To meet these necessities the Government has been developing a water power project at Muscle Shoals to be equipped to produce nitrogen for explosives and fertilizer.  It is my opinion that the support of agriculture is the chief problem to consider in connection with this property.  It could by no means supply the present needs for nitrogen, but it would help and its development would encourage bringing other water powers into like use.

Several offers have been made for the purchase of this property.  Probably none of them represent final terms.  Much costly experimentation is necessary to produce commercial nitrogen.  For that reason it is a field better suited to private enterprise than to Government operation.  I should favor a sale of this property, or long-time lease, tinder rigid guaranties of commercial nitrogen production at reasonable prices for agricultural use.  There would be a surplus of power for many years over any possibility of its application to a developing manufacture of nitrogen.  It may be found advantageous to dispose of the right to surplus power separately with such reservations as will allow its gradual withdrawal and application to nitrogen manufacture.  A subcommittee of the Committees on Agriculture should investigate this field and negotiate with prospective purchasers.  If no advantageous offer be made, the development should continue and the plant should be dedicated primarily to the production of materials for the fertilization of the soil.

RAILWAYS

The railways during the past year have made still further progress in recuperation from the war, with large rains in efficiency and ability expeditiously to handle the traffic of the country.  We have now passed through several periods of peak traffic without the car shortages which so frequently in the past have brought havoc to our agriculture and industries.  The condition of many of our great freight terminals is still one of difficulty and results in imposing, large costs on the public for inward-bound freight, and on the railways for outward-bound freight.  Owing to the growth of our large cities and the great increase in the volume of traffic, particularly in perishables, the problem is not only difficult of solution, but in some cases not wholly solvable by railway action alone.

In my message last year I emphasized the necessity for further legislation with a view to expediting the consolidation of our rail ways into larger systems.  The principle of Government control of rates and profits, now thoroughly imbedded in our governmental attitude toward natural monopolies such as the railways, at once eliminates the need of competition by small units as a method of rate adjustment.  Competition must be preserved as a stimulus to service, but this will exist and can be increased tinder enlarged systems.  Consequently the consolidation of the railways into larger units for the purpose of securing the substantial