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A BILL TO PROVIDE FURTHER FOR THE NATIONAL DEFENSE;
TO ESTABLISH A SELF-SUSTAINING FEDERAL AGENCY FOR
THE MANUFACTURE, PRODUCTION, AND DEVELOPMENT OF
THE PRODUCTS OF ATMOSPHERIC NITROGEN FOR MILITARY,
EXPERIMENTAL, AND OTHER PURPOSES; TO PROVIDE RE-
SEARCH LABORATORIES AND EXPERIMENTAL PLANTS FOR
THE DEVELOPMENT OF FIXED-NITROGEN PRODUCTION;
AND FOR OTHER PURPOSES

Printed for the use of the Committee on Agriculture and Forestry

WASHINGTON
GOVERNMENT PRINTING OFFICE

1920

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PRODUCTION OF ATMOSPHERIC NITROGEN.

MONDAY, MARCH 22, 1920.

UNITED STATES SENATE,

COMMITTEE ON AGRICULTURE AND FORESTRY,

Washington, D. C.

The committee met pursuant to call of the chairman in room 326, Senate Office Building, at 10 o'clock a. m., Senator Asle J. Gronna presiding.

Present: Senators Gronna, Norris, Kenyon, Wadsworth, McNary, Capper, Gore, Smith of South Carolina, and Kendrick.

Present also: Senator Oscar Underwood, of Albama; Representative E. B. Almon, of Alabama; Hon. Newton D. Baker, Secretary of War; Maj. Gen. Clarence Williams, Chief of Ordnance, War Department; Col. J. H. Burns, and Mr. G. J. Roberts.

The committee thereupon proceeded to the consideration of S. 3390, which is here printed in full, as follows:

[S. 3390, Sixty-sixth Congress, first session.]

A BILL To provide further for the national defense; to establish a self-sustaining Federal agency for the manufacture, production, and development of the products of atmospheric nitrogen for military, experimental, and other purposes; to provide research laboratories and experimental plants for the development of fixed-nitrogen production; and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of War is hereby authorized and empowered to designate any five persons to act as an organization committee for the purpose of organizing a corporation under authority of and for the purposes enumerated in this

act.

ORGANIZATION.

The persons so designated shall, under their seals, make an organization certificate, which shall specifically state the name of the corporation to be organized, the place in which its principal office is to be located, the amount of capital stock, and the number of shares into which the same is divided, and the fact that the certificate is made to enable the corporation formed to avail itself of the advantages of this act. The name of such corporation shall be Unite States Fixed-Nitrogen Corporation. The said organization certificate shall be acknowledged before a judge of some court of record or notary public, and shall be, together with acknowledgment thereof, authenticated by the seal of such notary or court, transmitted to the Secretary of War, who shall file, record, and carefully preserve the same in his office. Upon the filing of such certificate with the Secretary of War as aforesaid, the said corporation shall become a body corporate and as such, and in the name United States FixedNitrogen Corporation, shall have power—

First, to adopt and use a corporate seal;

Second, to have succession for a period of twenty years from its organization, unless it is sooner dissolved by an act of Congress, or unless its franchise becomes forfeited by some violation of law;

Third, to make contracts;

Fourth, to sue and be sued, complain, and defend in any court of law or equity; Fifth, to appoint by its board of directors such officers and employees as are not otherwise provided for in this act; to define their duties, to fix their salaries, in its discretion to require bonds of any of them, and to fix the penalty thereof, and to dismiss at pleasure any of such officers or employees;

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Sixth, to prescribe by its board of directors by-laws not inconsistent with law regulating the manner in which its general business may be conducted and the privileges granted to it by law may be exercised and enjoyed;

Seventh, to exercise by its board of directors or duly authorized officers or agents all powers specifically granted by the provisions of this act and such incidental powers as shall be necessary to carry on the business for which it is incorporated within the limitations prescribed by this act, but such corporation shall transact no business except such as is incidental and necessarily preliminary to its organization until it has been authorized by the Secretary of War to commence business under the provisions of this act.

The corporation shall be conducted under the supervision and control of a board of directors, consisting of not less than three nor more than eleven members, to be appointed by the Secretary of War. The directors so appointed shall hold office at the pleasure of the Secretary of War. The Secretary of War shall be ex-officio chairman of the board and shall have power to designate one of the directors as vice chairman. The vice chairman shall perform the duties of chairman in the absence of the Secretary of War.

The board of directors shall perform the duties usually appertaining to the office of directors of private corporations and such other duties as are prescribed by law.

POWERS OF THE CORPORATION.

The corporation shall have power

(a) To purchase, acquire, operate, and develop in the manner prescribed by this act and subject to the limitations and restrictions thereof the following properties owned by the United States:

1. United States nitrate fixation plants numbered one and two, located, respectively, at Sheffield, Alabama, and Muscle Shoals, Alabama, together with (a) all real estate used in connection therewith; (b) all tools, machinery, equipment, accessories, and materials thereunto belonging; (c) all laboratories and plants used as auxiliaries thereto, including the fixed nitrogen research laboratory at Washington, the Waco limestone quarry in Alabama, the electric power unit at the Warrior River station of the Alabama Power Company, and transmission lines, and many others used as auxiliaries of United States fixed nitrogen plants numbered one and two.

