MUSCLE SHOALS TUESDAY, MAY 13, 1924 UNITED STATES SENATE, COMMITTEE ON AGRICULTURE AND FORESTRY, Washington, D. C. The committee this day met, pursuant to adjournment, at 10 o'clock a. m., in room 326, Senate Office Building, Senator George W. Norris presiding. Present: Senators Norris (chairman), Capper, Gooding, Norbeck, McKinley, Smith, Ransdell, Harrison, and Johnson. The CHAIRMAN. The committee will come to order. The associated power companies, who made one of the bids we are considering, are to start in this morning. I don't have a list of their witnesses, nor do I know who has charge of them. Mr. YATES. I understand that I am to testify. The CHAIRMAN. Very well. STATEMENT OF MR. E. A. YATES, BIRMINGHAM, ALA. Mr. YATES. I am vice president and general manager of the Alabama Power Co., living in Birmingham, Ala., and I represent the associated power companies of the Southeast with respect to the proposal that they have made on Muscle Shoals for the use of the power and the manufacture of fertilizer. The CHAIRMAN. Perhaps you had better give us briefly the names of these associated power companies and describe generally, so far as may be necessary, those companies, so that we may get an idea of who and what they are. Mr. YATES. I thought that if it was satisfactory, I would like to read the letter that the associated power companies sent to the Senate committee on April 28, which summarizes the matter. This letter is dated Chattanooga, Tenn., April 21, 1924, and reads: Hon. GEORGE W. NORRIS, THE TENNESSEE ELECTRIC POWER Co., Chairman Senate Committee on Agriculture and Forestry, Washington, D. C. DEAR SIR: The undersigned on January 15, 1924, submitted to the Secretary of War a proposal in connection with the power plants of the Government at Muscle Shoals. On January 25, 1924, the undersigned, together with Messrs. Theodore Swann, Raymond F. Bacon, and Louis C. Jones, submitted to the Secretary of War an additional proposal to manufacture nitrogen and fertilizer at Muscle Shoals. These proposals are published as House Documents Nos. 158 and 173, first session, Sixty-eighth Congress, copies of which are hereto attached. During the hearings before the Military Affairs Committee of the House, Mr. E. A. Yates, on behalf of the undersigned, stated that "at the option of the Government we would be willing to form one corporation with a capital of $15,000,000 in cash to take the lease of the nitrate plant No. 1 and all the water power projects under the terms of our proposals, to be owned and controlled by Americans." We stand ready to carry out the terms of these proposals and furnish information in regard thereto as may be desired by the committee, both with respect to fertilizer production and a 50-year lease of the Wilson Dam under the terms of the Federal water power act. If the Government should construct Dam No. 3, we will lease it under like conditions, as explained in our offer. or we will construct Dam No. 3 at or own expense, the Government contributing a portion of the cost in consideration of navigation improvement. Our offers were formulated with a view of serving the interests of the Government, the production of fertilizer, and the most advantageous use of excess power through its distribution to the public in the surrounding States. If, however, the committee should desire to consider the Muscle Shoals question on some basis other than is outlined in our proopsals or on a basis involving modification of the terms of our proposals, we will be glad to discuss that question at such time as the committee may desire, holding ourselves ready to conform so far as we are able to any reasonable program that the Government may finally conclude to adopt with respect to these properties. Attached is a summary of the important features of our proposal. Very respectfully, TENNESSEE ELECTRIC POWER CO., By B. C. EDGAR, Vice President. MEMPHIS POWER & LIGHT CO., By T. H. TUTWILER, President. ALABAMA POWER Co., BY THOMAS W. MARTIN, President. Senator HARRISON. Are those the only companies associated with you? Mr. YATES. They are the only companies associated in making the proposal on fertilizer and power for Muscle Shoals. All of the power companies of the Southeast are interested in the situation, and prior to our making these proposals, and in response to a letter sent out by Mr. Merrill last September, eight or nine of the power companies of the South evidenced their interest in Muscle Shoals by answering that letter jointly, but only these three have signed the proposal, and the real reason for that is that these three are the adjacent power companies to Muscle Shoals, and the other companies are dependent on their lines and facilities to relay the power from Muscle Shoals to their companies. The CHAIRMAN. I wish you would give us briefly a description of each of those three companies that have joined in this bid. I think that that ought to be in the record. Senator HARRISON. And I think, for the record's sake, that every power company which is interested in this proposition should be stated, even though they did not sign this. Mr. YATES. I would like to enter into the record the letter that was sent to Mr. Merrill in response to an inquiry from him dated January 8, signed by the power companies of the Southeast. I think that that would be meeting your thought. Senator HARRISON. All of these companies are interested in this bid? Mr. YATES. Yes, sir; they will be. They will get the power if the power is distributed. The CHAIRMAN. Your proposition is to form a new