over so long a period in advance. period in advance. You can readily see that the situation in that picture might change quite a bit. Mr. DOUGLAS. Yes. Mr. BELL. And it would be a very sensible thing to do from time to time; but I would rather suspect any power company would hesitate to enter into obligations of that character for 50 years; situations might arise, in other words, where they would rather build up their own by such an arrangement and, of course, power companies are always building up their own by such an arrangement. Whether they would want to tie themselves up for 50 years to help us out, even though we reciprocated with waste power at certain times, I doubt. I think you are getting into a very complex problem; but I can only give that as an offhand impression. Mr. QUIN. Mr. Bell, there was one element in your answer there if the Government failed or declined to build Dam No. 3 and Cove Creek Dam, your proposition provided you could not and would not go above 20,000 tons of nitrogen per year? Mr. BELL. That is correct; yes, sir. At least, we provide we can not be required to go above 20,000. Mr. QUIN. I mean your offer is that. Mr. BELL. Yes. Mr. QUIN. And you could not, if you carry out the contract with your allies, the Union Carbide Co.; unless you have that arrangement with the Union Carbide Co., the physical facts would be such as to make it impossible for your company to produce over the 20,000 tons of nitrogen? Mr. BELL. We could not, even regardless. Mr. QUIN. You can not meet the 50,000? Mr. BELL. Even regardless of the Union Carbide agreement, we could not, on the bases of Dam No. 2 alone, meet the 50,000-ton guaranty if we were confronted by the electric furnace phosphoric acid. Mr. QUIN. That is all. Mr. GARRETT. Mr. Bell, on the question of the distribution of surplus power, how many of the cities within a reasonable distance from Muscle Shoals own their own power plants, or have plants owned by power companies; do you know? Mr. BELL. I do not know of any large cities that own the distribution-any large cities near Muscle Shoals. I really do not know, Mr. Garrett; I believe I had better not attempt to answer that question. Mr. GARRETT. Assuming that most of the city power plants are owned by power companies, you speak of building transmission lines to some given point and, at the end of that transmission line, when you get there you either have to get your franchise or to distribute your power through the agencies already there. would not you find yourself at the end of the road in the hands of Now the same company that is already connected with Muscle Shoals with its transmission lines now all through that whole country? Mr. BELL. Yes; either with them or an associate company of theirs. Mr. GARRETT. That is what I mean-either with them or some of their associates or allies. Mr. BELL. Correct. Mr. GARRETT. So that even then, if you make an independent distribution of power, you have to build your own transmission line and then, when you reach the city, you must get your franchise from the city and either sell your power to the company that is there already operating, or put up your own independent agency of distribution? Mr. BELL. That is the situation. Mr. GARRETT. Now, then, in doing that, it would not be so expensive to put in your distributing agencies to reach industry, but it would be quite a different thing to reach the people generally in lighting houses? Mr. BELL. Oh, yes. Mr. GARRETT. You would have to put in a complete distribution plant in the city? Mr. BELL. Exactly. Mr. GARRETT. Well do not you find about the only people you can talk to down there are the people that already have that thing grabbed in that country-either deal with those people, or go out and put up all independent lines? Mr. BELL. That is the situation. (The committee thereupon adjourned until Tuesday, February 11, 1930, at 10.30 o'clock, a. m.) MUSCLE SHOALS TUESDAY, FEBRUARY 11, 1930 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met at 10.30 o'clock a. m., Hon. Harry C. Ransley, presiding. Mr. RANSLEY. At our last meeting it was understood that Mr. Bell would return to-day and speak in reference to the Wright bill. I would like to suggest to the members of the committee that Mr. Bell close about a quarter to 12 and then we go into executive session, for there are some matters that your acting chairman would like to take up with the committee as to its policy. Now, Mr. Bell, you may proceed. FURTHER STATEMENT OF W. B. BELL Mr. BELL. Mr. Chairman, I am not quite clear just how the committee would wish me to proceed. Do they wish to ask me questions; or, in view of the fact there are some new members on the committee, do they wish me to discuss the situation from the standpoint of a more or less general summary of what we propose to do? Mr. RANSLEY. It was my understanding, Mr. Bell, that we were to have a general summary, and in all probability questions will be asked during that summary that you make. Mr. BELL. Well, if I am disrupting the program of the committee at any point, do not hesitate to interrupt me. I will accommodate myself to your program entirely. Mr. QUIN. You understand, Mr. Bell, that this is for the benefit of our new members, and you want to make it explicitly plain so that they can grasp it, and if any of us do not understand it, why it is our fault. Mr. BELL. Yes; I will do my best. The first thing about it that might be of interest to the new members is that we have proceeded on the theory that it is better to outline in complete detail the nature of the contract we have in mind to enter upon; in other words, we want the Congress to know precisely what it is we propose to do at every point; and then we hope to enjoy this advantage, if the bill passes, that all the argument and discussion will have taken place beforehand and all we have left to do is to operate the plant, make the fertilizer, and sell it. And in that respect I think it perhaps differs, certainly, from some of the offers that have been before vou, and perhaps differs from most of them. We also have another view to be served by this program, and