2. Any other plants or parts of plant, equipment, accessories, or other properties belonging to the United States, which are under the direct control of the President or of the War Department, and which the President or the Secretary of War may deem it advisable to transfer, convey, or deliver to said corporation for use in connection with any of the purposes of this act, or for any purpose incidental thereto.

(b) To acquire, establish, maintain, and operate such other laboratories and experimental plants as may be deemed necessary or advisable to assist it in furnishing to the United States Government and others, at all times, nitrogen products for military or other purposes in the most economical manner and of the highest standard of efficiency. (c) To sell to the United States such nitrogen products as may be manufactured by said corporation for military or other purposes.

(d) To sell any or all of its products not required by the United States to producers or users of fertilizers or to others.

(e) By direction of the President, to act as his agent in carrying out and performing any or all of the duties imposed upon him by section 124 of the act of June 3, 1916, known as the national defense act, including, after its completion, the operation of the hydroelectric power plant now being constructed at Muscle Shoals, and the use and sale of the hydroelectric power to be developed under authority of the act of June 3, 1916, aforesaid, and the President is authorized, in his discretion, to delegate to the corporation any and all powers and duties conferred or imposed upon him by said act which relate to the production, development, or manufacture of atmospheric nitrogen products, or which are incidental thereto, and to pay into the Treasury of said company any unexpended balance out of the appropriation made by section 124 of the act of June 3, 1916, such funds to be used by the corporation for the purpose of said act as amended by this act.

(f) To enter into such agreements and reciprocal relations with others as may be deemed necessary or desirable to facilitate the production and sale of nitrogen products on the most scientific and economical basis.

(g) To purchase, lease, or otherwise acquire United States or foreign patents and processes or the right to use such patents and processes.

(h) To obtain from the United States or from foreign governments patents for dis coveries or inventions of its officers and employees, and, in the discretion of its board of directors, to require any and all of its officers and employees as a condition of their

employment to enter into agreements with the company that the patents for all such discoveries or inventions shall be and become in whole or in part the property of the corporation.

(To assume any or all obligations of the United States entered into in connection with the construction, maintenance, and operation of the plants to be transferred to the corporation under the provisions of this act.

(j) To deposit its funds in any Federal reserve bank or with any member bank of the Federal reserve system.

(k) To sell and export any of its surplus products not purchased by the United States or by persons, firms, or corporations within the United States.

(1) To invest any surplus of available funds not immediately used for the operation construction, or maintenance of its plants or properties in United States bonds or other securities issued by the United States.

(m) To lease or purchase such buildings or properties as may be deemed necessary or advisable for the administration of the affairs of the corporation or for carrying out the purposes of this act; and with the approval of the Secretary of War to lease to other persons, firms, or corporations any of its properties not used or needed by the corporation, or to enter into agreements with others for the operation of such properties. In the operation, maintenance, and development of the plants purchased or acquired under this act the corporation shall be free from the limitations or restrictions imposed by the act of June 3, 1916, and shall be subject only to the limitations and restrictions of this act.

CAPITAL STOCK.

The capital stock of the corporation shall be divided into two classes, to be known as common and preferred. The common stock shall be without par value. The company shall have no power to issue stock except that issued to the United States under authority of this act.

In exchange for the properties purchased or acquired from the United States and from time to time transferred, conveyed, or delivered to the corporation by the President or by the Secretary of War, as provided by this act, the corporation shall cause to be executed and delivered to the Secretary of War a certificate for all of the common stock of the corporation, which certificate shall be evidence of the ownership of the United States of all such common stock. In consideration of the issuance of such common stock to the Secretary of War, the President and the Secretary of War are authorized and empowered to transfer, convey, and deliver to the corporation all of the real estate, buildings, tools, equipment, supplies, and other properties belonging to, used by or appertaining to the plants and properties to be acquired by the corporation under the terms of this act, and to transfer, convey, and deliver as and when they may deem it advisable any other equipment, accessories, plants, or parts of plants or other property referred to in this act and which the corporation. is authorized to acquire or purchase from the United States under its provisions.

The President or the Secretary of War, as a condition of the transfer, conveyance, or delivery to the corporation of any property herein referred to, may require the corporation to assume any and all agreements and obligations entered into by the United States in connection with the construction, maintenance, or operation of such plants or other property.

The corporation shall have the power to issue and sell preferred stock in any amount not to exceed $12,500,000, of a par value of $100 per share, such stock to be entitled to 5 per centum dividends. All such stock shall be subscribed by the United States of America, and such subscription shall be subject to call upon the vote of the board of directors of the corporation with the approval of the Secretary of War at such time or times as may be deemed advisable, and there is hereby appropriated out of any money in the Treasury not otherwise appropriated the sum of $12,500,000, or so much thereof as may be necessary, for the purpose of making payment upon such subscription when and as called.

Receipts or certificates for payment by the United States of America for or on account of such stock shall be issued by the corporation to the Secretary of War and shall be evidence of the stock ownership of the United States. The Secretary of War is authorized to use any funds now available for the completion of the construction and equipment of such United States nitrate plants, numbers one and two, and accessories, either after or before the conveyance and delivery of such properties to the corporation in accordance with the terms of this act.

DISTRIBUTION OF EARNINGS.

All net earnings of the corporation not required for its organization, operation, and development shall be used

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