Senator BANKHEAD. Can not we get through with these other Alabama witnesses?

Senator NORRIS (presiding). There is a conflict of committee meetings tomorrow and next day. I am sorry.

(Thereupon, at 12.05 p. m., Tuesday, February 16, 1932, the committee adjourned to meet again at 10.30 a. m. on Friday, February 19, 1932.)

TO CREATE MUSCLE SHOALS CORPORATION OF THE

UNITED STATES

FRIDAY, FEBRUARY 19, 1932

UNITED STATES SENATE,

COMMITTEE ON AGRICULTURE AND FORESTRY,

Washington, D. C.

The committee met at 10.30 o'clock, a. m., pursuant to adjournment, in the Senate Office Building, Senator Charles L. McNary (chairman) presiding.

Present: Senators McNary (chairman), Norris, Capper, Norbeck, Frazier, Thomas of Idaho, Townsend, McGill, Bankhead, and Mrs. Caraway.

Present also: Senator Hull.

The CHAIRMAN. The committee will be in order.

Senator HULL. Mr. Chairman, the State Commissioner of Agriculture of Tennessee, Dr. William J. Fitts, is the first witness. The CHAIRMAN. Come forward, please.

STATEMENT OF WILLIAM J. FITTS, COMMISSIONER OF AGRICULTURE, STATE OF TENNESSEE

The CHAIRMAN, Please state for the record your name and address, and occupation.

Mr. FITTS. William J. Fitts; Commissioner of Agriculture of the State of Tennessee. My occupation is farmer. My home address is Gallatin, Tenn.

The CHAIRMAN. Proceed with your statement.

Mr. FITTS. I am commissioner of agriculture of the State of Tennessee and a member of the board of the University of Tennessee by virtue of that office. I graduated from the University of Nashville Medical School in 1900. I am a farmer by profession, and have been on the same farm some 31 years.

I am here at the request of the Governor of the State of Tennessee to discuss with you gentlemen the interests of our State in the use of the facilities at Muscle Shoals. I have read the report of the Muscle Shoals Commission. You gentlemen will remember that three citizens were appointed to represent the State of Tennessee and three to represent the State of Alabama on the Muscle Shoals Commission. These men are all citizens of high character and ability, and have given a great deal of care and study to the question. In addition to my study of the report made by the commission, I have discussed the matter at very considerable length with Mr. J. F. Porter, of Columbia, Tenn. Mr. Porter has been for a good many years president of the Farm Bureau Federation of Tennessee, and is one of the representatives of the State of Tennessee on this Muscle Shoals Commission.

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This commission has found that it is economically feasible to operate the Muscle Shoals properties:

(a) Primarily for quantity production of types of commercial fertilizer and/or fertilizer ingredients of greater concentration than those which are now generally sold to the farmers.

(b) Cooperative scientific research and experimentation for the betterment of agriculture.

(c) Manufacture of chemicals.

The commission is also of the opinion that these benefits "can best be obtained by private operation under lease contracts through competitive negotiations." The commission recommends the enactment of legislation by Congress to retain the purposes outlined, and it goes into some detail in its recommendations as to the provisions of any such leasing contract. I am not a chemist, although I took chemistry in the study of medicine, but am of course rusty on it as I have not practiced medicine for a good many years. I base my opinion very largely upon the conclusions and recommendations of the Muscle Shoals Commission. Its members gave a lot of time to the study of the question, they are all able, conscientious men, and I have confidence in all of them and in the work they have done. The plan they propose, so far as I can tell, has the unanimous indorsement of the agricultural interests of Tennessee, the public generally engaged both in business and industry, and the press. They appear to be gratified that at last a plan has been worked out by our own people directly concerned, which is approved by all conflicting interests thereby removing the difficulty that has prevented a settlement of this important question before now.

I undestand that in order to introduce the manufacture of fertilizer of greater concentration than that now generally in use, that it is necessary to permit the lessee to also use the properties at Muscle Shoals for the manufacture of other chemicals. Some products, I understand, will be new products. The interest of this section and particularly Tennessee, as I see it, will be very beneficially served by adopting the plan recommended by the commission for, among others, the following reasons:

(a) It would benefit the American farmer.

(b) It would tend to produce fertilizer not only at lower cost, but fertilizer of greater efficiency through concentration. As I understand the legislation under which the Wilson Dam was built, the properties. were to be used for the national defense in time of war and in peacetime for agriculture.

(c) It would bring about the production of fertilizer of greater efficiency and at lower cost and if methods and processes can be improved tending to still lower the cost and tending to attract capital in similar methods and plants throughout the country, we have gone a long distance in benefiting the American farmer.

