HEARINGS BEFORE THE COMMITTEE ON MILITARY AFFAIRS SEVENTIETH CONGRESS FIRST SESSION ON H. R. 8305, H. R. 7744, H. R. 6031, H. R. 10028 2.0.0. 4/25/28. MUSCLE SHOALS HOUSE OF REPRESENTATIVES, COMMITTEE ON MILITARY AFFAIRS, Thursday, January 26, 1928. The committee met at 10.30 o'clock a. m., Hon. John M. Morin presiding. Mr. W. B. Bell, president of the American Cyanamid Co., was present in support of the Madden bill (H. R. 8305). That bill is printed herewith with certain amendments agreed to by Mr. Bell and the committee in italics. [H. R. 8305, Seventieth Congress, first session] A BILL To authorize and direct the Secretary of War to execute a lease with Air Nitrates Corporation and American Cyanamid Company, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of War is hereby authorized and directed, for and on behalf of the United States of America, to execute and enter into with Air Nitrates Corporation, a corporation organized and existing under the laws of the State of New York, and American Cyanamid Company, a corporation organized and existing under the laws of the State of Maine, the following lease: This indenture, made in triplicate this day of 192 by and between the United States of America (hereinafter called the lessor) acting by and through the Secretary of War, duly authorized so to do by Act of Congress approved on the day of 192, and Air Nitrates Corporation, a corporation organized and existing under and by virtue of the laws of the State of New York, with offices at Five hundred and thirty-five Fifth Avenue, New York City (hereinafter called the lessee), witnesseth: That in consideration of the sum of $1 paid by the lessee to the lessor, the receipt whereof is hereby acknowledged, of the rents to be paid and of the mutual covenants, stipulations, conditions, and agreements herein contained to be kept and performed by the parties, the lessor has granted, demised, and leased and by these presents doth grant, demise, and lease unto the lessee for the possession, use, operation, advantage, and enjoyment, under and consistent with the terms hereof, of the lessee and its successors and assigns, all the properties constituting what is generally known and designated as the "Muscle Shoals development" including all structures, plants, buildings, machinery, tools and equipment, franchises, rights, powers, and privileges for the construction, maintenance, use, and operation thereof, as well as all lands, tenements, easements, servitudes, rights of way, riparian rights, and the appliances, fixtures, and appurtenances thereunto belonging (as now or hereafter constituted and supplemented during the term of this lease by the acquisitions, constructions, and improvements hereinafter described) and embracing (but without in any way limiting the generality of the foregoing): (1) Dam Numbered 2 with its lands, water rights, power house, structures, and facilities, which shall include installed electrical generating equipment sufficient to generate there two hundred and forty thousand horsepower, all its hydroelectric and operating apparatus, appurtenances, accessories and facilities, trackage, transmission lines, telephone and telegraph lines, and electrical tie connection of a capacity of not less than one hundred and twenty thousand horsepower at suitable voltage connecting properly the power house at Dam Numbered 2 with the steam power plant at United States nitrate plant numbered 2, the necessary transformers and switching apparatus and all lands, 1 buildings, housing, easements, rights of way, and riparian rights appurtenant thereto and/or owned, controlled or hereafter acquired by the lessor for or in connection with said dam and power plant, but excluding and excepting from the property hereby demised and leased the locks and navigation facilities and such housing as the Secretary of War shall designate by notice in writing to the lessee given within sixty days from the date hereof, as being required for the housing of lock operators; (2) Subject to the provisions of Article D hereof, Dam Numbered 3 with its lands, water rights, power house, structures, and facilities, which shall include installed electrical generating equipment sufficient to generate there two hundred and fifty thousand horsepower, all its hydroelectric and operating apparatus, appurtenances, accessories and facilities, trackage, transmission lines, telephone and telegraph lines, an electrical tie connecting the switch house at Dam Numbered 2 with said power house, of a capacity equal to the generating capacity installed in said power house, the necessary transformers and switching apparatus, and all lands, buildings, housing, easements, rights of way, and riparian rights appurtenant thereto and/or owned, controlled or hereafter acquired by the lessor for or in connection with said dam and power plant, but excluding and excepting from the property hereby demised and leased the locks and navigation facilities and such housing as said Secretary of War shall designate by notice in writing to the lessee given at the time of the delivery of possession of said Dam Numbered 3, completed, as being required for the housing of lock operators; (3) United States nitrate plant numbered 2 (as officially known and designated on the records of the War Department of the United States) including its sixty thousand kilowatt steam power plant, the Waco limestone quarry with equipment therefor, and all lands, buildings, housing, easements, rights of way, materials, trackage, transmission lines, telephone and telegraph lines, fixtures, apparatus, tools, supplies, appurtenances, accessories and facilities, such existing service equipment as the Secreatry of War shall certify by notice in writing to the lessee given within sixty days from the date hereof as belonging thereto, and the sulphuric acid units now in storage on the premises, but not including the platinum catalyzers for use in the manufacture of nitric acid, which shall be retained by the lessor and the lessee shall in no way be responsible therefor; and (4) United States nitrate plant numbered 1 (as officially known and designated on the records of the War Department of the United States) including its power house and transmission line to United States nitrate plant numbered 2 and all lands, buildings, housing, easements, rights of way, materials, trackage, transmission lines, telephone and telegraph lines, fixtures, apparatus, tools, supplies, appurtenances, accessories and facilities, as respects the properties described in paragraphs (1), (3) and (4) above for and during the term of fifty years beginning on the date of delivery to the lessee of possession of said properties and thence ensuing and fully to be completed, and as respects the properties described in paragraph (2) above for and during the term beginning on the day of delivery to the lessee of possession of the said properties completed and thence ensuing and until the end of the aforesaid term of fifty years, upon the terms and conditions contained in this lease and to that end the parties hereto respectively covenant and agree as follows, namely: A. The lessee will pay to the lessor as rental therefor within fifteen days after the end of each fiscal year (which is hereby defined to begin July 1) of the lease term except as herein otherwise stated: (1) From the aforesaid delivery of possession of the properties described in paragraphs (1), (3), and (4) of the granting clauses hereof (a) a sum equal to interest at the rate of 4 per centum per annum upon the total of all sums expended by the lessor upon the acquisition and construction of Dam Numbered 2, with its lands, water rights, power house, structures, and facilities, as hereinabove described, and its locks and navigation facilities, exclusive of expenditures and obligations paid or incurred by the lessor prior to May 31, 1922, and (b) annual amounts sufficient, if continued for one hundred years, to amortize, on a basis of 4 per centum interest compounded annually, the entire amount (without deduction of expenditures and obligations paid or incurred prior to May 31, 1922) so expended, except that such payments of said sum as aforesaid and amortization combined for the first six years from the aforesaid delivery of possession shall be at the rate of $200,000 per year, and that the difference between such $200,000 per year and the full amount of said sum aforesaid and amortization (with simple interest on such difference at the rate of 4 per centum per annum) shall be paid in annual installments commencing not later than the end of the thirty-fifth year of the lease term, each such installment to be equal to at least one-fifteenth of the principal sum of such difference and interest thereon to the date of payment; (2) From delivery of possession of said Dam Numbered 3 completed (a) a sum equal to interest at the rate of 4 per centum per annum upon the total of all sums expended by the lessor upon the acquisition and construction of Dam Numbered 3, with its lands, water rights, power house, structures, and facilities, as hereinabove described, and its locks and navigation facilities, less the sum of $6,000,000, and (b) annual amounts sufficient if continued for one hundred years, to amortize on a basis of 4 per centum interest compounded annually, the entire amount (without deduction of such $6,000,000) so expended, except that such payments of said sum aforesaid and amortization combined for the first three years from such delivery of possession of said Dam Numbered 3 shall be at the rate of $160,000 per year, and that the difference between such $160,000 per year and the full amount of such interest and amortization (with simple interest on such difference at the rate of 4 per centum per annum) shall be paid in annual installments commencing not later than the thirty-fifth year of the lease term, each such installment to be equal to at least one-fifteenth of the principal sum of such difference and interest thereon to the date of payment; (3) During the term of the lease of said Dam Numbered 2, $35,000 annually, in installments quarterly in advance, for repairs and maintenance of such dam and its locks and for operation of said locks irrespective of the actual cost thereof; (4) From such delivery of such possession of said Dam Numbered 3, $20,000 annually, in installments quarterly in advance, for repairs and maintenance of such dam and its locks, and for operation of said locks irrespective of the actual cost thereof; and (5) The lessee will supply to the lessor, free of all charge during the period of the lease of Dam Numbered 2, to be delivered at any point on its lock grounds designated by said Secretary of War by notice in writing to the lessee, such electric power as in his judgment shall be necessary for the operation and lighting of its said locks, and will supply to the lessor from such c'elivery of such possession of said Dam Numbered 3, to be delivered at any point on its lock grounds designated by said Secretary of War by notice in writing to the lessee, such electric power as in his judgment shall be necessary for the operation and lighting of its said locks. If the lessce be deprived of possession of any portion of the demised properties for any part of a fiscal year, the total payments to be made by way of rental by the lessee for such fiscal year for the demised properties shall be reduced so that the rental to be paid, with respect to that portion of the properties of which the lessee is deprived of possession, shall be the same proportion of the total yearly rental of such portion of the demised properties, as the time, during which the lessee enjoyed possession during such fiscal year of that portion of the properties of which it was deprived, is of one year. In case the lessee shall be deprived of the possession of any part of the demised properties pursuant to the provisions of subdivision (3) of Article E hereof, the payments to be made by the lessee by way of rental hereunder shall thereupon be reduced proportionately as may, subject to the provisions of Article N hereof, be agreed upon between said Secretary of War and the lessee. B. In addition to the payments above covenanted to be made the lessee covenants and agrees that it will (1) At its own cost and expense complete the steam power plant connected with said United States nitrate plant numbered 2 by installing such additional electrical generating and other equipment as will increase the generating capacity of said plant up to at least ninety thousand kilowatts according to plans and specifications therefor to be approved by said Secretary of War; (2) In accordance with plans and specifications which have been or may be prepared or approved by said Secretary of War and out of funds which the lessor hereby covenants and agrees promptly to make available for that purpose, install in the power house of said Dam Numbered 2, with reasonable promptness after such funds are so made available, such additional electrical-generating units, together with necessary hydroelectric and operating appurtenances, accessories and facilities as will increase the generating capacity of the equipment of said Dam Numbered 2 up to approximately six hundred thousand horsepower, at the cost and expense of the lessor and without profit to the lessee, each such additional generating unit to be the property of the lessor and included in the leased property upon which rental by way of interest and amortization shall be paid to the lessor from the time of its completed installation, such additional |