The TVA Experiment After Two Decades

...In the decade that followed, top private companies made offers to finish the job, but none were acceptable to Congress...

...In 1952, more than 830 million ton-miles of valuable freight passed over it, including automobiles, gasoline and oil, coal, fertilizer, iron and steel products, grain from the Midwest and sulfur from the Gulf Coast...

...As Republican Congresses vainly sought a plan of private power operation that would protect the public interest, they gradually came to favor public operation...

...Contrary to popular belief...

...In a speech out West, President Eisenhower said he intended to turn back the ""creeping socialism" of the past twenty years...

...When TVA was established, only about 3 per cent of the farms in the area had electric service, whereas today over 90 per cent use power from the network lines built by locally owned and managed cooperative and municipal systems...

...The overwhelming majority of these new jobs are in private enterprise...

...5) the proper method of reforestation: and (6) the economic and social well-being of the people living in the river basin...

...and legislative insurance of a reasonable level of earning...

...since V-J Day, the people of the Valley have bought more than a billion dollars worth of appliances...

...As a matter of fact, it springs from (he Monroe Administration, when Secretary of War John C. Calhoun prevailed on Congress to pay for a navigational canal at Muscle Shoals, Alabama...

...This compares favorably with private utility payments in the same region...

...This has, of course, made the whole region a booming market for electrical appliances...

...permission to exercise the right of eminent domain to secure land and right of way for plants and facilities...

...In the dry season, stored waters are used to supplement the river's low-water flow...

...Actually, TVA does pay tax equivalents to the stage and local governments of the Tennessee area, as do the municipal electric systems and most of the rural electric cooperatives...

...At the moment, six large steam-electric plants are under construction...

...But even if TVA's power earnings were taxed at the same rate as private utilities, there would still be enough left to cover the Government's investment in the power system...

...This tremendous quantity means that each mill per kilowatt-hour the AEC saves represents a cash saving of $45 to $50 million a year...

...One of TVA's early objectives was to develop methods for utilizing Western phosphates, since they are strategically located in the country's Midwestern "breadbasket" and can help reduce the drain on limited middle-Tennessee reserves...

...What are the facts...

...TVA checked this situation and brought true competition into the utility field...

...For example, large plants are being built to use the West's phosphate rock resources, which were ignored until now...

...Eight of the nine dams on the Tennessee also regulate flood peaks...

...another, the Shawnee plant, is only slightly smaller...

...One of them, Kingston, will have 1.4 kilowatts of capacity, the largest in the world...

...The Federal tax situation is slightly different...

...Four times as many people in the Valley now use electricity as did before TVA...

...In the seven Tennessee Valley states, these agencies have increased their budgets from about $8.5 million in 1934 to almost $57 million in 1952...

...Flood control, navigation and power production depend on harnessing the Tennessee River and its five major tributaries...

...The Muscle Shoals plant, which had stood idle from 1918 to 1933, was turned over to TVA for the production of fertilizers...

...The Authority has provided electric service to countless new consumers in rural areas whom the private utility companies had once considered unprofitable...

...The average national electric rate has been reduced 60 per cent since TVA began selling power...

...Savings in freight charges totaled 110 million, and the first half of 1953 showed a 25-percent increase in freight traffic...

...Of the "hundreds of industries" alleged by TVA's foes to have come from other areas, the single example cited—the Massachusetts Knitting Company of Columbia, Tennessee??migrated in 1931, two years before TVA was created and eight years before the town in which it located obtained TVA power...

...Private utilities frequently charge that TVA is able to maintain low rates because it does not pay taxes or interest on its investment...

...Proper use of fertilizers, particularly phosphates and lime, has helped restore topsoil...

...that is done by 148 municipal and cooperative systems, which buy power wholesale from the Authority and distribute it retail...

...a distance of 630 miles...

...last year, the same region used 24 billion kilowatt-hours...

...Forest-management demonstrations throughout the area have brought better use of the territory's timber, which could yield three times the $300 million income it now provides...

...When asked at a press conference to explain, he said (as paraphrased) : "He would give specific examples...

...From all over the nation, 5 million tourists come to the Valley each year...

...it can appeal and take away the industries from the other sections of the country...

...Research done at this plant has provided fertilizer not only for the Tennessee Valley, but for many other regions...

...Municipal systems in the district are exempt from income taxes as a matter of national policy, as are the municipal systems in California and Massachusetts...

...TVA's power system pays for itself...

...The low rate they will charge is important to the taxpayer, because they will be supplying the AEC with 45 to 50 billion kilowatt-hours of electricity...

