Statement on the Report of the Muscle Shoals Commission.

Note: On the same day, the White House issued a text of the Muscle Shoals Commission report, dated November 14, 1931, which follows:
To the President of the United States and to the Governors of the States of Tennessee and Alabama:

The Muscle Shoals Commission has the honor of submitting this report of its findings and conclusions:

ORIGIN OF COMMISSION

Acting upon the suggestion contained in the message from the President of the United States to the Senate dated March 3, 1931, returning without approval Senate Joint Resolution No. 49, the Legislature of the State of Tennessee by Senate Joint Resolution No. 38, approved March 23, 1931, appointed three commissioners as representatives of the State of Tennessee to consult with any commission created by the State of Alabama and such other commission as the President might designate in connection with the consideration of the problem of utilizing the United States plants at Muscle Shoals, Alabama, for the purpose of quantity production of fertilizers and the development of the resources and industries of the Tennessee Valley.

By House Joint Resolution No. 331, approved June 30, 1931, the Legislature of the State of Alabama authorized the Governor to appoint three commissioners to represent the State of Alabama to consult with the commissioners appointed by the State of Tennessee and any similar commission which might be appointed by the President, for the consideration of the problem.

Pursuant to the authority granted in H. J. Res. No. 331, the Governor of the State of Alabama appointed three commissioners.

In conformity with the foregoing, the President appointed a commission of three members to meet with the commissioners appointed by the States of Alabama and Tennessee, and on July 14, 1931, announced the Muscle Shoals Commission.

MEMBERSHIP OF COMMISSION

The membership of the Muscle Shoals Commission is as follows:
Representing National Farm Organizations
EDWARD A. O'NEAL, Chicago, Illinois, President, American Farm Bureau Federation
Representing the State of Tennessee
MERCER REYNOLDS, Chattanooga, Tennessee
J. F. PORTER, Columbia, Tennessee
R. L. MOORE, Jellico, Tennessee
Representing the State of Alabama
W. F. MCFARLAND, Florence, Alabama
WILL Howard SMITH, Prattville, Alabama
S. F. HOBBS, Selma, Alabama--Chairma
Representing the War Department
COLONEL HARLEY B. FERGUSON, Corps of Engineers, United States Army
COLONEL JOS. I. McMULLEN, J.A.G.D., United States Army

By vote of the Commission at its first meeting on August 3, 1931, Honorable S. F. Hobbs of Selma, Alabama, was elected Chairman of the Commission.

SCOPE OF INQUIRY BY COMMISSION

The general scope of the inquiry by the Commission is outlined in Section 124 of the National Defense Act and the Acts of the legislatures of the states of Alabama and Tennessee enacted pursuant to the suggestion of the President, in his message to the Senate dated March 3, 1931, which returned without approval Senate Joint Resolution No. 49. The purpose of the Commission has been to inquire into the problem of applying the benefits available at the United States Plants at Muscle Shoals, Alabama, to agriculture and to consider the development of the resources of the Tennessee Valley in the interest of agriculture and industry.

INVESTIGATIONS MADE

From the outset the Commission recognized the fact that any successful plan for the operation of the properties must be based upon sound economic principles. With that thought in mind, the Commission assembled and considered all available practical data relative to the engineering and industrial possibilities of the plants. Much authentic and valuable information was gleaned from the reports of prior investigators, of which there have been many. Since there has been a very marked advance in the fertilizer, chemical, and power industries during the past ten years, it was necessary to make careful surveys of these industries to determine the present existing situation. Additional surveys were made to obtain specific engineering data pertinent to the situation. Various technical experts in the industries concerned were consulted. Since it is proposed that agriculture is to be the beneficiary of any plan, the advice of representatives of farm organizations and agronomists was sought. For the purpose of obtaining the views of individual farmers and small groups of farmers, public hearings were held in various cities of the states of Alabama and Tennessee. These meetings were well attended and much basic information was obtained.

Through the press and the mail, the general public and all industrial organizations which might be interested were solicited to submit bids and proposals for the operation or disposition of the properties. Eight bids and proposals were tainted from this source and while they evidenced careful thought and serious intention, none was sufficiently satisfactory to warrant the endorsement of the Commission.

