APRIL 16, 1930
THE future of the great government plant at Muscle Shoals is still undecided. The power interests, represented by the Alabama Power Company, have long been trying to get hold of it. So has the American Cyanamid Company, which has asserted, in order to gain farmer support, that it wants to use the plant chiefly to make fertilizer. In its previous session, Congress passed Senator Norris’ bill for government operation, but President Coolidge killed it by a pocket veto. The Senate has again passed the bill, but even if the House does the same, President Hoover will probably reject it, and if he does, it is not certain that it could be repassed over his veto. Meanwhile, we are beginning to get some of the history of the intrigue which has heretofore blocked it.
Recent testimony before the Senate Lobby Investigating Committee by a representative of the American Farm Bureau Federation, an organization of one million farmers over the country, revealed how the White House has been eating out of the hand of this farmers’ lobby in the matter of Muscle Shoals. The lobbyist, Chester H. Gray, admitted that he had influenced President Coolidge to stop the Department of Agriculture from writing a Muscle Shoals bill which he, Mr. Gray, did not like; that he had persuaded President Coolidge to assign his Secretary of Commerce, Mr. Herbert Hoover, to help Mr. gray in putting over a Muscle Shoals bill he did like. Furthermore, he actually dictated the paragraph on Muscle Shoals in one of President Coolidge’s messages to Congress. Strange that the big-business administration should have shown such respect for the desires of farmers? Ah! but Mr. Gray was pushing the Cyanamid bid for Muscle Shoals, by which the government turns over the people’s property to a private company promising to manufacture fertilizer for the farmer––and actually meaning to do nothing of the kind.
Aside from the argument of Senator Norris, who has gone over the situation with chemists, that the cyanamide process of manufacturing fertilizer is obsolete, newer methods having been devised, there is plenty of evidence that the American Cyanamid Company is not leasing Muscle Shoals to manufacture fertilizer. Why should it? When Henry Ford bargained for Muscle Shoals some years ago, the president of the American Cyanamid Company himself testified before the Committee on Military Affairs, before which the bill came up, that the value of this development was not in its fertilizer possibilities, but in its electric-power resources. The profits from the water power are so stupendous in comparison with the Cyanamid’s proposed profit on the fertilizer that it is absurd to suppose that so great a business concern as the Cyanamid Company would dedicate itself to such poor business.
Moreover, the recapture clause of the bid, which should provide for the government’s recovery of Muscle Shoals on the failure of the lessee to manufacture fertilizer, doesn’t guarantee that at all. Drawn up by that great legal mind, Charles Evans Hughes, the recapture clause consists of twenty-one lines of whereases, provisos and heretofores, which, translated into intelligible English, state that in fifteen years (not until then, mind you), if the lessee is converting all the power at Muscle Shoals into profits and none into fertilizer, a board may (not must) file a complaint with the Secretary of War; that the matter is then to be submitted to arbitrators, who are to hold hearings; that if the arbitrators agree with the board that the suspension of the manufacture of fertilizer is likely to be permanent––no, the lease isn’t canceled yet––the matter then is to be referred to the Secretary of War; that he is to refer it to Congress, which may acquit the company of the duty of making fertilizer; finally, in case Congress fails to act, the Secretary of War may acquit the company himself.
Senator Black, of Alabama, who is not a government-operation man, but has committed himself to getting fertilizer for the farmer out of the nitrates at Muscle Shoals, said of the Madden-Wright bill, in which the Cyanamid offer is incorporated, “The bill, as now written, in my judgment, would not cause enough operation of the nitrate plants to remove the crust from the wheels.”
