Noting that railroad station in the center of the chart, Senator, you see in carrying the ordinary fertilizer to the farm the farmer has to make five trips. If you take this concentrated fertilizer and deliver that to the farm it only takes 3 tons to contain the same 3,600 pounds of plant food, and he only makes one trip from the station to the farm. The result is that if he wants to redilute that fertilizer in order to spread it on his farm in the same form as he used to, he can mix it with local dirt instead of carrying that dirt all the way from Muscle Shoals to his farm, or wherever else it may be, and he can probably mix that during the time he would be making one of the four trips he would save. The net result is that if he buys cooperatively, we figure the fertilizer for that farm can be had at $175 per farm instead of $390. In other words, it cut the cost in two to the farmer.

In order that you may not think that this is an impractical dream, this concentrated fertilizer is being used now all the time. We just have not waked up in this country to it.

Senator McNARY. Mr. Hooker, I may be awfully stupid on that proposition. It has been before the committee. I understand the manner of using this dirt, of course. That is simple, so much so that it needs no explanation by a figure even like this. What would prevent Mr. Ford or the Government from making concentrated fertilizer, and my using my own dirt out in Oregon instead of paying freight on it all the way from the fertilizer plant, just as easily under the other propositions as under your propositions?

Mr. HOOKER. That is, what advantage have we over Mr. Ford in doing this?

Senator MCNARY. Why, certainly, because they all contemplate the same kind of fertilizer.

Mr. HOOKER. Of course we are not, any of us, doing this now. Concentrated fertilizer has not been used in this country, and this proposition has not been laid before Congress at all yet.

Senator McNARY. It was in the hearings two years ago, and we generally conceded that that is the only way to do it. You don't want to ship dirt from here to Oregon. I have plenty of it there on my own farm.

Mr. HOOKER. Let me answer your question. Why can this be done under our proposal better than under the other proposals? That is what you want?

Senator MCNARY. Why, certainly.

The CHAIRMAN. That is the point exactly.

Mr. HOOKER. In the first place it costs $26 a ton for fertilizer now, and it may under this plan cost something like $12 or $10. Suppose $10 a ton saved. That is partly made up in the saving of cost of ammonia. You are paying 12 cents for ammonia now. can make it for you for 6 cents. We shall be able to make it in the increased plant we have just arranged at Niagara for five cents. don't think there is any doubt about it.

We

Senator MCNARY. Then you claim to have a superior process? Mr. HOOKER. To anything that is being used now; yes.

I

Senator JOHNSON. With your new process of manufacturing fertilizer then, the freight rates will not be taken very seriously into consideration, because you don't need to haul a whole lot of stuff there that is unnecessary.

Mr. HOOKER. Yes, sir. And, Senator, that is the reason we have asked General Atterbury to come into this enterprise. I suppose there are a good many people out West who feel the railroads are not trying to help the farmer. We have here one of the best transportation experts in the country to take hold of this matter of helping the farmer to get his fertilizer transported cheaper, and there is at least 25 per cent of this whole $10 saving which can be made in transportation.

Senator McNARY. That brings it down to the proposition now that it is not so much concentrated fertilizer as it is the process that you control that is superior to any other process now being used?

Mr. HOOKER. No. This $10 is made up of 25 per cent transportation, in which I believe with the talent we offer this company can do better than anybody else. Twenty-five per cent of it is in cheaper ammonia. At the present time we can make that cheaper ammonia better than other bidders because we are using on a large scale what we believe to be the most economical modification of the Haber pro

cess.

Senator JOHNSON. Mr. Hooker, you realize that if the railroad company does not make so much in hauling fertilizer, they will raise so much more crops that they will make more money on the crops than they lose on hauling fertilizer. We are raising too much now. In 1922 we raised so many potatoes that it did not pay to dig them. We are not worrying about fertilizer up where we are, but down in Mississippi of course they need it.

Mr. HOOKER. This is all based on trying to produce cheap fertilizer and get it to the farmer. Of course if you don't want it, my argument falls to the grourd.

Senator JOHNSON. Of course you know we have other fertilizer up there now, but then we may need it later on.

Mr. HOOKER. I take it that is the problem.

