The CHAIRMAN. Yes. Major MILES. It will probably cost in the neighborhood of half a million dollars. The CHAIRMAN. Major, you said that you are convinced that within a period of 10 years the production of these nitrates will be so developed that Muscle Shoals will pass out of the picture of national defense? Major MILES. I made that statement in answer to your question as to the status now as compared with that which existed at the time that the national defense act was put into effect. The CHAIRMAN. Yes. Major MILES. In that sense; yes. The CHAIRMAN. When you can develop these things to give what is necessary for explosives, etc., under some other process without the use of power, then of course it will be simply a power proposition there, and will not be a national-defense proposition at all? Major MILES. Yes. The CHAIRMAN. It will be of no value so far as national defense is concerned? Major MILES. Of course, from the standpoint of national defense, as a facility for the manufacture of nitric acid, as I pointed out, we need 40,000 tons and we have commercial manufacturers with a capacity of 10,000 tons, and the difference has got to come from somewhere; so that if that facility were in existence at Muscle Shoals, it would be used. And until such time as the nitric-acid capacity by the synthetic method can be developed to the point where you can put that synthetic capacity into operation quicker by expansion than you could put the stand-by plants at Muscle Shoals into operation, I believe the Muscle Shoals plants ought to be maintained as a preparedness measure, and I would say that they ought to be retained anyway for the next 10 years. The CHAIRMAN. Ten years. That is all. Mr. JAMES. Major, you experts do not agree in the Ordnance Department, do you? Major MILLS. We try to. Mr. JAMES. How long have you been down there? Major MILES. In the Ordnance Department in Washington, sir? Mr. JAMES. Yes. Major MILES. About one year. Mr. JAMES. One year. You say it will take 10 years longer? Mr. JAMES. You have given this matter a great deal of attention and study, have you? Major MILES. Yes, sir. Mr. JAMES. You have studied it carefully, have you not? Major MILES. As carefully as I can. Mr. JAMES. In 1926 we had another expert before us, Major Burns. Do you know him? Major MILES. Yes; very well. Mr. JAMES. He knows his business? Major MILES. Yes, sir; he does. Mr. JAMES. In 1926, before the joint committee, he said that we only needed five years longer; so that that would be three years from now? Major MILES. Yes. Mr. JAMES. That is quite a difference. Major MILES. Yes; I think on all of these questions we all have our personal ideas based on our own particular study of the situation; and in saying 10 years I did not mean to say that I am 100 per cent right, but that is the way I look at it at the present time. The CHAIRMAN. You are making that as an outside guess? Major MILES. Yes, sir; I think that is a reasonable guess. Mr. JAMES. Major Burns's was an outside guess, too? Major MILES. Of course, Major Burns three years ago was looking at the synthetic industry coming into development. It is coming into its own, and it may be coming in just a little bit slower than he might have expected. Mr. JAMES. At one time you gentlemen down there were very enthusiastic about operating plant No. 2, were you not? Major MILES. In 1919 we thought it would be a good plan. Mr. JAMES. Major Burns was very strong for that at that time. Major MILES. Yes. Mr. JAMES. In 1926 Major Burns stated that there was this plant operating of the Niagara Ammonia Co. at Niagara Falls, N. Y. Do you know what capacity they are operating at to-day? Major MILES. The Niagara Ammonia Co. is operating at that same capacity, or has that same capacity. Mr. JAMES. Are you sure? Major MILES. I am not positive; no, sir; but I think their output is somewhat less than their capacity. Mr. JAMES. Are you just as positive about that as you are about the rest of your testimony? Major JAMES. No, sir; I am not. Mr. JAMES. You are more positive on this, or not as positive? Mr. JAMES. It appears that a short time ago this year (1928) this Niagara Ammonia Co. went into bankruptcy; liabilities, $9,748; assets, $8,999. So that they are not quite as well off as we thought in 1926, are they? Major MILES. The capacity still exists; whether they can operate it economically is another question. Mr. JAMES. They went out of business because they could not make any money. Now, where is there a place in the United States manufacturing fertilizer by the synthetic-ammonia process or nitrates by the synthetic-ammonia process! Major MILES. There are a good many places where they are making fertilizers. There is no place where they actually go from the base of ammonia direct to the fertilizer. It is understood that the plant at Hopewell, Va., will be such a plant; at least, its excess capacity for producing ammonia will be turned into nitrates. That is hearsay, however, and I would not want to make that as a statement of fact. Mr. JAMES. They are not manufacturing any now? Major MILES. No, sir; they have projected a very large plant, there. Mr. JAMES. Who told you they were going to manufacture fertilizer any day? Major MILES. I think it was Major Burns. Mr. JAMES. Major Burns? Major MILES. He made a trip with Senator Norris, and when he returned he came into the Ordnance Office and gave us that information. Mr. JAMES. Major Burns does not believe in the Government entering any kind of business, does he? Major MILES. I do not know Major Burns's opinion on that. Mr. JAMES. I think he testified so in 1926. How many tons of nitrogen do you think we ought to have a year in peace times, for the ordnance department? Major MILES. For complete preparedness, we ought to have about what we had in the last war, a capacity of 150,000 tons per annum. In peace time, for current manufacture, 10,000 tons per annum. Mr. JAMES. How much do you think we ought to have at the present time in order to keep up with the demand? Major MILES. Do you mean for explosives Mr. JAMES. For peace-time use? You say we can get rid of those plants in 10 years. How much capacity would we have to have at that time in order to meet the needs? Major