TVA Fights for Its Life

...Opponents who for four years had been sterile of ideas about how to save the country's economy—or their own businesses—now suddenly became full of ideas about how to kill RUFUS TERRAt has covered developments in the Tennessee Valley for the St...

...The privately-owned fertilizer companies were opposed because they feared competition, as sadly as their business needed it...

...Nine years ago a major shift took place in the propaganda line when a survey by Opinion Research Corporation startled the industry by reporting that the great majority of people were in favor of TVA...

...The following year, 1936, the utilities returned to the attack at law...

...After succesful referenda by overwhelming majorities in all four principal cities of Tennessee—Memphis, Nashville, Chattanooga, and Knox-ville—TVA began negotiations to acquire the electrical properties of the Tennessee company for itself and the municipal and co-op distributors of its power...

...The Dixon-Yates syndicate responded by suing the government for $3,500,000...

...There are 12 state parks, 53 municipal and county parks, and 336 private businesses— boat docks, resorts, fishing camps, and lodges...

...In his first campaign for the Presidency, General Dwight D. Eisenhower, finding he had aroused fears that his election would bode ill for the development of the Tennessee Valley region, gave the country his pledge—carefully worded—that he would not "impair the effective working out of TVA...

...For his holding company, it had been a highly profitable peace...

...Until last September, General Vogel had been limited in his operations to an essentially negating role, but he let it be known that as soon as a second member was appointed he expected to control the majority on the board and take over the offensive actively...

...The executive order did violence to the separation of legislative and executive powers...

...Now, on its 25th anniversary, TVA's reward for two and a half decades of outstanding service which has stirred admiration and emulation in virtually every corner of the world, is the necessity to fight for its life as it has never had to fight before...

...United States criminal law forbids anyone to serve the government and a private concern simultaneously in a matter in which the private concern stands to profit—"conflict of interest," it is called...

...The power trust," said Norris scornfully, "paid $50,000 to have itself sued and to have itself enjoined from carrying out its own contract...

...Since something like half of all TVA's power output was required to operate plans of the Atomic Energy Commission, which had top priority on the power, the places where the pinch would be felt were in the stores, industrial plants, mines* and homes of the people of the Valley...

...Night scene during the construction of Font ana Dam during World War II...

...As in the Ashwander case, the front against TVA was a false one...

...The power company boycotted the Chattanooga News, an old established daily which had fought for public power, and subsidized a new daily, the pro-power company Free Press, by means of a concealed $10,000 investment in stock, increased payments for advertising, and reduced- charges for electricity...

...But the likelihood of violation of the United States criminal code provided a barrier...

...Having signed the contract, the companies refused to honor it...

...So little headway was made for so long that all the principal cities except Knoxville, and several of the smaller towns as well, felt compelled to start construction of their own systems, and began serving customers...

...While his two fellow-directors steadfastly opposed the deal at every point, General Vogel allied himself with Admiral Lewis L. Strauss, chairman of AEC, as front-runner for Dixon-Yates...

...President Eisenhower twice denied that Wenzell had had anything to do with Dixon-Yates, but it was evident that the President had been misinformed...

...Instead, a suit to enjoin performance of the contract was brought by 14 preferred stockholders of the Alabama Power Company...

...With the furor over Dixon-Yates at its height, President Eisenhower's first opportunity to make an appointment to the TVA board occurred...

...He demanded $37,000,000 more than an independent audit and TVA's estimate of depreciation showed the properties to be worth...

...The whole idea was the brainchild of a Wall Street investment banker, Adolphe H. Wen-zell, whose firm stood to reap a fat fee from handling the Dixon-Yates securities—with one of its officers employed by the Bureau of the Budget as technical adviser...

...He chose Brigadier General Herbert D. Vogel, a member of the Corps of Engineers of the United States Army, which was hostile to TVA for having taken over functions the Corps considered its own...

...And who paid the bill...

...Political as opposed to legal agitation by the power companies against TVA reached its apogee in the Chattanooga municipal referendum of 1935 on the issue of a public power distribution system...

...In 1933, only one farm in 28 had electric service...

...It was evident that the Administration was desirous of selecting as window dressing someone known to believe in "the wisdom and feasibility of the TVA Act," as the law requires all the directors to swear on being inducted into office...

...A few years before this picture was taken, these two fields in Madison County, North Carolina, were equally eroded...

...The public pays the expense...

...It has asserted that dams on tributary streams are "not necessary to navigation and contribute practically no navigation benefits," though TVA tributary and mainstream dams are contributing to navigation on the Mississippi and Ohio rivers as well as on the Tennessee...