Why do the farmers support a company that is using them as a blind to acquire the power at Muscle Shoals for its own profit? Because they don’t know that Mr. Gray, who writes the resolutions which they trustfully accept at annual conventions, is fooling them. He says that the Cyanamid bid is their means of procuring cheap fertilizer, and they believe him, as the rank and file of the American Legion believe their leaders who tell them that the conscription bills before Congress conscript capital. They don’t know the facts as they were brought out at the hearings: that Gray opposes amendments on the Muscle Shoals bills, not as they affect the farmers, but as they affect the Cyanamid Company; that he refused to allow the president of the Cyanamid Company to submit to a more drastic recapture clause, which would certainly be to the advantage of the farmers; that R. F. Bower, who addressed them as a representative of the American Farm Bureau Federation at farmers’ meetings, was paid by the Cyanamid Company or its ally, the Tennessee River Improvement Association; that the pamphlets and circulars sent out by O. M. Kile for the American Farm Bureau Federation brought him $725 a month from the Cyanamid Company. Do they know that when the little town of Muscle Shoals offered to buy power from the government, Mr. Gray, the farmers’ representative, promptly warned President Coolidge not to establish the bad precedent of government dispensation of power? No power company could have been more perturbed. How could they suspect that their representative coöperated with the secretary of the National Fertilizer Company, which opposes the manufacture of fertilizer, naturally, but favors private operation of Muscle Shoals (and for a good reason)?
“Does the question come up as to what the farmers are thinking?” the credulous husbandmen read in the propaganda disseminated by the American Farm Bureau Federation. “Send for Gray,” is the order, and Gray, speeding by taxi down the broad boulevard, arrives under the Capital dome to tell Congressmen and Senators just how their contemplated course will affect the farmers and what the probable reaction will be.
No inkling have they of shadowy maneuvers such as are revealed, for example, in a letter dated July 24, 1929, written by Mr. Gray to Mr. Edward A. O’Neal, president of the Alabama Farm Bureau Federation. “Relative to your authorizing R. F. Bower to do some field work this summer and fall,” says Gray, “in deflecting senatorial votes from the Norris resolution, I know the question which will be uppermost in your mind will be whether or not you, as president of the Alabama Farm Bureau Federation, desire to send out a member of the personnel when the finances to support him come from sources other than the regular income of your Federation.” And thereupon Mr. Gray reminds his colleague that the performance is not without precedent in their organization.
The blitheness with which their own leaders hoodwink the farmers undoubtedly relieved the White House conscience for doing likewise. So coveted a prize is farmers’ support for a bill which sanctions private operation of a public property that President Coolidge could not resist it, even though it was given under an illusion. When Mr. Gray informed him in 1926 that the farmers would never support the bid of a power company for Muscle Shoals unless, like the American Cyanamid Company, it wore a chemical cloak, the President got the point. Moreover, he agreed with Gray that the man to effect a compromise between the power and the so-called “chemical interests,” and thus insure the defeat of the Norris resolution for the federal operation of Muscle Shoals, was his Secretary of Commerce, Mr. Hoover. That Mr. Hoover made the attempt was brought out by correspondence at the hearings; but it failed.
The plan, however, was too good to abandon. Gray and his cohorts held conferences with the Alabama Power Company, while instructions from the president of the Cyanamid Company poured in. The Tennessee River Improvement Association, of which the distinguished Republican National Committee chairman, Claudius H. Huston, was president, came out loudly for the Cyanamid bid and quietly accepted money from the power companies. Recognizing the kinship of the enemy––after all, the Cyanamid Company has no distributing system and would have to sell the power generated at Muscle Shoals to the power interests––and duly impressed with the farm appeal of the Cyanamid Company, the power companies withdrew their clamors for Muscle Shoals. It was a tacit agreement, Mr. Bell told Mr. Gray, entered into out of respect for our monopoly law. Through it, everybody was to get his––except the unlucky electric-light user, who would have to pay a middleman’s profit on his bills. Thus, the Cyanamid bid came to be the outstanding opposition offer to Mr. Norris’ resolution for Muscle Shoals.
