A Consumer's View of Tva

I

THE August Atlantic contained an article by Mr. Wendell L. Willkie, a pleasant, clever Hoosier lawyer who went to New York and at length became the president of a great utility holding company which owns the common stock of an operating subsidiary in the Tennessee Valley. Inasmuch as TVA has been treading on his toes a little (and, albeit, educating his utilities to a rate structure by which, for the first time in their experience, they are selling electricity to households in quantities comparable to those used domestically in Switzerland, Sweden, and so forth), he has reprehended as a menace to America the very idea of government-owned utilities, whatever might be their pattern, shape, or form.

The September Atlantic followed with another article, this one by Dr. Arthur E. Morgan, a serious, huge-framed engineer whose varied career has included the protection of Ohio’s Miami Valley from another Dayton flood, and the reclamation both of an Arkansas swamp and of a waterlogged Ohio college. Prestige won in these enterprises led to his choice as Chairman of the Tennessee Valley Authority. In his piece he tilted a shaky lance for public ownership, as exampled by TVA.

This debate between these gentlemen is bound to be immensely interesting to hundreds of thousands of us here in the Tennessee Valley. I have in my family treasures a letter from my great-grandfather, Dr. Tomlinson Fort, written to his wife in 1842, eagerly reporting that ‘at last I believe, the government at Washington is going to do something about Muscle Shoals. . .’ For at least a century the property holders and citizens of the Tennessee Valley have waited for the government to ‘do something’ about their great river — too large a task for their own unaided hands.

As I say, we were born sighing for something to be done about our river; and yet, now that something is being done about it, some of us feel as though we were guinea pigs in a vivisection laboratory; indeed, as though we were guinea pigs doomed to be the spoils of a struggle between the angry savants of two rival schools of vivisectionists, who have hold of different parts of our devoted carcasses and are pulling and hauling our whole bodies, one enjoining the other in the courts of law on the theory that the God in his Heaven had dedicated all guinea pigs to his privately owned dissecting knife. So we wonder if the prizes of this titanic struggle are to be deprived of all voice in electing which shall wield the sacrificial knife.

As editor of a newspaper in Chattanooga, it has been my journalistic lot to see, at close range, many exciting episodes of this struggle; to take part in some of them, and to sense the feeling of the Valley folk about the controversy. Perhaps I should preface my remarks by saying that while I am delighted at the prospect, and reasonably pleased with the performance of TVA, still I abhor both of the mutually exclusive theses: the first, that the distribution of electricity must never be ‘of the people, by the people, and for the people’; the second, the equally uncomfortable ideological strait-jacket that all power must be public, because all private utilities always indulge in frenzied finance, corrupt local politics, and exploit the hapless consumers.

Neither of these theories seems to me exclusively tenable; much better is it for us here in this Valley to eschew absolutist contentions, and to consider the debate from the standpoint of the welfare and development of the region itself. And for us the question is not merely one of whether power shall be private or public; we are chiefly concerned about the economic development and social progress of the Valley and its people.

This Tennessee Valley watershed, covering some 40,000 square miles, embraces parts of seven States. A significant thing about it is that its annual rainfall is among the heaviest in the United States. Carrying this to the Mississippi, the Tennessee River falls 600 feet in 200 miles — and there is power in the fall. The Tennessee system as a whole may be made to yield three million kilovatts of electric energy. The power in these streams belongs to the people — is among their last great unalienated natural resources. Now the Government is undertaking to develop this power by an integrated system, and to use it as an energizing agent to quicken the economic competence and to raise the living levels of the whole area.

This basin has immense natural resources. After water power, at the head of the list, comes coal, in great abundance; iron ore and the limestone to flux it; zinc, and other metals; bauxite to make aluminum; marble, building stones, and many of the nonmetallic minerals. Forest products are bountiful. The region has a diversified agricultural yield, and its human stuff is of sturdy, independent Anglo-Saxon stock.