CONCLUSIONS

From the mass of information obtained from various sources and from a careful consideration of the views of representatives of various enterprises including farm organizations, fertilizer and chemical industries and those dealing with raw materials incident to fertilizer and chemical fields and from exhaustive studies by experts, the Commission unanimously arrived at the following conclusions:

1. It is economically feasible and desirable to use and operate the Muscle Shoals properties for the following purposes:
(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 farmer.
(b) Cooperative scientific research and experimentation for the betterment of agriculture.
(c) Manufacture of chemicals. 2. It is the definite conclusion of the Commission that the foregoing public benefits can best be obtained by private operation under lease contracts through competitive negotiations.

RECOMMENDATIONS

The Commission unanimously adopted the following recommendations:

3. The enactment of the necessary enabling legislation by Congress empowering the President or such agency as he may elect to negotiate and to conclude a lease contract for the United States properties at Muscle Shoals, Alabama, and to supervise operations thereunder, for and on behalf of the United States.

4. In addition to usual and necessary covenants, the lease contract covering the properties should contain provisions giving effect to the following terms:
(a) Such power as may be necessary, and such lands, buildings, fixtures and other equipment belonging to the nitrate plants as may be serviceable, will be used for making fertilizer and/or fertilizer ingredients in form suitable for quantity production, or for home mixing, or for direct application to the soil.
(b) Fertilizer and fertilizer ingredients in form suitable for home mixing or for direct application to the soil, so produced, will be sold to farmers or their authorized purchasing agents under conditions providing for equitable distribution and reasonable profit limitations.
c) All power necessary for the production of a required initial minimum amount of fertilizer or fertilizer ingredients, and for the production of increasing amounts from time to time in response to reasonable market demands, and for the manufacture of chemicals, should be guaranteed and allocated for such purposes.
(d) The lessee shall pay a fair and reasonable rental on mutually agreeable terms.
(e) Up river development, including Cove Creek Dam, and equalization dam below Wilson Dam, to increase the rental in fair proportion to the benefits derived therefrom.
(f) Term of lease shall be 50 years, with Boulder Dam clause on re-negotiation as to rental.

5. In behalf of the development of the Tennessee Valley, there should be authority to sell or use surplus Muscle Shoals property and to sell or dispose of, on an equitable basis, surplus power at the switchboard; states, counties, municipalities and chemical operations to have preference; the remainder of such surplus power shall be subject to recall on reasonable notice for the purposes above named.

6. Power rentals accruing to the United States and proceeds from lease or sale of surplus property should be expended, not exceeding 25% for research and investigation, under the direction of a Board to be named from organized agriculture, and not exceeding 75% for the creation of a revolving fund for the operation and financing of the purchase and storage of fertilizer and fertilizer material, and the development of better methods of manufacture and distribution of fertilizer by a farmers cooperative, representing national farm organizations. Any surplus of funds not needed for such operations will be applied to the Wilson Dam share of the amortization of the cost of Cove Creek Dam.

7. Preference as a lessee should be accorded a corporation exclusively owned and controlled by organizations of farmers, operated without profit.

8. Cove Creek Dam should be constructed by the Government. This is justified and recommended for the benefits to accrue to navigation, flood control and incidental power development, there, and at points downstream. It would greatly enhance the value of Wilson Dam and greatly encourage the building of other high dams on the Tennessee River. The construction of Cove Creek Dam should be begun immediately after the disposition, by lease or otherwise, of the Muscle Shoals project has been authorized.

9. The right of recapture of the dams involved in this report, at the termination of the lease or amortization period of fifty years, by the States of Tennessee and Alabama preferably, should be recognized, under the terms of existing laws.

10. In the opinion of the Commission, based upon careful study and survey, if such enabling legislation is enacted by Congress, such a contract will be readily negotiable, at a fair and reasonable rental, and the benefits to agriculture to be derived therefrom would be immeasurable.

The publication of all of the information which was made available and considered by the Commission in arriving at its conclusions would be very voluminous. It is believed, however, that the public might be interested in a part of that record information. Accordingly, the Commission proposes to publish a booklet setting forth certain documentary and other evidence pertinent to the solution of the problem. Some parts of this evidence received the endorsement of the Commission and other parts did not.
Most respectfully submitted,
S.F. HOBBS, Chairman
EDWARD A. O'NEAL
HARLEY B. FERGUSON
JOS. I. McMULLEN
MERCER REYNOLDS
J.F. PORTER
R.L. MOOREW F. MCFARLAND
WM. HOWARD SMITH