...The TVA Experiment After Two Decades While some people feel that TVA is not consistent with private enterprise, the truth is that it has fostered competition among the utilities and raised power consumption By Myron Kolatch In the twenty-first year of its existence, the Tennessee Valley Authority has become more controversial than ever...

...Spokesmen for the utilities began their refrain of "TVA is creeping socialism," while TVA supporters cited the Authority as an outstanding example of capitalism's vitality, as tangible proof that capitalism can cope intelligently with its own problems...

...It is interesting to recall, however, that in 1903 Theodore Roosevelt vetoed a bill for private development of Shoals because he felt it abused the public interest...

...This inland waterway, connecting with the Ohio and Mississippi Rivers, has opened up new markets for products from distant states...

...The record shows that less than a dozen small firms, employing about 600 people, have moved into the region and none came from distressed New England...

...The nineteen dams built during the last two decades, and a twentieth now nearing completion, are built to serve all three purposes...

...The signal for the new TVA debate came from the White House...

...Recreation resources created by TVA lakes and initiated with a few park and other demonstrations (long since discontinued) have been fully developed...

...By 1956, the AEC wants TVA to supply its two huge plants in Oak Ridge, Tennessee and Paducah, Kentucky with 25 billion kilowatt-hours of power??or twice the amount of electricity used in New York City...

...Not long ago this appeal was made to him in behalf of the expansion of Federal expenditures in the TVA region...

...TVA was not suddenly conceived during an unholy marriage between New Deal Democrats and socialist theorists...

...he signed the Tennessee Valley Act in May 1933 and TVA became a reality...

...GOP Congresses passed public-power bills for the valley in 1926 and 1931, but these were vetoed by Presidents Coolidge and Hoover...

...It is TVA's generation of electric power that has stirred controversy through the years...

...This insures wide distribution of electricity at fair rates and provides the Government with a true-measure "yardstick" that can be used for effective regulation of private monopolies...

...In the realm of forest development, TVA instituted modern forest practices in a region having half its land area in woodlands...

...Before TVA came into existence, there was no such thing as free competition among the utilities...

...exclusive marketing rights over defined areas, or at defined levels...

...TVA's only control over these distributors is its so-called "resale clause," which prevents high rates and operates on the theory that people will make more and better use of power if they get it at a reasonable price...

...What is more, the system can??if necessary??be used to reduce flood crests on the lower Ohio and lower Mississippi basins, so as to protect an estimated 6 million acres of rich Mississippi Valley bottomland from any danger and to relieve the flood burden on an additional 4 million acres...

...Kentucky reservoir, near the river's mouth, protects 4 million acre-feet, while reservoirs upstream from Kentucky provide storage space for another 2 million acre-feet...

...One question remains: Is TVA consistent with a private-enterprise system...

...TVA also keeps independent fertilizer manufacturers informed (free of charge) of the advances achieved through its research...

...Far from creeping up to destroy capitalism, the Tennessee Valley Authority has given it new life...

...At the same time, the municipal and cooperative electric systems earn substantial surpluses that are devoted to retiring debt, paying for expansion and improvements, and, finally, reducing rates...

...Under the law, too, TVA is repaying the Treasury (over a 40-year period) for funds invested in the power system...

...What is the record after 20 years of TVA power...

...TVA power has been invaluable to the defense effort, and especially to the Atomic Energy Commission...

...In other words, about 6.5 cents out of each dollar paid by the average electric consumer went to state and local taxes...

...More than 211,000 acres have been reforested, mostly by private landowners, with 250 million TVA seedlings...

...At the same time, trade, service, finance, transportation and construction, which provided 342,000 jobs in 1929, provided 507,000 in 1950...

...So we get to this curious thing in the socialistic theory that we, all of us provide cheap power, such cheap power for one region that...

...President Franklin D. Roosevelt did not use the veto...

...Electric Energy, Inc., a new company formed for the purpose, will provide about 40 per cent of the power for the AEC's Paducah plant, while another new private company, the Ohio Valley Electric Company, will furnish all the power for the AEC plant being built at Portsmouth, Ohio...

...The President later tried to soften the blow by pointing out that not all the features of TVA were alarming from his viewpoint, but the battle was on...

...TVA is also enabling the AEC to contract with private utilities for power at rates considerably below their usual industrial rates...

...During World War II, TVA supplied about 60 per cent of the elemental phosphorus used for munitions, and its advances in electric furnace smelting of phosphate rock were largely responsible for private industry's ability to contribute the other 40 per cent...

