EXHIBIT B-1 Price per ton paid by farmers for fertilizer used on cotton [From Crops and Markets, published monthly by the U. S. Department of Agriculture] 1 1919, average price paid by farmers of the United States for all fertilizers $42. EXHIBIT C Estimate of cost of fixed nitrogen by cyanamide process at Muscle Shouls-Cont 1 Estimate of cost of fixed nitrogen by cyanamide process at Muscle Shoals EXHIBIT C-1 MUSCLE SHOALS NITRATE PLANT NO. 2 IS NOT OBSOLETE (By W. F. McFarland, Florence, Ala., member of Muscle Shoals Commission) Since Henry Ford made his offer in 1922 for Muscle Shoals, and agreed to manufacture 40,000 tons of nitrogen annually, those who opposed the use of plant No. 2 in the production of nitrogen for the farmers, and those who wish to use the power from Wilson Dam in an experimental distribution of power, have joined forces in spreading the report: That the cyanamide process for fixing air nitrogen is obsolete, and plant No. 2 at Muscle Shoals is therefore useless and should be junked. This statement has been made so often by men in high places that many have accepted the statement as true. No proof, however, has ever been offered in support of this statement. Plant No. 2 at Muscle Shoals is the most favorably located cyanamide plant in the world. This is due to the close proximity of all the heavy raw materials; limestone, coal, and coke, and the availability of cheap power. February, 1919, a test run was made of plant No. 2, under the direction of Maj. Gen. C. C. Williams, Chief of Ordnance. A report was made by General Williams showing the exact amount of raw material, such as coal, coke, limestone, electrodes, and other material and supplies used in producing a ton of calcium cyanamide. The writer has ascertained the cost, under normal conditions, of all raw materials required, as shown in General Williams's report, including freight, labor, overhead, maintenance cost, and power at 2 mills per kilowatt-hour, and the results shows that calcium cyanamide can be produced at plant No. 2 at a cost of $20.36 per ton. (Copy of cost sheet is attached hereto and marked Exhibit A.) In support of the correctness of the foregoing estimate of the cost of producing calcium cyanamide at plant No. 2, I call attention to the fact that in 1929, we imported 206,371 tons of calcium cyanamide at a cost of $30.14 per short ton (p. 588, Statistical Abstract of the United States, 1930, by U. S. Department of Commerce) and the further fact that the American Cyanamide Co., of Niagara Falls, Ontario, is now offering calcium cyanamide, freight paid to all points in Alabama, at $26.33 per ton, with a guaranteed nitrogen content of 444 pounds. (Oil, Paint, and Drug Reporter, September 14, 1931.) Calcium cyanamide contains 460 pounds of pure nitrogen. The cost per pound of nitrogen is therefore 4.426 cents. At that price per pound, a ton of Chilean nitrate, which contains 300 pounds of nitrogen, would cost $13.28. Price of Chilean nitrate to-day is $41 per ton. (See Oil, Paint, and Drug Reporter of September 14, 1931.) Cost per pound of Chilean nitrogen is 13.67 cents. The consumption of imported calcium cyanamide in the United States is increasing each year. In 1926 we imported 98,977 short tons; in 1927, 122,450 tons; in 1928, 152,014 tons; in 1929, 206,371 tons. (P. 588, Statistical Abstract of United States, 1930, by U. S. Department of Commerce.) The major portion of the imports of calcium cyanamide come from a plant located at Niagara Falls, Ontario, which is in every respect like plant No. 2. In 1922 those who opposed the operation of plant No. 2 claimed that the nitrogen industry of the United States would be amply able within a short time to take care of our domestic requirements; and in 1931, they are still making the same claim. Their claims are contradicted by the following facts: The average annual cost of imported nitrogen during the years 1921 to 1925, inclusive, was $45,001,000; 1926 to 1929, inclusive, the average annual imports amounted to $50,132,500. Total cost of imports during the nine years amounted to $420,535,000. The cost of nitrogen imported during 1929 was $50,406,000, and exceeded the 9-year average by $3,679,900. (P. 588, Statistical Abstract of the United States, 1930, by U. S. Department of Commerce.) During 1929 the United States consumed, for all purposes, 469,200 short tons of pure nitrogen; of this amount 239,500 (51.4 per cent) was imported. The major portion of the imports consisted of 45,000 tons of pure nitrogen carried in calcium cyanamide, and 160,000 tons in nitrate of soda. (Chemical and Metallurgical Engineering, January, 1930.) The foregoing facts