...Eisenhower first professed to doubt the sincerity of Memphis' intentions, but finally accepted its bona fides and canceled the contract as summarily as he had commanded it 13 months before...

...Working around the clock, TVA construction crews placed three million cubic yards of concrete and had it producing power in less than three years...

...Work on the project was halted for a while after the end of the war for lack of funds, and the dam was not completed until 1925...

...When Franklin Roosevelt was inaugurated in 1933, the opposition to public developments of Muscle Shoals stood paralyzed by the awful fate which had befallen private business in four years of searing depression...

...This giant crane is unloading three barges of pulpwood for the Bowaters Southern Paper Corporation pulp and paper mill at Calhoun, Tennessee...

...Rossville Boulevard in Chattanooga, Tennessee, during the flood of 1917...

...In the meantime, the burning question of what to do with the dam and the chemical plants became the focal point of a great national debate...

...At the same time many communities within transmission distance of Wilson Dam in Alabama, Tennessee, and Mississippi were clamoring for the power...

...Wilson Dam, started in World War I and completed in 1925, was turned over to TVA in 1933 to become the first link in the new river system...

...The revelations of secret contract secretly arrived at had not even momentarily deterred it...

...The News finally was forced out of business...

...Gradually, through investigation by newspapers and members of Congress, it became known that the Board of Commissioners of AEC had voted against the deal and that the Board of Directors of TVA was similarly opposed...

...touis Post-Dispatch and other publications for three decades and has written many news stories and editorials on a vast variety of TVA operations...

...The propaganda mills contended that the same dams could not provide both flood control and power, though it was being done not only in the Tennessee Valley but also at Grand Coulee and Boulder...

...The Machiavellian joker in his appointment was that Dr...

...Between 1943 and 1955, the plant expanded from a $350,000 to a $2,000,000 enterprise, increasing employment front 170 to mpre than 300...

...They would neither deliver the transmission lines to TVA nor negotiate in good faith with the municipalities...

...It also provides a market for locally-grown grain—$2,000,000 worth in 1955—and thus aids in the shift toward more diversified farming in what was once one-crop cotton country...

...Then Senator Hill revealed on the floor of the Senate that the most damaging single fact of all had been omitted from the promised "full report...

...Most of the people were against socialism...

...In TVA, General Vogel was progressively frustrating policy, tearing down morale, and worsening what had been at best an impossible situation...

...Merchants saw in the program the birth of an expanding power which could mean new life to them...

...The fight was out in the open...

...It assumed command of AEC and TVA, two agencies created as arms of Congress independent of the executive department...

...The White House announced that the President by executive order had directed the Atomic Energy Commission to contract with a syndicate of two private power companies to build a generating plant at West Memphis, Arkansas, and supply TVA with its output...

...As the Administration cast about for means of getting off the hook, the city of Memphis announced that it would rather build its own plant than accept the distasteful Dixon-Yates scheme...

...it was a wartime measure designed to free the United States from its hazardous dependence on Chile as its principal source of nitrates for munitions...

...The Tennessee Municipal League, representing the city governments of the state, and the Tennessee Valley Public Power Association protested to the President that Vogel had "seriously undermined the independence of the agency" and "aligned himself with TVA's enemies to harass and even to destroy it," with a consequent threat to investments of the association's member systems totaling $400,000,000...

...Around Franklin Roosevelt, to the contrary, his celebrated— and maligned—Brain Trust filled official Washington with a ferment of ideas—broad, bold, and, above all else, confident...

...For all the venom and fury with which TVA had been attacked hitherto, the most dangerous attack of all, and by far the most difficult to combat, began only five years ago...

...Supreme Court sustained the decision in favor of TVA...

...Regulation of the floodwaters by the TVA multiple-purpose system lowered the crest by 22 feet, averting an estimated $66 million in property damage...

...The battle to destroy TVA was on...

...Located about 19 miles from the mouth of the Hiwassee River, the $100,000,000 plant manufactures newsprint and sulphate pulp...

...With this formidable array of forces, the official assault was levied against TVA on three fronts: to starve it out, to render its low-cost power program ineffective through infiltrating high-cost private power into its system under compulsion, and to recompose its board of directors with appointees hostile to TVA...

...The starvation pincer was applied by the simple expedient of choking off, in the Bureau of the Budget, TVA requests for new generating plants to expand supply in response to the expanding demand of a healthy, growing region...