In other ventures in behalf of the farmers and their interest in Muscle Shoals, the White House was more effective. Early in 1928, Chester Gray, prowling around in the Department of Agriculture, gathered that somebody was working on a Muscle Shoals bill based on the government-operation idea. Immediately the farmers’ representative thought of the American Cyanamid Company, and tore to the White House. Before he could finish his report of the dangerous activities at the Department of Agriculture––so Gray imparted to O’Neal––the President actually sent word that any effort to write a bill competitive to the Madden-Wright Muscle Shoals bill must cease until the Department had conferred with him. “There is no doubt in my mind that the President is with us,” wrote Gray, after the President’s secretary called him up to report the progress of the conference. The President had declared therein that “he wanted the Madden bill to have the right of way unobstructed,” and the Department had promised to write no more Muscle Shoals bills.
“Oh, yes, I had a very fine contact at the White House on the Muscle Shoals in the Coolidge administration,” Gray boasted before the Lobby Committee.
“You mean you controlled the President?” asked Chairman Caraway.
“No, I conferred with him upon details as they came along, sometimes at my solicitation and sometimes at his.”
“Two souls with but a single thought,” suggested Caraway.
“That is it,” agreed Gray, “poetically expressed.”
But the greatest display of obeisance a President could make to a lobbyist was the alteration of the presidential message to Congress at the lobbyist’s dictum. Unluckily, Gray was out of town when an advance copy of the speech reached him. He promptly telegraphed to the President: “At complete loss to understand paragraph on Muscle Shoals in view of your statement to us last Tuesday. Hope not too late to revise this paragraph so you can be free to aid Congressman Madden in passing his bill.” Evidently it was never too late to consider the farmers’ representative. Conferring with him by long-distance telephone, Mr. Sanders, the President’s secretary, took from him a dictated revision of the paragraph. “Had I been in Washington,” Gray wrote O’Neal early in January, 1928, “it might have been possible to have made a more accurate wording to suit us, but that was the best I could do in a very hasty and disturbed long-distance conversation.”
Questioned by the Lobby Committee as to the assistance he had rendered President Hoover in connection with the Muscle Shoals section of the congressional message, Mr. Gray admitted that his help was not needed. “It was the best Muscle Shoals resolution,” he explained, “that any president has ever written.”
“He beat both of you?” asked Senator Caraway, referring to the partnership of Coolidge and Gray.
“He beat both of us,” said Gray.
The “contact” in the Hoover administration is not as direct as it was in the preceding administration. It could, nevertheless, have been very considerable, as Colonel J. W. Worthington, Mr. Huston’s successor as president of the Tennessee River Improvement Association, recognized. Writing Mr. Gray after President Hoover’s election, he advised him:
Get Mr. Huston to introduce you to Mr. Horace Mann [Mr. Hoover’s southern campaign manager] and to Mr. Richey [gum-shoe secretary to the President]. Huston, Mann, Richey and Akerson [another secretary] are close contact men with Mr. Hoover. You can talk most freely to Mr. Huston (just as freely as you can talk to me) and you can get help from him. He knows all about the danger of Mr. James’s banditry…[This refers to the recalcicantry of the Military Affairs Committee chairman in selling out on the public.] Altogether, the Madden bill is an inviting bridge for you to cross over to the Hoover presidential shore.
Before attaining his present eminent position, Mr. Huston had dispatched a letter to each member of Congress, urging him to accept the Cyanamid bid for Muscle Shoals. That he did not mean to fall short of expectations was recognized by Mr. Gray in a recent communication to Mr. O’Neal. “He is okay,” wrote the former, “and is doing all that he dares to do in the position which he occupies. I learned that he is watching his step on this for fear of being called by Caraway’s Committee. We do not want to urge him to do too much right now on this account.”
What prompted Mr. Gray to deceive the farmers and devote himself so fervently to the interests of the Cyanamid Company has not yet been brought to light by the Committee. But more important than Mr. Gray’s incentives is the unhappy fate these revelations must bring to the secret ambitions of the American Cyanamid Company.
This article appeared in the April 16, 1930 issue of the magazine.