are ample proof that the cyanamide process for fixing air nitrogen is not obsolete. It is shown that plant No. 2 produced nitrogen in the test run in 1919; that we import an enormous tonnage of calcium cyanamide produced in plants using the same process at plant No. 2 at Muscle Shoals; that imported calcium cyanamide is now the cheapest source of nitrogen available to American agriculture; that nitrogen imported exceeds the production of the nitrogen industry of the United States; that nitrogen can be produced and sold at plant No. 2 at around 5 cents per pound, affording relief to our farmers and giving employment to American instead of foreign labor. [Copy of letter from Henry G. Knight, Chief of Bureau, to Muscle Shoals Commission] MUSCLE SHOALS COMMISSION, Washington, D. C. GENTLEMEN: Returned herewith is a memorandum from Mr. W. F. McFar land, entitled "Muscle Shoals Nitrate Plant No. 2 is Not Obsolete," this memorandum having been handed to Mr. Howard for comment by this bureau. The two outstanding figures of this statement are believed to be essentially correct; that is, the price of cyanamide and the cost of production at plant No. 2. This bureau does not, however, agree with the conclusion that the operation of the plant can afford relief to our farmers. It is true that nitrogen can be fixed cheaper in the form of cyanamide. The difficulty has been that cyanamide is not a popular material with American farmers and does not fit in well with American fertilizer practice. Nitrate of soda is preferred even at a much higher cost. There is an ample supply of cyanamide from the present source and therefore the consumer can be benefited only by a reduction in price. As stated in Mr. McFarland's memorandum, the price of cyanamide is $26.33 per ton with freight paid, and the cost of production at Muscle Shoals is estimated at $20.36 per ton. This cost does not include freight to the point of consumption and this item would be rather high, averaging probably $4.50 per ton, since the marketing of such a large quantity of cyanamide would require shipment to all parts of the fertilizer consuming area. Sales expense would probably amount to 75 cents per ton to cover interest on the money required for new construction and working capital, as well as to pay up losses incurred during initial months of operation when the cost of production would be greater than $20.36 per ton. Interest at 4 per cent on $4,000,000 a smaller amount than has ever been estimated as the new capital required, would wipe out the small balance and make it impossible to reduce the price below $26.33. Such operation would therefore result in no saving to the farmers. The status of cyanamide in American agriculture is indicated by the import figures for the first seven months of 1929, 1930, and 1931, listed beside those for nitrate of soda. In former years a considerable part of the cyanamide imported was converted into ammo-phos fertilizer mainly for export. It will be noted from these figures that only a small part of the capacity of the Niagara Falls plant is required to supply current imports. Imports of nitrate of soda have also fallen off but a considerable part of this shrinkage has been covered by the production of the same material at the Hopewell (Va.) plant, where nitrate of soda is the main product. In sizing up this situation it is necessary to consider with particular care the record of 1930 and 1931. It is realized that these figures are not so easily availalbe as those for former years. The latest import figures now available are those for July 1931. Very truly yours, HENRY G. KNIGHT, Chief of Bureau. EXHIBIT D Estimated cost of producing phosphoric acid (P205) by electric furnace process at Muscle Shoals Mr. MCFARLAND. In conclusion, Mr. Chairman, I wish to call attention to the relief that will be afforded the unemployed in a wide radius of Muscle Shoals if the plants are operated in the production of fertilizer and other chemicals. The employment benefits will not be confined to the Muscle Shoals district in the production of fertilizer and essential chemicals. Employment will be increased in the coal mines, at the coke ovens, and at the limestone quarries of Alabama, and in the phosphate rock area of Tennessee. Full capacity operation at Muscle Shoals in the production of nitrogen and the phosphoric acid necessary to make a properly balanced fertilizer will require annually the following raw materials: 58,000 tons of coal; 212,000 tons of coke, 360,000 tons of limestone; 500,000 tons of phosphate rock; 100,000 tons of silica (clean sand); 64,000 tons of muriate of potash, and 85,000 tons of coal for the steam