Senator BANKHEAD. What is the present freight rate on phosphate rock to Muscle Shoals?

Mr. MCFARLAND. $1.48.

Senator BANKHEAD. Senator Norris asked you about the economics involved in the location of the fertilizer plant, that is, whether it would be cheaper to bring the rock to the present Muscle Shoals plant, or take the plant to the rock fields.

Mr. MCFARLAND. I have not investigated that, Senator, and I do not know of anyone who has. I would hesitate about giving an opinion on it, although I did state to Senator Norris, just making a guess, that I would say that you had better concentrate your operations at one place, and bring your rock to that place.

Senator BANKHEAD. The rock beds are scattered, are they not?
Mr. MCFARLAND. Yes.

Senator BANKHEAD. Is there any place available there where you could place a plant that would last from 50 to 100 years, without hauling the rock to it?

Mr. MCFARLAND. I am not competent to answer that, but I do not think there is.

Senator BANKHEAD. It is likely that any location you selected would exhaust the rock immediately available to it, and the plant would then have to be moved or the rock transported to it.

Mr. MCFARLAND. Very likely; yes, sir.

Senator BANKHEAD. In considering the question of the location of the plant, would you not also take into consideration the available existing railroad facilities for outbound freight, as well as inbound freight?

Mr. MCFARLAND. And the river, too, as a medium of transportation.

Senator BANKHEAD. I will get to that. If you moved the plant over into Tennessee, into the rock fields, you would simply then have either one railroad, or you would have a branch line coming to it.

Mr. MCFARLAND. There is no point where you could locate a plant in the phosphate field where you would have more than one railroad.

Senator BANKHEAD. Of course, in addition to the advantages in railroad transportation now existing, you would have the matter of water transportation.

Mr. MCFARLAND. Yes, sir.

Senator BANKHEAD. Is there any actual water transportation available now, or is it merely potential?

Mr. MCFARLAND. We have four and a half feet at the low water periods up to Florence.

Senator BANKHEAD. You mean from the mouth of the river.

Mr. MCFARLAND. Yes, sir. That is the shallowest water in that stretch of the river.

Senator BANKHEAD. And that goes, of course, into the Mississippi. Mr. MCFARLAND. Yes, sir.

Senator BANKHEAD. From that point to the Mississippi River. Mr. MCFARLAND. It connects up with the inland waterways system. Senator BANKHEAD. Does the fact of either existing water transportation or potential water transportation secure cheaper railroad rates?

Mr. MCFARLAND. I do not think potential water transportation does. When it is actual, then it does reduce the rates.

Senator BANKHEAD. So, the probability is that when your water transportation facilities there were further developed and improved, as a result of that you would secure lower railroad rates?

Mr. MCFARLAND. Lower railroad rates.

Senator BANKHEAD. In addition to your cheaper water rates?
Mr. MCFARLAND. Yes.

Senator BANKHEAD. That, of course, would not be available if you moved your plant over into Tennessee, to the rock territory?

Mr. MCFARLAND. No, sir; it would not. There would be no competition.

Senator BANKHEAD. With respect to the matter of transmission lines, would you not have to consider the cost of stepping up the power, and stepping it down again?

Mr. MCFARLAND. Oh, yes.

Senator BANKHEAD. That is a large item, of course?

Mr. MCFARLAND. Quite an item in the transmission of powertransformer losses, that is, losses due to resistance.

Senator BANKHEAD. Would you not also naturally take into consideration the existing facilities at Muscle Shoals as compared with the initial cost of establishing a plant over in the rock territory?

Mr. MCFARLAND. You would have to do that in making a comparison, of course.

Senator BANKHEAD. It would be necessary to do that?

Mr. MCFARLAND. Yes.

Senator BANKHEAD. That would give an additional advantage to the location at Muscle Shoals?

Mr. MCFARLAND. Oh, yes.

Another matter, Senator, before you get away from that point. You know, you require coke in the electric furnace production of phosphoric acid. You would be moving farther away from your coke if you went up into the phosphate field.