Here in the Tennessee Valley area we have the whole Southern problem in microcosm. We have poverty in the midst of potential plenty; we have rivers running to waste that should be harnessed; we have rich resources needing development; we have people of low incomes with all the qualities needed to do skilled tasks and to build a civilization of high degree. The Tennessee Valley is particularly suitable for a demonstration of the coördinated development of human and material resources. The Tennessee Valley should become the American Ruhr.

Furthermore, TVA is at grips with the region’s vital problems. Take soil erosion. The experts say it was not Alexander, nor Tamerlane, nor Genghis Khan, who destroyed the ancient civilizations on the fertile Tigris and Euphrates plains; not they, but soil erosion, made a desert out of a paradise. We Americans should remember this. It is estimated that in 1931 soil erosion destroyed enough land in West Tennessee alone to equal 10,000 farms of thirty acres each. This illustrates why it is one of our worst national menaces. The Authority considers soil conservation and erosion control among its most important jobs. It is now setting up in each county in its area a unit which can aid the farmers to terrace their land and, through crop adjustment, to preserve it.

A second major activity is in fertilizer. The old World War nitrate plant at Muscle Shoals has been transformed into a plant for reducing the acids needed for fertilizer. The rich phosphate beds of Middle Tennessee are near by; new reduction processes are expected to yield better fertilizer at much less cost. New methods of distribution through farmers’ fertilizer coöperative groups could cut the delivered cost. This is only one of many examples that could be offered of the experimentation and research by the Authority, as a result of which many new methods and processes have already been developed, to save time and money, and occasionally to give an open-sesame to new enterprises.

Another important phase is the development of the river which will make it available for year-round navigation from Paducah, Kentucky, to Knoxville, Tennessee — an immense boon to interior transportation of heavy-burden freights. Incidentally, one of the South’s great disadvantages in the interregional competition is the higher levels of freight rates we must pay in comparison with those charged to the north of us. TVA has already taken steps to bring some redress to this disadvantage.

Then the TVA is devoting itself to bringing about a companionship of industry and agriculture. With huge quantities of power to wholesale, it must look for customers, and one place it seeks them is on the farm. TVA is taking electricity to the farmers, who are themselves organizing county coöperatives to run their rural lines. Several such have been formed, and they have succeeded from the word ‘go.’ Rural electrification stimulates farmers to increase their income. It lightens the farm wife’s backbreaking burden. Running water, modern plumbing, electric lights, and refrigeration — all these things add new satisfactions to rural life.

TVA likewise seeks increased residential load in the towns and cities. Although it does not distribute directly, through its wholesale power contract it retains control over the retailer’s rates. This control is essential, because the Authority sees its problem as one of procuring the widest possible use of electricity, and it is operating on the sound theory that lower rates bring great volume increases, which in turn enable costs to be cut to the bone — the path Ford took to make the automobile a necessity for the common man. This programme is working wonders. In little Tupelo, Mississippi, for example, power use has doubled and trebled, householders are paying no more cash than before, and the city is paying itself taxes, retiring its debt, and showing a profit. The sale of electric refrigerators, stoves, heaters, and so forth, in the Valley is prodigious. The TVA rate structure, directed toward more power use, not less, ties right in with an abundance economy.

Then TVA does not overlook industrial use of electricity. With such quantities of current, thermal as well as mechanical users must be had. But the Authority has carefully avoided trying to siphon these new users out of other areas. It is making an earnest effort to find completely new industries to establish here to use its power. Within the last year it has made contracts with great industries involving the sale of huge blocks of secondary power, at prices which yield the Authority an income of about $4,000,000 a year.

Perhaps more important than anything I have mentioned is that TVA may give us the key to the efficient public performance of economic function. All over the world, government seems on the move from performing services of a merely political or ministerial type to the performance of economic function. We may praise or deplore the tendency, but the essential fact is that it is under way. Our public operations are becoming increasingly important and we must find the way to have them well done. The competence of American public service has suffered both from the unwieldy size of the government machine and from the indifference of the public personnel. This last began over a century ago, when our mystic Democracy claimed every man was a popular sovereign and hence competent to hold any sort of public post, no matter how technical might be its tasks. Our civil-service reformers sought to correct it by substituting a rigidly frozen system of status and rights, without any workable mechanism for discovering and rewarding the worker who has energy, imagination, and intelligence. Therefore incentive for good work was lacking.