that is that we think there are some features of this thing which Congress should pass upon, both for reasons of constitutional law and also because in that way we may be assured as to just what the policy of Congress is. Had the situation been delegated to some officer of the Government under general instructions, we might find ourselves confronted later on by the opinion of some counsel or the opinion perhaps of a court to the effect that that officer had done something ultra vires, something that Congress did not intend that he should do; and, therefore, we have set out in the bill an exact lease, complete in every respect, with instructions to the Secretary of War to execute that lease, provided the proper authorization of the officials of the Cyanamid Co. are exhibited to him. Mr. STAFFORD. Has this bill, in the form of a lease, ever been submitted to an executive department for consideration and report? Mr. BELL. At one stage of the proceedings an Assistant Attorney General was present at the session of the committee. Mr. QUIN. Judge Wheat? Mr. BELL. Yes, Judge Wheat; and my understanding is that the bill met with his approval, and I think at the same time Mr. STAFFORD. Purely as to its technical phraseology? Mr. BELL. Oh, yes; he did not attempt to pass on matters of policy. Mr. STAFFORD. Then this offer has not been submitted to the War Department, as Mr. Henry Ford's offer was submitted, and in which Secretary Weeks made many decided recommendations and corrections in the original offer? Mr. BELL. My impression is that the Secretary of War may never have said anything about this Mr. STAFFORD. Not whether he has ever said anything about it, but has it been submitted to the War Department, like Henry Ford's offer was submitted to the War Department, for opinion as to whether it protected the interests of the Government? Mr. BELL. My understanding is it was submitted to certain officials of the War Department, and some of them have expressed disapproval of it. Mr. STAFFORD. Was it submitted in any formal way to the War Department, as Mr. Henry Ford's offer was submitted! Mr. BELL. I think not; but I am not quite clear I am competent to give you a reply on that. Mr. STAFFORD. Who would be competent? Mr. BELL. I think perhaps some of the members of the committee would know, because I was not around when Henry Ford's offer was submitted. Mr. STAFFORD. I am not speaking of the Henry Ford offer; I am asking if this offer was submitted to the War Department for their review and opinion, as the Henry Ford offer was submitted? Mr. BELL. The difficulty is I do not know how the Henry Ford offer was submitted. Might I appeal to Mr. McSwain on that? Mr. MCSWAIN. Mr. Quin is familiar with it. Mr. QUIN. Certain departments of the War Department have passed on some features of this bill for the benefit of this committee, and especially the subcommittee, but I do not think the general proposition, as the gentleman from Wisconsin, Mr. Stafford, asks, was submitted to the War Department. However, the Attorney General was requested to have a man up here-we could not pass on this bill without his advice-and this gentleman is now Judge Wheat, and he conferred with our subcommittee on the legality of it. Mr. STAFFORD. I asked that question, because in examining the bill this morning I notice it is all pervasive in giving everything the Government has and more to the Nitrates Corporation and the American Cyanamid. I do not think that any high War Department official would recommend such broad powers as incorporated in the proposed draft. Mr. BELL. Well I certainly would not wish you to get from me the impression that any Secretary of War has made any specific recommendation in favor of this bill. I do not so understand. I doubt if he has made any at all, but I am sure he has not done that. I am reminded now, however, of the fact there are some clauses that have been dealt with by the War Department which, when you asked your question, I had overlooked. For example, the cost accountant of the Judge Advocate's office went over in great detail the cost clauses and approved them. I think the Judge Advocate General was consulted by the committee at one stage of the proceedings. Mr. MCSWAIN. Yes, sir. Mr. BELL. And made some recommendations which were adopted. Mr. MCSWAIN. The Department of Agriculture also had its representative consider the matter and I think, incidentally, that the Federal Power Commission has dabbled in this bill. Mr. BELL. Oh, yes; the secretary of the Federal Power Commission gave a general opinion on the bill which was quite unfavorable. Mr. MCSWAIN. Yes. Mr. QUIN. The Commerce Department did, too, did it not? Mr. SPEAKS. All of the departments of the Government have been called in to give any information they might be able to regarding it, but never with respect to the question of whether or not a lease should be entered into or a permit taken under which the property might be taken over by somebody. That was for Congress to decide aird that was the attitude of the committee-that it did not make any difference what the War Department thought about it, or what the Commerce Department thought about it, or any other department, it was up to Congress to determine what should be done. Mr. BELL. Outlining the general project as it stands in the bill, what is proposed is that the lessee shall have turned over to it for a period of 50 years a number of different properties. The first one that might be mentioned is Dam No. 2 (that is the existing dam and power station at Muscle Shoals), not only with the machinery installed up to 240,000 horsepower (which, when the bill was written, had not been completed, but now has been completed), but also with an obligation on the part of the lessee to install, at the cost of the Government, certain additional generating equipment, and also for the Government to build a suitable transmission line to connect this power station with nitrate plant No. 2. Dam No. 3 is also included, but Dam No. 3 is in the future; it has yet to be built. Dam No. 3 is about 17 miles up the river. It will add, as the Tennessee now |