...The syndicate became generally known as Dixon-Yates after the names of the presidents of the power companies involved...

...In actuality the proposed new block of power would supply the increasing demand of the city of Memphis, which was no business of the Atomic Energy Commission's...

...The Edison Electric Institute has produced rigged analyses purporting to show that the TVA power system operates at a loss—and to reach this conclusion has charged to it the cost of flood control and navigation and, for good measure, all the other activities of TVA...

...The pledge was not only hedged but empty, for it left to the Eisenhower Administration, hostile TVA lakes are widely used for recreational purposes...

...Privately-owned electric power companies were opposed because they feared competition from the power at Wilson Dam —yet they needed the stimulating and guiding influence of competition even more than did the fertilizer companies...

...Under natural conditions, the flood of January-February 1957 would have been about six feet higher, as indicated by the arrow...

...Alabama Flour Mills, Decatur, Alabam,a, was established to take advantage of the navigation channel...

...Wilson Dam had been operating all these years for the sole benefit of the Alabama Power Company, which, having the only transmission line to the dam, took as much or as little of the output as it pleased from day to day and paid for it on a take-it-or-leave-it basis—an arrangement which wasted something like half the output and paid about half its true value for what little was used...

...a lie in substance, since, though the federal government cannot legally be taxed, it can make payments in lieu of taxes, as TVA has done from its inception, on terms deemed fair by Congress...

...The owner of the field at left entered the TVA test-demonstration program and by use of phosphate and lime produced cover that halts erosion and permits livestock growing...

...Eighteen power companies challenged the constitutionality of the TVA Act and sought to enjoin it from carrying out its power program except for sale of power from Wilson Dam...

...He is the author of "The Missouri Valley: tand of Drouth, Flood, and Promise," published by the Yale University Press...

...Edison Electric Institute has provided funds to finance scholarships for teachers from many sections of the country to a "workshop" on electric power at Columbia University, which resulted in a teachers' guide on electric power policy slanted to the companies' viewpoint...

...General Vogel plainly shared the view that TVA was "creeping socialism," and instead of exercising independent judgment as the TVA Act contemplated, made himself the errand boy of the Budget Bureau and the anti-TV A palace guard headed by Sherman Adams...

...Jones had a record of antagonism to public power extending back to his term as a member of the Kansas Corporation Commission, where he had done his bit to try to wreck the Rural Electrification Administration in his state...

...It stripped TVA of the powers of managerial decision in an area vital to its successful operation...

...Frank J. Welch, dean of agriculture at trie University of Kentucky...

...After the decision at the polls, the campaign against TVA was still carried on through other means...

...in drier periocjs, its stored water is used at eleven dams downstream to produce power and maintain navigation depths...

...His Budget Bureau and the AEC prepared and issued long, detailed chronologies of the Dixon-Yates deal...

...As these disclosures of facts which it had sedulously tried to withhold embarrassed the Administration more and more, President Eisenhower promised that the entire story would be told...

...It consisted of a Citizens and Taxpayers Association formed for the occasion...

...As TVA began to develop its first modest power supplies, accompanied by the first modest means of transmitting the energy, the power companies resorted to a wrecking operation which came to be known popularly as "spite lines...

...Bank fishing below mainstream TVA dams is getting to be big business, in a pleasurable sort of way...

...This line was dropped when TVA reached the point where its accumulated power earnings exceeded the net expense of all its programs, including non-power ones...

...TVA Fights for Its Life by RUFUS TERRAL HPhe Tennessee Valley Author--¦- ity's quarter-century of brilliant achievement has been marked by a day-in and day-out battle against enemies relentlessly seeking to destroy the system or turn it to their own selfish ends...

...A peacetime schedule for building this dam was five or six years...

...Eisenhower's Department of Justice is now contending that the contract was illegal because of a conflict of interest on the part of Wenzell, and was in general against the public interest...

...There a farmer might go to sleep one evening with the new hope of obtaining electricity through the partnership he and his neighbors had formed with TVA and REA, only to find next morning that a power company spite line had come during the night to tower over his front yard...

...Construction of Wilson Dam and its affiliated chemical plants at Muscle Shoals, Alabama, which were ultimately to become the first links in the TVA system, was authorized by Congress a few months before the 1918 Armistice...

...Wendell L. Willkie, president of the holding company and later Republican candidate for President, showed himself a shrewd bargainer...

...Wishing to avoid the economic waste of duplication, TVA negotiated a contract under which the power companies agreed to sell transmission properties to the agency and, when prices could be agreed upon, distribution systems to the towns wanting TVA power...