TVA is an approach to both these problems. Because of the restricted zone of operation, it permits both immediacy and flexibility of control. Its directors are seeking to set up the apparatus for discovering and then promptly advancing the men of promise. From the start, it has made political backing a disadvantage in getting jobs. This policy, commanded by the law of its establishment, has had the backing of its Chairman from the beginning. The Authority’s personnel policies cut through the rigidities of civil service and come closer to affording those rewards for initiative which make men really work.

II

It is from such standpoints that the Authority strikes us here in the Valley as exceptionally interesting. The time was, after the Norris Act first passed the Congress, when the people of the Valley looked upon TVA as our special Federal Santa Claus, coming down our chimney bringing a marvelous profusion of free gifts. That attitude, I am happy to say, is now less in evidence. We arc looking at it more realistically.

I make no sweeping claim of this, for there are one or two corners in which there lingers just a little flavor of Kriss Kringle. At the moment TVA is in its constructional phase, as it will doubtless continue to be for five or ten years. Nearly every community that has the river running by it wants a dam, because while it is under construction it means a big payroll to be spent in the town. Only a few of these pleas for building a dam have been met, however, and in no instance except where the dam had been already scheduled by TVA’s world-famous experts. So here Santa Claus has been judicious in his gifts.

Seven cities may have claimed to be Homer’s birthplace, and easily that number want to be the headquarters for TVA. When first it began to proliferate its staff in Knoxville, rents took a jump and that city had a vigorous boom. Now quite a number of offices have been removed to Chattanooga, geographically the capital of the Valley, and even the most reluctant private-power partisans in the ‘Dynamo of Dixie’ are not ignoring the fact that TVA has by far the city’s largest payroll.

Nor can I ignore the fact that there are several things about the operations of the Authority that we do not like. We should much prefer to have it a more local enterprise. Most of the common labor is recruited in the area, but its directors have filled the key posts with experts from almost everywhere in the country and the world. We here still have lingering traces of localism and are, therefore, not any too pleased by this incursion of outlanders to fill most of the high-paid jobs. Yet we recognize this as a badge of the national nature of the enterprise; and furthermore, when we get a chance to rub elbows with these men from Iowa, and Massachusetts and Wisconsin, — these coördinators, land planners, erosion experts, and so forth, — we begin grudgingly to admit that they are pretty good fellows, even if some of them talk about a crick instead of creek. And they are, most of them, sharp lads with plenty of knowledge as well as enthusiasm. So we do not resent this invasion of the experts as much as once we thought, we should.

At the beginning some of us resented rather deeply the paternalistic attitude at the top. These outlanders seemed to have come down here to reform an illiterate, godless lot who would not wear shoes; they would teach us that there really was some merit in occasionally employing footgear. No matter how benighted our section may be regarded by an always enlightened North, no matter how much it may be sneered that the Valley contains both Dayton and Scottsboro, its basic population is of good sturdy folk, capable when given opportunity, and quick to resent apparent indignities or slights. Therefore there was a prompt resentment of these intimations of superiority and twinges of paternalism.

However, it soon developed that this was by no means the general purpose and policy of the Authority; there was exhibited at least an equally vigorous idea on the part of some of its controllers that TVA’s purpose in this Valley was not to redeem a backward race by demonstration; that rather it was to afford opportunity to people who, whenever given opportunity, promptly embrace it. This new tone and attitude, an index to TVA’s own capacity for self-education, was a happy change. To-day one hears fewer whispers of this zeal for reform, but rather a growing understanding of the merit of the people of the region. And with the change on the part of the Authority has come a companion change of the people’s own attitude. TVA is now of us and not of others. Its roots have begun to sink. It is no foreign Santa Claus, but the spirit and the purpose of the Valley.

III

To be sure, the proof of the pudding is the eating thereof, and one of the tragedies of TVA in this Valley is that, by one means or another, the pudding has been kept too small to do more than taste; never has there been enough for a general repast.