corporation? Mr. YATES. Yes, sir. The CHAIRMAN. Will these other companies that Senator Harrison has asked you about have an interest in that corporation? Will they own some of the stock? Mr. YATES. They probably will; yes, sir. The CHAIRMAN. Has that been determined? Mr. YATES. No, sir; it has not. The three companies that signed the proposal have signed with the understanding that the rest of the situation would be worked out and the other power companies will get their pro rata share of power, whatever it may be determined to be. Senator HARRISON. Are there any power companies in Mississippi interested in it? Mr. YATES. There are a number of isolated power companies in Mississippi. Senator HARRISON. What are the names of them? Mr. YATES. There is a power company at Gulfport, which serves along the Gulf coast. There is a power company at Meridian. There is a power company, I believe it is called the Mississippi Power & Light Co., which serves Columbus and Jackson and Vicksburg and Greenville. Senator HARRISON. That is an Arkansas company. Mr. YATES. Yes, sir. Senator HARRISON. Who is at the head of that, Mr. Couch? Mr. YATES. Yes, sir. There has been no interconnection, or no transmission lines to any extent established in Mississippi. They are isolated plants. The CHAIRMAN. Would it be agreeable to the three companies that have made this bid if these Mississippi companies should also come in and own some of the stock of the $15,000,000 corporation contemplated? Mr. YATES. I don't think that there is any question about it. The CHAIRMAN. What about their desire or their willingness to come into that corporation? Mr. YATES. I can't answer that, because the power situation in Mississippi consists of a number of isolated plants. I don't think that there is any one company operating there that now could hook up with the power companies in the general coordination and distribution of power. The CHAIRMAN. Why not? Mr. YATES. They are not large enough. They haven't the facilities. But there isn't any question about that. I want to develop that point as I go on. I have some maps here showing the probable location of lines in Mississippi. I have some information on the probable loads in Mississippi, and I would like to develop as I go on how we think Mississippi can benefit from the distribution of this power. Senator HARRISON. But there is no doubt that the understanding now is that these isolated companies in Mississippi, as well as throughout the Southeast, are interested in the Alabama Power Co.'s bid about which you are now testifying? Mr. YATES. I don't think there is any question. They know what is going on, and it has always been our thought that if Muscle Shoals is disposed of in a manner that will permit the distribution of the energy Mississippi ought to have its share. The CHAIRMAN. How do these Mississippi companies get their power-from coal, water, or both? Mr. YATES. Well, some of the power is manufactured by sawdust from sawmills, and I presume that the balance is from coal. Senator HARRISON. Largely by coal isn't it? Mr. YATES. I believe that there are a number of wood-buring plants. The CHAIRMAN. Referring particularly to this Arkansas company that operates in Mississippi, do they have plants in Arkansas also? Mr. YATES. They have some plants; yes, sir. I believe they have steam plants, and I believe they are building some water-power plants on the Wichita River. The CHAIRMAN. Do you know about the size of that company? Mr. YATES. I can't tell you much about it. We can get some information for you. The CHAIRMAN. The water-power possibilities in Mississippi, as I understand it, are very limited. There isn't much water power there? Mr. YATES. There isn't any potential water power to speak of in Mississippi. The CHAIRMAN. There is, however, a good deal of water power in Arkansas. Mr. YATES. I believe that there is. The CHAIRMAN. And there is a good deal of development going on there now? Mr. YATES. I believe that there is. The CHAIRMAN. What about the company that will be organized if this bid is accepted being willing that the Arkansas company should get some of this stock? If these various plants were hooked up together, especially if Arkansas had some companies, particularly water-power companies, wouldn't it be to their advantage and also to your advantage, if you got this, to have them hooked up together? Mr. YATES. Unquestionably. The more plants that are brought into an interconnected system the more it reflects to the advantage of all the plants in the system. I don't know specifically about the Arkansas power situation? I believe they the some distance from Muscle Shoals. They are, I believe, 180 or 190 miles southwest of Memphis, and my belief is that it would be some time before the Arkansas situation would be hooked in with these cities in the Southeast, but that will come about in due time. Senator MCKINLEY. I might say to you that I think Little Rock comes within 300 miles of Muscle Shoals. Mr. YATES. Yes, sir; that may be so. If the committee is interested, I would like to read this letter of January 8 to Mr. Merrill, signed by the power companies of the Southeast. The CHAIRMAN. All right. Hon. O. C. MERRILL, THE TENNESSEE ELECTRIC POWER Co., Executive Secretary, Federal Power Commission, Washington, D. C. DEAR SIR: We acknowledge receipt of your letter of November 24, 1923, requesting the companies joining in this letter to advise you concerning the price that could probably be secured for electric energy available on completion of Wilson Dam, Muscle Shoals, in July, 1925. |