...The dam includes a lock, and opens the former upstream shoals to navigation...

...And the firm of E. Hofer & Sons, of Portland, Oreg., which has used utility support to expand from a small Western outfit to nation-wide operations, has sent canned editorials every week to newspapers all over the country, for publication as the editors' independent opinion...

...Ashwander Case, contended that the management of the Alabama Power Company had entered into the contract under duress because it was threatened with competition it could not meet...

...Rural electrification brought the opportunity for farm water systems, making for more convenient living and easing farm tasks...

...The Chamber of Commerce of the United States has lent its eminent name to the propaganda line...

...And Governor Frank Clement of Tennessee charged that General Vogel "has pursued a course of conduct in clear violation of his duty in that office...

...The President spoke vaguely of possible alternatives to the customary method of financing TVA capital investments by Congressional appropriations...

...The President then named as his second appointee Arnold R. Jones, who like General Vogel came from an organization hostile to TVA— the Bureau of the Budget, of which he was deputy director...

...TVA was one of the first of these...

...On the Post-Dispatch he became interested in applying the TVA idea to the Missouri Valley and wrote most of the editorials on the subject when that paper made MVA a major crusade...

...A three-judge panel in district court ruled against the 18 companies, and the Supreme Court threw out the appeal on grounds that possession of a state franchise conferred no legal right upon a utility to be immune to competition resulting from legitimate activities of the federal government...

...To date, so far as the public record shows, Dr...

...Attempts to poison the sources of public information have not even stopped short of trying to pit one region of the United States against another, seeking to convince taxpayers in the rest of the country that they are subsidizing electric service in the Tennessee Valley by helping pay its power bills...

...Neither business men nor their special-interest representatives in Congress had any idea which way to turn...

...The facts are that the TVA power program is paying its own way and more, the distributors are earning profits, and the customers, using half again as much electricity as consumers in other areas of the country, are saving millions of dollars annually on their electric bills...

...The deal, conceived in utmost secrecy, continued to be enveloped in mystery concerning its most salient details...

...The lawsuit, known as the Before the advent of electricity, carrying water from wells or from, springs was a common chore in rural areas of the Tennessee Valley...

...Industrial communities felt with almost panicky conviction that without TVA power they would be unable to compete with other industrial communities in the Valley that had it...

...The technique was simple...

...About 95 per cent of farms in the region now have electricity...

...It imports Nebraska grain and corn by barge...

...He played the security angle extraordinarily close to the vest by becoming a director of TVA on leave of absence from the University of Kentucky...

...The lakes are popular for boating (including sailing), and fishing...

...It was demonstrated that the arrangement would cost the government nearly twice as much as building its own plant, and that the high-priced power might very likely compel TVA to raise its rates to meet $5,500,000 a year in excessive costs...

...As Operation Trojan Horse proceeded swimmingly at Knoxville, Operation Dixon-Yates was sinking in deepening dismay at Washington...

...On the Electric Companies Advertising Program alone—to say nothing of all the other sources, and the cost of the extended litigation— 120 power companies spent nearly $11,000,000 in one seven-year period...

...Contesting the claim, Mr...

...Fontana is 480 feet high, the highest dam east of the Rocky Mountains...

...Tennessee Electric's parent Commonwealth & Southern Corporation contributed $20,000 of the Association's $22,000 expenses...

...Further obstructing a final settlement were offers, principally by Henry Ford and the American Cyanamid Co., to buy the properties—at a fraction of their value...

...Only after the election did it become apparent that the utilities' attack on TVA had been taken over in its entirety by the President of the United States, who would sponsor an undeclared war to destroy the government's own agency, bringing to bear on that purpose all the powers of his high office, together with some powers which the Constitution reserves to Congress...

...The true nature of the dummy suit was withheld from public knowledge until Senator Norris disclosed that counsel's fees had been paid by the Edison Electric Institute, the trade association of the electric power industry...

...The financial bankruptcy which the business community of the nation confronted was appalling, but it was as nothing compared with its bankruptcy of ideas...

...Soon after his election, the new President, despite his campaign pledge, referred slur-ringly to aspects of TVA as "creeping socialism...

...Opponents declared that TVA paid no taxes—a fact in form...

...The referendum, nevertheless, voted in TVA power by 19,000 to 8,000...

...It was claimed TVA was a superstate robbing the people of their liberties, though the agency possesses no power other than those usually assigned to federal agencies...