Senator BANKHEAD. With respect to Cove Creek Dam, how many months in the year, Mr. McFarland, would water be needed from that reservoir to increase the primary power?

Mr. MCFARLAND. Senator, there is no primary power contemplated at Cove Creek.

Senator BANKHEAD. I say, to increase the primary power at Muscle Shoals, No. 2?

Mr. MCFARLAND. That would depend upon the duration of the low flow in the river.

Senator BANKHEAD. What is it, on an average? You are familiar with that, are you not?

Mr. MCFARLAND. I would say, taking a 25-year average, that you would be releasing some water from that storage dam. The average would be about four months in the year.

Senator BANKHEAD. And the other eight months, you would be accumulating water.

Mr. MCFARLAND. Accumulating in the storage dam.

Senator BANKHEAD. During that accumulation of storage, you could not well operate a power plant, could you, at Cove Creek?

Mr. MCFARLAND. No, sir. There would be no water to operate it. Senator BANKHEAD. You are holding all the water for filling the dam? Mr. MCFARLAND. Yes.

Senator BANKHEAD. Of course, if you operated a power plant, you would let the water out, instead of holding it in the reservoir?

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Mr. MCFARLAND. Yes, sir. But that would develop a very valuable power there, Senator. The engineers recommended the installation of something like 200,000 horsepower of generators there. That would produce power, you see, during the low-water periods when power is scarce, and whoever controlled that power would find a ready sale for it, because it would take the place of more expensive steam auxiliary power.

Senator BANKHEAD. Mr. McFarland, is there any other statement you want to make?

Mr. MCFARLAND. I think I have covered the subject, Senator. I hope I have, at least.

Senator BANKHEAD. Do you think that with a lease which confines the lessee to the production of nitrogen in fixed quantity at that plant, you could secure a lessee?

Mr. MCFARLAND. I think if the law were so drawn, Senator, that it would compel him to make any large amount of nitrogen over a long period of time, you would not get a lessee.

Senator BANKHEAD. Do you think the same results would be reached for the benefit of the farmer by simply requiring the production of a minimum amount of plant food?

Mr. MCFARLAND. Plant food, yes; and that minimum amount could be filled by the production of either nitrogen or phosphoric acid, or both. But if he could buy nitrogen cheaper than he could make it, then he should be compelled to buy it. The object is cheaper fertilizer.

Senator BANKHEAD. That is all.

(The papers submitted for the record by Mr. McFarland are as follows:)

EXPLANATION OF METHOD OF CALCULATING COMPARATIVE INDEX UNIT OF FERTILIZER EVALUATION

There appears little or no systematic relation of valuation among the several fertilizers with varying analyses. It is therefore necessary to work out a method for calculating these various prices and ratios to a common unit basis. In most States the departments of agriculture use as a means of comparative evaluation of the various mixed fertilizers, a system of assigning a relative fixed value respectively to the nitrogen, P20, and potash. For instance, Indiana uses the relative values of nitrogen 2.5-Р2O, 1.2, and potash 1. As an example, take a mixed fertilizer containing 3 per cent nitrogen, 8 per cent P2O5 and 5 per cent potash, that costs the farmer $23.60 per ton. The unit of evaluation is determined

as follows:

Nitrogen (3X2.5)

P2O5 (8X1.2).

Potash (5X1.0).

Total....

7.5

9.6

5. 0

22. 1

The 22.1 evaluation units divided into $23.60 gives for each evaluation unit $1.06787. Then by multiplying this by the relative factors we obtain the unit value of each constituent, which multiplied by the respective percentages gives the original price back as a check:

Nitrogen (1.06787X2.5-$2.66967×3).
P2O5 (1.06787X1.2-1.28144X8).
Potash (1.06787X1.0-1.06787 X 5).

Total...

$8.00902 10. 25152 5. 33946 23. 60

By taking the numerical average of any number of these indices of units of evaluation we obtain the true average price per unit of any number of various analyses with various prices. Then by multiplying the percentage figures of any average analysis of fertilizer by the respective prices per unit and adding the results we obtain the actual average price paid.

EXHIBIT A

P2Os used: