Arizona republican., 1922-03-08
KAHN TELLS
FORD LEGAL.
OBSTACLE ES.
OFFER.
Long Court Fight Would
Follow Sale Of Muscle
Shoals To Detroiter, He
Tells Representative
TRepubIlcan A. P. Leased wIrel

WASHINGTON, March 7.--Chair-
man Kahn OF the house military COM
mittee today told w. B. Mayo, chief
Of engineers for Henry Ford, that it
would require years to thresh out
existing legal entanglements and it
was doubtful even then that the gov
ernment would be able to accept the
Detroit manufacturers proposen con-
tract for purchase and lease Of the
nitrate and power projects at Muscle
Shoals, Alabama.
After the committee adjourned
other committee members said the
legal barriers to acceptance of the
Ford proposal appeared inescapable
because of the contracts held by the
Alabama Power company and the Air
Nitrates corporation, which those
concerns claim, give them exclusive
rights to purchase the Warrior steam
plant and nitrate plant No. 2, respec-
lively. Both units would be de-
livered to Mr.. Ford with free titles
in the event his proposal was ac-
cepted, and could not be freed from
the contract conditions without pro-
longed litigation in the courts.
Ford Alterations Presented
The discussion of the legal diff
culties the committee faced in con-
sidering the Muscle Shoals situation,
developed after Mayo and Gray Sill
yer, Washington representative of the
American Farm Bureau Federation,
had presented three alterations which
they said Mr.. Ford had agreed to
make in his original offer for the
shoals projects.
The first alteration provided for a
fixed capitalization Of not less than
$10,000,000 for the company Mr..
Ford would create to operate the
Alabama enterprise. The amend
ment was suggested by Secretary
Weeks when he submitted the bid
to congress in order to safeguard the
governments interest against failure
of the operating company to carry
out the contract in good faith for the
100 years it would be effective.
Another amendment offered by Mr.
Mayo was a guarantee to manufac-
ture Commercial fertilizer" rather
than nitrates and "other compounds
while the third proposed to give
authority to the company's directing
board to regulate the delivery Of the
fertilizer direct from factory to con-
sumer. making it impossible for in
termediary agents to handle the pro-
ducts and increase the price to the
farmers above the eight per cent
profit charged by the manufacturing
company.
These amendments were accepted
by the committee although some
members expressed regret that Mr.
Ford had refused to accept a 50-year
lease and had insisted upon the 100
year clause.
Chairman Kahn and Representative
Miller, Republican of Washington,
asked Mr.. Mayo il Mr.. Ford would
further modify his offer. eliminating
the provisions requiring the govern
ment to give him clear titles to the
Warrior steam plant and nitrate
number two. and whether Mr.. Ford
would agree himself to adjust the
legal disputes over the rights claimed
by the Alabama Power company and
the Air Nitrates corporation, defray-
ing the litigation expenses as we'll.
Refuse To Modify Offer
Mr. Mayo replied that the legal sit
uation was the governments business
and Mr.. Ford would not be willing to
pay the costs of court trials. He also
insisted that the Warrior plant was
essential to the plans for the Muscle
Shoals development that Mr.. Ford
had in mind.
Mr.. Kahn said attorneys for the
power company and the nitrate cor
poration had advised him they would
insist that the government discharge
the obligations it had assumed when
contracts for the construction of the
two units were executed with war de-
partment officials and options given
their clients for exclusive purchase
for the two plants in the event the
government ever decided to sell them.
Under their separate warnings that
they would refuse TO submit to the
disposition of the properties to Mr..
Ford and would battle for their rights
from the lowest to the highest courts,
how the government could enter into
the agreement proposed by Mr.. Ford
TO the extent of delivering the plants
to him for immediate development or
for future operation if the courts up
held the power company and the nj
trate corporation in the final decision
Mr.. Mayo revealed that it was Mr..
Ford's intention TO begin work at
Muscle Shoals this summer.
1T would be a crime" he said, mot
to settle this affair so we can get
into the river this summer during the
dry season"
Mr.. Kahn said he favored quick
action by congress but believed that
despite whatever action was taken,
there could be no assurance that the
legal problems could be solved for
years.
O.