...One of them was bonding authority for TVA, to permit self-financing...

...It provides a million acre-feet of storage space for flood control...

...At last the deal was consummated, for $78,600,-000—$21,000,000 above the estimate of its value...

...off this major new hope of reviving it...

...Welch has been a complete nonentity on the TVA directorate...

...It was a powerhouse capacity of 436,000 kilowatts, largest of any of the TVA dams...

...But the force of a dynamic idea was in ferment...

...But \vhile the bonding proposal was in the throes of the "study," discussion, indecision, and plain inertia which still immobilize it more than four years later, a remarkable development occurred...

...At last, the death of the final board member who had fought for TVA gave the President his opportunity to complete an all-Eisenhower board...

...Serving as the general staff for this strange conflict has been the Bureau of the Budget, an adjunct of the President's office which coordinates the budget requests of administrative departments and agencies and determines what they shall contain when they are sent to Congress...

...Though TVA was now a going and settled operation, the propaganda against it did not slacken, but mounted in volume and intensity...

...The Guntersville Dam in northern Alabama is shown in the background...

...What these activities against TVA and public power by the private power companies have cost is anybody's guess...

...The semantic subterfuge under which AEC was drawn into the picture was the contention that the power was intended to replace some of the power the Commission was taking from TVA...

...The choice fell upon Dr...

...Within a year after the agency had set to work, litigation, in which the power companies took the offensive, reached such prodigious proportions that at one time 57 separate restraining orders and preliminary injunctions from state and federal courts blanketed the valley and paralyzed the power program...

...Peace, it's wonderful," sighed Willkie when it was all over...

...As the managing director of the National Electric Light Association, M. H. Ayles-worth, counseled the companies in 1924 when the propaganda mills were running to the tune of $1,500,-000 a year: "Don't be afraid of the expense...

...Recreation facilities represent an investment of about $60 million by states, counties, cities, and private individuals and companies...

...It involved AEC in a political mission alien to its grave duties...

...to the whole venture, the decision as to what would or would not "impair" TVA...

...Hundreds line the banks at all Tennessee River dams, and the catches are reported consistently good...

...Coal companies, fearful of the competition of waterpower as a means of generating electricity, joined in opposing a development which has since brought them larger markets than they had ever dreamed of...

...More than 30 million person-day visits are made to the lakes every year for recreational purposes...

...As soon as an association of private citizens was formed for the purpose of bringing in TVA power, the utility built lines into the heart of the area with the aim of skimming off the cream of the available business, thus making service to the remainder impractical even for TVA...

...Two months after the inauguration the law establishing TVA was enacted by Congress...

...Arguments advanced to the voters by the power company front contained, in the words of the committee of Congress that later investigated TVA, "numerous statements which were either factually incorrect or used in such a way as to create a false inference...

...Nitrates are useful for fertilizer as well as munitions, and the succession of bills which Senator George W. Norris of Nebraska introduced in Congress between 1918 and 1933 called for use of the Muscle Shoals chemical plants for both purposes...

...Welch, though he bore a reputation for believing in TVA, would find little security in an appointment for less than one-third of an unexpired nine-year term unless his course of conduct on the board pleased the anti-TVA forces at the White House well enough to win his renomination to a full term...

...It was disclosed that the Dixon-Yates syndicate had been favored as a chosen instrument, without competitive bidding...

...In the operation President Eisenhower has been aided, if indeed he has not been inspired by his chief staff assistant, Sherman Adams, a former governor of New Hampshire who is among the most virulent foes of public power in the country...

...Thereafter the Electric Companies Advertising Program began to harp on the contention that federal expenditures for water control projects, particularly the power part of multiple-purpose developments, constituted socialism...

...The roots of the struggle go all the way back to World War I, fifteen years before TVA was born...

...The spite line device was employed by power companies nationally in an effort to prevent the Rural Electrification Administration from finally bringing the industrial revolution to the American countryside, but nowhere so intensively as in the Tennessee Valley...

...At the same time, Opinion Research offered the power companies a measure of hope...

...The district court ruled against TVA, the circuit court of appeals reversed the decision, and the U.S...

...It has misrepresented the TVA power investment by including in it the cost of navigation, flood control, dredging, navigation terminals, and fertilizer works...

...So the spite line was foredoomed because it lacked popular acceptance...

...It all goes on the electric bill...

...A widespread, vicious and unprincipled propaganda campaign, well organized and well heeled, sordid and bold," Senator Lister Hill of Alabama, who sponsored the TVA Act in the House, called it...