plant during the low-water period which occurs each year in the Tennessee River. Total raw materials required, 1,379,000 tons. The employment benefits will be continuous, because there will be a ready demand for all the concentrated fertilizer that can be produced at Muscle Shoals on account of the low cost. The employment benefits will not be confined to the worker who receives the pay envelope. Railroads will handle the enormous tonnage of raw materials and finished products; increasing the employment of railway workers and employment will also be increased among those who produce the food, clothing, and other necessities of those who mine the coal, limestone and phosphate rock, make the coke and produce the finished fertilizer and other chemicals. The Muscle Shoals Commission has unanimously agreed that the Muscle Shoals properties should be used primarily in the quantity production of concentrated fertilizer; that the best results can be attained through a private lease; that a farmers' corporation should be given the preference in leasing; that the net proceeds from the lease and the sale of power should be used in financing the storage and distribution of the fertilizer produced, and for scientific research for the benefit of agriculture. The benefits which can be derived from the operation of Muscle Shoals primarily in the production of concentrated fertilizer will be widespread. The fertilizer can be economically shipped to every State in the Union. The benefits to agriculture will be reflected in every line of business. STATEMENT OF J. F. PORTER, PRESIDENT OF THE TENNESSEE FARM BUREAU, MEMBER OF THE MUSCLE SHOALS JOINT COMMISSION FROM TENNESSEE Mr. PORTER. Gentlemen of the committee, I have been unable thus far to appear personally before your committee. As you are aware there were no funds appropriated to pay travel or other expenses of the Muscle Shoals Commission. The organization that I serve, the Tennesse Farm Bureau Federation, has paid my expenses to four hearings in Tennessee, to Muscle Shoals several times, to Anniston, Ala., one trip to Washington, and several other meetings of the commission in addition to my time and other incidental expenses. Aside from the fact that my duties with the Farm Bureau, and its related organizations demand all of my time, I have felt Í should not cause any additional expense unless it was absolutely necessary. I am therefore asking my good friend, Senator Hull, of my State, to present to you may views very briefly. certainly can not qualify as an expert in this case. My views are arrived at first as a citizen of Tennessee, second, with what information I received through study and association with the commission. My first conclusion after looking and thinking over the situation was that this is not as much of a national matter as I had been wont to believe. The Tennessee River and its power resources, and even its navigation possibilities, are matters concerning Tennessee and Alabama much more than any other State though not exclusively. The construction of Cove Creek Dam will mean much to a large section of Tennessee and Alabama in connection with power development. Natural resources consisting of coal, timber, phosphate rock, and other minerals and materials will be needed and used if a bill is passed in Congress based on the report of the Muscle Shoals Commission. The commission made an extended inquiry for the purpose of finding out how much the Muscle Shoals facilities could be best used in the interest of American agriculture and the country generally. It made certain unanimous recommendations which are found in the printed report of the commission. It unanimously reached the conclusion that these properties could be best used for lowering the cost of fertilizer to the American farmer. In order to induce the utmost in the way of obligations from a lessee to produce concentrated fertilizer at a limited profit under supervision I am convinced that it is advisable to permit the lessee to produce other kindred chemicals at Muscle Shoals. Phosphoric acid is one of the principal ingredients of commercial fertilizer. Ordinarily the amount of phosphoric acid in a balanced fertilizer equals the quantity of both nitrogen and potash, the other two remaining ingredients. Across the line in Tennessee within approximately 50 or 60 miles of Muscles Shoals there is a great abundance of phosphate rock. There is a large amount of high-grade phosphate rock, and also a great abundance of low-grade phosphate rock. The deposits extend out from the Mount Pleasant fields over into Hickman County as well as through Maury, Giles, Lewis, and other counties |