power business. I am anxious to protect legitimate private capital that is in a legitimate business, whether it be in the fertilizer business or in the power business. I have no interest whatever in a fertilizer plant, and no interest in any power plant. I have never received or been offered a nickel, as I have testified, or one penny, from any public utilities corporation in my life, and was never connected with one, directly or indirectly. My only interst is the development of my community, more on account of the five sons I have growing up in that community, than on account of myself. I have retired from business. Their future depends on the future of my community, and I am interested in the settlement of this matter and the development of the Tennessee River more for that reason than for any other reason. The CHAIRMAN. You are interested primarily, of course, naturally, in cheaper fertilizer.

Mr. REYNOLDS. I beg your pardon?

The CHAIRMAN. You are interested in cheaper fertilizer. You want the cost of that item diminished considerably, is that true? Mr. REYNOLDS. I am; yes, sir.

The CHAIRMAN. You say you farm 4,000 acres?

Mr. REYNOLDS. I do not farm it, because I saw it was going to break me if I kept on. I own it.

The CHAIRMAN. That is all right. Let us not be technical or facetious. You said you had 4,000 acres there, and consequently you are interested in lower costs for your fertilizer.

Mr. REYNOLDS. I am.

The CHAIRMAN. Certainly; then, naturally, from that viewpoint, you appear here in the interest of a cheaper fertilizer. Is it your idea that by leasing it to private interests you can obtain cheaper fertilizer?

Mr. REYNOLDS. I think our only chance to get cheap fertilizer at Muscle Shoals, or anywhere else, is to use a concentrated fertilizer. Mr. Brand testified before the Military Affairs Committee that the average freight rate on fertilizer being used to-day, on the raw materials, is $6.30 a ton. That is an average of about 16 per cent plant food, and 1,640 pounds of inert material, or filler, that we ship, and handle, and pay the freight on. There is a fertilizer being made

The CHAIRMAN. We are all very familiar with those details. Let me ask you a general question now. You are interested in cheaper fertilizer, of course.

Mr. REYNOLDS. Yes.

The CHAIRMAN. Do you think the operation by private parties at Muscle Shoals, through lease of this plant, will reduce the cost of fertilizer, and if so, to what extent? Can you give us any figures?

Mr. REYNOLDS. We will save $16.90 on freight alone, in making fertilizer that contains 60 or 64 per cent plant food. If you do not do that, you are not going to get any cheaper fertilizer from public operation or private operation.

The CHAIRMAN. What is the present cost of fertilizer per ton, of 3-8-3?

Mr. REYNOLDS. At what point?

The CHAIRMAN. F. o. b. the farm owned by Mr. Reynolds.

Mr. REYNOLDS. Mr. Brand testified that $21.60 was the average price last year. That is the best evidence I have.

The CHAIRMAN. Have you bought any fertilizer in recent years?

Mr. REYNOLDS. No.

The CHAIRMAN. What do you think it would cost you, under private operation of the plant at Muscle Shoals?

Mr. REYNOLDS. I do not think it would be possible for the Government, or private capital, either, to save me any money on fertilizer, unless they made a more concentrated fertilizer at Muscle Shoals, which is possible.

A great deal has been said about nitrate plant No. 2. In all fairness to everybody concerned, I do not think you could take plant No. 2 and make nitrogen in competition with the present price of nitrogen because it is being made at a loss by everybody that is making it. Nobody has made a dollar on it. They have lost heavily in the past few years making it. It is not fair to say that because we have a depression here, and everybody is selling everything below cost, that the Government or anybody else could go there and take nitrate plant No. 2 and make nitrogen in competition with the present price, because it is a cutthroat game to-day, which can not always exist. I think nitrate plant No. 2 should be maintained, even if it is obsolete. It is a beautiful plant. It is well equipped. There is no money being wasted in maintaining it. It is the largest poison-gas plant in the world. It can be turned, within 30 days, into the largest poisongas plant in the world. We say we are not going to use poison gas, but France bought 40,000,000 gas masks the other day, one for every inhabitant of France. So, I do not know what they are buying them for, and I think it should be maintained. I think the time will comeand not far off when it can be well utilized. It is a beautiful plant. It can be changed into a phosphoric-acid plant without a great deal of expense. I am an engineer, and I know that can be done.

The CHAIRMAN. You do not entertain a very strong hope that either through private or governmental operation, the cost of fertilizer will be much cheapened at Muscle Shoals?

Mr. REYNOLDS. Yes, sir, I do, because we can cheapen the cost of phosphoric acid, and make a much more concentrated phosphoric acid on account of the phosphate bed being right at Muscle Shoals, just across the river from Muscle Shoals in Tennessee. All your phosphate rock in the United States, and a large part of the world's supply, is in Florida and Tennessee. You can not make a concentrated fertilizer from acid phosphate. That is too much inert material in the rock that must stay there, in the acid process.

The CHAIRMAN. We have had a great deal along that line this year, and in former years running back to 1915. You have the rock there and in Alabama. If we further assume that you make concentrated fertilizer under the present price of $21 on commercial fertilizer, what would you save per ton, in your opinion, by the operation of the plant at Muscle Shoals?

Mr. REYNOLDS. You would save, in the beginning, if you made concentrated fertilizer, $18.90 in freight alone, by shipping 1 ton instead of 4.

Senator TOWNSEND. You mean $18 out of $21?

Mr. REYNOLDS. You are shipping 4 tons of fertilizer now, with 16 per cent plant food, which equals 1 ton of 64 per cent plant food fertilizer. Consequently, you are shipping only 1 ton, and Mr. Brand's testimony was that the freight rate was $6.30 a ton. In the future, you are going to ship only 1 ton where you are shipping 4 now.

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?

Mr. FITTS. I think that conclusion is drawn. Of course, the committee 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.

for fertilizer?

Mr. FITTS. Phosphate rock.

Senator TOWNSEND. Where is that located?

Mr. FITTS. In Tennessee.

Senator TOWNSEND. In Tennessee?

Mr. FITTS. Yes.

Senator TowWNSEND. Near Muscle Shoals?

What raw materials

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?