Much of this has been the result of the understandable but none the less regrettable legal devices of existing Valley subsidiaries of great nation-wide utility holding companies. One lawsuit has already got to the Supreme Court, the Ashwander case, and in it that high judicial body held decisively that the Federal Government is equipped with the constitutional right to dispose of its surplus power. In another suit, nineteen private utilities sought to enjoin any extension of TVA activities on the ground of some fearful conspiracy. Though the net result of this in the end remains free from doubt, the law’s delays have tied the hands of TVA in so many directions that it cannot function fully until this litigation comes to an end. And then there are suits galore to enjoin this, that, or the other municipality from establishing municipal distribution systems. While too multifarious to be related in detail, they are all of a piece: phases of the effort of the private-utility interests to hold up in court any largescale realization of this integrated publicpower programme, until the delay causes the public to lose heart and run up the white flag.

As yet there are no very significant symbols to indicate that the public is ready to surrender. At the moment, TVA is serving almost two-score small cities. Knoxville, Chattanooga, and Memphis have indicated, at referenda at the polls, their substantial public wish for public power. In each of the first two cases the result has been blocked by litigation. The third city is now getting ready to go ahead.

The municipal elections I have cited seem to demonstrate that the people of this Valley definitely want public power, and are anxious to take any appropriate steps to assist its advent. But this does not mean that they consider the confiscation of existing private-power properties ‘dedicated to the public use’ (as goes the legal phrase) within the range of appropriate steps, or that they desire the competition within the area of public and private systems. They want TVA, but they want it to come with a fair compensation to the existing properties.

IV

If I read aright the feelings of the general run of folks here in the Valley, it is about like this: —

First, they do not feel that the private power companies can ever do one quarter as much for building the region as can the Federal Government through TVA, and therefore they want TVA to do the job. But in doing so they would like the TVA to take over the generation and transmission of electric power in the Valley, purchasing the area’s existing private utilities’ transmitting and generating facilities.

Second, they are anxious for the TVA to acquire, at a fair price, the existing power facilities. This price should represent the real remaining investment value, and not any ‘wind and water’ of fictitious write-ups. There are tens of millions of dollars of legitimately made private investments in bonds and preferred stocks of Valley operating subsidiaries. Except for rare extremists, the Valley public does not want these values wiped out. They favor no confiscation; indeed, they are willing that the price paid perhaps shall be a little above the real value, in order quickly to unsnarl the tangle and get TVA to work. As Chairman Morgan says, condemnation is not necessarily the most appropriate procedure. Indeed, assuming that both parties to a potential purchase went into the conference room with a real desire to effect a meeting of the minds, there is no valid reason why either an upset price, or at least a mechanism for achieving one, could not be directly agreed upon.

Third, in the event of any ‘dog in the manger’ refusal by the private-power people to negotiate upon any other than a fantastic basis, the public would, by a vigorous majority, insist that TVA go ahead, erect the necessary public-power transmission lines, and bring its power to competing public systems in the towns and cities of the Valley. In such event, the wreckage of private investors’ securities would be chargeable to a blind Bourbonism on the part of private-power magnates.

Fourth, the actual distribution within cities, towns, and for coöperative rural lines, should be undertaken by the appropriate public agencies in the units. For example, in the City of Chattanooga, the distribution network would be run by the Electric Power Board of Chattanooga, an agency authorized by the public at election and established by legislative charter. This agency has already sought — in vain — to secure any sort of conference with the private-power owners of the present Chattanooga distribution network to consider the latter’s purchase. The people of Chattanooga want the Electric Power Board to buy the existing private properties, at a fair price. Still they want public power and TVA. This attitude typifies the feeling of the public in most of the towns and cities of the Valley.

The result of such a programme would be a great system, under which TVA would generate and wholesale power; the cities and towns would buy it at city gates and distribute it within their retail areas, and the Valley would progress amazingly. This is the ideal and logical goal for TVA in the Valley. Incidentally, this is a programme in which the dominant management influences in TVA itself would be happy to coöperate. It is greatly to be hoped that the controlling private-power interests in New York will at some stage be willing to cease their guerrilla war and talk common sense.