizer? Doctor Wood. In the improved synthetic processes, power is the least important factor. It is the question of location, proximity to available coal sources and centers of railroad distribution that are the controlling factors. Coking coal, as I called attention to in my testimony on Friday, has been, up to the present time, one of the most important factors in the improved synthetic process. Perhaps it may be well to call attention to the fact that that process is being improved, as I understand it, so that they are not limited. to coking coal; they can use other forms of coal that are not so good for coking. Is that not true, Doctor Cottrell? Doctor COTTRELL. They have been trying for some time to get away from that limitation, and it is undoubtedly coming in the future, but just how rapidly it is difficult to state. Doctor Woods. In regard to coking coal, I promised you that I would secure a statement in reference to the locations. (U. S. Bureau of Mines Report on Production of Coal and Coke covering the year 1925.) At the present time Alabama furnishes 6.866,632 tons of coking coal. That was in 1925. Colorado furnished 795,320 tons; Georgia furnished 23,493 tons; Illinois furnished 325,097 tons; Indiana furnished 53 tons; Kentucky furnished 8.882,510 tons; Maryland furnished 42,739 tons; Ohio furnished 18,500 tons. Mr. HUGHES. Have you not got West Virginia there? Doctor WOODS. Yes. Pennsylvania furnished 23,825,944 tons; Tennessee furnished 98,824 tons; Utah furnished 327,504 tons; Virginia furnished 799,218 tons; Washington furnished 68,655 tons; West Virginia furnished 15,091,130 tons, and the undistributed amount was 514.216 tons, or a total of 57,679,835 tons. That is for a year. Mr. GLYNN. What year was that? Doctor WOODS. 1925. Mr. SPEAKS. I want the Doctor to make a little clearer why hydroelectric power should not be among the cheapest of all energies developed. You speak of the cost of producing power by coal and hydroelectric power. Doctor WooDs. I am speaking of it for the purpose of nitrogen fixation. In the process of nitrogen fixation power has ceased to be the most important factor, and coal is absolutely essential in the new process. If they could have the power alone possibly hydroelectric power would be cheaper, but you have to have gas from coal or coke in these improved processes, and so far as nitrogen fixation is concerned, therefore, coal, which furnishes both power and gas for making the hydrogen is the controlling factor. Mr. SPEAKS. Both power and some ingredient which enters into the nitrogen? Doctor Woods. Yes, sir, or rather combines with it to "fix" it. Mr. HILL. Doctor Cottrell, on Saturday. I asked you if you did not think that Professor Tours's estimate of the cost of synthetic ammonia, at about 6.7 cents per pound in this country, was correct, and you said you would have to know whether or not that figure was based on the synthetic ammonia in its gaseous form. I have here Professor Tours's report, which I will be glad to let you look over, and it shows that that estimate of 6.7 cents per pound for synthetic ammonia is based on the synthetic ammonia in its gaseous form. Do you not agree that Professor Tours is about right in that estimate? Doctor COTTRELL. That would depend also on the conditions. Is that from electrolitic or water gas? |