Senator RALSTON. Would it be feasible, Mr. Hooker, for the Government to manufacture fertilizer at Muscle Shoals and sell or lease to a private corporation the surplus power?

Mr. HOOKER. Senator, it is perfectly feasible for the Government to do this whole thing. There is no question about it. You don't need any help from anybody at all. The only thing is it will cost That is all there is about that.

you more, and it will get into politics.

I am certain we can save you money by handling it instead of the Government, far in excess of any return contemplated being paid us. Our aim has been to make the return to us what seemed to be fair and then cut it in two, and that we have done.

Senator RALSTON. That would be a good place, I believe, to answer my question about the tariff. What is your expectation about a higher tariff?

Mr. HOOKER. Senator, I am going to refer the tariff to some of my successors. I don't know anything about the tariff. We haven't any idea of doing anything about the tariff, as far as we are concerned, but some of these gentlemen who will follow me are much more competent to speak about the tariff than I am.

Senator JOHNSON. He is a Democrat. He doesn't care about the tariff anyhow.

Senator RALSTON. I am not going to vote for any proposition that will enable anyone to come in after we give them this proposition

and get the Government to impose a high protective tariff on fertilizer, and thereby increase the price of it to the farmer. That is one thing I am not going to vote for.

Mr. HOOKER. I am going to ask my brother whether this proposition is going to result in any increase in the tariff on fertilizer? Mr. A. H. HOOKER. I should say distinctly not.

Mr. HOOKER. Is there any possibility of it?

Mr. A. H. HOOKER. We manufacture fertilizer here and ship it to other countries.

Mr. HOOKER. This plan will make it so cheaply that we can compete with anybody.

Mr. A. H. HOOKER. I will say this, that we are sending out, exporting, as much free nitrogen, as much ammonia as the entire nitrogen production of the Muscle Shoals operation to-day, and anything to lower the cost of fertilizer would have a tendency outward and not inward.

Senator RALSTON. They are doing the same thing with furniture and farm implements in this country, and still we have a high protective tariff.

Mr. HOOKER. I have spoken to you of the $10 or $12 a ton that can be saved by concentrated fertilizer and by the adoption of our bill. A quarter of it can be saved in transportation, and we think we offer better facilities for that than the other bids. A quarter of it is due to ammonia, and being in that particular chemical business we think we are ready to offer you better facilities there than anybody else. The remaining $5 is in overhead, advertising, competition among fertilizer companies for the business, and trying to collect bad debts from farmers, and there is a tremendous lot of that.

Most of these are things the Government can save. In fact, the Government can save almost all of it, and, therefore, if we have a Government corporation in which the Government is receiving threequarters of the returns, and having already received their entire investment back, we have the opportunity and the justification for using Government agencies to the greatest extent to help the farmer get this fertilizer cheaply.

Senator MCNARY. Mr. Hooker, you say one-fourth is in transportation?

Mr. HOOKER. One-fourth of the saving; yes.

Senator McNARY. That is derived from the earth that is mixed with the concentrated fertilizer. Can you save any more in transportation than the Government could?

The CHAIRMAN. Or than Ford could or anybody else?

Mr. HOOKER. Well, gentlemen, I am willing to take up the cudgels for General Atterbury against Mr. Ford as a railroad operator.

Senator MCNARY. All right; let us go to ammonia. Do you have processes that are secret whereby you can manufacture ammonia cheaper than the Government?

Mr. HOOKER. Only because we can manufacture it cheaper than the Government, but not because of any secret process.

Senator MONARY. That is because the efficiency of private ownership is above that of the Government? That is how you arrive at that figure? Is that right?

Mr. HOOKER. Yes. Everything we are laying before you the Government can do perfectly well. The only advantage rests in

justified doubt that the Government will operate as efficiently as an individual business group. That is the only question.

Senator MCNARY. Then you have $5 left, which is 50 per cent of the saving, which you say is saving in competition among fertilizer manufacturers, advertising, and things of that kind?

Mr. HOOKER. Yes.

Senator MCNARY. Are you in any better position to save that than the Government or Mr. Ford or the Alabama Power Co. ? Mr. HOOKER. Yes.

Senator MCNARY. Just in what respect do you save that $5? Mr. HOOKER. I think if the Government could handle the entire enterprise and could do it as efficiently as business, the Government could save every cent of it.