MILES. So far as our peace-time needs are concerned, we can get that from the commercial industry. Mr. JAMES. How many tons? Major MILES. Our needs are very small at the present time, principally because of the small amounts Mr. JAMES. How much will they average? Major MIES. I am not prepared to answer that question, I can put the answer in the record, if you would like to have it. Probably 10,000 tons of fixed nitrogen per annum. Mr. JAMES. Nitrogen fixation; what capacity at the present time, how many tons of fixed nitrogen are being produced? Major MILES. By the synthetic process? Mr. JAMES. By any kind of process. Major MILES. About 100,000 tons per annum are being produced by the old method of using Chilean nitrates, and there are at the present time about 30.000 tons per annum being produced by the synthetic method. Mr. JAMES. Will you put in the record what plants there are, and where they are, and how much capacity they have? Major MILES. Yes, sir; for the synthetic plants? I can put it in the record from this paper as ammonia, but hot as tons of nitrogen. We would have to convert it, but I can put that in the record. Mr. JAMES. Put it in the record, how many tons of ammonia and how many tons of nitrogen. Major MILES. Yes, sir. 1 Recently went into bankruptcy. Not known whether production has ceased or not. Mr. WURZBACH. The synthetic process is much more experimental than the cyanamide process, it is not, in this country? Major MILES. I do not so consider it, now. I would think it is quite the other way around, because there are several companies that can produce synthetic ammonia now, and there is practically but one that can produce by the cyanamide process; so I think it is the reverse, in reality. Mr. WURZBACH. You say, then, that there is more nitrate manufactured and produced by the synthetic process in this country than by the synthetic process? Major MILES. On the pound for pound basis, no; but so far as the information which is required to manufacture, the personnel which is required to manufacture, is concerned, I think there is more personnel in the country to-day who understand the manufacture of synthetic ammonia. Mr. WURZBACH. I am talking about the actual manufacture. I do not think the other is very important, that we have got men that know how, that are not manufacturing it. I want to know how much is actually being manufactured in this country by the cyanamide process, and how much by the synthetic process. Major MILES. I have not those figures offhand, but I can put them in the record. Mr. WURZBACH. Have you not some idea of that without referring to your figures? Major MILES. It is my impression that the American Cyanamid Co. is turning out about 10,000 tons of fixed nitrogen a year. Mr. WURZBACH. Is that the only company that is manufacturing it? Major MILES. Yes. Mr. WURZBACH. And how much did you say was being manufactured by the synthetic process-actually being manufactured? Major MILES. Thirty thousand tons a year. Mr. WURZBACH. And you think that during the next 10 years, probably, we are not in a very good condition of national preparedness? 89830-28- -29 Major MILES. No, sir; I think we should retain the nitric acid facilities at Plants Nos. 1 and 2, and also the facility there for the manufacture of ammonium nitrate, which is the very small additional portion of the plants coming after the nitric acid part. Mr. WURZBACH. Do you not think it is a matter of good business if we have bought at Muscle Shoals that which can be used for the Government's purpose, namely the manufacturing of cheap fertilizer during peace time, and that would also manufacture nitrates and be in a stand-by condition to manufacture nitrates for explosives in time of war, that that should be retained; that that would be a pretty good combination that we ought to try to work out? Major MILES. From the military standpoint; yes, sir. Mr. WURZBACH. And also from an agricultural standpoint? Major MILES. From an agricultural standpoint, undoubtedly. Mr. WURZBACH. And do you not think a solution of the problem along those lines, of nitrate manufacture in peace times for fertilizer, and keeping the Plant No. 2 as well as Plant No. 1 in a stand-by condition for nitrate manufacture in time of war, for national defense, is a good solution of the problem, and looking to the Government's purpose of national defense and serving the interests of the farmers in this country? Major MILES. Being charged with the production of explosives in time of war, we would naturally lean toward keeping any facilities which are available, in condition to operate. Mr. WURZBACH. In other words, even if you had reasonable expectation of getting nitrates by the synthetic process, you would still need additional nitrates to serve the demands of the Army in a great emergency? Major MILES. Yes, sir; we feel so; up to the time when the synthetic process reaches the stage where it can be put into operation more quickly than the stand-by plants can be put into operation. Mr. WURZBACH. When that time comes, say that is 10 or 15 years from now, the Government would not be in any worse position to abandon the nitrate plant No. 2 than we are in right now? Major MILES. No, sir. Mr. WURZBACH. Then would it not be your general conclusion that legislation that takes care of both of those things, now, manufacture for fertilizer in time of peace and for manufacture of nitrates in time of war, would be a good solution of this whole problem? Major MILES. Yes. Mr. WURZBACH. That is all. The CHAIRMAN. The Morin bill provides for that, does it not? The CHAIRMAN. It provides for agriculture in time of peace and for national defense in time of war? Mr. JAMES. In what section does it provide for that? Major MILES. We would like to see the national defense aspect of that more emphasized than it is. In other words, if the cynamide plant is leased, we would like to see it leased upon the basis of making it impossible for them to do away with the facilities that are there for military purposes, that is, for the manufacture of nitric acid and ammonium nitrate. Mr. JAMES. Major, I presume you know that the Secretary of Agriculture wrote a letter to Senator Norris the other day regarding |