Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-04
Text of Shoals Veto
President Suggests States Operate Huge Plant as
Local Enterprise for Benefit
of
of Agriculture.

nual income to this project of about
$1,000, 600, or loss upon this basis
Of nearly 100000 annually. This
territory is now supplied with power.
and to obtain such an income it
would be necessary to take the GUS
toners of the present power COM
panies. To secure these customers
1t would be necessary to undercut
the rates now made by them. 1t is
difficult to estimate the extent to
which it would be necessary to go in
such rate-cutting in order to secure
the business. In any event 1t would,
Of course. diminish estimated in
come and increase the losses.
It is obvious that any estimate of
income contains a large element of
conjecture, as the proportions of in
duStrial and municipal load cannot
be foretold. But any estimate of
the income of the project as set up
by this legislation will show loss.
The plants at Muscle Shoals were
originally built for a production of
nitrates for use in war explosives. I
am advised by the War Department
that the very large development in
the United States by private enter
prise in the manufacture of syn
thetic nitrogen now affords an ample
supply covering any possible re-
quirementS OF war. 1t is therefore
unnecessary to maintain this plant
for any such purposes.
This bill provides that the Pres
ident for period Of IL months may
negotiate a lease of the nitrate
plants for fertilizer manufacture un-
der detailed limitations, but in fall
ure to make such lease the bill
makes 1t mandatory upon the Gov
eminent to manufacture nitrogen
fertilizers at Muscle Shoals by the
employment Of existing facilities or
by undermining existing plants or
by any other process. I may state
at once that the limitations put upon
lessees in the bill are such that
this provision is of no genuine Inn
portance. Inquiries have been made
Of the most responsible and expert
enced concerns that might possibly
undertake such lease and they have
replied that under the conditions
set out in the bill it is entirely i'm
practical for them to make any bid.
The leasing provision is therefore of
no utility; it may at once be dis
missed. In consequence the project
we have to consider under this bill
Is the manufacture of fertilizers by
the Federal Government.
Plants Now Obsolete.
The Department of Agriculture re-
ports that these plants are now more
or less obsolete and that with power
at even mills per kilowatt hour,
with proper charges included, could
not produce the products for which
they are constructed as cheaply as
these products are now being sold
in the wholesale markets. There
fore, it would be necessary to mod
ernie the equipment at an unknown
cost in millions. There is no evil
dence as to the costs of nitrogen
fertilizers by the newer equipment,
and there is therefore no basis upon
which to estimate the results to the
Government from entering upon
such a competitive business. It can,
however, be stated with assurance
that no chemical industry with its
constantly changing technology and
equipment, its intricate problems Of
sales and distribution, can be sue
cessfully conducted by the Govern
ment.
The first essential Of al b,:ciness
Is competent MANAGEMENT. Al
though the bill provides for the
management by three directors, the
Congress must from the nature of
our institutions be the real board Of
directors and with all the disad-
vantageS to technical business that
arise from a multitude OF other
duties, changing personnel, chang
ing policies and regional interests.
These three directors are to have
political qualifications, as 1t is stipu-
lated that not more than two shall
be Of one political party. They are
to receive $50 per diem, but are
limited to $500 each for tie fret
year and $1,000 annually thereafter.
The act provides that:
"All members of the board shall be
persons that profess a belief In the
feasibility and wisdom, having in
view the national defense and the
encouragement of interstate COM
merce, of producing fixed nitrogen
under this act of such kinds and at
such prices as to induce the reason
able expectation that the farmers
will buy said products, and that by
reason thereof the corporation may
be Self-suStaining and continuing
success"
In other words, they are to say
that they believe in Government
manufacture of fertilizers, and that
1t can be made success on this set
up. We are thus supposed to APP
point business administrators on the
basis of their beliefs rather than
their experience and competency.
These directors are manifeStly to
have political complexion and APP
parently the entire working force is
likewise to have such basis of Sc
lection, as the usual provision for
the merit service required by law in
most other Federal activities is omit
ted. Three men able to conduct a
$50, 100000 business cannot be
found to meet these specifications.
Opposes Government in Business.
I am firmly opposed to the Gov
eminent entering into any business
the major purpose Of which Is COM
petition with our citizens. There
are national emergencies which re-
quire that the Government should
temporarily enter the field of bust
ness, but they must be emergency
actions and in matters where the
CoSL OF Lne project Is secondary 10
much higher considerations. There
are many localities where the Fed
eral Government is justified In the
construction Of great dams and
reservoirs, where navigation, flood
control, reclamation or stream regu-
lation are of dominant Importance,
and where they are beyond the
capacity or purpose of private or
local government capital to con-
struct. In these cases power is often
a by-product and should be disposed
Of by contract or lease. But for the
Federal Government deliberately to
go out TO build up and expand such
an occasion to the major purpose of
a power and manufacturing BUSH
ness Is to break down the initiative
and enterprise Of the American peo-
pie; it is destruction Of equality of
opportunity amongst our people; it
Is the negation Of the ideals upon
which our civilization has been
based.
This bill raises one Of the impor-
tant issues confronting our people.
That Is squarely the issue of Federal