The CHAIRMAN. Your corporation would not have to advertise? Mr. HOOKER. No; nor would a Government agency. You could save every cent of it. Likewise, if you are dealing with a corporation in which you have a large interest, which is practically a government partnership, in which the Government gets nearly all the returns, you can again do almost the same thing, because of the Government's interest in it, but if you do it with Mr. Ford, to whom you have already paid $214,000,000, or allowed him $214,000,000 to begin with which you could have received from somebody else, you haven't any justification for turning over in addition the entire Government machinery at great expense and putting in a lot of Government money to help Mr. Ford make more money individually, by taking the 8 per cent on fertilizer and putting it into his own pocket. You get 75 per cent of the fertilizer profits back if you are dealing with us on this proposition.

The same thing is true with the Alabama Power Co. Our proposal uses all the Government departmental agencies available. If you do that for Mr. Ford, you are doing it for his private pocket. If you do it for the power companies, you are doing it for their private profit. If you do it for us you get three-fourths of the profits back as your own. If you did it for the Government you would get it all, but you would probably pay out more in operating cost than the small profit you would give to us.

Here are some notes I will read to you as a direct further answer to your question, Senator:

(1) The Government would be justified in extending fertilizer production to the largest limit that the country would absorb, and supplying the necessary working capital under conditions which safeguarded that capital but which would not justify the same necessary working capital being furnished from private sources. There are several reasons for this:

(a) The Government can borrow this working capital at an average cost over a period of years probably not exceeding 4 per cent, whereas the investment of private capital would not be justified on the same basis.

(b) Under the Hooker-Atterbury-White proposal the Government would receive three fourths of the maximum of 8 per cent profit allowed on fertilizer, which would be equivalent to 6 per cent on the gross sales price, and this would give an adequate return to the Government on the working capital needed.

(c) Anything which saves the farmers money in the cost of fertilizers and results in larger crops from increased use of fertilizers would add to the general prosperity of the country, would increase the capital values of the farms, and would increase the income and other taxes received not only from farmers but from merchants and others benefited by this added general prosperity-a return which would not accrue to any private capital which might be interested in this general situation.

(2) Because of the 6 per cent on gross sales price to which the Government would be entitled out of the maximum 8 per cent profit on fertilizers, the Government would be justified in cooperating through the Department of Agriculture and its agencies, and other governmental agencies, in educating the farmers in the efficient use of fertilizers, and assisting in their cheap distribution, not only for the indirect reasons above stated but also because the actual cost of such cooperation could be paid for out of the three-fourths of the profits (6 per cent), to which the Government would be entitled.

And this in addition to the $214,000,000 already saved over the Ford proposal to start off this enterprise.

(3) In case the Ford proposal is accepted, Mr. Ford and his associates will naturally desire to utilize the maximum proportion of the available power for manufacturing aluminum for automobile bodies and for making metal alloys useful for other parts of automobile construction. Their enormous output would permit of an early and prompt utilization of a large part of the power for these purposes. This would be of maximum benefit to the Ford interests, but would be of comparatively little benefit to the farmers of the country generally or the miscellaneous interests of the South.

On the other hand, the Hooker-Atterbury-White group, having no such large industries to which this power could be applied, would have every reason to develop new industries which would be of greater benefit to the South, as a whole, and to devote a larger part of the available power for manufacturing fertilizer for general distribution, as the 2 per cent which would go to this group would give them an adequate return for their time and portion of working capital provided, whereas the net profits to which Mr. Ford and his associates are limited from fertilizer manufacturing would be comparatively insignificant as compared with the profits which they could make by using their funds for manufacturing aluminum and other products for their automobile industry.

(4) The increased development of nitrogen fixation and the upbuilding of a permanent manufacturing organization for this purpose would be a potent resource to the Government for the foundation materials for explosives and a valuable reserve ready to hand in case of need for national defense. This is of exceedingly great value to the Government, but of no substantial value to private capital which might be invested.

That is a reiteration of those points.

The CHAIRMAN. Mr. Hooker, your improved method of extracting nitrogen from the air does not require as much power as the cyanamid process that is used in nitrate plant No. 2, does it?

Mr. HOOKER. No.

The CHAIRMAN. Power becomes a comparatively insignificant factor?