...TVA's chemical engineering and chemical processing studies have also been a boon to industry...

...And it was this, that since the Federal Government had seized and was purchasing a monopoly in power down there, that it was impossible for that locality now to expand unless the Federal Government spends more money down there...

...TVA does not distribute the power itself...

...and 15 in the case of OVEC), and together they will provide almost as much electricity for the AEC as does TVA...

...These include the use of public streets for poles, lines and underground circuits...

...Has cheap TVA power pulled industries away from other parts of the country...

...In addition to the more than $3 million paid by TVA in 1952, distributors paid $4.7 million, so that the taxes paid by the public-owned utilities of the area totaled $7.8 million...

...In wartime, its facilities were used to produce munitions...

...None of this work, as far as can be determined, has ever met substantial opposition either within or outside the valley...

...It seems that we have got to have some kind of re-evaluation of all these things...

...The validity of this theory is borne out by the fact that average home use of electricity in the Tennessee Valley is nearly twice the national average, while power costs less than half as much...

...In 1933, the area now served by TVA used 1.5 billion kilowatt-hours of electricity...

...Ten dams and their reservoirs located on the tributary rivers provide adequate storage for 6 million acre-feet of water during the flood season, reducing floods at Chattanooga and other points along the upper section of the Tennessee River itself...

...During its entire period of operation to June 30, 1952, return on the power investment has averaged more than 4 per cent annually...

...Manufacturing jobs have increased 72 per cent since 1929, compared with 41 per cent in the nation as a whole...

...However, municipal systems distributing TVA power earn nearly a 10-per-cent return on investment, which equals the return earned by private utilities before taxes...

...Through the Authority's efforts, control of forest fires by states, counties and private agencies has been extended to protect about 90 per cent of the forested area...

...Far from promoting centralization, TVA has stimulated state, local and private agencies to new interest in resource development...

...4) the proper use of marginal lands...

...The facts provide an ironical answer...

...Both new companies were formed by combinations of existing companies (five in the case of EE, Inc...

...During the first 15-year period of flood-control operations, 22 floods occurred at Chattanooga that would have caused serious damage if they had not been thus controlled...

...3) the maximum generation of electric power consistent with flood control and navigation...

...During World War I, Congress authorized Federal development of the Shoals, but the work was incomplete when the war ended...

...The nine dams on the Tennessee itself also form an unbroken chain of slack-water pools which provide a continuous navigable channel, with a minimum depth of nine feet, from Paducah to Knoxville...

...The Act summed up TVA's purposes as follows: ". . . in the Tennessee drainage basin and adjoining territory...

...TVA itself does not pay Federal income tax, since all its income belongs to the Government...

...1) the maximum amount of flood control...

...The fanners, workers, businessmen and housewives of seven states know this very well...

...Federal activity has raised, not cut, the expenditures of state resource agencies (agriculture, forestry, wildlife, parks, etc...

...Overall, the value of TVA flood regulation is estimated at $11 million a year, more than half of it outside the Tennessee Valley proper...

...More than 65,000 farmers in 28 states have participated in TVA farm test-demonstrations under the guidance of county agents and state extension services...

...States, counties, cities, private enterprises and individuals have invested $31 million in facilities for a new national playground...

...Within three years, some 60 billion kilowatt-hours will be required...

...During the first two decades of this century, Congress passed several bills calling for development or operation of a valley hydroelectric system by private power companies, but no company would meet the terms offered...

...The Government, realizing the importance of wide power distribution, has always treated private utilities as "public utilities" and granted them special privileges...

...As a result, commercial concessions along the lakes (all locally operated) realized $4.35 million in 1951...

...In 1933, the same stretch of water, a shallow mudhole then, carried only 33 million ton-miles of traffic, consisting of sand, gravel and wood products...

...2) the maximum development of the Tennessee River for navigation purposes...

...In the 1952 fiscal year, the combined net income of their systems was over $17.4 million...

...The estimated saving for Chattanooga alone exceeds $45 million, almost a third of the flood-control investment for the entire river system...

...The ever-increasing demand for power has outrun the region's hydro resources, and, although there are still some dams to be developed, TVA has had to erect large steam-generating plants to keep up with needs...

...Furthermore, the region TVA serves has been shifting from a predominantly agricultural region to a rapidly expanding industrial area...

...Similarly, the new cheap electricity has brought new regional industries...

...More recently, the farm test-demonstration program has been supplemented by the sale of TVA fertilizers by cooperatives and private companies...