I have read the brief filed by a large number of gentlemen from Alabama with the House Military Affairs Committee. This brief points out that the production of fertilizer ingredients in commercial quantities as recommended by the Muscle Shoals Commission, and the manufacture of chemicals hand in hand with industrial fertilizer manufacture would employ a very large number of people, not only at the plants at Muscle Shoals, but elsewhere throughout the section in producing coal, coke, phosphate rock, limestone and other materials

which would be needed, and in the employees of transportation.companies handling these materials. All over our section there is an abundance of intelligent labor upon our farms. We have near Nashville a large rayon plant. Boys and girls in our section travel over our good highways and work in this plant. They live at home on the farm. I have no doubt that boys and perhaps girls in that part of Tennessee near Muscle Shoals would find employment there. Many of them would be able to live at home on the farm. As you gentlemen know, we are in rather an acute situation with respect to unemployment, and an industry which offers employment would be a godsend to our section of the country. As I see it, the dissemination of industry throughout our rural communities is a basic principle for the restoration of national welfare.

We have a large amount of phosphate rock in Tennessee, some of it within 50 miles or so of Muscle Shoals. We have a great abundance of high-grade phosphate rock and a very great abundance of low-grade phosphate rock extending pretty well all over middle Tennessee. I understand from the brief I have referred to that industry at Muscle Shoals would start off with a minimum requirement of something like 2,225,000 tons of phosphate rock per year. This, of course, would pay the market for our rock and provide employment, and very greatly increase the value of the farms in that territory where phosphate rock may be found.

The operation of the Muscle Shoals plants will necessarily attract other industry to the possibility of available water power throughout that section, which will bring about in a large way my idea of an agricultural-industrial set-up.

An industrial population at Muscle Shoals would have to be fed. Muscle Shoals is in North Alabama about 18 or 20 miles from the Tennessee line. In the section of Tennessee near Muscle Shoals our farms raise all kinds of food products-poultry, milk and milk products, livestock, and a world of truck products. Our farms ship trainloads of strawberries, cabbage, and other farm products out of west Tennessee. A large industrial population would find nearby in Tennessee abundant farm food products. These are some of the reasons why I believe the interest of Tennessee would be vary constructively served by adopting the commission's plan for the operation of the Muscle Shoals project.

The CHAIRMAN. Are you here advocating any particular measure, or proposal, or plan?

Mr. FITTS. Nothing more than indorsement of the commission's report.

The CHAIRMAN. We are all familiar with that. In a word, do you think that meets the approval of the public generally in the State of Tennessee?

Mr. FITTS. I think that is the best proposition that has been made, Mr. Chairman.

The CHAIRMAN. That involves a lease to private parties.

Mr. FITTS. Yes.

The CHAIRMAN. And the power to be used in the creation of fertilizer for the farmers.

Mr. FITTS. Primarily, yes, sir.

The CHAIRMAN. Is there anything in that that involves Government operation?

Mr. FITTS. That would be the last measure, as I see it, the last resort.

Senator TOWNSEND. Do you represent a large percentage of the farmers of your State?

Mr. FITTS. I am supposed to, yes, sir; occupying the position of commissioner. We assume the position of mouthpiece for the farmers of the State.

Senator THOMAS of Idaho. Has this subject been discussed among the farmers?

Mr. FITTS. Quite a bit, yes.

Senator THOMAS of Idaho. Does the sentiment of the farmers favor private operation rather than Government operation?

Mr. FITTS. Yes.

The CHAIRMAN. Do they know the difference between the two, and what it is all about? Do they know the technical details, or is it a fact that they want the operation to go forward and believe that fertilizer will be made considerably cheaper by virtue of this power? Mr. FITTS. They think fertilizer will be made cheaper by a lease of the Muscle Shoals power.

The CHAIRMAN. Do you recall the engineer who represented Mr. Ford some years ago, when he wanted to get the property, who made the statement that fertilizer would be reduced 50 per cent to the farmers?

Mr. FITTS. No.

The CHAIRMAN. That statement was made. Is that the idea that obtains among the Tennessee farmers?

Mr. FITTS. No, I do not think so.

The CHAIRMAN. What is the basis for the conclusion that fertilizer will be considerably cheaper if manufactured at Muscle Shoals, either by private parties, through lease, or through Government operation on its own account?

Of course, the com

Mr. FITTS. I think that conclusion is drawn. mittee made an investigation on that, and I take it that they went to the limit to get all the information possible. Then, of course, there is the factor of the proximity to Muscle Shoals of the raw materials, which would, I think, enter into the conclusion.

Senator TOWNSEND. I am interested in that. What raw materials for fertilizer?

Mr. FITTS. Phosphate rock.

Senator ToWNSEND. Where is that located?

Mr. FITTS. In Tennessee.

Senator TOWNSEND. In Tennessee?

Mr. FITTS. Yes.

Senator TOWNSEND. Near Muscle Shoals?

Mr. FITTS. Yes; all through the central part of the State. The largest deposit is in the southern-central part of the State.

Senator THOMAS of Idaho. Has there been any agitation, as between Government-owned power that would be developed there, and privately owned power?

Mr. FITTS. Yes; there has been quite a bit of discussion on that point.

Senator THOMAS of Idaho. What do the farmers think about it? Do they favor Government-owned power down there, and Government-developed power, or do they favor private ownership of power?